What We Spent in 2010

January 4th, 2011 No comments

Where Does the Average Consumer Spend Their PaycheckIt’s time to figure out where our money went for the year. The Department of Labor has come up with a really neat looking graph of the average consumers spending.  I just wish I understood it better.  According to the graph, average income is almost $63,000 and average spending is $49,000.  What happened to the other $13,000, savings?  Somehow I doubt that, and I’m going to guess that is what happens when you average things.  I tried to match our expenditures up with this and ended up having to modify it somewhat, while still keeping it accurate.

One thing to keep in mind is that while the average “consumer unit”  is 2.5 persons, we have 5.

So I now present to you, the Decidely Average Spending graph of 2010:

2010 Spending Comparison

The first thing that will grab your eye is our food expenditures seem to be shooting for the moon, and I have to admit, they are higher than they should be, even when you take into consideration we have double the average people.  Also mixed in with our grocery category were cleaning supplies and some other household items.  I tried to go through Quicken and fix those, but I’m sure I didn’t get them all.  When we first started budgeting, we had a separate envelopes for cleaning supplies and toiletries, and that just didn’t work for us, so we combined the money together into one envelope.  For 2011, I want to try and break it back apart somehow in Quicken but keep the cash together still.  But even taking that into account, when I did a report of our grocery spending, we went over budget almost every week. I think we are going to have to both increase our grocery budget a little bit and become more diligent at the same time.

Dining out was very close to the national average which surprised me, because I didn’t think we dined out all that much.  Housing and Mortgage Interest/Expenses I was pleased with.

Our clothing spending is lower than the average, even with double the people and having three teenagers.  You’d think that would be great, but I’ve probably been a bigger miser than I should be when it comes to clothing, and I hope to be a little looser (but not too loose) when it comes to spending on clothes this year.

Our transportation costs and gas & oil costs look flip flopped from the average.  We went down to two cars from three, not by choice really, but because one just died and it wasn’t cost effective to fix it. My son is saving up for his own car, and said he wants something to drive that’s better than our current cars, an admirable goal for sure, and the reason our costs are low.  We drive two used cars, a 1991 Buick bought from a little old lady (seriously!) and a 1993 Honda. So no car payments for us, but more repairs.  As far as Gas and Oil, I have a little over 100 mile commute every workday, which explains that.

We must be really healthy because our spending is very low.  I think we have one regular prescription, and, if my youngest son hadn’t broken his finger, next to no medical expenses.

Entertainment?  I’m sure my wife is going to have something to say when she sees how low it is compared to everyone else.

And insurance (and pensions): I did not contribute to our 401k the last two years while we were paying off debt, so this is bound to start rising soon.

So how does your spending compare to average? And do you plan on changing it once you find out?  If you really want to geek out with statistics, the Consumer Expenditure Survey has more data than you will ever be able to use.

Taxes Take a Holiday

January 4th, 2011 No comments

Tax HolidayHoliday! Celebrate!

Hey, maybe I could use Madonna lyrics for my blog post titles.  What do you think?  Material Girl, Gambler, Like a Prayer, Rescue Me, Causing a Commotion, Give It 2 Me, Don’t Cry For Me Argentina?  Hmm, maybe not.

But the holidays aren’t ending for us here in the US, because we now get to enjoy a Payroll Tax Holiday all year through.  That is what this temporary reduction in Social Security contributions is being called, at least. And I don’t know how much celebrating will be going on. Essentially, for the next year, you will pay 2% less of your gross towards Social Security, making it 4.2%, but your employer will still “match” the 6.2% that you normally pay.  Anything above $106,800 doesn’t pay on this anyways, so no gift to you people. The average American is going to see an extra $35-$50 on their paycheck, assuming you get paid bi-weekly.

This isn’t that big of a deal, because the Making Work Pay Tax Credit is going away. I don’t mind because it bit me in the butt by not having enough withheld again this year.

Hurry Up and Wait

Because Congress didn’t pass this legislation until the 11th hour, the IRS is giving companies some extra time to get it together, according to Don’t Mess With Taxes.

Companies will be able to delay adjusting the withholding down to 4.2% until January 31st, but they must make that amount up to you before March 31st.  Meaning your first paycheck might not change.

Woulda Coulda Shoulda

December 28th, 2010 No comments

Woulda Coulda ShouldaIf Only

It’s the time of the year when you reflect on all the things you set out to do, and all the ways you failed miserably at them.  I don’t know about you, but I never seem to accomplish all the goals that I set in my mind to accomplish.  Some of it is procrastination.  Some of it is lack of faith, and a lot of it is unreasonable planning.

