Budget Meeting 02/28/07

This post is probably going to seem a little disjointed, but if there's anything that I'd like any reader to take away from it, it's the very last two sentences.

If you’re like the vast majority of the households in America, then one spouse "handles the money" and keeps the other spouse informed of what's going on. This information exchange varies from couple to couple to a wide degree, all the way from almost managing the money together to one spouse not knowing what's going on at all.

I like to think that MLB and I are right in the middle of that group. As you can probably guess, I have a pretty firm (and detailed) handle on our money, managing all aspects of our financial lives. I make sure that every penny is given a job when it comes in, and is tracked when it goes out. MLB certainly doesn't care for doing it and I'm a bit of a money-psycho, so it works well for us.

That said, MLB and I sat down and had our monthly budget meeting tonight. Basically, every month, we sit down together and go over the past month's expenditures and income, and establish the next month's budget.

I'm the biggest nerd at the homestead (okay, the only nerd), so I'm also the main finance guy, or the CFO of the household, as MLB calls it, and I prepare all the statements of expenditures and incomes. I also lay out the upcoming month's preliminary budget, based on the past month's income. We go over the preliminary budget I've created for the next month, and we discuss and make any changes that are necessary. We also discuss any issues we came across over the last month: where we’ve overspent, where we can cut back, and how we can do better. We also talk about any upcoming financial hurdles and how we're doing in working toward the financial goals we've set for the year.

It sounds really detailed and complicated, but since I already track everything, and most information is automatically generated by my spreadsheets, it's really not too bad. MLB gets thoroughly briefed in everything and has veto/approval power over absolutely every aspect of our finances, so it's completely a 50/50 agreement. By the end of the meeting, we're both very clear about where we stand, where we're going, and how we're going to get there.

I know that we're probably a bit unusual in this regard (okay, I'm unusual), but there is no doubt in my mind that our management method works, and works well. We're never surprised by a bill (more on why in the next few days), never seem to come up short, and have been able to put more and more money into investments and savings.

Now, I'll be the first to admit that MLB isn't exactly excited and enthusiastic about the meetings, mostly because she is not a numbers person and she trusts me to get things done right. Let's face it, budgeting is not sexy. But, I know that she's appreciative of the all care that is taken, and is confident that I'm managing our money well. And, I firmly believe that it is absolutely critical that she understand our situation financially. Full disclosure is the only policy.

Finally, and most importantly, maintaining and going over our budget every month gives us each financial peace of mind like you wouldn't believe. And, since more marriages dissolve over money issues than anything else, that is completely critical to our relationship.

Budgeting and sleeping well at night because of it,

YFNN

02/27/07 Market and Me

Disclaimer: I'm not a stock analyst. I'm just an average guy that pays attention to this stuff and knows just enough to be a danger to himself and others.

If you follow the stock market at all, or you listen to the bobble-headed chicken littles on CNN, you probably noticed that the U.S. stock markets took a tumble yesterday. In fact, the drop was the largest single-day drop in five years, wiping out the gains for the calendar year so far and making for fabulous sound bites for the "The economy sucks! Alarm! Recession! The sky is falling!" pundits of the cable news shows.

But, what does this stock market correction mean to me, FNN, the average investor?

In the grand scheme of things, it means next to nothing. Almost zero. I'm a firm believer that the slow, sure path to investment success is to buy and hold quality stocks and especially quality index funds. If you follow this mantra, then the daily market rollercoaster, even the large swing that happened yesterday, is almost completely irrelevant. I'm in it for the long haul, so short term gains and losses mean little to me.

If anything, I look at yesterday's sell off as an opportunity. Fundamentally, I don't think anything has changed about the market, so I see this next week as a golden buying opportunity, not as an indication of a long-term slide.

