It’s about time, I know. I remember last February, I ran into someone I see every month or so, and he wished me a Happy New Year. I responded in kind, but thought to myself that it was already February, time to move on. Since it’s still mid-January, I’m thinking it’s not too late to share my 2012 goals.

• Run 1000 miles. Again. In 2011, I came up short, just over 900. This year, I need to be more consistent, once behind, it’s really tough to keep up, and the time off at year end isn’t time to run at all, so I need to end November well ahead of pace.
• I still need to drop a few pounds. I ended last year about five less than I started, and this year would like to drop the last ten. The running isn’t enough. I need to stay away from the buffets, and when away from home avoid the temptation of all the sweets. Jane 2.0 has reprimanded for my eating habits, skipping breakfast and lunch and heading into dinner with a huge appetite isn’t a good habit to be in. I’m also avoiding processed flour. Cutting down on bread, pasta, and potato. Budweiser has a beer aimed at the low-carb crowd, Select 55, named for its 55 calories. No sweets, but I can have beer when I like.
• I’ve been contracted for another year of writing for TurboTax, which has taught me a bit about writing. It’s interesting to have some topics you know so well that you have to cut down on how long the article goes, and then others that are so narrow focused a bit more effort has to go into the how and why it’s important to the reader. It’s also a motivator to have a topic and a deadline compared to here, where the topics are more varied and deadlines don’t exist.
• My daughter and I are still are struggling with AnotherFineMeal.com as both of our schedules were busy this year. We put up 6 posts, and agree that in 2012 we’d like to work toward a regular posting schedule there.
• The Basement. In November of 2010, the first batch of drywall (70 sheets) was dropped off. As I got into the summer of ’11, I realized I was coming up short and I changed from wanting to put in a drop ceiling to finishing it off with drywall. So another 50 sheets were ordered. I’m now within a few weeks of being done with that and will sub out the plastering. We’ll hire guys to put the floor in and this project will be behind me. It was a long project, and will add close to $40,000 to the house’s value and tax assessment. I’ll post a few before and after pictures once this is completed.
• Finances – I’ve shifted gears. Last year I stated I’d like the mortgage paid by the summer of 17, when my daughter would start college. Instead, with rates as low as they are, we are refinancing to a fixed 15 yr mortgage at 3.5%. For some time, we’ve been saving 20% of our income, funding college savings, and prepaying the mortgage. We’ve managed to budget to such a low fraction of our income, it’s time to loosen up a bit. I still plan to pay the new mortgage at a faster pace, but now to be paid by 2021, when our daughter graduates. For the next five years, we just need to monitor college costs and add a bit to cover any increases. In other words, we have four year’s worth of college cost now set aside, at today’s rates. This decision came after a lot of time looking at the numbers, and reading articles with titles like “can you be saving too much?” I also saw a neighbor’s house for sale, a couple who both work, and have three kids. I found out they are downsizing to pull out money to use for college. We are close enough to our goals that such a downsize could let us retire. Instead, we’d like to keep working, but not worry about the extra trip or for that matter, some of the charities we’d like to better support.
• Retirement – not this year of course, but I do need to plan. Specifically, I want to be sure that each year, I am shifting out asset allocation a bit so that we are at the allocation we want at retirement. The disaster of the 2008 downturn didn’t hit those with a decent allocation quite as badly as those who were fully invested in US stocks, which is closer to how we are today.
• Last (I promise) – Declutter. No, I don’t have my gas, electric and phone bills in a file cabinet spanning decades, those get glanced at, paid, and shredded. I do, however, have too many brokerage account statements going back almost 30 years. This is the year I plan to start downloading PDFs of these statements, and discontinuing the mailings each month. My broker had access to download 10 years back, so for the accounts I need to keep cost data, I’ll download and shred. This year, the paper has to go.

Well, that’s it. Eight goals for the new year. How did you do with your goals in 2011? Do you write them down, or just think of a few, but never really do them? How many stay on the list year after year?

written by JOE \\ tags: declutter, goals, Retirement

I hope my friends at Save Flexible Spending Plans will forgive me for saying this, but I think it’s time to kill the FSA. Really.

In case you have no idea what I’m talking about, the Flexible Spending Account is an account that lets you take money out of your paycheck, pretax, and get it back when you have a co-pay, or any unreimbursed medical expenses. Prior to 2011, you could also use it for OTC (over the counter) medicine or other first aid products. Now, aside from insulin, you must have a prescription for any medicine you wish reimbursed. Once you have an expense, you need to submit a copy of your bill to your administrator, as companies usually outsource this process, sometime to the insurance company, other times to another company specializing in this. If approved, you get a check in the mail a few weeks later. Sounds like a lot of effort, doesn’t it? Time and effort by both you and the guy reviewing your bills. Somebody is paying for this, and the expense is wasted, spent on paper pushing not on healthcare.

