Category Archives: Finance

Pulling The Family Sled

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In my family, I pull the financial sled alone.

As I watch my friends become rich along with their working wife, husband or significant others, I can’t help look at them with a quiet envy as I pull the family sled alone.  I feel alienated, and slowly over years I avoid more fortunate friends as I find myself succumbing to my embarrassing, hidden envy.  They talk about retirement at an age that I will not be able to match, because as they and their companion,  both pull the sled, at my home, it’s just me.  They talk about their great partnership and the enjoyment of life with their significant other as I continue to pull and pull.

 

I pull the sled day and night, working late developing and refining financial family plans, trying to find a better grip as I pull the financial family sled along, alone.  The sled gets heavier each year with my daughter jumping in the back, my son ignoring my pleas because he has his headphones on (even when they are not on his head) and my wife laying on the couch or bed, always watching TV.  My wife has no time to help me, so I pull by working one, two and sometimes three jobs to keep the sled moving..

When I’m sick, I still pull the sled, the sled is heaviest then, but still I struggle on.  Now I’m sick and getting sicker, but I still pull the sled alone.  What happens when my time is up?  Who will pull the sled then?  Maybe I pulled the sled far enough that they will be okay?  Hard to say, have I pulled far enough that the pieces are in place for at least a survivable life for them?

Some days, when I’m alone and I’m isolated and in a dark place, I wonder what would happen if I stopped pulling the sled and just let things go.  Thoughts, so many thoughts but for now I just pull the sled alone.

-Chase

When Debt is a Good Thing

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Back in the post called “Back in Debt But It is Different this Time“, I mentioned that instead of buying my used Toyota Camry outright, I decided to take advantage of the cheap loan interest rates and borrowing the money from the banks and invest the cash that I would have used to purchase the car outright.  The idea being that I should be able to make out better financially if I invest the $10,000 instead of paying off my car loan…

So, how is investing the money working out for me?

Well, so far between stock accumulation and dividends, I now have $4075 that I wouldn’t have had if I paid off the car balance outright with the cash!  Granted that I still have about 2 years left to pay on the car, I’m pretty happy with the progress that I’ve made so far!  By borrowing the money at a very low-interest rate, and keeping the money that I would have spent in a fairly safe stock, I should almost break even from a money outlay perspective by the time the loan terminates.

By break-even, I mean that the car didn’t cost me anything, or pretty darn close to nothing.  That’s almost like getting the car for free… almost!

So as happy as I am currently with my decision, who knows what the future will bring.  The stock market has been rallying for a long time now, and it might be getting ready to correct soon, who knows…  I’m in a pretty safe stock (utility based) and it does have a dividend so I should be good, but…

Let’s play “Worse Case Scenario” (one of my favorite what-if games).

What if the stock market does have a correction, or even go into bear mode?

My stock is a utility, so that means it won’t be going out of business just because of the nature of utility businesses (other than coal).  Along with a certain state of security, I highly doubt that the dividend will be in danger… After all, this company has never decreased its dividend payout and has a solid history of continually increasing it… even during the “Great Recession”.  If the dividend can survive the “Great Recession”, then whatever the next few years brings should be okay too!

I already WIN… (kind of)!

Just taking into account the dividend stream alone, the sum of the total cumulative dividends would equal the interest charges that I’ve incurred already with the borrowing of the money from the bank.  So in some ways, I’ve already ahead of the game.from a financial perspective assuming the stock valuation remain close to 10k (yes, I know, I know… there is still a small tax consequence but it’s trivial and will so be a non-element).

So yes Virginia, borrowing money and going into debt for this particular scenario should be a good financial move in this case!

Getting Smarter?

Not all debt is bad and sometimes debt is good…  sometimes it pays to crunch the numbers and take a fairly safe risk! 😉

Don

 

Personal Finance Funk

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Today, I’m sitting in a library realizing that I’m in a kind of personal finance funk lately and that I made a lot of personal finance mistakes these past years, but now I’m down the road so far that it’s hard to imagine going back and rethinking my choices.  Things have been set into motion and objects altered based on the decisions that I’ve made and I’m finding it hard to fix matters.  Today I’m going to write about my personal finance mistakes and the possible options I might have to alter them in a “talking to myself” format.

einsteinsilly

Money Trapped in the Equity of my House Problem

For a while, I was debt free and even afraid of debt.  I created an accelerated debt repayment plan and executed it with a great degree of success.  I knew that such a plan would guarantee that I force myself to stick to it and get it done.  But on the negative side, now I have a good chunk of my money tied up in home equity that hasn’t really appreciated in my city much.

On the positive side, I had great peace of mind during “The Great Recession” since I was totally debt free during that period of time.  I admit, it was a good move that made me almost stress free a good portion of the time during that horrible period.

