Category Archives: Personal Finance

Home Repair Costs and Insurance

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Recently a part of my parents’ roof was damaged in a heavy rainstorm. The insurance company is willing to pay for only $772 of the damaged little portion of the roof. However, further investigation by a few contractors revealed that much more of the roof needed fixing including replacing a main beam because of rot and damage. Estimate from contractor = $6,000 . Now that’s a $5,000 difference that the insurance company should pay, and hopefully they will, but this still needs to be completed regardless. With a proper emergency fund, which my parents don’t have funded currently, would have taken care of this issue without headaches. They now need to figure out how to deal with this at the last moment if the insurance company does not compensate..

Contractors
The insurance company sent them some contractors that they could work with and she also received some estimates from Home Depot. They seemed nice enough, but after much deliberation and checking of reviews online on contractors and the large box store, they decided to go with a local neighborhood licensed contractor that had completed several other neighbors’ roofs already. The only difference is that he came with an estimate slightly higher than the others, but with the peace of mind that he will get the work done fast and on time, with no headaches as experienced by the hundreds of people that left reviews on contractors online. Besides, they can go pester him if he’s not on the job site :)

Fingers-crossed, this will be the desired outcome.

Insurance Payment
With such a big gap in estimates between the insurance company and the contractors, a detailed list will be submitted by the contractor as to what exactly needs to be completed. This should makeup for the gap. However, if they don’t, that will mean they will need to finance it somehow out through a home equity loan (if they can get one) or borrowing from me and others. I don’t really want it to go this route as I’ve warned them that they need to start funding that emergency account, but I guess I will do what is necessary to have a roof. I’m helping as much as I can to properly request the additional funding from the insurance company until this is completed. My negotiation skills will get some additional use :) Wish me good luck!

Expenses in Foreign Places

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Presently I am on business in Dubai and it’s interesting to see how the mind spending patterns shift when on travelling. The expenses will be paid for by my company, which like many others that get this benefit can take us out of the “normal” patterns we are used to. To give you perspective, in Dubai the cost-of-living is pretty much in par with New York city (i.e. A Subway foot long grilled chicken sandwich + coke = 30 AED = $8.17). Along the way, I’ve come to realize that one can easily go overboard when someone else is paying for them. Thus, along the way, I’ve tried to minimize costs to ensure that I am not changing my spending patterns too much and save the company some money in the process.

One of the ways I save money is to use my no foreign transaction fee credit card. At the same time I earn airline miles :) The card is a Capital One Venture Card (not affiliated with the card) with no annual fee, and there are other cards out there such as Chase Sapphire, but they do charge an annual fee. My corporate card does charge a foreign transaction fee, which I am saving my company for paying, and at the same time gaining some points!

Another way is to cook breakfast instead of buying it at the hotel buffet. It’s amazing how much money the hotels overcharge (60 AED = $16) versus an entire week’s worth of breakfast supplies from the local supermarket. Grant it, this is something that makes intuitive sense, but I find that people just take advantage of the situation that it is not their own money and go on a spending binge.

I also try and take local transit as much as possible as the cost is often time 10x more expensive to take a cab; however, it can be prohibitive if the walking distance to the transit stop is too far (in 100+ F weather) or if you’re running late (15 min cab ride = 40 min bus ride). I won’t count that as a way I save, but if I was in a better location then yes.

Bundling. Not all hotels provide internet service in the price or other amenities such as a gym, thus looking at more details for the hotel often helps to find other ways to save. For example, the current place I am staying at also has a washer/dryer combo that I can save on laundry services + free broadband internet. A comparable hotel with a fee internet charge + laundry services on location would’ve been significantly more expensive.

Many of these methods are ones that I use in everyday life at home, but it’s amazing how easy it can be to spend money when you’re in a foreign country on someone else’s dime. So practice what you preach and save a little money :)

Image Source: Flickr - http://www.flickr.com/photos/hani_suliman/5170581380/in/pool-52239804480@N01/

$2,000 loan payment .. and 134 months to go.