There’s more to this, as if it weren’t complex enough, you have one chance to decide how much money to put in for the year, usually early November the year prior. Your kid needs braces, and you find out in February? Either Junior waits until next January or you miss using your flex account to fund the braces. The spouse need a $1500 root canal? There’s no planning for this. To top it off, any money you don’t spend by the end of the year (plus grace period if your company allows it) is lost. Presumably this offsets those who got back money they never deposited, perhaps leaving the company before the end of the year.

In my daily travels, I frequently find myself driving past Walden Pond, and the above quote comes to mind. With this in mind, I suggest that every change congress wishes to enact to the tax code must always create less code, not more. Instead of creating new accounts, create fewer. With regard to the FSA, kill it, and in its place offer a deduction, even for non-itemizers. The current FSA rules are a disservice to those who may need it most, those with unexpected expenses, and those who are fearful they can’t predict their cost and don’t want to risk losing their deposit.The alternative is the continued tinkering. More rules, more adjustments, more unhappy participants and employers. Stop this craziness. Simplify, simplify, simplify.

Are you a user of the FSA? Have you lost money by not spending your deposits by year end? What do you think of my plan to simplify?

written by JOE \\ tags: congress, FSA, medical spending

Another year has passed. Later this week, I’ll have my goals for the new year to share, but for now, I’ll just take this moment to wish all my readers and fellow Personal Finance Bloggers a Happy, Healthy New Year.

written by JOE

I am taking off through New Year’s Day. Spending the week in the city (for me “The City” will always mean NYC, no place else like it in the world) with my daughter, ‘Jane 2.0.’  I’ve never perfected the art of writing ahead of periods I plan to be away. Maybe 2012 will be different. I hope this past year treated you well, and the the new year brings you the right mix of wealth, health, and happiness. Be well, and see you all next year.

Joe

written by JOE

When I mentioned The Financial Buff’s Behavioral Economics Explanation for Sensitivity on Service Fees a couple weeks back, I didn’t think an example of this would come to my attention so quickly. But first, a quick recap of TFB’s article. His discussion focused on how people reacted to the $5/mo debit card fee  that Bank of America was about to inflict charge on its victims customers.  This was the first example, baggage fees, another. Today, here’s mine.

This is a ticket (redacted to eliminate my info) to an upcoming concert. The ticket price is $125, which I guess is within reason, good baseball tickets cost this much and there’s 90 chances to see the local team play at home. Yanni, or any performer is pretty limited in how often you can see them play live. But the thing I found irksome was the ticketing fee, $18.50. There’s a transaction cost the credit card processor charges, and I get a 2% rebate each month, so there’s $2.50, it’s the balance of $16 to process this transaction that I object to. The agent has little overhead to handle this ticket, in fact they print nothing and mail nothing out. It was all done electronically.  Here’s the crazy thing – If the tickets showed a price of $150 with a $1 mailing fee or free to print yourself, I’d have been happy and thought this a great deal. It’s only when the fee is broken out and I see I’ve paid $37 to process two tickets that I feel ripped off. Not enough to avoid the transaction of course, but just enough to write about it. Last I saw Yanni live was over 20 years ago, before I was married, and he gave a great concert, looking forward to seeing him again. But I won’t be buying popcorn there.

written by JOE \\ tags: fees, Finance

Sometimes I’m wrong and I know I’m wrong. Other times, it takes an intelligent reader (ha! you thought I’d say my wife. Well, she doesn’t read me, so it takes a reader!) to set me straight.

In this past Sunday’s roundup, I joined the Thousandaire to poke fun at Joe Biden for his low net worth. Often, when pulling titles together for my roundup, I don’t go a level deeper. In this case, that lack of extra research has me feeling pretty bad. As Elle pointed out to me, Joe Biden did not have the luxury of being able to save, but he had his priorities straight. From Elle’s comment:

“Biden’s wife and baby daughter died in 1972, and his two sons had critical injuries, when a truck crashed into the car his wife was driving. Biden was a single dad of two sons for the next 4.5 years. Wiki entry: “To be at home every day for his young sons, Biden began the practice of commuting every day by Amtrak train for 1½ hours each way from his home in the Wilmington suburbs to Washington, D.C., which he continued to do throughout his Senate career… Biden left standing orders that he be interrupted in the Senate at any time if his sons called.” Biden re-married in 1977 and had a daughter with his second wife.

Three kids to put through college and graduate school. A long commute for nearly all his working life. If the guy has a positive net worth; managed to put his children through graduate school; and has no mortgage; then given the pension, he is wealthy.”

So, I’m left to say “Sorry, Joe.” You are a good dad, and no bank balance can take that away from you. As Elle continued “I’ll take a low income VP or senator, who’s scrambling like most of the U.S. to make a living, over a wealthy one (especially those who inherited) any day.” I agree with her sentiment. And I wish you well.

written by JOE