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 Post subject: $40,000
PostPosted: Thu Aug 21, 2008 8:22 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
We now have $40,000+ in our ING savings account. Wow!!

The bulk of the money is in (1) our emergency fund - $18972, (2) my car fund - $14787, (3) Escrow for real estate taxes for our 3 Fla. properties (taxes are due in Nov. so those accounts will go down - we manage our own escrow accounts and earn interest on the money) and a good chunk in travel and our other misc. savings accounts.

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Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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 Post subject: better rates
PostPosted: Thu Aug 21, 2008 6:07 pm 

Joined: Sun Jun 01, 2008 10:13 am
Posts: 148
It's amazing how you've managed to stash your cash in the past year and a half. Yay!
I totally agree it feels weird not to be putting at least some of your $ to work.

Adding a child to the mix soon is an excellent reason to keep more in cash and maybe up your idea of bare minimum monthly expenses to keep on hand. Personally since reading GRS and having elderly relatives that I assist, my idea of 3-6 months of expenses has gone up from the bare minimum to the lighter side of worst case scenario. That's just our current situation so I've adjusted accordingly. I made a detailed list to remind myself of why we might need more than the bare bones now.

That said, it depends on things like your insurance coverage, co-pays and deductibles; the possibility of both you and Mr Sam being out of work at the same time; and other skills and resources you might have to call on. Do you have family and friends close by, for example? I don't think it is fiscally irresponsible or a luxury to keep an extra cash cushion.

I recently got 4.1% on a four month CD offered by Hudson Bank. Longer term doen't necessarily mean better rates, I discovered, and ladder accordingly, keeping no more than 3 months in cash savings. This is actually my husband's savings---this is a guy who would keep all his savings in low interest checking before we joined accounts and thought nothing of it. (He had enough there to put 30% down on our first house.)
We've both come a long way since then.

Good luck!


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 Post subject:
PostPosted: Tue Aug 26, 2008 5:31 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $15787 (Progress - 93%.)
(3) $11280 ($18,972*) (Progress - 113%)
(4) $5
(5) $0

Total: $31,072 (Progress - 62%)

* Our emergency fund already had $8000.

I've also updated our Net Worth IQ chart, you can find a link on my blog, to reflect the lower 2008 assessed values of our Florida real estate (which is based on the official property appraiser assessment).

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Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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 Post subject:
PostPosted: Tue Aug 26, 2008 9:49 am 

Joined: Tue Aug 05, 2008 3:22 pm
Posts: 548
Location: Northern CA
Sam wrote:
2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $15787 (Progress - 93%.)
(3) $11280 ($18,972*) (Progress - 113%)
(4) $5
(5) $0

Total: $31,072 (Progress - 62%)

* Our emergency fund already had $8000.

I've also updated our Net Worth IQ chart, you can find a link on my blog, to reflect the lower 2008 assessed values of our Florida real estate (which is based on the official property appraiser assessment).


Sam:

I don't understand why you're allocating as you do. You could move $$ from the EF into the car fund, and you'd be done with both #2 and #3 goals. Then you could move on to #4 and #5.

Also, why not have a 2008 IRA on your list? Any funds you put in there now would grow tax-deferred, which seems more important than over-funding the EF and car accounts...

Sandi


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 Post subject:
PostPosted: Tue Aug 26, 2008 10:41 am 

Joined: Fri Aug 31, 2007 7:48 am
Posts: 286
2008 IRA is number 5...

I agree, why the huge EF? I guess you don't really need a car right now?


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 Post subject:
PostPosted: Tue Aug 26, 2008 11:50 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
Mallow and Sandi,

Good questions. I appreciate the feedback.

We have a larger emergency fund because we have real estate investments (4) plus our primary home. As the real estate market has deflated in Florida (3 of our investments are in Fla.) we have bumped up our emergency fund because the chances of having an empty unit (all 3 are currently rented, 2 are covering the carrying costs plus a bit of profit and 1 is just covering the carrying costs) have increased. Having 3 rental units (the 4th investment property is just land) also increases the emergency opportunities. Earlier this year we had a $1700 A/C replacement at one property, we also had $800 termite tenting at another property, etc. The $1700 A/C came out of the emergency fund.

The e/r fund continues to grow because I also use it for our car insurance escrow (I generally don't pull that money back out) and my pay myself first savings. I've been shopping around for higher interest rates (thinking about a CD ladder) for about half of the e/r fund to increase our return.