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I just made $1,000 for a side project and spent $2,000 on repaying a small part of my grad school loan. Since all of my debt is now essentially student loans, I’ve been quite aggressive to try and pay them off as soon as possible. My goal is to do $1,000 per month (notwithstanding the $155/mo I’m already paying on the undergrad loan). According to calculations using a conservative 6.8% interest rate as the bulk of my loans are that + some lower interest rate federal loans, I should have it paid off in: 130 months or 10.8 years..

Now I think I’m doing well in my plan, but it is certainly a daunting task. I plan on using any extra money I make to pay these loans back as soon as possible, but I have to also keep on saving for my other goals.

Personal Finance take on Life Satisfaction and High Achievement

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In a topic that’s a little bit away from the usual personal finance blogosphere, but highly relevant is having life satisfaction and a high degree of achievement.

Having recently read the New York Times article on this topic, “What if the Secret to Success is failure?”, it made me wonder and reflect on my own life. The article summarizes educators’ mission to improve the graduation rates and predictors of success in life of their students. It was observed that those students that succeeded in college, were not necessarily those with the highest placement test, but in fact they had other characteristics that allowed them to persevere in college. This is rated in what they call a Character Grade. Among the top characteristics were: zest, grit, self-control, social intelligence, gratitude, optimism and curiosity. These characteristics, taught and impressed on young children would then help them build the necessary tool set to deal with stresses later on in life.

It’s a radical way of thinking, and I like it. I think these characteristics apply to life in general, and certainly to personal finance. This is my take on how each of these characteristics would apply:

  • Zest – meaning great enthusiasm and energy
    • keeping up the energy to deal with the bills and to keep on track for debt freedom. nothing helps more than a good attitude.
  • Grit – courage and resolve
    • having the strength to deal with your issues head on and not giving up. the start is a little daunting, but gets easier as you move on.
  • Self-control – The ability to control oneself
    • pretty explanatory, developing the skill to control our desires and wants can help us achieve our true goals.
  • Social Intelligence - the ability to use one’s brain to navigate and negotiate complex social relationships
    • it helps with careers tremendously. being able to relate to others, or understand when it is appropriate to bring up issues is crucial.
  • Gratitude - the quality of being thankful
    • i can’t tell you the number of times saying thank you has helped me somewhere down the road. it’s the polite thing to do, but it also helps lift someone’s spirits, thereby improving your social intelligence. Being thankful for what we have currently is a great way to take stock of your life and analyzing what your goals truly mean to you.
  • Optimism - hopefulness and confidence about the future
    • When you’re in debt, you have to have this optimism to get you through the days. It’s a tough road, as great debt doesn’t easily disappear, but you have to be confident that better days will come.
  • Curiosity - a strong desire to know or learn something
    • Start with knowing your debts, but continue by learning about the topics you’re most afraid of. I was afraid of personal finance and retirement at the beginning, but the more I learned and read, the more comfortable I got. That’s how I got started with this blog, with just a strong curiosity to learn and improve myself.

Do you apply these charteristics to your life?

If you don’t use it, you lose it

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The maxim holds true in so many forms. Whether it’s exercise or financial control, it is so relevant. As one example, the other day I received travel rewards for a flight I took all the way in January but forgot to put my rewards number for.

Apparently, I was right on the line of not being able to count that trip towards my miles as they have a 9-month after travel expiration date. So check your recent trips and rewards plans. If you don’t have it applied, you might be out of luck.

This applies to purchases made at specific stores with rewards programs as well. A little known fact, at least at the store I frequent, is if you keep your receipt you can later call in to have that reward applied to your card.

Why it pays to check your credit card statement

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I just wanted to share this with you all as I was just the victim of a wrongful charge. I wouldn’t have been privy to it had I not looked at my bank statement.

In this automated world that we live in, often times we tend to ignore our bank statements. But I think it’s good to review them to keep ourselves grounded and to determine if any errors have been made.

For me, it was a large error made by the dental office who made a mistake and charged another $720 for work I had already paid for in December of last year. I called them up and they confirmed they will remove the charge.

This concept applies to everything from bank statements, to apartment leases, to gas bills. Computers and people make mistakes and we have to be on top of it when they occur.

