Tuesday, April 29, 2008

Consider Renting a House for Your Next Vacation

I just got back from a weekend trip. In total there were 6 people on the trip and we spent just about $350 for 3 nights of lodging at a private home. We found the house through VRBO (Vacation Rentals by Owner). We could have gotten accommodations in a slightly more convenient place for about $70/night. In total it would have been $140/night since that place could only sleep 4, so we would need to get 2 rooms. But that place was not very nice (think camping) The added benefit of renting a house is having facilities to cook. On the 3 day trip, we ended up eating out only once (this was because we couldn't find a convenient place to eat the sandwiches we packed so we ended up getting some fast food). Personally I really like renting houses since everyone ends up spending more time together. The house had 3 bedrooms, which was perfect for us since we all got a little bit of privacy too!

Money saved on accommodations = ($140*3) - $350 (cost of house rental)= $70
Money saved by not eating out = (7 meals * 6 people * $7) - $100 (estimated cost of all meals) = $194

Total saved = $244

Wednesday, April 23, 2008

This Month Our Cash Flow Is Negative

Typically C and I are very good about spending less than we earn every month without a real budget. Not so this month.

1. We paid about $6,500 in taxes. I wasn't expecting it to be that much.
2. We finally bought our plane tickets for our upcoming month-long vacation.
3. And we both maxed out our Roth IRAs for 2007.

Granted the last item is actually a form of savings, but it feels like spending since it's harder to withdraw the money (whenever there are penalty and fees involved, I don't believe in taking the money out).

So with all of the expenses listed above, our checking account is down a lot. Normally we wouldn't even have enough money in our checking account to cover all of those items, but about a month ago, I realized that the interest rate on an ING Checking account with a balance of over $50K was actually higher than the interest rate on the savings account. The rate isn't that different, but when I saw this, I realized that I was potentially missing out on $100-$200 in the course of a year.

C and I have several sub-accounts in ING for our home down payment, emergency savings, vacation savings, and my early retirement contribution. All together, these totaled over $50K so I decided to put it all in the checking account.

Now the thing that is unclear to me is where should all of this spending be coming out of? Obviously, the plane tickets come from our vacation fund. But do taxes come out of our down payment fund or our emergency fund?

I'm not sure putting all of our money together is a good idea since it is hard to control spending and savings goals. I know I could just spend 30 minutes a month working on it, but I must admit. I'm lazy.

Tuesday, April 15, 2008

Today is the LAST Day to Fund Your IRA for 2007

Today I took the opportunity to fund my Roth IRA for 2007. Why did I wait so long? Well if you saw my earlier post on taxes, you know we just finished them over the weekend. I wanted to make sure C and I didn't exceed the income limit to make the full contribution. Once we had our AGI figured out, I knew that I should fund my Roth ASAP. But I made the mistake of not having enough money in my BofA checking account nor directly with Schwab, where I have my Roth. I had all the money in my ING account and I could have sent a check from it, but I felt more secure transferring the money to my BofA checking account so I could make the deposit in person. I ended up starting these transfers last Thursday. The money was fully transferred into my BofA account today with no holds, so I was free to deposit that check!


The one lesson I learned here is it's good to not cut things so closely. There were some online transferring options that I wanted to do, but it would have taken too long for the money to clear and become available hence I had to go with the in person option.

Monday, April 14, 2008

Taxes Are DONE!

Ever since getting married a year and a half ago, doing taxes has always been my husband's job. It's funny since I pretty much handle everything else financially related, but I've pushed this task onto him. I'm not sure why he did them last year, but I conned him into doing them again this year. We used Turbo Tax to file and they let you compare information from previous years if you have the previous year's tax returns on the same computer. I used that excuse to tell my husband that was why he needed to do the taxes. Oh and I checked and it doesn't matter who the primary filer for our economic stimulus rebate is since the last 2 digits of our social security numbers are within 3 digits of each other. But I don't think we'll be getting our rebate on time anyway since we didn't end up filing until yesterday. We did e-file, but I don't think they can process our returns that quickly. Note the link above states that your returns need to be filed and processed by April 15. That's okay.

I think the reason my husband and I procrastinated so much on the taxes this year is because we knew we were going to owe money. Well at least I knew so I didn't push him to do them sooner. I wanted to change our withholdings midyear so we would get less of a tax rebate, but when I went to the IRS withholding calculator, I found out that we were going to owe taxes. Needless to say, I ended up changing the withholding on my paycheck the other way to get less money, but apparently it wasn't enough. The total additional amount we had to pay was about $4K federal and $2K state. I don't know the exact numbers since C did the taxes. I asked C if we had to pay a penalty since we owed so much in taxes, but he said he didn't see any fines on our return.

I surmised that our withholding issue is related to both our paychecks. Our AGI was significantly higher this year than last due to substantial pay increases and C working for the full year. When C first started his job, his withholding might have been off since he made so little in 2006. He only worked for 1/4 of the year and then I made him contribute almost all of his salary to his 403B. Getting married in 2006 ended up reducing my tax liability significantly.

Ok, that's almost it for my post on taxes. One last thing - if there is anyone out there who still needs to do their taxes, H&R Block is now allowing everyone to use Tax Cut Basic and E File for FREE (I don't think this includes state taxes, but let me know if I'm wrong). Since I used Turbo Tax to do my taxes, I don't know much about Tax Cut, but you can't beat the price.

Monday, April 07, 2008

NCAA Winnings

I'm so excited! C participated in a Super Bowl pool this year like he does every year. It's a pretty big pool, so while he didn't place first, he was one of the top 5 and won over $150!! This is going to be added to our joint goal.

Today C and I were talking about our trip. This is going to be the trip of a lifetime for us. Things are pretty expensive, especially due to the weak dollar. We can afford to spend what we've budgeted, or more even, but it means giving up on other things we want to spend our money on. Budgeting is about choices and sometimes I just don't know what the right choices are.