Really, what YFNN thinks it comes down to is this: Nobody really knows what yesterday’s sharp drop really means. Nobody ever knows what’s going to happen with the stock market. Not even Jim Cramer. I still believe the best bet for me and 99% of the folks out there is to just relax, take a deep breath, and remember that investing in the stock market is a long-term journey.

Keep on keepin' on.

YFNN

Be Still My Calculating Heart

spread•sheet (sprěd'shēt'):
n.
1. A piece of paper with rows and columns for recording data for use in comparative analysis.
2. An accounting or bookkeeping program that displays data in rows and columns on a screen.

I need to let the whole world know that I love spreadsheets. Make no mistake; I am absolutely, positively, 100% head-over-heels in love with spreadsheets. In grade school, when I learned just a few basic techniques on one of the first Microsoft Excel programs, I found that Lady Spreadsheet had her hooks in me and was never going to let go...and I never, ever wanted her to.

Now, it should be a given that I use spreadsheets every day at work. What good nerd wouldn't? But, I use spreadsheets extensively in even my daily personal life. Finances, to-do lists, Christmas card databases, inventories; spreadsheets hold them all together. I keep no less than thirty different spreadsheets I've written updated regularly. They're tracking, calculating, and listing various aspects of my life, and each one of them warms my heart in a different way. We're not talking simple ones, either. Oh, no. I've got them automatically updating, creating charts and graphs, forecasting, and monitoring countless variables and data.

I know what you're thinking: "That man has lost his #@$%! mind!" Let me try to explain:

da•ta (dā'tə, dāt'ə, dä'tə)
pl.n.
1. Factual information, especially information organized for analysis or used to reason or make decisions.
2. Numerical or other information represented in a form suitable for processing by computer.
3. Values derived from scientific experiments.
4. Plural of datum.

I'm a data man. I love data. I literally can not get enough. The more, the better. I want measurements, assessments, and quantifications until I'm drowning it. I want as much numerical information as I can get my hands on. It's the reason I walk with a pedometer. It's the reason I track household expenditures to the penny. It's the reason I count the number of steps from my office at work to the car. I crave numerical information.

With this constant stream of information constantly coming at me, I need a way to store, organize, and analyze it. That's where spreadsheets come in. As far as I'm concerned, they have no competition. They're the reason I can tell you how much my take-home pay will change if I up my 401(k) contributions by a percent (-$22.90) or how many gallons of gas I put into my motorcycle on September 24th (3.26).

I know, I know. You still may not completely understand my passion, so here in list form is why I love spreadsheets so:

1.) Automation - If I change a number on a spreadsheet, it can automatically re-run every calculation based on that change. Even if it's three hundred and forty-two formulas away, it'll do it, and do it instantly.

2.) Error elimination - I know that if I enter a formula correctly the first time, the spreadsheet will never make a silly math error, like forgetting to carry the four. It's perfect every time.

3.) Charts and graphs - There is nothing I like better than a solid, informative chart or graph. It can convey information so clearly, so concisely, and provide an understanding that no data table could ever dream of. Spreadsheets can generate them beautifully.

4.) Organization - Data is kept in nice, neat columns and rows. Everything is aligned properly. Data can be labeled and sorted with colors, fonts, or even animation. Organization will set you free!

5.) Flexibility - They can be used for simple lists, or the most complex financial statement. They're just as happy storing your Christmas card list as they are at calculating complex failure analyses. I know because I do both.

6.) Power - There's no better way to express the meaning of hundreds of thousands of data points than by using a spreadsheet to illustrate it by generating a simple graph or reduced data table.

7.) Speed - Instantaneous calculation. I'm pretty good at punching numbers with my TI-85 calculator, but I'm no match for the lightning-like quickness of Excel.

If you're afraid of spreadsheets, please don't be. They're perfectly amiable, and are eager to be your best friend.

YFNN

Nerd vs. Manly-Man, Part One

MLB and I went to a wedding this past Saturday. It was a nice wedding with a nice reception, but that's not the reason for this post. While having a lovely discussion with a couple that runs in MLB's crowd, I learned of a plot of land for sale about 40 miles away from the current YFNN homestead.