Face-off: Moving Tape – Cheap vs. Premium

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You get what you pay for, or so the saying goes. Well, I recently moved and certainly got what I paid for when it came to packaging tape.

At the beginning of the move, I bought the premium name brand tape, then when I ran out, I bought the cheaper (no-name) refill for the tape dispenser. Little did I know just how much more inferior the cheaper tape was, even though it was half the price.

The premium tape, I used 1-2 pieces per the bottom and top of box correspondingly – and they stayed on strong. The cheap tape, I used 4-5 pieces – and it still did not stick properly!

To the numbers:
Premium Tape: 133 ft for $5.94 @ $0.045/ft
Cheap Tape: 327 ft for $3.97 @ $0.012/ft

Comparison – assuming each piece is 1 ft:

  • At a ratio(1:4) of 1 piece premium to 4 pieces cheap
    • I paid $0.045 (premium) < $0.048 (cheap)
  • At a ratio(2:5) of 2 pieces premium to 5 pieces cheap
    • I paid $0.09 (premium) > $0.06 (cheap)

Depending of how many pieces of tape I used, the prices fluctuated as to which tape was most efficient. However, when comparing the quality and trust that I had in the premium tape versus the cheap tape, hands down the premium tape won. I had a cheap box open up and a bunch of books fell out. Next time I will be more careful, and pay a little more for less headaches.

Face-off winner: Premium Brand.

Is your emergency fund big enough?

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My emergency fund is by definition an account to be used in the interim should an “emergency” arise. What constitutes an emergency is really dependent on the user of the fund – I left it to medical expenses, being laid off, and unforeseen family issues. Currently the fund is at $16,000, and that should more than cover expenses for 6-8 months in NYC.

One question I’ve been toying with for the past couple of weeks is whether or not I should stop contributing to my emergency fund and switch to other investments or saving goals. In addition, I have my student loan payments to start worrying about.

I think i’ll give the funding other savings goals a shot (i.e. my home downpayment fund). That way, I can at least rely on it as well should the emergency be even bigger than what I currently have saved. Once I feel comfortable with the size of the home downpayment fund, then I’ll lower that contribution and switch to start either paying down the loan faster or making some Roth IRA investments.

My question to you is, is your emergency fund big enough?

Loans, Loans, Loans… Federal Loans

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Having recently completed my MBA, I am now amidst the beggining in repayment of a large sum of money.  With 6.8% interest on the Stafford loans that I received from the loan agencies, I need to make this a priority.

I’ve already started repaying a some of these loans, including the TA’ing i did during school. Regardless, it’s still a large amount and I want to get rid of it as quickly as possible. I know some view it as good debt that can be repaid of a longer period of time, but regardless it is still a debt that hangs over my head so I have to eliminate it.

This is the plan I’m following:

  1. Make sure that the emergency fund has approximately 8 months of expenses for anything that may arise.
  2. Continue funding for a home downpayment, but a smaller rate (250/paycheck).
  3. Contribute $1,000/mo toward the 6.8% loans (approx 6 years of payments to follow).
  4. Contribute the minimum to all other lower % loans.
  5. Any additional money – dump into the loan.

This means that I will have to cut back on some things during this period, but it is doable.

One step at a time :)

Networth Update – 4/25/11

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-Updated Networth-

Total Assets: $75,583
Total Liabilities: $109,657

Networth: -$31,074

Slowly but surely I am working my way into paying the student loans, my only outstanding “good debt” as they say, although I don’t know how much good it is with some of the loans at 6.8%. I also received a decent bonus from work, which was taxed 50% of course, but I entered it all toward paying the student loan. I am looking to make some additional payments for the student loan, but I need to come up with a game plan for 2011 in terms of how I’m allocating the money. It’s pretty cool, and I’ll share my insight to the way I’m approaching this. Essentially, I am taking the total amount I am expected to make over the rest of the year net, then I am subtracting all of my trips, gifts and large expenses. Then I am calculating my monthly needs (some of which I know such as rent and cell bill), and determining what my budget should be for everything else. This is a new way that I am allocating my money and I’m hoping it will help me in becoming more conscious of my spending as I will be automating all the goals on a bi-weekly basis.