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First time here

December 19th, 2008 at 08:20 pm

Well, I've been posting for awhile in the forum, so I thought I'd try my hand at blogging, since so many people seem to love it so much. I guess it can be kind of carthartic in a way.

To start off things so everyone is on the same page, I thought I would summarize my financial mindset:

1) Minimize unnecessary lifestyle expenses. This does two things simultaneously: make saving easier, and reduce the amount you need to retire on. My wife and I are pretty frugal people. We don't eat out a lot, indulge in mindless consumerism, or have many expensive hobbies. I do like to golf but I do it so rarely (and poorly) that it can barely be considered a hobby. Before our daughter was born we skiied a few times a year, and will probably continue to do that in the future. We drive older vehicles and are trying to get a good amount of life out of them. I work from home and my wife commutes only a mile or two so we don't put a lot of wear and tear on our vehicles. I am hoping to get 10 years out of them.
2) Splurge on things that matter, but pay cash for them. For one, we love to travel. It isn't as easy as it used to be with a young child, but we still manage to fit in 1 or 2 major vacations and a few long weekends a year. We save up for them all year long and pay cash when it's time to go. Technically we use a cashback credit card and then pay it off when the bill comes in. We love watching movies, so I "invested" in a low-end but functional home media center in our basement. Of course we paid cash for all of it. We don't go out to the movies nearly as much now that we have a kid, so this is the next best thing.
3) Save aggressively for retirement. I'd love to retire early, so I have tried to make retirement savings a priority, more so in recent years. My wife and I both took time off of working when we were younger to get master's degrees, so we started a little late. In addition, we didn't save much the first couple of years after we bought out house. But we've tried to make up for that the last few years, saving more than 20% of our pay yearly. That includes maxing out my SIMPLE IRA, putting about 10K in my wife's 403b, and maxing out 2 Roth IRAs. Our investments are about 80% stocks and 20% bonds, because I feel that 100% stocks is not going to get you that much higher return and is going to make for a rough ride along the way.
4) Use debt judiciously. I haven't followed this rule as well as I've liked. We don't carry credit card debt month to month. Our cars are paid off. Student loans are a thing of the past. We do have a mortgage, 2nd mortgage, and HELOC. The 2nd mortgage was part of the financing when we bought our house and is about 1/2 way paid off (it was a 7-year loan). The HELOC was supposed to just be for emergencies but I decided this year to take a large chunk out and put it in a savings account in case the bank decided to freeze our line. The rate is prime minus 1/2, currently 3.5%. Our savings account pays 3.75% so we actually make a little money doing this. My goal is to leave the savings account alone, giving us a sizeable (6-month) emergency fund, and pay down the HELOC over the next 3 years.

Well, that's the meat of it anyway. I'll be posting more detail in later entries. I don't want to give it all away now, or I'd have nothing to talk about!