The car. I want a nused car. But, my paid for car continues to chug along (knock on wood) okay so we are not in a huge rush to make that purchase. And the more money I see in the car account the less excited I am about spending it. What I don't want to be doing is paying for an expensive repair when I think the car is worth about $3000 for trade in value. If an expensive repair comes up, the nused car will change from a want to a need.

Retirement. We are also putting money into our 401ks which is not reflected in our 2008 savings goals. Fully funding 2008 IRAs ($10,000) is last on our 2008 goal list because that goal can carry into 2009 (up to 4/15/09). Fully funding 2007 IRAs was a 2008 goal (we maxed out our 401ks in 2007 - $31,000) but we only put $4000 into my IRA by the time 4/15/08 rolled around.

Additional thoughts or suggestions welcome.

_________________
Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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 Post subject:
PostPosted: Tue Aug 26, 2008 3:12 pm 

Joined: Tue Aug 05, 2008 3:22 pm
Posts: 548
Location: Northern CA
mallow wrote:
2008 IRA is number 5...


Oops, that's what I get when I'm not reading For Comprehension. :)

mallow wrote:
I agree, why the huge EF? I guess you don't really need a car right now?


Yes, this. Sam, remember that if you are contributing to a Roth IRA, you can use those funds for emergencies...so you may want to fund the Roth IRA first, over and above the EF base level initially established.

Sandi


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 Post subject:
PostPosted: Tue Aug 26, 2008 3:19 pm 

Joined: Tue Aug 05, 2008 3:22 pm
Posts: 548
Location: Northern CA
Sam wrote:
Mallow and Sandi,

Good questions. I appreciate the feedback.

We have a larger emergency fund because we have real estate investments (4) plus our primary home. As the real estate market has deflated in Florida (3 of our investments are in Fla.) we have bumped up our emergency fund because the chances of having an empty unit (all 3 are currently rented, 2 are covering the carrying costs plus a bit of profit and 1 is just covering the carrying costs) have increased. Having 3 rental units (the 4th investment property is just land) also increases the emergency opportunities. Earlier this year we had a $1700 A/C replacement at one property, we also had $800 termite tenting at another property, etc. The $1700 A/C came out of the emergency fund.


So you've had $2500 in property expenses. Can't you make "property upkeep fund" a sub-account, and set a reasonable limit? I read somewhere that repairs on the average place cost ~ 2 months mortgage payments annually. So what if, once you reach that amount, you then start funneling the savings into retirement?

Sam wrote:
The e/r fund continues to grow because I also use it for our car insurance escrow (I generally don't pull that money back out) and my pay myself first savings. I've been shopping around for higher interest rates (thinking about a CD ladder) for about half of the e/r fund to increase our return.


Yes, that makes sense.

Sam wrote:
The car. I want a nused car. But, my paid for car continues to chug along (knock on wood) okay so we are not in a huge rush to make that purchase. And the more money I see in the car account the less excited I am about spending it. What I don't want to be doing is paying for an expensive repair when I think the car is worth about $3000 for trade in value. If an expensive repair comes up, the nused car will change from a want to a need.


You've already got $16K set aside for the car. Even if your car blew up tomorrow, you CAN'T tell me that you can't find a reasonable used car for $16K. Why not sell the used car now, and add in what you get in a sale price into the car savings? That would give you $19K to buy with. The advantage? You're CHOOSING WHEN TO BUY - so it's NOT a need, as it would be if you waited for the car to go belly-up entirely (and possibly inconveniently). If you start looking now, you're much more likely to buy smartly, rather than in a panic because you need transport TOMORROW.

Sam wrote:
Retirement. We are also putting money into our 401ks which is not reflected in our 2008 savings goals. Fully funding 2008 IRAs ($10,000) is last on our 2008 goal list because that goal can carry into 2009 (up to 4/15/09). Fully funding 2007 IRAs was a 2008 goal (we maxed out our 401ks in 2007 - $31,000) but we only put $4000 into my IRA by the time 4/15/08 rolled around.

Additional thoughts or suggestions welcome.


And this is why I think it's time to stop with the car savings. You have a very real possibility of NOT maxxing out your 2008 IRA, just like you did with 2007. And that's a bonehead mistake, especially with a robust EF and cash on hand for a car.

Sandi


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 Post subject:
PostPosted: Wed Aug 27, 2008 7:26 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
Quote:
So you've had $2500 in property expenses. Can't you make "property upkeep fund" a sub-account, and set a reasonable limit? I read somewhere that repairs on the average place cost ~ 2 months mortgage payments annually. So what if, once you reach that amount, you then start funneling the savings into retirement?