How to accomplish your goals

Make Them Personal

Why are you trying to accomplish this?  If you have a personal motivation you are much likelier to succeed. Why do you want to lose weight?  Because you should?  How about instead you lose weight to control your diabetes.  Or you lose weight to look more attractive?

Make Them Specific

Don’t say I want to accomplish financial freedom.  It’s too vague (and broad.)  Say I want to pay off my last credit card.

Make them Time Driven

If you set a goal with no time limit, your mind will keep telling you that you have plenty of time to complete it.  Set a goal date.  I want to lose 20 pounds before Labor Day. Then write that date down next to your goal, and mark it on the calendar.

Do you know what would be neat?  A goal calendar with “growing” tasks.  The closer you get to your goal date, the larger the task appears, until it’s either taking up your whole screen, or gone because you hit your goal.  I might need to work on creating that.

My Goals

This year my goals are:

  1. Get my weight down to 170 pounds by June 1st ( )
  2. Clean out my overflowing garage (again) before April 1st ( )
  3. Expand the garden area by May 1st ( )
  4. Sell or give away all my old computer junk by September 1st ( )
  5. Write a blog post explaining my goals and how to accomplish them by January 1st ()

Gold Vending Machines

December 17th, 2010 No comments

Gold barA company just installed a gold vending machine in a mall in Boca Raton, the first of it’s kind in the nation.  It will hold up to $150,000 worth of gold and you decide the amount you would like.  It’s going to be guarded by armed guards to begin with, so, go jobs creation!

Is this really anything but a gimmick? First, do most people even buy gold?  You see it on television commercials and on the news, but do you buy gold to stockpile?  And if you do, would you buy it out of a vending machine?  I get irritated when I try and buy a can of soda and it gets stuck or steals my money.  What would I do if my $2,000 gold ingot got stuck?

I don’t see us ever returning to the gold standard.  It might help curb inflation over the long run, but in the short run (years) it can’t react fast enough.  Plus, do we even have enough gold to do such a thing?  We’d have to do a full reset of not only our economy, but all the economies.  It might be easier to go back to the cowrie shell standard.

Fancy ATM skips the folding cash, spits out gold – Yahoo! News.

The One About Estate Taxes

December 15th, 2010 No comments

Lovey...

What is the Estate Tax?

The estate tax is tax that is levied on the transfer of the taxable portion of a deceased person’s estate.  It is levied on the estate as a whole, and is not dependent upon portions given to different individuals.

One of the items that is being negotiated for the current tax cut package is the estate tax.  It’s one of those hot button issues that everyone gets up in arms about, along with abortion and gay marriage.

The thing is, the estate tax doesn’t affect the majority of tax payers.  In 2000 only 2% of estates were levied estate taxes.  In 2010 there was no estate tax. If the proposed changes are approved, the estate tax won’t kick in until $5 million.  If nothing is done, estate taxes come back into play starting at $1 million and with a top rate of 55%.

Why are people against Estate Taxes?

It’s a double tax

This is true.  But then again, so is property tax and sales tax.  You pay for those with money that you earned and already paid income tax on.

It punishes success

Why should you work hard just to give your hard earned dollars to the government?

Why are people for Estate taxes?

It helps prevent a perpetuation of wealth

Wealth that is transferred from generation to generation with no tax just grows and grows, consolidating the wealth of the nation into a  smaller and smaller group.  We see this happening already.  90% of the wealth of the nation is held by 10% of the population.  The estate tax helps (in some small way) slow this down.

It prevents the lack of incentive to work

If someone just handed you a boatload of money, why would you bother to do anything? Why work or innovate?

Something that I ran into while reading about estate taxes are what is known as death elasticity.  This would be lengthening or shortening your life based upon the current estate tax laws.  Would you consider giving up treatments and dying during the current tax year if it would mean your survivors would keep more of the inheritance?  Pretty Morbid.

The median inheritance is $60,000 currently.  It isn’t going to be taxed.  So why do so many people get upset by it?  Do you?

Did I mention We Are Debt Free?

December 10th, 2010 No comments

Dave RamseyWe are, and have been since the end of September.  I’ve been slacking posting here.  And it is not completely debt free.  We still have a mortgage, and I’m waiting on about $700 worth of medical bills to arrive, but we have no other financed debt. I have to thank Dave Ramsey for this.  Even though we haven’t stuck to the plan as well as we should have, without his course we never would have known where to start.

So what have we been doing since we hit that point?  Spend, spend spend! I’m ashamed to say that we haven’t put much of the money we were putting towards debt towards saving.  I wouldn’t say we blew most of it, just didn’t sock it away.  I did manage to take my wife away for a weekend to a nice hotel, an intimate concert, dinner and shopping, and we did use some of it to open an ING checking account, which just gave us $50 for doing so.

