Bills paid:
$615 for childcare deposit.
$547 for CC#1
$107 for CC#2
$40.20 for dentist
$24 for natural gas bill
$64 (late) for telephone bill
$138 for water/sewer bill (bimonthly)
$55 for electricity bill (bimonthly)

Bank of Moloch has indicated it may start altering the closing date on the card. I believe that Bank of Moloch and other credit card issuers don't want for us to use their cards. Maybe HELOCs and cheques and debit cards.

FlexCar fees, rates and charges to go up.
Natural gas rates to rise. So now I have to consider: what energy efficient moves can I make that are CHEAPER than paying for the extra energy? Caulking, yes. The energy efficient windows will lower heating costs by 15%, BUT will the windows ever pay for themselves in our lifetime?

The problem with sudden bursts of money is that ideas for spending/saving/investing percolate afterward. IRAs were initially the main focus, then the payments for my son's social communication playgroup will be due, because insurance won't carry them.
Vehicles and trips versus padding the emergency fund and maximizing my Roth IRA contribution and contributing to my son's education fund. Looking at the finances of the school district, I'm considering private school.

Living Food: Healthy Citizens

Today's Bust is all about Credit

From the Valley of the Shadow of Debt

We went to Boeing Surplus and purchased two large metal desks, a chair, an adding machine, two magazine racks or "in trays" and five pens. All we need now are the Luxo Lamps. Grand total of $74. Beat that, STAPLES or OFFICE DEPOT!

Bought some enzymatic cleaners for some fabrics the psychotic kitty that lives in the basement has soiled. Received cheque for $3117. Deposited it, and treated ourselves to a nice lunch at the Berkshire Grill. Too many wants chasing after too few dollars -- who can't relate to that?

We have a lot of stuff downstairs I'd like to get rid of: maybe a trade for store credit in Twice Sold Tales, or a yearlong project to declutter and sell them on eBay. Maybe another FlexCar rental to take crap down to the dump.

Not sure about keeping the booze cabinet in the home office. Hubby says it's perfect: the money we save on gas can go to things like... whiskey! Arrrr!

Ah, the spouse has revealed to me he reads this. Expect sanitized Erma Bombeckisms now. Soon my son will be reading these too.

Net worth statement is up 1% from last month. Retirement accounts balance are tantalizingly $3000 lower than the mortgage loan balance. The "Car loans" entry is clear. The spike in retirement account balances is almost solely responsible for the increase.

The gotchas: we'll likelily be billed for my kid's social communication therapy (Bleah) because insurance won't cover it. It's not a rehabilitation treatment from a difficult birth and complicated pregnancy: I suspect what he has is genetic.

A wee gotcha: we're shoppin' at BOEING SURPLUS. Tomorrow is the last day for specials on: credenzas, computer tables, chairs with wheels and office tables. Plus a 20% discount for Boeing employees. Using my FlexCar membership to "rent" a pickup truck. Time to remeasure the office's area space.

Next saving trick: yet another computer for the spouse to work on his MCSE. Estimating $850 for that.

Stock bonus still hasn't come. Dammit, and I need new clothes too -- new trenchcoat or raincoat, new blouses, new pants, new tights, earrings...

Link of the Day: From SmartMoney.com, The best time to buy

I sometimes feel I miss out on coupon fun. Our family doesn't go for much processed food nor fast food anymore. We run to supermarkets for quickie "oh I didn't realize we ran out of..." trips. We don't see coupons for stuff we like -- garlic bread, flour, whipping cream, fresh herbs. I wish I had some evidence and proof that none of the chemicals, additives, preservatives and flavourings in the processed food contributed to diabetes or cancer, and were equally as healthful as the fresh stuff we buy. Then I'd be couponing too.

My starbucks coffee is free so I don't pay attention to the tsktskers who go on about the "latte factor." I have one or two espresso drinks a week, but I also get access to NYT crosswords, so there's some subsidy.

I am reading the simple life -- thoughts on simplicity, frugality, and living well. It's edited by Larry Roth, the same man who wrote the Political Frugality book. Check out this paragraph.

While I was happy I had gotten my start twenty years earlier, I began calculating the price increases I had absorbed. My salary had increased five times, but my housing costs had increased more than eleven times, and a new car was six times what I paid for one in 1971. It occurred to me that Americans could not continue to survive their expenses outrunning their means for much longer.

I totally relate to this. We are not so careful about costs of eating out -- I splurged on saltimbocca, because it'd been at least six months since I had veal -- but I don't colour my hair as much as I used to, we don't have cable, we don't have mobile phones, we don't have two cars. Our stylist has figured out that my spouse has been "cheating on him" going for the $10 haircuts.

Current Balance: $0.00
Last payment amount: $2049.11
Last payment date: 09/13/2006

Happy Days Are Here Again -- Requires RealAudio-compatible plug-in.

