Homefront Updates

Some quick hits of the personal variety:

1) In the nick of time Shiner and I bought airline tickets for a honeymoon using frequent flyer miles. I'm glad I never jumped on the frequent flyer credit card bandwagon. Pretty soon you're going to have to pay to redeem them. Oh wait...

2) I have an interview for that job with the big old pay cut I've been hoping for. Gooooooo pay cut! Still need to print out a fresh copy of my resume and writing sample, skim a couple recent publications for topical talking points, finish up a draft of an unrelated project that has to by done tomorrow morning, shave my legs and/or find my sole pair of nylons that are not in a disgraceful condition, and get a good night's sleep. That's kind of a lot yet to accomplish tonight. Eep.

3) I wish people would stop asking me if I'm going anywhere over the Fourth of July. I'm not. I'm working. Shiner's working. It's going to be a truly delightful celebration of our overthrow of monarchical tyranny in favor of market tyranny. Except with firecrackers.

Spending Money to Save Money (and Health): My CSA

It's springtime, which means that along with opening my windows and pumping up my bike tires, I have once again written a $320 dollar check for--well, I'm not exactly sure.

I know in general terms. It's my CSA, which is short for "community supported agriculture." It's a program that lets consumers buy a subscription to a local farm for a growing season. The farm uses those up-front payments for its seasonal startup costs, and then as crops are harvested, all the CSA members get a regular portion of the harvest. The idea is that by running the program on a subscription model, the members are not only supporting local, sustainable farming, but they share some of the risk and benefit of farming--if there are droughts or floods or infestations, the members get less produce, and if growing conditions are ideal, they get much more. But this means I don't know exactly what I'll get for my $320. Will the peppers fail this year? Will slugs destroy the tomatoes? Will I be eating butternut squash into the winter (I hope so)? Will they plant those delicious raspberries again? WIll I ever figure out what to do with burdock? It's an exciting world of possibilities.

This is my fourth year as a CSA member, and my third as a member with this farm. There are a number of reasons I love my CSA. Some of them are hippy-dippy and not at all financial. I like that I am supporting a local business, I like that I get vegetables and fruit that three years ago I couldn't have identified on the grocery shelf, I like that it helps me eat "in season" because the CSA harvest changes weekly as growing conditions change.

But there are financial reasons, as well. Shiner and I split our share with another couple because in the peak season, there is simply too much produce for either of our families to eat before the next shipment arrives. So for $320 we get fresh, organic, local produce for twenty weeks. I may occasionally buy additional produce at the farmer's market if I'm doing something special like canning a large batch of tomato sauce, but otherwise this provides all our summertime produce for $16 per week. That's all the produce we would normally eat, plus more. Our veggie intake definitely increases during the CSA subscription because it seems like such a sin to let beautiful, delicious food we've already paid for go to waste. I might be able to go to the grocery store and buy the same amount of produce at the same price or slightly cheaper, but not the picked-yesterday fresh, organically grown, locally produced, super-flavorful heirloom varieties I get through the CSA. Very frequently, I'd spend closer to $20 or $25 per week on produce during peak season. And with food expenses going up as quickly as they have been lately, the CSA is not just delicious, it's a twenty-week hedge against inflation. Since Shiner and I don't eat much meat, this makes up a large portion of our grocery expenses.

It's very convenient for us to get the food. The boxes are delivered to various drop sites around the metro area. My friend bikes right past our drop site on her way home from work, and later that day I stop by their house to collect our share. A coworker is in a CSA that delivers his share to his home--that beats s trip to the grocery store for sure.

$320 is not a small cost to front, but at this point it's not an unexpected one for me. During the darkest part of winter, when I most miss the warm weather and my fresh produce, I start setting aside money for my share of the subscription. My farm also allows monthly autodebits for households on tighter budgets, and accepts food stamps. It might not be too late for you to find a CSA program near you. Local Harvest lets you search by zip code or state. Maybe a CSA makes sense for youe household, too.

This post was featured in the Carnival of Personal Finance #150, hosted by Lazy Man And Money.

Net Worth Not Impressive: My Coping Strategy

My net worth numbers have been sucking since the end of 2007. Completely crappy. I was getting a fair amount of motivation every month by watching that number grow, and now for reasons mostly not within my control (Hello, stock market! Meet the housing market!), that number has gone haywire, and I don't know when it will right itself. If I can't use net worth progress to track the incremental improvement that I know I'm making, what sort of benchmark am I going to use?

