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

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education, money, npr, recession, student loan

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?

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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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We’re not dead. We’re feeling much better! I’ve ignored this blog for about 14 months now, but it’s time to get back on track.  We’ve totally blown our debt reduction goals.  Some in part to unforeseen expenses, but a lot due to over spending.  But we have made progress.  We have a little more than $1,200 in credit card debt left to pay, a couple medical bills, and then we will be debt free save the mortgage, but that should be paid off within 10 years even without any extra going towards it (bi-weekly payments rock.)

So my resolution for March is to post to this blog more.  Which, considering one post in 14 months, shouldn’t be too time consuming!

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I read this story about a week ago, about Heartland and their payment system being compromised, and thinking: Hmm, I wonder if that will affect us?

Well, we got a letter from the bank yesterday saying that the Mastercard Fraud Department had notified them that we were included in a suspected data breach involving card numbers and cardholders names (just like what was stolen from Heartland.)  So we will be issued new cards and have the old ones cancelled.

What a pain.  Now I have to go and figure out what automatic payments are done with that card so I’ll be ready to change them, not to mention the worry that our account will be suddenly empty.  There doesn’t seem to be a way to find out where it was that I used the card that it could have happened, either, so I spend time going over in my mind where I used the card, like that little diner where I stopped for lunch while working away from the office (heartland does CC processing for lots of small restaurants.)  I could kick myself for not having my envelopes with me.

StorefrontBacktalk » Blog Archive » Heartland Breach Hit At Its Unencrypted Point.

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Rich Slick at Get Rich Slick has a post, Deflation Hits Grocery Store that I read  last week, showing periodic prices of staple items, and comparing them.  I decided that I am going to start tracking similar items at both of the stores we shop at, Aldi, and Sullivans, a regional grocery chain.  These prices are for Central, somewhat rural, Illinois.

There are a couple changes from Rich’s: regular milk instead of organic; I don’t think I have ever even seen organic milk around these parts. The other is I left off the steak. Aldi does not carry steak (at least here,) and we buy all of our meat a half a cow at a time, to save money.

The majority of these prices have stayed the same the last couple of months, according to my unscientific memory.  Most of these items we buy at Aldi, which is obviously cheaper.  No one in the family can tell the difference between the Aldi milk and the “name brand” milk.  We also haven’t bought bacon in a while because we were able to purchase a ten pound box of “irregular” bacon pieces very cheaply.  All bacon looks irregular to me, so it suited me and my frugal ways just fine.

I’ll keep updating these prices so I can see where they are going also.

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Get Rich Slowly Has a post containing an old Coronet Instructional Films movie about your thrift habits and saving money.  It’s an excellent video.  I know most people watch these movies now for a good laugh, but I always enjoy them, irony free.  Ignore the cheesiness and pay attention to the content of them, and you will learn.

The part I most enjoyed were the graphs the boys made to track their progress compared to their plan.  I find that the act of writing something down by hand really helps to cement it into my mind, even if I never go back and look at it again.  My hand drawn graph isn’t nearly as nice as those in the film, but I don’t have an art department, either.

The rest of the tips in the film are great, too, about delaying gratification, buying quality, and perseverance.  I strongly suggest you go watch it, and read the post: Your Thrift Habits: Money Tips from 1948 ∞ Get Rich Slowly.

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graphs, instructional films, money, perseverance, saving money

National Average 2007

MSN Money had an article yesterday on how to save $10,000 in 2009.  The article didn’t interest me much (the suggestions are either impractical for us, or we’ve already done them,) but the pie chart of the average spending by familes in 2007 caught my eye.  I decided to make my own pie chart for last years spending and to compare them:

What we earn

• We fall more or less into the Average pretax income.
• Our household size is 5, double the national average.
• We own three cars, though only drive two currently.