To answer fern's question: Insurance for me is $271. Gas for 7200 miles is $420.00

The funny thing is that I saved a few hundred dollars by borrowing @ 2.9% -- had I waited later I would not have had the promotional discount, and my 2005 dollars would have to rise by 3.2% for 2006 dollars.

debtfreeme, I answered your questions in a private message. Thanks for your support and interest.


Yamaha Majesty YP400S. 395cc displacement.
Typical Mileage: 60mpg.
Highway Mileage: 65mpg.
Maximum Speed: 95 mph.
----------------

Childcare deposit: $615 (0% interest -- goal to pay off by November 1, 2006)

Credit card: $649 (6.9% interest -- goal to pay off by October 10, 2006)

Mortgage: $157500.48 (5% interest -- goal to pay off by April 15, 2014)

I was so tempted to post something from the Daily Reckoning site about how the Anglo-Saxon, English-speaking nations are at the bottom of a report from the CIA, ranking nations in order of their current account balance, and have some contentious entry title like "Whitey Can't Save" (a disservice to North Europeans and white Afrikaaners), or "if you can read this, you probably can't save." (nonracial, more accurately linguistic and cultural)

But savings rates everywhere are going down. Yes, even in Japan.

But instead I will reflect on the refi mania in Seattle. I thought I was hard done by because we don't have cash to buy stuff at the drop of a hat. "I want a new kitchen but I don't want a $50K HELOC. Got to save." "I want a new car but I don't want a $20K loan. Got to save." "I want to finish the basement but I don't want to be upside down when the market takes a 50% hit." Odd then that I don't seem to mind loans at under $10K.

We won't be upside down if Seattle homes universally fall by 50% in price -- I doubt they'd do that but then several years ago you'd have had a hard time convincing me the NASDAQ would fall from 5000 to 1900 -- but if they do, so many people I know are in trouble. It's fascinating to see the histories of some neighbours: refi into ARM with a balloon payment in seven years, refi into another ARM, refi into another ARM, take out $240K home equity line of credit.

I'm not against refinancing -- I've done it myself. But I didn't cash out -- merely shortened the term. The backup plan is the HELOC. Sometimes I regret that, but I think about how important the house is to me. I want, when the financial poo gets flung by screeching primates, to be able to pay off the balance and say "yeah I own this home now. Income is gravy." I know it's too much to expect a family that earns ONLY twice the median income to put 20% cash downpayment on a home here, but think of what that would do to house prices.

And I also think "wasn't there a time when we could save up for things instead of relying on home equity? At least people aren't borrowing from their 401(k) plans. My husband did. No, it wasn't smart. No one counselled us otherwise. One can also take $10000 from an IRA (traditional, yes; not sure about Roth). How did things get so expensive?

Speaking of screeching and flinging poo, I'm planning some housework schedules for me, the wee bairn and the mister. I need to be organized and the males being lazy and distracted aren't helping. I got the boy to help with dishes only by dangling a snack as a reward.

I'm also planning to take a course once or twice a week from those non-credit extension catalogues. I'm overwhelmed by the options: food, garden design, yoga, bookkeeping, pilates, bridge... (this alone makes me sound middle-aged, doesn't it?)

first rule: do not talk about Seattle Housing Bubble

According to Northwest Multiple Listing Service's August report, the average single family house price in King County is over $700,000 and the median price is almost $430,000.

I'm guessing then that the average household income is $233,000 or that people bring home a monthly net income of $10208. The median income should be $143,000. But the AmLife.US Economic Distribution Table (scroll to view) shows 2004 incomes to be well in the five-figure set.

Yeah yeah it's gauche of me to bring this up, you're flinching as you read this, but it makes me frickin' weep -- all this time spent learning about how to evaluate stock fundamentals, what bonds are and how they work, how to live within my means, but never how to make sure my salary rises 15% every year to keep up with utilities and housing prices. I guess half of King County is pretty comfortable, financially, so they won't mind if the "impossible" happens and there's a 25-30% drop in real estate prices over the next six years. Some people are estimating steeper drops, like 50-70%.

Is anyone from these cities: Sacramento, Los Angeles, Irvine/Santa Ana/Anaheim, Miami, Phoenix, Las Vegas, Boston, San Diego, San Francisco reading this? Please share the state of your locality's housing market.

It could be my lousy math skills that confound me. Twelve - fifteen years ago I was reading personal finance primers that counsel against buying a house priced beyond 2.5 times one's household income. Mortgage interest rates then ranged from 6.65% to 7.49% (source). Rates so far this year are indeed lower, 6.30% to 6.77% (source). Maybe the personal finance primers nowadays are advising to go no further than six times one's household income owing to this INCREDIBLE DROP IN MORTGAGE INTEREST RATES.

