The other week I received a call from a local Funeral Director asking me if I would perform a funeral for a family that did not have a pastor. I agreed and met with one of the family to work out the service details.

The funeral was for an older person who did not have children, and was only married for a short time before they died. The person had a will, but it was written before they were married. Also, shortly before they died, they changed  executors of the estate. Talk about setting up fireworks for when you pass away! Part of the family was mad because they switched executors. Part of the family was mad that the person married. Then there was confusion because the will was outdated because they had gotten married. So some of the family was scrambling to make sure they “got what was coming to them”.

When I did the funeral, some of the family stayed outside until right before the service started – they didn’t want to speak or see the other part of the family! Fortunately there was no fighting at the funeral, but it was tense. It saddened me that the individuals were more concerned about the estate than about the deceased.

This was a reminder to me and now to you – make sure your will is up to date! And choose your executor wisely. Also it was a reminder to me that if there is something I definitely want to give to someone, if I can give it while I am still alive that is the best – then I know that they will get it!  A final thought that I had was that I want to live in such a way that my family and friends will miss me and not just wish for my money.

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The other day my wife was talking with some of her girlfriends and they were talking about houses. One of them made this comment that just surprised my wife completely. This women said that her family did not own a house (they rent one) because they did not want to pay real estate taxes. My wife couldn’t believe that comment and I know I can’t.

Now there are many good reasons to not own a home and to rent. Depending on particular circumstances, renting may be a financially wise choice. But to make a decision to rent verses buy because you don’t want to pay taxes is not a good reason. It is wrong financial thinking. In the first place – they are paying taxes, albeit not directly. The landlord / owner of the house, his goal is to make money. When they come up with a price for rental, it will include covering the mortgage payments and taxes. So the price of the rental will have those items, among others factored in. Her family is paying the taxes, but on a monthly basis to the landlord verses a lump sum to the city.  

Although I am surprised at thinking like this, I know I shouldn’t be. Everyday people are making wrong financial decisions out of ignorance, foolishness, or just carelessness. I do not want to be one of those people, and if you stopped by today to read this, hopefully that means you also do not want to be one of those people. It was a good reminder for me to keep learning and growing in this area, so that I do not fall into traps that have caught others by surprise. Let’s keep learning together!

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This was the article I was going to post before our Dodge Caravan died! Additions or changes are in bold italics.

I like to check my Net Worth on about a quarterly basis (little late this year!). So far this year, my Net Worth is down about $600 $2000! Considering all the medical bills we have had (my wife has been sick for about two months), and all the house expenses we have had (well pump, water heater, windows, etc.), and now buying a used vehicle, I am surprised we are not down more. A brief snapshot of the factors affecting my Net Worth so far this year:

• Decrease in Net Worth: Spending on our Home is up significantly (well pump, windows, water heater, etc.)
• Decrease in Net Worth: Spending on Medical bills is up significantly (braces, sickness)
• Decrease in Net Worth: Savings Goals (budget categories I save for, i.e. groceries, etc.) is down (prices up!)
• Decrease in Net Worth: Used Car Purchase!
• Increase in Net Worth: Retirement Saving (stocks are up!)
• Increase in Net Worth: changed my budgets, increased savings!

Right now, the biggest thing we need to do is increase our emergency fund and build it back up. We now have a grand total of $200 in our emergency fund!!!  Yikes!!!

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After my last post, I did a little more checking on Zillow.com , I thought I would see how the price compares to since I purchased the house. I am still doing okay – the value of the house is still higher than when I bought in 2004.

One of our readers mentioned that zillow can be quite volatile in its pricing, and I agree with that, especially in the short run. What I am looking for is trends – is my area trending up or down over the past year. So for me, zillow is okay as a barometer.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Home Value since I Purchased is a post from: A Penny Saved, the best darn personal finance blog around.

I took advantage of a promotional offer and opened a sharebuilder account through ING (I already have an account with them). If I put at least $50 into the account (which I have), they will put $50 into the account within 4 weeks. Not bad!

I am not planning on doing any significant trading, but since interest rates are so low on savings accounts, etc., I thought I would try to boost my returns a little bit. I plan on being conservative, at least as much as you can with stocks. I will focus on stocks that regularly pay dividends. We’ll see how I do this year!

Anyone else investing in dividend stocks right now? I would love to hear your thoughts.

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Read an article by Beryl Jantzi who is a stewardship education director for Mennonite Mutual Aid – an agency that helps individuals with insurance and financial services. In the article he talks about the new normal for living well, which is living below your means.

According to Jantzi, living beyond our means (spending more than we earn) produces four negative results:

1. borrows from our future
2. it is unsustainable in the long-term
3. leads to significant finance charges
4. takes a toll on our emotional, spiritual, and financial resources

Living within our means, which is what a lot of us were taught growing up, is a little better, but has risks also:

1. no real immediate debt
2. is sustainable in the short-term
3. leads to no long-term financial goals
4. is a time-bomb waiting to go off (emergencies, etc.)

Living on the edge, living paycheck to paycheck, is just one paycheck away from disaster.