In the past, MLB and I have discussed building a house in the future on a 2-5 acre plot, within 30 minutes of downtown big-city, but it's never really gone anywhere. Mostly because it's a lot of work to find a plot like that around here, we can’t buy it with cash at this particular moment in time, and neither of us are all that committed to it right now.

However, This particular plot sounds like it's a pretty solid fit for our future homestead goals. It's about two acres of grassy land seated about 20 miles outside of the downtown of our large city. It's just outside the city limits of a nearby upscale suburb, has easy access to major highways, is within the limits of city water and sewer, and in a good school district. The plot is free of structures, except for a recently built (1998 construction) two-story 1400 square-foot 4-car garage with finished second floor. We're certainly not ready to build yet, but the property seems to be listed at a very good price, and from what we've found out, the seller is motivated (divorce, etc.).

Now, re-read that last paragraph. Did you catch the "important to YFNN" part? Those that know me certainly did.

Let me be a little more descriptive regarding the "important to YFNN" part.

This structure is a two-door, 1400 square-foot 4-car garage already supplied with 100-amp electric service, city water and sewer, and equipped with heating and cooling. The lower level's got a slab concrete floor with floor drains, and is currently in use as a woodworking shop for the current owner. The second floor is fully finished with a full bath and living area.

…

Oh baby.

…

So, that leaves me in a bit of a quandary. Do MLB and I make a grab for this property even though we're not financially prepared (we can't buy it outright, but I'm pretty sure we can afford it fairly easily), and we're not ready to build a house, yet? Do we want to take on additional property taxes, even though we won't really be using the property in the next couple of years? Do we even want to consider such a impulsive decision?

To be honest, MLB and I haven't even discussed this thoroughly yet. She may be just going along with it for right now, letting me fret and calculate and analyze and estimate for a while. In her mind, this may be completely wrong for our long term plans.

I'm a firm believer in collecting data, analyzing what you collect, planning, meticulously preparing, and slowly making decisions based on sound analysis and logic. But, man oh man, do my knees ever get weak at the idea of a huge climate-controlled garage and shop with a second floor office, room for an automotive lift, and enough space between me and the neighbors to fire up a racecar or loud motorcycle in the middle of the night.

My analytical and painstakingly-detailed inner nerd is battling with my gasoline-powered, chest-thumping inner manly-man!

Help!

YFNN

Price Drops and Refunds

This post is based on one of the "blog inspiration emails" I've sent to family recently.

If you buy lots of things from Amazon.com, this can be pretty valuable information.

Not many people know this, but Amazon.com has a price drop policy. They don't exactly hide it, but they certainly don't advertise it. Basically, if they lower the price on something that you’ve purchased within the past 30 days, they’ll issue a credit to your account (although you have to catch the price drop and ask for it).

If you want to check if any of your recent purchases are eligible for a refund, just follow these simple steps:

1.) Visit your account and look at all of your invoices from the past thirty days.

2.) Click on the item names to pull up the current item description and price and compare to the price that you paid.

3.) If you paid more than the current price, copy down the order number and go to the Returns and Refunds Contact Form.

4.) Select “Refund Inquiry” as your subject, and check off the orders of interest. If you don’t see the order in question listed, enter the order number in the “Other” field.

5.) State in the comments that the price dropped, and that you want to be credited for the difference. It might help to mention the item name as well as old and new price, but I’m not sure that this is necessary.

That’s it. You do have to be semi-vigilant in checking for price drops, but it's not that big of a deal.

In the past month, I've gotten refunds on a DVD player that I purchased, and the Kill-A-Watt, since they dropped the prices on both items since I purchased them. I also got back money on a pair of 19" LCD monitors. Overall, I got almost $20 back so far.

Being a nerd pays off again.

YFNN

Kill A What?