Here's the deal: historically houses have appreciated at the rate of inflation plus 0.4%. Either we're in a big housing bubble, because house prices zoomed up from 2003 onward, like 15% year over year appreciation, which I once believed could only be done by high-flying tech stocks (but not sustainably over five years), or the silent and deadly hyperinflation era is here and no one is talking about it.

Somehow people are getting the $$ for these pricey houses. After all, price is determined by supply and demand. Many $$$ chasing few houses leads prices to escalate. But wait! Why are homebuilder stocks like Beazer, Toll Brothers, and Hovnanian trading at or below book value? They should be raking it in like ExxonMobil!

Let's see, inflation adjusted wages for the state of Washington dropped 8.1% from 2001-2005.

Seattle is sixth in the nation in Option adjustable rate mortgages, plus a recession is looming. Economists are predicting October 2006, although some, following retail industry data, say it's already here.

Yes, I'm sure that we will be spared. [b]

I read today that my natural gas utility will raise its delivery and usage rates by 10% October 1. I am now seriously considering a solar-powered hot water heater. To you people south of the 40th parallel, I say do not scoff. My grey-skies PNW environment is actually a good area for solar energy. Germany is closer to the Arctic Circle, and it's one of the world leaders in use of solar energy.

The photovoltaic panels, it is reasoned, will not return our investment until 2046 -- our electrical use is pretty cheap, about $40/month on average. Whereas, if natural gas costs rise at 10% per year, we'll have payback for the heater within five years. The minimum HELOC charge would be $15.06 -- pretty affordable.

Actually I am jumping the gun about the subject title. I will be free and clear of that scooter debt in two weeks. I do recognize I have some abnormal queasiness about debt, what I post in concern about my peers is of course a projection of my own fiscal anxieties, but like many other people I can rationalize with the best of them.

Debt is personally acceptable if:
the interest rate paid on the debt is lower than the savings rate or the rate of increase on a necessity (utilities, for example).

it's cheaper than paying full price for an item.

it's incurred for an appreciating asset.

Interesting that Googling for "complacent about debt" returns many UK Websites, but few US ones.

If the national savings rate is in the negative, does that mean that Americans are more focused on servicing their debt? Weren't they getting into debt when the savings rate was positive?

Also, I've read that the median credit card debt number is $0. Does this mean that more people are using their home equity lines of credit to pay off balances? Or does it mean that more people are getting to be credit card free, but the ones that linger in the red are growing redder?

Here's a link to a progressive economist's article about middle-class, because it challenges some widely accepted notions about credit card debt, shrinking middle class, living paycheck to paycheck.

Note that the economist focuses on the childfree households 55-64 years of age. Mortgage paid off, no more college or child care, still earning money.

A majority of Americans have no credit card debt. And of the 46 percent of Americans who do, the Federal Reserve's Survey of Consumer Finances says the median balance is $2,100. Yeah, the AVERAGE may be $8,700, but the median is low. Bill Gates could enter a homeless shelter and, on average, everyone in the shelter would be millionaires.

Middle class assets are up. No doubt the bubblicious inflated house values are factored in, and when the 10%-35% depreciation slide happens (from summer 2006 through 2009, in selected coastal and southwestern markets), will middle class assets still be up?

We look kind of good on paper, but cut the house price by 25% (what it's actually worth) and that's a big slide. We're still young: our house is our biggest asset and our biggest liability.

Most household debt is mortgage debt. I'm awaiting a correction. When the aforementioned depreciation happens, will people declare bankruptcy? will there be foreclosures? Will there be enough bankruptcies, market dips and foreclosures to bring down the median net worth so we'll still look good?

1. Unexpected ouch: forgot that the deposit for the new preschool was $910, not $100 that I paid 6/22. Put down $205 on 9/1, and paid the $910 that was due.
It'll still be cheaper than the other daycare, but by $50 overall thanks to the steep deposit.

2. I e-mailed someone who has a Post Carbon online group, he said the #1 thing I should do to prepare for peak oil is get out of debt. Ugh. Is borrowing for solar panels and big rain cisterns and filtration systems acceptable? If I could with certainty project the rising utility costs at 13% year over year I would say borrowing is certainly worthwhile. If one could reap a Return on Investment within five years for home improvements, borrowing at a competitive interest rate could be beneficial.

3. I was a bad girl and researched some DRiPs. I found some fairly recent directories in the Business Reference section of a Regional Library, so that pleased me. Some I may consider further research on for the family:
JNJ, COF, HDI, BUD, WTR, TGT, MDT, BNI, UNP, CHD, HCN.

4. I decluttered my papers: shoving the business/record types in one folder, and the recipes in another. Then I commenced with some merry shredding.

5. I am freaked/wistful that my son will attend Kindergarten next year. Where does the time go? I hope he fares well in his new environment.