Big Brood

According to this article on Yahoo Finance, MasterCard is finding quite a bit of profit from other countries even as it gets more business in the U.S. from consumers desperate to cover their bills in a down economy.

As much as Goose and I have found credit cards to be useful, I’ll be glad when we are out from under them. We have spent years shifting some floating debt around on 0% interest cards, rather than paying it off like we should. While this has helped us to live a little “faster” than we could have, we now regret this.

The truth is, we came to a point where our monthly bills nearly exceeded our monthly income. Our credit card debt was increasing due to sloppy buy habits and this was making it hard for us to meet our other obligations.

We were working for Mastercard and Visa rather than for ourselves.

Now, we are on a road to recovery and we are looking forward to keeping our money out of the hands of credit card companies.  So far during our recovery we have had a fairly rigid “no credit” policy.  So far, we have slipped a couple of times but paid off the new balance at the end of the month.    I’ll post later on how we are doing and what our plans and techniques are.

Have you had problems with your credit cards?  What have you done to avoid using your cards?

The Star-Telegram has an article talking to the Hinkles about 10 tips to save money on your food bill.

We don’t have any teens yet so I’m glad to get a little advice from a more “advanced” family. From their tips, the only things I don’t think we’ve tried are:

• Shopping at international markets where you may find things like rice and spices cheaper.
• Setting a once-a-month Use-It-Up week to use up leftovers and bits & pieces.
• Setting aside stale bread. I don’t think we usually get much stale bread.

We do have a few small international markets around here, so it sounds like we need to take our price book and check them out!

Do you have any other tips to add to these that help you to save money on your bill?

This post by CNNMoney entitled Top Tips: Reasons for Optimism is a nice dose of sunshine in an otherwise dreary news stream. In this article they talk about 3 good reasons to be optimistic.

1. Low mortgage rates, which can help those of just considering refinancing as well as those that may be stuck in some of those nasty sub-prime loans.
2. Consumer Incentives: Look for deals on larger cars, furniture and electronics as retailers and dealers look to clear out slow moving inventory. Bad news: Compact cars are less likely to have incentives. Good news: We need a LARGE van.
3. Now is a good time to buy in the stock market. For those of you with the extra cash, it’s time to go nuts!

These things are good news for us, but I hope that this tumble ends soon.

How do you feel about the economy right now? Do you think we’ve hit the bottom?

If any of you have taken a look at our “About ” page, you’ll see that we admittedly have not done the right things with our money. What the right things are, well, we don’t really know. This is the first post in a series of posts I am putting together to discuss investing.

One thing that you learn very quickly when teaching, is that the best way to learn is to teach! If you can’t teach, then the second best way is to try to write things down. Blogging is a great way to do that.

Here’s a bit more background on me, so you know where I’m coming from. I am in my mid 30’s and have spent most of my life spending. Whenver I wanted something, I got it (within reason). However, now what I really want, is to be able to retire someday! To reach this goal, I know I need to become much smarter about our money.

So, I come to this with a fairly fresh mind. Fresh meaning, ignorant when it comes to money. However, I do have one thing going for me. I love to learn and ask questions.

So, we began this blog to begin to better understand our own finances, motivations and possibilities. What CAN we do with our money so I can retire someday? What options are available? How much money do I need to dedicate to this goal? Can we do this without hurting our family life?

All these questions lay before us, and I hope in this series to begin to answer some of them.

Hopefully, you learn something too. If nothing else, look for things to NOT do. I’m pretty good at finding those.

I was wandering around wondering about my grocery bills and I ran across this great piece from the UIUC Farm Gate. The summary:

“The relationship between corn, ethanol, and gasoline prices has resulted from the federal ethanol production mandates, and they will have an impact on corn prices particularly if a short corn crop results from weather issues. The reduction in production will raise corn prices to levels that ethanol refineries cannot afford to operate, and either the ethanol production mandates will have to be relaxed or refineries will have to be heavily subsidized to be able to buy corn at nearly $8 projected prices.”

This article really hits home with us because, of course, we worry about fuel prices, food prices and our environment. It appears as if La Niña is likely to cause some drought conditions in the U.S. this year, leading to higher corn prices. NOAA’s drought monitor seems to back this up.

Corn prices are also higher this year because of government mandates around ethanol and a generally “greener” focus on ethanol in our country. All of this comes together to push commodity prices up. That is, farmers who want a better crop to sell, will sell corn because of its higher price. That leaves less land available for wheat and soy beans, which also pushes their prices higher.

In the end, the combination of government mandated use of ethanol, our focus on corn-based ethanol and looming drought conditions mean higher prices for our groceries based on these commodities. Also, don’t forget that much of our corn goes to feed our beef.

Have you seen the effect in your grocery bill yet? Do you see any counter-trends?