This post is based on one of the "blog inspiration emails" I've sent to family recently.

Here's some proof that little changes can yield big (well, relatively big) results.

On January 15th, I replaced about 80% of the light bulbs in our house with compact fluorescent bulbs (CFLs) from Home Depot (the only CFLs that I've found that have the quality of light that we like). The remaining 20% (basement, storage, etc.) we don't use often enough to warrant the extra cost of the CFLs. Most of the bulbs I replaced were 60-watt bulbs, replaced with an equivalent 14-watt CFL. I also started shutting off both of our computers at night and when we're not home, rather than leaving them run 24/7.

Our electrical billing cycle runs from the 15th to the 15th, so I got a full month of data. In January, our electric bill was $124.65. The bill I received yesterday, with the same amount of days in the billing period, same rate per kWh, was $89.57. That's a reduction of 28%!

Now, you're probably thinking "Wow, that's pretty good, but what about the outside temperature? That will drastically affect your heating and electric." Well, we have gas heat for the house, so the furnace won't affect it hardly at all (pennies at most...solely for the blower), but, the hot tub is electrically heated. However, the February billing cycle was COLDER than the January one, so even with the increased heating of the hot tub, it should have affected it the other direction.

So, now you're probably thinking, "Great, the electrical bill is lower, but he just shelled out over $60 for some silly light bulbs!". Well, you're right. After one month, I'm in the red overall, by about $25. But, after next month, I'll be firmly in the black, and since the CFLs last about 7-10 times longer than standard bulbs, I won't be replacing them nearly so often. So, the savings will add up even more quickly.

So, just by paying a little closer attention to our computer habits, and by replacing some bulbs, we're set to save about $400 a year. That's not too shabby.

I also recently purchased a Kill-A-Watt. It's a great little device that measures the energy usage of anything you plug into it. It's a perfect tool to assess how much power that 5-bulb office lamp pulls (322 watts!) or how much it costs to run the porch light all day long. And, at only $25 or so, it's a great gift for any nerd you know. I got mine at Amazon.com.

Other interesting things I learned by taking some measurements with my Kill-A-Watt:
- Even in hibernation mode, our computers used about 220 watts. That's like running two 100-Watt light bulbs 24 hours a day.
- Our air purifiers use 61 watts in "high", but only 22 watts on "medium", with just a small drop in efficiency. No more running them on "high" at night!
- LCD monitors use A LOT less power than the big bulky CRTs (about a third, actually).

Science is fun AND profitable!

YFNN

My "Self Tax" and Initial Results

This post is based on one of the "blog inspiration emails" I've sent to family recently.

I'm a big personal finance person. I enjoy shuffling money around, managing expenditures, and budgeting. I strive to make good financial decisions, plan effectively, make the best return on my money. I absolutely LOVE automatic savings and investments and forced savings. I like crazy ways to save more money. Basically, I'm a money nerd. So, I came up with my "Self Tax":

I'm forcing myself to pay a 10% "tax" on items that are unnecessary or poor choices. This not only forces me to reconsider most purchases (after all, a 10% tax is a stiff penalty...even a quick dinner at Wendy's costs an extra buck), but it forces me to put an extra amount into savings every month.

Here are my criteria for the tax. Essentially anything that is not:
- a regular bill (mortgage, cable, insurance, electric, etc.)
- groceries (since we SHOULD be eating at home as often as possible)
- a gift (we shouldn't be taxed for giving)
- charity
- healthcare/medical/prescription

is taxed.

Really, what it comes down to is that anything that is discretionary is taxed. This forces me to reconsider meals out, movie tickets, and other unnecessary or unhealthy purchases.

So, our self-tax for December came out to be $147.07. So, that money was transferred to a high-yield savings account today, where it can earn 4.5%. After $500 has accumulated in that account, the money will be transferred to a Roth IRA (the reason it's not directly placed into the Roth IRA is to limit the fees in the IRA...I pay per trade), where it can supplement our retirement. Woohoo!