We could do that and its something I've considered - leaving the rental profits in the house account for each property (we have checking accounts for each investment property) and then utilizing those funds when they come up. I also have ING escrow accounts for each investment property for real estate taxes and property insurance and I could park rental profits in those accounts.

To me there is not too much of a difference in having one large e/r fund vs. one e/r fund and 3 rental propery e/r funds. Also, based on our expenses our emergency fund (3-6 mos. of expenses) is not yet fully funded due to the fact that I count the investment property expenses as part of our monthly expenses. So, I'm not just covering the mortgage and monthly escrow costs for our primary home but also for 4 other properties. While our tenants cover the carrying costs of that real estate (except for the vacant land) we are responsible for those expenses if the properties are empty. And the risk of empty rental property is higher now due to the real estate market. I pay those mortgage bills each month so even though I pay the bills with money received from our tenants that flow through creates some anxiety becaue I'm on the hook.

Quote:
You've already got $16K set aside for the car. Even if your car blew up tomorrow, you CAN'T tell me that you can't find a reasonable used car for $16K. Why not sell the used car now, and add in what you get in a sale price into the car savings? That would give you $19K to buy with. The advantage? You're CHOOSING WHEN TO BUY - so it's NOT a need, as it would be if you waited for the car to go belly-up entirely (and possibly inconveniently). If you start looking now, you're much more likely to buy smartly, rather than in a panic because you need transport TOMORROW.


I agree with your point, I could find a good car for the money already saved and we have started our car research and plan to up the research and effort towards the end of this year. If my car quit tomorrow I wouldn't be in a huge panic because I live in a small walkable city (we don't do much driving Fri. eve. - Sun.) and I work 6 miles from home and my husband could drive me if necessary.

Quote:
And this is why I think it's time to stop with the car savings. You have a very real possibility of NOT maxxing out your 2008 IRA, just like you did with 2007. And that's a bonehead mistake, especially with a robust EF and cash on hand for a car.


I agree it would be a mistake not to max out the 2008 IRAs. I put it last on the list not because its not important but because of timing. Also, our IRAs are traditional as we cannot contribute to ROTH IRAs. We likely will convert our traditional IRAs to ROTH IRAs in 2010 assuming the caps expire as planned and that would give us more flexibility.

_________________
Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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 Post subject: 8/29 - Car Account is Fully Funded
PostPosted: Fri Aug 29, 2008 11:42 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has neen completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $11813 ($19,813*) (Progress - 118%)
(4) $192 (Progress - 4%)
(5) $0

Total: $33,005 (Progress - 66%)
* Our emergency fund already had $8000.

At present, we've made some good progress catching up and we are only @$650 behind on our 2008 savings goals. The nused car account is now fully funded and we have moved on to goal #4.

_________________
Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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 Post subject: Nused Car
PostPosted: Mon Sep 08, 2008 6:43 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
We bought the nused car on Sat.!!

Whoo-hoo. Details on the blog.

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Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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 Post subject:
PostPosted: Mon Sep 08, 2008 7:30 am 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
You didn't say what car you bought!

Congratulations.


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 Post subject:
PostPosted: Mon Sep 08, 2008 2:52 pm 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
Nissan Maxima.

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Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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 Post subject: Out of the loop
PostPosted: Sun Oct 05, 2008 9:27 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
Well, I bought the new (new to me) car, went on vacation for two weeks and the whole financial market tanked (continued tanking).

Anyways, we continue working on our 2008 goals, we are working on Goal #4 (baby fund) and we continue to invest in our 401ks. I've posted my goal numbers and updated our net worth on my blog. While its easy to be bummed out about the financial market and our $50,000 loss we have a good plan we have lots of time for the market to improve and we think the best action for us is to keep working our plan.

Cheers!

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Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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 Post subject: Multiple goals
PostPosted: Thu Oct 09, 2008 6:00 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
While we continue to work on goal #4, our baby fund, I've also started working on goal #5. I've started funding our 2008 IRAs earlier than planned because there are some super stock bargains that I wanted to jump on. I use my IRA to buy individual stocks, my 401k monies are in mutual funds, that I plan to buy and hold for years. While the market is very down our plan is to keep working our plan and that includes buying more stocks of good companies that I have fully researched and vetted.

I'll be updating my goal numbers this weekend.

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Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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