Reviewing Our 2012 Financial Goals

I wanted to take a look back at the financial goals that we had set for 2012 and review how each of the areas that I had targeted actually performed.  The way I handle our financial spreadsheet, the net worth review that we do toward the beginning of the month is how the year is closed out, so even though there’s still some time left in the year, we can give an accurate look at our goals based on how things shaped up with the most recent review.

Here is a summary of each goal as well as how things actually turned out:

  1. Home value increases by 1% – The housing market had begun to show signs of stability at the beginning of the year, but it now looks like an actual recovery is taking place.  The formula which I use to calculate the value of our house takes into account a number of considerations, including Zillow’s reported value, comparable houses sold in our neighborhood and surrounding subdivisions, and a couple of other factors.  I’m happy to report that, based on these calculations, the value of our home went up by 5.7%.  There’s still quite a ways to go before we even reach the point of having it worth what we paid for it, but it’s still a great step in the right direction.  Achieved!
  2. Auto value decrease of 13% – Auto values had been holding relatively steady over the recent years, mostly as a result of an increased demand for cheaper, reliable used cars.  Now that the auto industry is steadily increasing sales and the age of the average car increases, the value of used cars has begun a more rapid decline.  Ours actually went down only by about 8% simply because the decline I forecasted didn’t really start until about mid-year (at least according to Kelley Blue Book, which is my estimating tool for our two cars).  Better than expected!
  3. A 25-30% growth in our investment account – I have a few stocks which I believed were ripe for big gains.  Unfortunately, they didn’t do as well as expected and we only realized about a 6% gain here.  It’s still better than nothing but not what I had hoped for.  Fail!
  4. A 15% increase in our cash holdings – We did OK here, seeing an increase of about 12%.  (Our cash holdings allowed us to pay for items and costs that came up, but if cash is not readily available there are options for quick loans that can get you through in a jam)  I had hoped our side income would be a little higher with various things that we do to earn money on the side, but while it was good, it was slightly less than expected.  Fail! 
  5. A fifteen to twenty percent increase in our retirement balance – This one was right on target and I’m happy to say it was toward the high end, as our retirement account balance increased by 19%.  Achieved!
  6. A five to six percent decrease in our mortgage balance – We did not apply any extra to our mortgage payments this year, but the 15-year 3.375% re-finance we got ourselves into last year helped us pay off 5.3% of the balance.  Achieved!
  7. An eleven to twelve percent decrease in our student loan balance – Again, we made minimum payments (thanks for nothing, employer who still hasn’t given out any raises) but this allowed us to pay off 11.3% of the outstanding balance we have for student loans.  Achieved!
  8. An overall net worth increase of 22% – If I were to have hit on all of the targets above, the end number would have resulted in a 22% net worth increase.  As it was, we hit on five and missed on two.  That’s the bad news.  The good news is that the ones we hit on had a bigger impact than the ones we missed on, namely hitting the high end of our retirement saving goal, and the value of our home going up by a few more percent than I had estimated.  With this we saw a net worth increase of 25%.  Achieved!

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2012 Predictions In Review

With just a few days left in 2012, I think it’s appropriate to check on the list of 7 predictions which I had made at the beginning of the year.  Let’s see how everything turned out:

  1. President Obama will get re-elected – Got it right – I knew without a doubt that Obama would get elected when Romney’s video explaining what he thought of ‘the 47%’ was released.  It proves that Romney, and really the Republican party, is very much out of touch with the voters.  I don’t know that they have a consolidated message and even when they do, they have done a very poor job at translating that into a message that the voters respond to.  This win wasn’t so much a victory for Obama as it was a fear of Romney. 
  2. A downturn on strategic defaults and underwater mortgages – Got it right – I figured that the housing market had hit bottom.  Last year it seemed that while things weren’t on the upswing just yet, we had leveled off.  This year did see an actual upswing in most areas of the country, and part of that included less strategic defaults and less underwater mortgages.  I guess if home values rise, this naturally brings people at or above the ‘underwater’ line, which would give people less reason to walk away. I’m very happy to see this and I hope that the housing recovery market is sustained moving forward!
  3. The Eurozone crisis will not be solved but will get less attention – Got it right – Was anything really accomplished in the European crisis?  Not really.  I think they did kick the can down the road a bit, but as far as actually solving anything, I don’t think that happened to any real degree.  However, the markets and the economy really didn’t react in much of a negative fashion.  There was a couple of months in the middle part of the year where the market did have some rough weeks, and they were tied to the European problems, but that was shrugged off relatively quickly and I don’t think it played much of a factor overall.
  4. Blackberry will be history (or RIM will be out of business) – Not so much – Blackberry is still around, and I’ve heard that the next release (Blackberry 10) is thought to be very well designed, and if it is received well, could put Blackberry back on the map.  I personally don’t see much hope here.  In the consumer electronics market, more often than not when customers abandon a particular company to the degree that has taken place with RIM, it’s pretty hard to convince them to come back.  The only big exception in history that I see here is Apple, but I’ve seen Apple, and I’m sorry RIM, you are no Apple.
  5. Apple will either provide a dividend or make a big purchase – Got it right – Apple instituted a dividend for the first time in 2012.   No big purchases, but since it was an either/or type of statement, I got it right.  The stock for Apple has been on somewhat of a roller coaster ride, rising all the way to $700 per share and dropping down to the low $500’s.  I think investors are finally starting to realize that while Apple is a great company that makes wildly popular products, the amount of growth potential may be slowing.  Wall Street investors live and die by growth, so the perception that Apple may have finally hit a ceiling could make for a bumpy ride moving forward.
  6. Unemployment will fall, the economy will improve,businesses will get better, but consumer spending will lag – Got it right – The economy has definitely continued to improve, and business profits have improved, but not to the robust levels that would indicate a long term healthy economy.
  7. Oprah will lose her network – Not so much – She still has her TV network, but the fact that I had to look this up to see where this stood, well it’s still not doing so well.  I know Oprah said that she wanted to put more of her ‘presence’ into the network this year, and I’m guessing she did that, but to what degree this matters, I really do wonder.  Before she shut down her talk show, you used to hear about Oprah in some fashion all the time.  Her opinion and voice was right up there in the cultural fabric.  Now, I think her voice has lost a lot of luster, so while she still has her ‘own’ network for now, I clearly think it’s been a disaster.