Why my net worth has taken a nose dive
From November 2005, when I started tracking my net worth, until December 2007, I was a freight train, a tigress, a perpetual motion machine, a number of really impressive metaphors. I increased my net worth by $107,822. I don't even know how to calculate the percentage increase because I started $46k in the hole, and high school algebra rules about multiplying and dividing negative numbers were a long time ago. But I know that's not shabby, considering that even at my most indebted that number includes home ownership and law school loans.

But 2008 is a different story. My retirement accounts are down--whose aren't? My debt load has gone up since the end of December when I had to replace my furnace, and I put that on a 0% card lest I chew through the bulk of my emergency fund in one go. I have the money to pay it off but I just don't want to until I've had a chance to rebuild my savings from that hit. But my savings are down, too, and this is truly a pisser. My savings account was nice and fat at the end of 2007, full of various subaccounts (emergency fund, vacation fund, wedding fund, etc.). But now the vacation subaccount has been liquidated to pay for the actual vacation, and the wedding fund is stagnant or even shrinking as I put money in every month only to take it out to pay for deposits on photography, ceremony venue, and the like. It's like pouring water into a bucket with a hole in the bottom. And I just got a notice from the county assessor that my home's assessed value for 2009 will be $18k less than it is for 2008. Even though I know my assessor's valuation is well below market value, that's the number I use for my net worth calculation because I'm conservative in most everything except politics, so that de-valuation will drag the net worth numbers down even farther.

So it's all treading water over here in Feminist Finance land, as far as net worth goes. I'm on target to max out my Roth 401(k) this year, and to once again have four months of living expenses in savings by the end of 2008, and to be able to pay for all of our wedding expenses in early 2009. But with the stock market in the toilet (despite periodic "rallies" like yesterday's, there's no putting lipstick on a pig) and the constant drain of wedding expenses that seem to accrue almost as fast as I save up for them, I can't count on any progress I make to show in my net worth numbers.

With all this going on, how can I track my progress?
What's a savvy woman to do? Throw up her hands and say, screw it, I'll keep on trucking and check in again in 15 months? Nay, gentle readers. I am far to goal-oriented for the ostrich strategy to work for me.

Debt Reduction
I'm going to continue my retirement contributions and direct deposits to savings as I have been doing, but for the next, say, six months, my primary interest will not be in tracking my net worth but in tracking my debt reduction. Since the targeted spending goals are what they are, and since I have zero control over the vagaries of the stock market or my housing valuation, my strategy is going to be to focus on the part I can control: debt repayment. Unfortunately, unlike with credit card debt, making big payments to these fixed-rate loans will not decrease my monthly debt obligations. But they will decrease my total debt load, which has a psychological, if not immediately practical benefit.

I have four debts: my mortgage, my home equity loan, my cosolidated student loans, and my American Express (the 0% card where my furnace expenses--and only my furnace expenses--are hanging out).* I do have other credit cards but those are paid off every month. All but the credit card are fixed rates, though there's a balloon payment on the home equity loan that will come due in September 2010. The home equity loan also has the highest interest rate of the three, at 6.25%. Due to those two factors, that's where I'm focusing my debt repayment energy.

To that end: My home equity loan, which started in Fall 2005 at $44,000, is now under $20k. $19,875, to be precise. Hooray for me.

Living Below My Means
I will also track the percentage of my gross income saved or invested (including extra debt payments), trying to keep that number above 50%. Between automatic retirement contributions, direct deposits to savings accounts, and the extra house payment Shiner contributes every month, I can usually hit this target. Sure, 32% of my monthly savings is earmarked for the wedding or for travel, but most of it is for emergency savings, and a 2008 IRA contribution (which I'll do in one or two lump sums for reasons I'm sure I'll post about later).

Keep Buying Low
Taking a cue from English Major, I am going to start tracking the shares I own in my retirement funds, rather than tracking the total value of those funds. I'm several decades from retirement. I'm not losing money so much as I'm buying low! I'm a freaking genius! Well, she is. English majors unite.

* I have the money to pay off the Am Ex and will do so at the beginning of May, three weeks before the 0% period ends. Three cheers for emergency funds.