So far the plan has been successful. Expenses for December were actually slightly lower than previous months, and I was able to put more money into savings, both of which are good things. I think that over the long haul, this tax will force both MLB and I to reconsider purchases and keep expenses down.

Is this necessary for us? Not at all, but MLB and I don't really deny ourselves very much. To be sure, we can live more frugally without giving up much. This seems to be an effective (and call me crazy: fun!) way to save a bit more.

Am I a total nerd? Absolutely. Am I lucky to have married a woman that will put up with this crap? Unbelievably.

YFNN

So Who Is This Guy Anyway?

One of the big decisions you need to make when you start a blog is how much information and detail about yourself that you're going to divulge. I've read blogs where only the bare minimum is expressed, and I've read others where the author will tell all sorts of details about their financial, romantic, and personal life. I'm sure I'll fall somewhere in the middle. We'll just see how it goes.

To start, I'm a late-twenties guy that lives in the Midwest, that was recently married. My wife is a wonderful, tolerant woman that has more energy than anyone I've ever met, and absolutely lights up my life with her humor and spunk. We've got a good-sized house in the suburbs of a large city, and a 80-lb fun-loving, energetic dog that can make home-life interesting.

I've got a pretty normal job in a technology industry, dealing with various aspects of engineering, management, finances, and science in general.

Throughout the blog I'll refer to several different people regularly. To keep things a little more private, I'll use some acronyms. I'm sure my close family and friend know them, but the average Joe off the street won't. Here are some that I'm sure will come up:

MLB: My Lovely Bride. This is my wife. We've been married for only a few months, but have been together for a more than a couple years. I'm VERY fortunate to have a wife that is as understanding as she is.
DD: Our pet dog. We've had him since December of 2004. He's a big guy (Doberman/Lab mix) that's very playful and affectionate, and has more personality than any other dog I've met.
TCFWIW: The Company for Which I Work. I've worked there for the last couple years, quickly moving upward. I'm not going to divulge much information, but I can say that it's a technology company, and I have a position which deals with nerdy subjects like engineering, finance, and management.

I maintain the standard stable of nerdy interests like reading, computers, and especially science, but I like to think that I'm much more than your stereotypical nerd. I love to cook because of the science behind every reaction and technique and I'm very involved in every aspect of personal finance. I'm sure each of these will come up regularly.

Believe it or not, I'm involved in some other more, um, manly interests as well. I've got two motorcycles, one of which is a modern 1000cc V-twin sportbike that I ride regularly, and the other is a 30-year old 2-stroke cafe-racer that I'm in the process of restoring to new-ish condition. I've also been involved in many different aspects of auto racing, and still have a highly-modified sportscar that I used to race.

Since this blog really doesn't have much of an agenda, I'm sure posts will touch on every portion of the above at some time or another.

So that's about it. I'm sure you'll learn more as time goes on.

Later,
YFNN

What's With the Name?

Well, here it is. At the request of some family members, I've started my own blog, here at http://yfnn.blogspot.com.

The reason for the name? Well, it's a bit of a Spiderman thing, where he called himself "your friendly neighborhood Spiderman". I LOVED Spiderman as small kid. And, well, I'm a nerd. It's okay; I've embraced it, and often, it pays off to be a big nerd. So, here it is, Your Friendly Neighborhood Nerd.

What the point of this blog? Well, it gives me a chance to share my nerdiness with friends and family, giving them a short glimpse into my everyday life. And, if other people stumble across this site, well, they can see the trainwreck, too.

Now, I'm not going to be one of those people that say "I'm going to write every single day!" or "I owe it to the readers to put out quality articles!". I'm really doing this for myself and no one else. It's a pretty non-committed commitment, so I'm not going to even suggest at posting frequency and especially posting quality.

So, that's it.

Yeah blog!

YFNN