Five out of seven, or just over a 70% ‘success’ rate was how it worked out for my predictions.  That’s not too bad!

How did 2012 turn out for you personally and how did things around the world play out from what you had thought would happen in 2012?

What topics do you think I should predict for 2013?

Enjoy Christmas As If You Were A Child

I doubt any kids read this blog.  While I think many of the topics that I talk about should be taught to kids (staying out of debt, paying credit cards, saving responsibly), I don’t write it to where I think kids would want to read.

That being said, this post is directly for kids…the one inside each and every one of you.

Christmas is next week and regardless if you celebrate that as a holiday, the time of year and the holiday spirit should be alive and well.

Unfortunately, I think many of us get so caught up in the ‘things to do’ regarding Christmas and the holidays, that we forget to actually enjoy the time.  Think about that for a second.  We do all these things to make it a great holiday: Decorate, Buy Presents, Wrap Presents, Pay For the Presents, Make Cookies, Gather the Family and all the other things.  We do all that and we get so consumed with it that we forget to actually enjoy ourselves.

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Would You Stop Speeding To Pay Lower Premiums?

I’ve heard more and more stories where insurance companies are getting creative with how they come up with their auto insurance premiums, to where some dynamic factors are brought into play.

Traditionally, insurance premiums are set by fairly static inputs:

  • Where you live – The frequency of crime in your area plays a big role in what you pay for insurance
  • What car you drive – Certain cars are more likely to be robbed and I’ve even heard that certain colors of cars (bright red) have a higher incident of accident, so you could pay more for certain elements
  • How much you drive – Our insurance premium factors in how many miles we put on our car during an average period.  The more you drive, the greater chance you have of an accident, I suppose.

There are things here that are within your control, most namely the type of car and the features you have, but a lot of these factors are probably a bit out of your control.  Most people aren’t going to move so that they can drive a few miles less to work, leading to a few bucks getting knocked off your policy.

But what if there were other factors that could directly impact your prices?

Read moreWould You Stop Speeding To Pay Lower Premiums?

Pay Yourself First To Save Money And Enjoy Life

One of the best strategies I’ve heard as method to save money is to pay yourself first. With this approach, you address your savings goals as the first item in your budget, rather than the last.  The principle is that if you address savings as a goal on the bottom of your list (meaning you ‘pay yourself last’), you’ll always find other things to spend the money on and you’ll miss the opportunity to meet or stretch your savings goals.

The money approach.  Say your goal is to save 10% toward retirement.  If you use the ‘pay yourself last’ approach, you’ll address most or all of your budget items before you get to savings.  More often than not, you’ll have less than your stated goal available when you get to the end (and if you still do, then it’s probably time to increase your goals!)  Many times, there won’t be anything left at all, which is how so many people go years and years without saving a single dime for retirement.

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Get Rid Of That Clutter Once And For All – Until Next Time

Clutter can take on many forms, and getting rid of clutter is a never ending battle for most people.  We try to stay on top of clutter as much as possible, but I was still amazed when I went through just the basement and thought about some of the items that we could likely eliminate or reduce if we really put some effort into it.

Here are a list of things that are currently creating clutter in our basement.