So what am I complaining about?  Well, when I started to make payments to pay off my house early, I knocked out a 7% borrowing rate, but later (during the last three or so years) I refinanced at 4.5%.  Had I just pumped the money into my 401k (or other investments), I would have a much healthier balance today.  I’m not saying that my balance today is unhealthy, but it would definitely be a larger amount.

So what is one thing that I can possible do?

Well, I could buy a new home and get a mortgage at the still relatively low rates, then take money from the sale of my exiting home and invest the money is some conservative investments that earn me a higher interest rate than my mortgage interest rate.  This is one option that would free up my money, while at the same time take advantage of the lower debt interest rates.  While I’m a little late to the boat on this one, it would still be to my advantage.

My Portfolio is Out of Balance

Overall, I’ve done well in the stock market these past few years, and this creates a most unusual problem for me.  My stock portfolio has too many speculative stocks that now make up a percentage that is too high for my portfolio.  While on the surface this might not seem bad, after all one want speculative stock jump up in value, right?  But the problem is that such stocks also can drop just as quickly.

What I’ve done, and still need to do…

First, I’ve already sold some of the stock when it was double what I initially invested, so I took my initial investment out (this was awesome)!  Unfortunately, my shares kept rising so much that I stopped this basic rule and started letting it ride (boo).  While I’m still up in the stocks that I left alone, they have come down a bit so that I just left them alone now.  What I need to do is take the hit and take out my principal as I should have done at the beginning of this year when the stocks were up over 100% vs my investment in them.

Next, once I sell my speculative winners and losers, I need to invest the money in some stocks like dividend stocks or something more stable.

So neither of my personal finance problems are unfixable, but sometimes they seem that way.  The steps to resolve such financial imbalances is to think it through, develop a plan, then execute it.

Thanks,

Don

Checking Out Southwest Airlines Rapid Rewards Program

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I’m flying out on a business trip soon, and I heard about the following information which I believe is pretty interesting.

jet landing

flying

 

Southwest Airlines works together with Chase Bank to provide loyal customers with the Rapid Rewards credit card program. These cards are available for both regular and business travelers who frequently use Southwest Airlines to get to where they need to go. They will receive preferential treatment at the airport as well as gain access to great deals on hotels, car rentals and events only available to Rapid Rewards members. Points can be redeemed for flights, hotels, cruises and even gift cards.

The Rapid Rewards Plus Card gives cardholders 25,000 award points when they spend $1,000 in the first three months of opening an account. Cardholders will receive two points per dollar spent on purchases made through Southwest Airlines or AirTran Airways as well as any purchases they make with Rapid Rewards partners for hotels and car rentals. They will also receive 3,000 bonus points on their cardholder anniversary. The card has an annual fee of $69 that is applied to the cardholder’s first billing statement.

The Rapid Rewards Premier Card is a top tier credit card with options for both business and leisure travelers. While the standard bonus award is the same as that offered to Plus card holders, Premier card members have access to more benefits that have a better rate of return on their expenditures. Cardholders will receive 6,000 awards points every year for their cardholder anniversary. There are no foreign transaction fees for purchases made abroad using the card. In addition, Premier cardholders are allowed to earn qualifying points that boost them towards A-list status. Plus card holders do not have this privilege. There are no blackout dates for Premier card holders who want to redeem their miles and get on a flight. The card has an annual fee of $99, which is applied to the first billing statement.

Some people may be able to apply for and receive a great Southwest credit card offer if they meet certain criteria. Travelers who carry little to no debt and have an excellent credit score will definitely benefit from the perks offered to Rapid Rewards program members. In some instances, travelers may want the perks that opening a Rapid Rewards card offers without the long-term responsibility of owning a credit card linked to the airline. For example, the opening offers provided by the Rapid Rewards Premier card give the user the ability to earn up to 50,000 bonus airline miles when they spend $2,000 on the card within the first three months of receiving it. This is a special limited offer that happens on rare occasions. Award points equaling 50,000 amount to over $700 worth of airfare, which is an incredible deal if one can take advantage of it. However, what should they do if they do not want to open another credit card account?

One approach that some people take is to apply for a credit card, be approved for it, and then close the account after the initial rewards have been collected. This technique is often used by consumers with good credit scores, no existing debt obligations and solid proof of adequate income. It is sometimes referred to as “churning“. Cardholders get to reap the rewards without worrying about holding onto a credit card for a long period of time. Where Southwest Airlines is concerned, this can be a great way to get a free flight for the cardholder and a traveling companion. If they qualify for the current deal, then they will receive enough points to redeem a “Wanna Get Away” flight.

If you are considering a fly soon check out my step to prepare to fly article,

Here’s to a safe flight and getting rewarded in the process!

Scott