New Retirement Plan Options

So my employer's 401(k) plan is changing administrators and changing fund offerings. This is good, in my opinion, as many of the new offerings are Vanguard funds. But since several of the funds I'm currently shoveling money into will be liquidated with any existing assets re-mapped to new funds, I've got to put a little thought into the new offerings before my next paycheck at the end of the month.

I am feeling crunched for time with work (we haven't even fully unpacked from the trip yet!) so I suspect I'll swap everything into the new Vanguard target fund option. But to make sure I'm not committing some gross retirement foul, bear with me while I talk this through a little. About half my money is in a Roth 401(k) and the other half is in a traditional pre-tax 401(k), since the Roth option wasn't available for the first fifteen months after I became eligible to participate. But the changes I make will apply to both types of funds, so I am going to ignore the tax status of the money, and talk about them all as part of one big pot.

So I am invested in five funds:
- a large cap growth fund (8.2% of my total 401(k) portfolio)
- a large cap blend fund (18.8%)
- small cap blend fund (27.1%)
- a second large cap blend fund (10.5%)
- a developed-markets international fund (35.5%)

All but the international fund will be liquidated and rolled over, though I have the option of swapping out the international fund, too, as part of a larger rebalancing.

The fund I'm eyeing up is the Vanguard Target 2045 fund, the latest target date my employer is offering. That fund breaks down like this:
- 71.7% total stock index fund
- 10.5% European stock index
- 10.0% bond fund
- 4.6% Pacific stock index fund
- 3.2% emerging markets index fund

I don't love the 10% in bonds, but honestly, the 18.3% in international funds is probably closer to where I ought to be for my personal comfort level, and the total stock fund means I don't have to think very hard about what sectors to invest in. Expense ratio of 0.19%.

So astute readers, any cautions for me? Pleas of sanity? Golden accolades? I'm about the pull the trigger.

Money Mind Freak

I am one of those people who deliberately sets their alarm clock wrong. Even though I know it's set ten minutes fast, I get a jolt every morning when I look at it and I think Oh crap, it's after 8! I'm going to be late! Shiner makes fun of me for this. He doesn't understand how I could really be tricking myself, since after all I'm the one who deliberately set the clock wrong. And it doesn't make sense. But even so, that trick successfully taps into the reptilian part of my brain that runs on instinct, and instinct is ultimately what prods me out of bed in the morning.

It occurred to me that I do the same thing when it comes to finances. I do lots of things every day in how I manage my money that aren't anything more than mind games, but those games keep me setting one foot in front of the other. A few examples:

I pay myself first. This one is an oldie but a goodie. I direct deposit a portion of every paycheck into an HSBC account in which I track separate sub-accounts for emergency savings, wedding savings, and vacation savings. My contributions to my Roth 401(k) work the same way. You can't spend what you can't see.

I keep my debt at a nice, round number. Every month I make at least three payments to my home equity loan: I make my regular minimum payment, obviously. And I make a second principal-only payment of $500. Then, after both of those payments have cleared, I make an extra principal payment of whatever amount will get me down to a multiple of $25. For example, at the end of December I made my regular minimum payment and my regular principal-only payment, ending with a balance of $21,662.80. Then, applying the snowflake-meets-OCD principle, I sent another $12.80 off toward that debt. Ta-da! $21,650 is so much more aesthetically pleasing than $21,662,80. And the ratchet tightens down just a little bit more.

I operate my checking account on a zero-balance principle. Sometimes I think of this as paying myself first and last. This has two parts. First, I control the amount of money I put into my checking account. Rather than setting my savings goals and letting myself spend everything else, I set my spending targets and try to save everything else. Both of those approaches are forms of budgeting, but withe different frames. I don't live on a miserly amount, but I do create something like an artificial sense of scarcity, which keeps me from feeling like I can spend it because I've got it. Second, at the end of each month, just before my next paycheck hits, I sweep what's left in my checking account into savings or debt repayment. This keeps me always putting "extra" money toward one goal or another. And, because I don't let myself "roll over" what's left from the end of my January paycheck into February, and the roll over February's paycheck into March, my monthly spending ceiling stays constant from month to month rather than creeping upwards.