I found this great post on Yahoo Finance today about David Bach’s Go Green, Live Rich: 50 Simple Ways to Save the Earth and Get Rich Trying. I’m really looking forward to this book as it fits right down our alley of trying to work better with our money and also decrease our impact on the environment.

If the summary is any indication, we may be doing most of these things anyway but it’ll be interestig to see if we can pick up some tidbits. David Bach’s The Automatic Millionaire : A Powerful One-Step Plan to Live and Finish Rich was one of the first books I read after I had my “epiphany”. I really enjoyed it and will probably do a book review on it at some point.

It’s also interesting to read the negative comments about this article. Most of them attack global warming theory. The odd thing about this is that David Bach is not advocating some sort of “socialist” method for reducing greenhouse gases. He’s merely helping some people to think about their own personal impact. Whether it effects greenhouse gas or not is a secondary issue to me. I want to reduce MY impact because I believe it is the most respectful thing to do with the environment, which is a gift that we’ve been given. My consumerism is just another manifestation of the sins of greed and envy and when I waste what I could save that comes from pride.

What do you think about Going Green, Live Rich? Is it just another focus on greed or is it really trying to solve a problem?

Over at The Sun’s Financial Diary, Sun has a post about the anniversary promotion from myFICO that allows you to get your FICO score at a 25% discount. Look toward the end of the post. This is a really great deal.

Also, if you’re wondering what determines your FICO score and what it is all about, I found this great guide on myFICO.

In summary:

• Credit scores are used to determine your ability to pay for your loan.
• The FICO score is based on:
  • 35% payment history
  • 10% Types of Credit in Use
  • 10% New Credit
  • 15% Length of Credit History
  • 30% Amounts Owed
• This guide gives great tips on how to keep your score in good shape such as:
  • Keep balances low on credit cards
  • Pay off debt rather than moving it around (whoops, we have done this one too often!)
  • Do rate shopping within a short period of time. This helps the FICO system to determine whether you are really shopping for rates or desperately casting about for new lines of credit.

We have not checked our FICO yet as we didn’t want to spend the money and we didn’t really think we’d be in the market for new loans. Our mortgage shopping has gone without a hitch so far so I’m not too worried (not to mention that Goosey has always been very good at paying bills on time.) However we did use a FICO estimator just to get an idea of where we stand.

Since mid-October or so, Goosey and I have been maintaining a price book. We have found that the price book has been one of our most effective tools in fighting food costs. As our brood grows in age and numbers our food costs are beginning to increase. To keep on top of it, we have used a price book. Here’s what it has done for us.

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Yahoo Finance has nice article entitled
A Fed Rate Cut Could Send Your Mortgage Rate Even Higher

that seems to correlate with my earlier analysis that now is a good time to get a refinance on our loan. Interest rates may get better in the future but inflationary fears will likely drive the long-term interest rates higher.

Since we’ll be looking for a 30-year mortgage, that’s what we’re interested in.

As a side note, this may seems like a repeat of our mistakes with our car as we refinanced that as well. In fact, the over all goal is the same. Reduce monthly payments and reduce overall interest payed. I think that this is still the right choice though because we are in a in a long-term effort to pay off all debt except for our house loan and I don’t currently plan to pre-pay my mortgage. Also, a house is a much longer-term than a car. We’ll essentially be extending our “overall mortgage time” to 31.5 years, but we’ll be paying less interest overall.

JD over at Get Rich Slowly has a great article on whether to pre-pay or not. His conclusion: Do whatever works best for you, but it seems it may be wisest to invest in an index fund. I think this is the way we’ll go once we get our stupid debt payed off.

Are you pre-paying or investing? Do you have any advice on what has worked better for you? I’d love to hear your Honk on this. Am I putting my foot into something I don’t want to step in?

Here we go again, with more Fed Rate Cuts. My financial acumen isn’t great enough to tell you whether this particular rate cut is a good thing or a bad thing for our economy.

In my own tiny universe, I see this rate cut as a negative. Since I can’t fully understand the greater economic implications without further study, all I can see is that my Money Market Account (MMA), in which I keep my emergency fund is becoming less and less useful.

I don’t expect stellar returns since we’re using the MMA merely as a parking spot for our cash so that it is liquid enough to be used in an emergency. However, when I opened it, it was at a modest 4.5% APR. We’re already down to 3.05% and now I expect it to drop even more.

So, the question I’d like to answer soon, is: Is there a better place to park this money? Some possible options:

• CDs: Since I want immediate liquidity CDs don’t seem to be a good option (and their interest rate isn’t great either!).
• There are some “High Interest Checking Accounts” but they have somewhat onerous usage requirements like requiring 10-12 uses of their debit card and 1 automatic deposit per month. I don’t think we want to do that at this point. This is supposed to be an emergency fund account, not a highly used checking account.

Do you have any ideas for other options?