What we spend on

Our spending for 2008

• Food at home surprised me:  I figured it would be almost double the average, but we spend almost three times the average!
• Dining out: We were close to the national average, which I guess is ok with double the household members.
• Housing: We are about 75% of the national average, but our housing prices are low in this area, and we bought a fixer upper.
• Transportation: Our costs are about 25% more than the average, but I think I can explain that:  we bought two used cars this past year, and the skyrocketing fuel prices this past year (compared to 2007.)  I also commute 120 miles a day, but this is still cheaper than if we moved closer to my job.
• Health:  We must be pretty healthy, because we don’t spend half the average.
• Entertainment: I wasn’t sure what all to throw in here, so I used our actual entertainment spending (not quite $600) and things like satellite TV, which brought it up close to the average.
• Insurance/Pensions:  we were about 50%, but we are not currently contributing to my 401K until we get out of debt, though a small amount goes into a pension fund for my wife.
• Other: I sort of swagged this one and came up with an number about the average.  Their amounts don’t add up to the total income, and I really didn’t know what to add in here.

So I guess, on the average, we are average, with the exception of our food costs.  Some of it can be attributed to rising costs, but it still seems high.  I’m hoping we can cut back on this by growing more things in our garden this year, and dieting (so I can lose the twenty pounds I resolved in 2009.)  We already buy most of our groceries at Aldi, and don’t buy a lot of pre-packaged foods, so I’m wondering where else we can cut.

How does your spending stack up to the national average?

How to save $10,000 in 2009 – MSN Money.

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I’m about as much on the fence about the issue as this article is:  Do we want banks to be owned by the government?  Most of the disadvantages listed would take time to accrue, in my mind.  I don’t see the government buying up all the banks, and then holding on to them for years.  A better approach would be to buy up  the biggest “bad” banks (I’m looking at you Bank of America,) get rid of the bad debt (but how?) and then privatize them again.  This is a case where trickle down might actually work.  If the big banks were stabilized, credit could begin to flow again, and the smaller banks would have breathing room to operate.

But here is an image for you: “Think of the bank as the DMV of the future, run by government employees who have little upward mobility,” says Mr. Kaytes.

And I agree with loosening up some lending standards due to pressure to achieve social objectives; but don’t open the flood gates, which unfortunately is what would likely happen.  The government always seems to achieve mediocrity without moderation.  Then again, wouldn’t that be better than the lending free for all we just had that got us into this mess?

The part that really irritates me about this whole banking siuation is that the only people who comprehend these exotic instruments enough to unwind them, are the people who created them.  So they are still valuable.

What to Do When a Bank Collapses – WSJ.com.

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Reading back through my posts, the majority of them seem to have a negative slant, but that’s not my intention.  Our plan to get out of debt shouldn’t be depressing, and it isn’t; I get excited when I think about it.  Every time I see how much money we have budgeted (and ready) for something, it gives me a warm fuzzy feeling.  We’re definitely not invincible, but knowing that I have that $1,000 sitting there and ready in case something happens is a wonderful feeling.

The pace of our debt reduction is slower than I want, but there is progress forward.  I hope that at the end of January, when we have our emergency fund resupplied, we should have a couple hundred extra bucks to put towards one of the accounts, and, God willing, we have that $4,000 retired by May.

Another good thing is that our Flex spending account this year will be back to being as functional as it was in previous years.  Before, we had a debit card that you could you not only for prescriptions, but also to handle copayments, glasses, contacts, over the counter drugs, etc.  Last year, when our insurance switched, you could only use the card for prescriptions.  To add insult to injury, any long term prescriptions you had were required to be ordered from the insurance company’s own mail order pharmacy, making the card even less useful (and the mail order place balked at letting you use the debit card issued by the insurance company!)  So the money I had budgeted for the up-front cost of contacts and such can now go towards debt. $18 a paycheck, but it will make a difference.

So my latest goal is to not sound down or negative about our finances all the time.  We’re gonna get there, stumbling blocks or not.

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debt reduction, drugs, Emergency Fund