But with the start of the new year will come the new austerity plan.  More to savings.  Save save save!  And I’ll change the debt odometer on the right to a save odometer. Right now the magic number is going to be $16,000.

Go Democrats

December 10th, 2010 No comments

Brass BallsAs much as I don’t want to have a smaller paycheck come January 1, I applaud the Democrats for giving the Republicans a taste of their own NO policy. You don’t say that you won’t approve extending unemployment benefits without having a way to pay for it, or give health care assistance to 9/11 survivors without having a way to pay for it, then all of a sudden say that you will, but only as long as people making over $250,000 a year get a tax break and estates worth less than $5 million don’t get taxed. Is there a word more strong than hypocritical? How can you run on a platform of reducing the deficit and reducing spending, and then make a deal that guarantees the deficit will grow and hurt Social Security? And kudos for telling the President the same thing.

I think the President would be better served if we had some sort of vision as to what his plan is.  His decisions so far seem to mostly be stop gap, fix the problem now.  If he could say “We propose doing this because, even though it is a step back today, it will put us here in 5 years,” people be more supportive today.

Do I want an extra $50 a paycheck this year?  That would be really nice.  Do I want my taxes to not go up next year?  That would be really nice.  Do I not want 2 million jobless, broke people with nothing left to lose surrounding me?  I would really, really like that!  But I would like it better if all these charades could end first.

The tax breaks were put in place to do two things: return the budget surplus to the people, and stimulate the economy.  The surplus has been returned many-fold.  There is no surplus. We have an extreme lack of surplus, an anti-surplus.  And as far as stimulating the economy, that policy doesn’t seem to have been very successful so far, now has it?

So there’s my rant.

Am I Heartless?

March 10th, 2010 1 comment

I listened to a story on NPR’s All Things Considered on the drive home Tuesday about the rising cost of Medical School.  The first person they talked to was horrified that her daughter would be paying 8.5% interest on her federally backed student loan and wanted the government to cut that rate in half to match the interest rate they just received on their refinanced mortgage.  They said she was going to have to borrow a total of $300,000 (the entire cost of her education.)

For some reason, this grabbed me in a similar way to the story last year about the health care executive (not a CEO or President, just an executive) who had paid $18 million for the largest yacht ever built, but it was sitting half completed at a bankrupt shipyard.  I had a hard time feeling any empathy.

Yes, she is going to be saddled with that debt for a long time.  Yes, the interest rate is higher than that for a mortgage, but with a mortgage, you have collateral.  What are you going to put up to back a student loan?  And while $300,000 is a lot of money, how much is the house she is going to buy to live in, as a doctor, going to cost?  It seems a matter of scale, a scale that most people in middle America are not going to deal with and maybe since I don’t have any sort of connection, I can’t relate to her situation.

If you don’t want to pay interest on that amount, there are several things you can do, like, say, not borrow.  Plus, she will not have to pay more than 15% of her income towards the loan, and there is talk of lowering that down to 10%.  I think she is going to survive.

NPR — Cost Of Medical School Rises In Recession

Back In the Saddle

March 10th, 2010 No comments

The thing that spurred me to start posting again [get it -- spurred...] isn’t a thing, but a who:  My wifey.  She decided to start her own blog, Emmylyn.com, mostly so she can post recipes.  She is a great cook and an excellent baker.  I’m not sure if anything I post here is interesting to anyone else, or even valid, but it seems that the process, such as thinking about a subject or idea, then putting it down in words, helps me improve, maybe even develop a healthy narcissism.  But you should go visit my wife’s blog, give in to my nepotism, and help build her a healthy narcissism on top of it.  What does this have to do with personal finance?  Let’s see if I can make a connection.  You will definitely save money by cooking her recipes as opposed to dining out, so there is that, plus you will be eating delicious food.  How’s that?

It’s Like a Tax Refund, But In Reverse…

March 6th, 2010 No comments

Last year I resolved to quit letting the IRS hold onto my money and give it back at the end of the year, and instead to have access to that money right away.  So I adjusted my withholding so we should have gotten about $200 back after filing our return.  You can probably see where this is going.  Last weekend I sat down and started on our taxes using TurboTax Online, which works really well.  Our taxes are not to complicated, but needs more than a 1040A.  So, cutting to the chase, we owe $510.  I’m confident I can come up with that amount before April 15th without dipping into our current savings, but any sort of set back is a little disheartening.

Oh, and I adjusted my withholdings again this year.  We’ll see how good my figurin’ and cipherin’ is once again.

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