  • Old couch and easy chair – I bought a leather sofa and easy chair back around 1999, which graced my condo for the eight years or so that I lived there.  It was a pretty cheap buy and the bachelor life didn’t do it any favors, so it quickly showed its age.  I keep it because the cats actually still like to sit on it now and then when they hang out in the basement, most usually to take a breather from the kids.
  • Two old television sets – We have two TVs, probably 19 or 21 inch models, that are pretty much collecting dust.  I’m not sure Salvation Army would even keep them.  I put them downstairs when we replaced them with flat screen TVs, thinking that if the flat screen went out, we could use it as a stopgap measure.  But, realistically, if a flat screen TV goes out, I’m getting another flat screen.  And if one of the remaining non-flat screen TVs that we use goes out, I’m not even plugging one of the ‘basement spares’  in.  I’m probably just…getting a flat screen.  These need to go.
  • Paint cans – I keep just about every bit of leftover paint there is from when a room gets painted.  With our house being somewhat colorful, there is quite an assortment of paint sitting in the shelving unit dedicated for paint.  I’m guessing that a lot of it could likely be eliminated.  I know that we bought a gallon of paint for the kitchen that we ended up not needing (that was the only paint we had mixed that I overestimated, which wasn’t bad) but do I really need a whole gallon and a half of spare paint?  Probably not.  I’m sure there are other cans that could be eliminated as well.
  • Table setting boxes – We use Fiesta Ware for all of our plates, dishes, bowls, and serving dishes.  We got a majority of the settings back when we got married, and have added to it since.  I have kept all of the boxes for this which takes up a significant amount of space.  Do we really need all of these?  Would we really pack them up this way if we ever moved again?  The only reason I would see us using them is that we pack some of the settings away since we don’t have room for all of them.  Right now they go into our china cabinet, but we’ll probably run out of room there someday.  So, maybe some of the boxes would be useful?
  • Kid clothes – We keep most of the clothing that both Little Boy Beagle and Little Girl Beagle have grown out of.  My wife prides herself in keeping it in great shape.  We keep it so that if we ever have more kids, or if anybody else in the family would perhaps need it some day (the likely candidate would be my wife’s sister, though she’s likely a ways away from having kids).  My wife keeps it packed in rubber storage bins, but the number of bins is starting to be overwhelming.  She is going to talk to her sister to find out if she would want us to keep it.  If some of the clothes might be five years or more old by the time they’d be needed, she might not even want them.  Eventually, it might make better sense to try to sell or donate them, but I don’t think we’re to that point yet but it’s something to keep in mind.

Read moreGet Rid Of That Clutter Once And For All – Until Next Time

When You Don’t Get The Answer You Were Looking For

My wife asked me a question the other day that I really didn’t even have to think about before answering.  She asked if I’ve noticed a measurable decrease in our spending each month as a result of our daughter no longer being on baby formula.

Our daughter is eighteen months old, so she’s been off of formula for quite a while.  She now eats ‘people food’ and drinks milk.  She was on a more expensive formula than the standard formula, though not the ultra-expensive stuff.  Luckily for us, the type that she required did have a version available in Target’s Up & Up brand.

But, the answer to my wife’s question was a very quick “No”.

Mrs. Beagle became a little annoyed and even asked again, probably thinking that maybe I had misunderstood the question.  I hadn’t.  The answer was still no.

She didn’t understand and you could tell that it bothered her as she had obviously expected the answer to be no.

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Get Your Rental Deposit Back After You Move Out

If you rent, as many people do, you likely had to pay a rental deposit before you moved in.  I only lived in one apartment in my lifetime, and we had to pay a month of rent as a deposit.  This was right after college, and my friend and I stayed there for two years, at which point he moved out and I stayed for several more months before moving out myself.

After I moved out, I was not expecting to get much of the deposit back.  Unlike what you might expect from two guys in their early 20’s, we actually tried to keep the place in good shape.  We were pretty clean and kept on top of things, so why, then, was I not expecting to get the deposit back?

Because of the spaghetti sauce incident. 

At the job where I was working, we staffed a 24×7 operation.  As such, we rotated through various shifts.  The ‘night shift’ only required a couple of people, so thankfully we only had to be on this shift for about a month out of the year.  This was my month.

Read moreGet Your Rental Deposit Back After You Move Out

Using Unofficial Experts Pays Off In So Many Ways

Finding an expert in any area is easy.  The problem is not breaking the bank to do so.  You can pay car dealers to fix your car or pay big fees to financial advisors to manage your investments, but if you can get the same level of expertise at a lower cost, you’ve not received value for what you’ve paid, and you’re out that money.  Finding expertise at a low cost is tricky.  You can always find someone willing to do it cheaper, but if they really don’t know what they’re doing, this can prove even more costly in the long run.

So, how do you strike this balance?

Look to the monkey.  I’ll start this off by asking a simple question.  Stick with me.  Here goes:

Do you know how to peel a banana?

The answer is, of course.  I can’t imagine anybody reading this has not peeled a banana in their life.

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The One That Thankfully Got Away

This is a story that goes back to when we were house hunting.  It got brought to light because, as you’ll see if you read on, it’s a very small world!

The backstory. In 2007, before my wife and I got married, we knew that we wanted to buy a home to start our marriage and eventually raise our family.  The condo that I’d previously held was nice enough but it wasn’t ideal for family living.

The housing market had already started to trend downward, at least here in Michigan.  Prices had already slipped on average 10-15%. At the time, I foolishly thought that they had neared or hit bottom, not knowing that the worst was yet to come.

As an aside, I sold my condo in just the nick of time.  I sold it for roughly $125,000 and it sold last year (through foreclosure) for $50,000.  No other property in this story lost anywhere near that percentage of its value.

Read moreThe One That Thankfully Got Away