Our Water Bill Is Going Up Less Than I Thought

I was excited to see that our water bill will only be going up about 5% total for the next twelve months. We have been hit with 10-15% increases for the past couple of years, and I had been expecting a similar increase this year, but the increase was less than I had anticipated
One of the things that our city did is fix a problem that I complained about as soon as I moved into the city. Not that I had anything to do with changing it, but it was still nice to see. The problem: They went from collecting water bills four times a year to collecting them six times a year. But in doing so, they kept the ‘base fee’, which is a fee you pay just for having service, the same. This resulted in a 50% increase in revenue in the base fee structure. I didn’t think that was very fair, and was happy to see that they actually lowered the base fees by about 30% this year. Though that only represents a small portion of our total bill, it’s still nice to have even a little bit of savings!

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Financial Moves In The Event Of A Job Loss

With the economy the way it is, I think it’s a good idea to have preparations in the event of a job loss.
My job is what I would consider relatively safe. I recently transferred into a just created position that is fully funded for the foreseeable future. ‘Baseline’ positions, as they are known here, are considered the best type to be in, because the customer funds them for a year at a time, and generally funds them in blocks versus individually.
Still, even though I don’t feel insecurity, I’ve learned that it’s always best to be prepared.
So, I have somewhat of a contingency financial plan in the event that I suddenly found myself unemployed. This would require a lot of changes since my wife is (by our choice) staying home full time.

The Plan

Unemployment Benefits / Health Care

I would expect that any state unemployment benefits that I would receive would be eaten up by health care premiums, whether it be COBRA or a privately funded insurance policy.
Paying the Bills
We have an emergency fund specifically for events like this. The money isn’t earmarked for anything else. We would use this to pay essential bills. It is funded for about 4 months.
If unemployment were to continue for longer than that time, we would look into one of several options. First, we could sell some investments. We have non-retirement investment holdings that I could sell that would sustain us for another 6 months or longer. Second, we could re-evaluate some of our other cash holdings. We have additional dollars alongside our emergency fund that are earmarked for things like a new car, home repairs, etc. that could be re-allocated if necessary.
Concentrate on the Job Search
Due to having a fully funded emergency fund, I wouldn’t be panicked, as I know that we would be able to pay the bills for quite a good long time without running into financial difficulties.
This would allow me to focus on finding a new job.
Reducing Expenses
There are definitely some expenses I would look to cut as a method to reduce our cash outlays. Even though we have a fully funded emergency fund, the fact remains that with a job loss, it would no longer be fully funded after I found new work, and would need to be re-built. I would employ the following strategies to make sure that our cash lasts as long as possible and to ensure that we could get back on track as quickly as possible once I found new work:

  • Postpone student loan payment 1 – We have two student loan payments, once of which is paid ahead. We currently make at least the minimum payments, but we could suspend those if need be with no penalty for at least four years. I’m hoping that I would get a new job by then!
  • Eliminate Netflix – We’re currently on the barebones plan for $4.99 a month, but I’d still suspend that.
  • Eliminate eating out – We spend probably about $80 – $100 a month getting pizza, takeout, or going out occasionally. We would have to buy more groceries, but this would allow us to reduce this amount by a decent amount.
  • Unlevel some of our spending – I currently put aside an equal amount every month so that our monthly spending is fairly even. But, this has increased the amount of cash that is on hand. So, for example, instead of putting aside $35 per month for the cat’s vet bill, I would suspend doing that, although I would have to ‘catch up’ later on. There are other categories that would help us in this regard.
  • Let the lawn go brown – I admit I like having green grass. I don’t water nearly as much as some of our neighbors, but the sprinkler system would be turned off if I lost my job.
  • Reduce or eliminate the A/C – The design of our house and landscaping makes it where we run the air conditioning on most days when it goes over 82 degrees. I would increase this threshold as well as re-adjust the thermostat to reduce the energy use.
  • Cut back grocery spending – If the job loss was short term, we could get by pretty well by eating down a lot of the food we have in the pantry or freezer. I’m a big believer in stocking up just so long as you don’t waste food, but this would give a cushion for cutting back grocery bills as we could go through our existing food stockpile which would cut grocery bills down for a bit.

There are definitely other things that we could look at but I think that these would keep us afloat for a long time and let me concentrate on finding work.
In future posts, I will share some experiences in the past that gave me some of this knowledge. I’ve actually had to employ some of these in the past, but under different personal and financial circumstances.
What plans do you have in place that I missed discussing? I’m always up for ideas!

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Net Worth Review: July 2009

July saw our three month streak of positive gains come to a close, as the stock market has done a slow downward spin erasing many of the gains from the last several months.