I buy myself lunch. To save money, I pack my lunch most days. But I realized that unless I was careful about it, I didn't really end up spending less money in the aggregate, because I would just spend that $5 on something else rather than putting it in savings or toward debt. So I started marking on my day planner when I brought my lunch or had it comped. At the end of each week or two, I transferred the money I saved--the number of days I didn't buy a lunch times $5 saved per meal--to pay down my home equity loan. Those savings dont get "lost" anymore.

So what head games do you play with money to keep yourself on the straight and narrow?

Are We Sure January Isn't The Cruelest Month?

First, the assets side. My retirement accounts lost nearly 7% in January. I knew it would be ugly, and all month long I deliberately avoided looking at my account balances. That didn't stop it from feeling like a sucker punch. Oof.

It's a sad, sad story on the debts side of the equation, too. I had to do some very expensive work on the house at the end of December, so I've got about $8,000 hanging out on a 0% APR card. I do have the money to pay off that balance. I could deflate my emergency fund to pay it off, but five more months of $8k at 3.5% or whatever HSBC is paying out now seems a far sight better than $8k at 0%. Plus, I think I would have a really hard time seeing the balance of my emergency fund crash like that if I were to yank the money out now. Yes, it's a mind trick, just like all the other mind tricks we play on ourselves to keep from becoming complacent as we make progress. But psychology is a huge part of this process, and I need to respect that.

All told, my net worth dropped by 16.36% in January. Again, oof. I know I'm fine, that Shiner and I are doing what we need to be doing. We have a plan, and we're following it. We aren't doing anything stupid, and we're doing a number of things that are pretty smart. But this is just ugly.

Political Violence And My Microloan

In November 2006, I made a $25 loan through Kiva.org to a Kenyan woman who took out a $1,700 loan to transition from maize farming to dairy farming by purchasing two diary cows. This is one of several loans I've made through Kiva. I don't make any money in interest, and I don't loan huge amounts of money, but I intend to keeping the money I currently have loaned through Kiva circulating to other Kiva clients because microlending is such a powerful tool for improving people's lives. The impact on the lives of women is especially remarkable. Microlending organizations have documented that microfinance extended to women is more likely to benefit family nutrition and children's education than loans made to men, and that loans to women are more likely to be repaid, allowing for the money to be lended to another client and further widening the circle. Many of the women whose loans I have funded through Kiva have been restuaranteurs or retail entrepreneurs. The loan to this Kenyan woman was my first agricultural loan, and as a fan of programs like Heifer International, I was especially interested in watching this woman's progress.

I get periodic e-mail updates about my various loans from Kiva and their partner organizations, the local groups responsible for administering Kiva's loans. Today I received an update from the Ebony Foundation, who administer this particular loan, describing the impact of the recent political violence on the Kenyan entrepreneurs repaying Kiva loans, and I wanted to share some of it with you:

The impact of the riots is most felt in the micro and small business
sector. Over 1 million small businesses were looted and or burnt down destroying the only source of income to millions of Kenyans. Most of the fighting and destruction occurred in slum areas in Nairobi, Mombasa, Nakuru and Kericho in Rift Valley. These regions are home to over 70% of Ebony Foundation’s clients and as you can imagine almost all of our clients in these regions have been affected by the riots. Only one region- (Mount Kenya) which is home to about 20% of EbF’s clients was spared the violence. The economy in this safe region is now getting stretched as the residents have to now house the displaced population.


We have recently completed auditing the riot’s impact on our clients and as of yesterday about 4,900 of our clients had been badly affected by the riots:

-- About 1,532 of our clients were displaced and both their homes and business premises burnt down. This population is currently housed in church compounds and police stations.

-- Another 2,479 clients had their business premises burnt down or looted leaving them with no source of income at all.

-- 833 clients had their homes looted or burnt down and about 56 clients are missing and feared dead or critically injured.

We arrived at these figures through a survey being administered at holding grounds, police stations, and through reliable reports from groups and community leaders.

Of course I've heard news coverage here in the states about the political violence in Kenya, and clucked and fretted about how it sounded terrible and very sad. But receiving this email made it seem more immediate to me, and more personal. This is a set of impacts I had not thought about in much detail before, but it seems obvious to me now that political violence would have wide-ranging and potentially long lasting effects on the economic lives of the victims. I don't know yet whether "my" farmer was among those affected. The Ebony Fondation update talks only of loan clients in the aggregate. I hope for the best for all of them.