However, if we can live below our means, there are four benefits:

1. Eliminates unnecessary debt
2. builds up savings
3. allows for flexibility for the present and future
4. creates space for generosity to others

I like how he broke this down into three categories instead of the usual two (living above or below). I know for me, there was a period of time I thought I was doing well because I was living within my means, but that is not the best financial plan.

How are you living right now? Above, within, or below your means? What step can you begin to take today to  move from one category to the next best one?

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During our last blizzard this weekend I spent time catching up on some paperwork and budgeting things that needed to get done. One of those items was reviewing and re-balancing my retirement portfolio. I usually try to do this once or twice a year, depending on how far out of balance my asset mix becomes. It was definitely overdue!

While reviewing everything, I decided to redo my retirement accounts that are in my 403 (b) account (similar to a 401-k but for nonprofits). Along with several other funds, I had been invested in a Target Retirement fund account, but I was not happy with the percentages of stocks, bonds, etc. So I decided to pull my monies out of that and redistribute them.

Also, my balance was out of whack between stocks and bonds and I needed to get that re-balanced (getting back to the right mix and percentage of stocks and bonds). So after reviewing funds, pulling monies, re-balancing, etc. my retirement portfolio now looks like this:

• Domestic Bonds are 20% of my portfolio
• Large Capitalization Stocks are 35% of my portfolio
• Small Capitalization Stocks are 20% of my portfolio
• International Stocks are 20% of my portfolio
• REIT (Real Estate Investment Trust) is 5% of my portfolio

The basic breakdown is 75% stocks (further broken down by small, large, and international stocks), 20% bonds, 5% real estate. For my age and my goals this seems to be a pretty good mix – we will see how it works out!

I am a buy and hold, index type of investor. I am still in index funds, I just changed some of the funds to better reflect my personal goals and needs. I invest a fixed amount monthly (with a company match) regardless of whether the market is up or down. This strategy (continuous automatic investing) in my opinion gives me the best opportunity for good returns.

I will now let things go for awhile, probably checking closely every three months to see how things are going. I tend to not re-balance my portfolio unless it gets close to 3-4% over or under my target percentages. Again, unless something really wild happens, I tend to only re-balance once or twice a year.

Have you recently (or ever?) re-balanced your accounts? This might be a good time to take a look and make sure you asset mix is in line with your investing goals.

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A lot of people at this time of year like to make New Year’s Resolutions. I don’t. I like to set goals. The difference? A New Year’s Resolution is usually a wish, a generic “I would like to…”. Goals on the other hand are specific, measurable, and attainable.

I sit down (usually with my wife) and I map out where we would like to be at the end of the year – whether it is financially or some other area of our life. Then I sit down to determine how to measure that goal, and the steps it will take to achieve it.

For example, our Emergency Fund has taken several  big hits recently (windows and a well pump). So one of my goals for next year is to build back up our emergency fund. Now that is still too general – a good goal will state how much I want to put into the emergency fund this year (specific, say $3000), and the steps I will take to achieve that. With money, it is pretty easy to set goals because money is measurable (either I will have put the money into the emergency fund or not).

I believe it is very important to set goals, especially financial ones. Otherwise, you will be tempted to spend your money on whatever comes along rather than having an objective for your money. If you don’t know where you are going, than any road will take you there.I hope we all know where we are going financially.

What are some of your financial goals for this year? Share in the comments where you are headed this year. I will close this post with one of my favorite quotes – “Failing to plan is planning to fail.”

Have a great New Year!

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One measure of how you are doing with debt is to look at your debt to income ratio, often referred to as the  DTI ratio. To determine this, you take your monthly payments toward debt – mortgage payments, credit card debt, car payments, etc. Add them all up, then divide it by your net monthly income. That percentage is your DTI Ratio. Some experts say that this ratio should be less than 35% (others give slightly higher or lower figures). The lower the number the better.

Lenders look at this number to determine your ability to handle your debt payments. Even if your credit score is high, if your DTI ratio is too high you may be denied a loan. For me, my DTI ratio is 19.2%, which is pretty healthy. If I needed to (which I don’t want to), I should be able to get a loan fairly easily and at good terms (especially linked with a high credit score).

Another good reason to have a low DTI is that if something happens to your income stream, you will have more flexibility in cutting back your spending. Having options in budgeting is always a good thing.

If you are having trouble making ends meet, one reason could be that your DTI ratio is too high. If more than 40% of  your income is going to pay off debt, that leaves you with very little to pay for everything else. This would be one indicator that you need to tighten your belt and pay off some of that debt.

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As I was painting my wooden deck furniture last night I got to thinking (must have been the fumes). This furniture is 21 years old! Then I thought about the van I talked about yesterday that is 14 years old. And then I thought about the mower I traded in this year that was almost 25 years old. Now, not everything that I have is old, but the things I purchase do seem to last. I buy well made items, and then take care of them. And they “pay me back” with many years of useful service.

Although these items are not stocks and bonds, they are investments. I have spent money on them. I want my monies worth. By spending a little time researching and buying well made items (not necessarily the most expensive), and by spending the time to maintain and take care of them, the items last.

In this era of get rich quick and throw away goods, going against the flow and staying in for the long haul, whether it be in stocks or deck furniture, is the way to go. Wealth is built slowly and in spending wisely.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Take Care of Your Investments is a post from: A Penny Saved, the best darn personal finance blog around.