Property –I use a combination of Zillow and CyberHomes. I make a small adjustment based on what I’m seeing things sell for, and I remove 7.75% for expected selling costs. For the month, the value went down, continuting a trend showcasing the mostly downward spiral of real estate values in the Michigan market.
Autos – The value of our two cars has held pretty steady the last couple of months as the used car market has heated up. We saw a modest decline, but nothing unexpected.
Investment Accounts – Our investment accounts declined 7%, pretty close to tracking the market decline for the month as there was a pretty decent giveback of gains made over the past few months.
Cash Accounts – We raised our cash accounts slightly. I expect this to fall next month with some planned purchases that we’ve been saving up for.
Retirement Accounts – Our retirement account went down 4% for the month. As with the investment accounts, we’ve tracked the markets decline, with a slight offset due to my contributions. My employer stopped matching, but we’re still contributing 10% of my salary at this time. Unfortunately, we’re not maxing out our retirement, but I still feel like we’re moving in the right direction.
Mortgage – Nothing special, just the monthly payment. Our mortgage is a 30-year loan at 5.875%
Car Loans – We paid off our second car a year ago and we have no outstanding car loans!
Credit Cards – This is the balance that’s accrued since the last statement. We pay our credit cards off every month. We have a little lower balance than last month but still quite a bit higher than usual (as evidenced by the increase from 12 months ago) simply because of the added costs of our newborn.
Student Loan 1 – This is the loan that had a higher balance and a higher interest rate. After paying the car loan off, we concentrated our debt payment on this loan. We’ve paid 57% of the balance from a year ago, which is great, although as you can see, we’re not putting as much towards it nowadays since my wife is no longer working, but I’m still happy with our progress.
Student Loan 2 – This is the second loan but it is at a very low interest rate. We make the minimum payments on this loan. After Student Loan 1 is paid off, we’ll have to decide whether to snowball the payments toward this loan, or switch to something else (such as the mortgage, investing, or adding even more to our retirement)
Overall, our net worth went down 7.6% for the month, and is down 25% from a year ago.
I was disappointed in the decline, but not surprised as I didn’t expect the market rally to sustain itself, given how much we went up so quickly over the prior months.
Stay tuned.

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Would You Hire A Driver For Your Own Car?

Personal Finance Playbook is one of the newest additions to my RSS reader feed. I get his articles delivered when he writes them.
One of the articles made me really think about how far I would go to save money.
In this post, PFP writes about how he was planning a bachelor party. He was planning things the right way because there would obviously be some drinking going on, since he was planning alternative methods of transportation other than driving.
First, I applaud his responsibility in that regard. Always better safe than sorry.
However, the post went on to talk about how he was planning to bypass some of the more traditional methods of transportation in such a circumstance, namely a limo or a taxi.
The reason, both were simply too costly.
Again, more applause to PFP for being frugal in that regard. It sounds like he was planning some fun stuff, but the reasoning was that the ‘getting there’ was less important than the fun of the planned events, so why spend the money?
Right on.
The alternative, though, to the three ideas listed above (driving, limo, taxi) was given as this. He was planning on hiring someone from Craigslist to drive his car, where they would be (hopefully) fully sober and available for the egal, vening.

Now, I like the idea of turning your own car into a limo / taxi of sorts. Again, cue up the applause for saving money and creative thinking.
BUT, this idea had all sorts of red flags on it. Specifically:
How do you know if the person you hire is a licensed and safe (driving record-wise) driver?
How do you know that they are trustworthy, in that the second the bachelor party heads inside somewhere, that the person doesn’t peel rubber and head to the nearest chop shop?
Or, maybe a little less dramatic, but what if there is damage to the car in some way? What happens then? What if they pull a ‘Ferris Bueller’s Day Off’ and take it for a joyride (if the car is joyride-worthy)?
What are the auto insurance liabilities in the event that there is an accident?
What are the medical liabilities in the event that the ‘driver’ was somehow injured?
I don’t know. Maybe I’m just paranoid but there seems like maybe just one too many ‘what if’ situations that could play here.
If it were me, I know that I’d be nervous about all that, even if I decided to go through with it. I’d be peeking around the corner to make sure that the car was just there and that if it was, there wasn’t a group swapping out my battery and tires with those found from a salvage yard.
I’ll be interested to see how this turns out, so hopefully PFP will post a follow-up when and if he decides to go through with this.
I guess, I’d probably consider other alternatives:
I might see if someone I know is willing to fill this role. Granted, depending on the places that they’re going and the ‘pops’ that might be consumed, this might be embarrassing, but I’d still make sure to leave no stone unturned here.
I might see if the costs can be spread around. Most bachelor parties that I’ve attended generally involve people ‘pitching in’ to ensure the fun times of the bachelor. If everybody threw in an extra $5-10 with the argument being that we all get a ’safe and fun time’, this might make the taxi a more feasible idea without putting the burden exclusively on the host.
What do you think? Are there other ideas? Would you consider this? Let me know what you think.

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