Tell Your Credit Card Company You're Not Paying Them

Have you ever made a purchase you later ended up returning, or made a payment for a service you never received? Maybe the shoes were the wrong size and you sent them back, or maybe decided to cancel your order for a new air conditioner after putting up a down payment. If you put these expenses on your credit card and your statement cuts before your refund has processed, you have two choices. You can pay the whole bill, including paying for expenses you are no longer responsible for, with the expectation that your next month's statement will reflect a credit after the refund has cleared. Or you can call your credit card company and tell them you're not going to pay the $XXX charge from Zappos because you've returned the item and are expecting a refund to your card any day now. If you're nice about it, the customer service rep you're talking to will make a note on your account and tell you what your payment is without the disputed charge so that you can make a timely payment on your account without having to fork over extra cash.

I much prefer this second course of action. It's easier on my cash flow, and I don't tie up liquid funds for a month just so I can "get it back" next month with a statement credit. It's especially helpful if, say, you've ordered multiple sizes of an item online and plan to keep only the one that fits best, or multiple outfits for an event and plan to keep only the one that's most flattering. Rather than pay for four different items when you never intended to keep three of them, you can just pay for what you've ultimately bought.

I have had great success with this tactic. In fact, I plan to use it again this month if the wedding dress (read: gorgeous cocktail dress I ordered to wear to my wedding--it was the wrong size, sadly) I returned isn't refunded by the time my January statement cuts. The only time I've had any amount of hassle doing this is when I was trying to get a refund for an adult education class I'd enrolled in and paid for before learning the class had been cancelled. The class had cost several hundred dollars, and wasn't something I was planning to cashflow. Paying for it would require me to take money out of savings. Because the class had been cancelled in advance, I was at first told by the CSR that I would have to wait until the first day of the scheduled class, and only when the class didn't happen could they consider it a service paid for but not rendered. When I explained that I'd received a letter telling me there would be no class, ever, because the sponsoring organization was in financial trouble, the guy I was talking to got it. He told me I could pay my credit card bill as though that charge were not on the statement, and that he'd mail me some processing paperwork that I should return with a copy of the letter cancelling the class, and he would help me work around the policy. By the time I got the paperwork and filled it out, the refund initiated by the class's sponsor had already posted to my account. Success! I never had to pull the money out of savings and it could keep earning interest.

I use my credit cards for everything, because they have such better consumer protections than cash, check, or debit cards. I pay off the bills in full every month, so consumer debt is not an issue for me. It's features like this that make me appreciate the convenience of credit cards.

Wells Fargo, Take... Four? Five? Ten?

How many hours have I spent on the phone with Wells Fargo over the last couple of years? After over a decade of incident-free banking, in which I have never had any problems that required more to resolve than a quick driver-by conflict resolution with the local teller, I moved away from my hometown bank and I opened a new set of accounts with Wells Fargo. They were conveniently located, they held my mortgage, and their hold music is no more crazifying than anyone else out there. And you know what? To their credit, they've always been really nice when I've called and asked them to fix their mistakes. But I have spent literally hours with them over the past couple of years getting them to correct their mistakes.

The joint account sweetie and I use to pay our household bills is the latest Wells Fargo timesuck. For a while we were getting a $1 fee every month as a fee to view electronic images of checks we wrote from the account. The problem? We never had checks printed on that account, we use it exclusively for free online billpay. Every month we'd be charged for an add-on feature that we never requested, never used, and in fact had absolutely no way of using. And every month I'd call, they'd reverse the charge, say they didn't know why that fee kept appearing, and reassure me it would never happen again.

Last week I called and went through the rigamarole again, and Steve, the guy who reversed the bogus charge, said that if we would just let him change the designation on our account from "Advantage" to "PMA Advantage" we could keep using our account just as we were now, only without any monthly mystery fees. Done and done. Today sweetie sent me an email asking if I knew why our account was overdrawn by about $4 when we normally leave a cushion of at least $20 in there. Instead of our old friend the $1 charge, we had a $25 fee for the privilege of having this new account designation.

Luckily Steve had given me his direct number, and I got him on the phone quickly. He reversed the charge and said "some linkages" had gotten messed up when they'd reprocessed the account designation, whatever that means, and that it wouldn't happen again. Awesome. I'll let you know in February whether that's true.