NinjaPigeon - My Flight to Financial Independence

Thursday, July 27, 2006

Losing money during your home sale

There is more money that changes hands when you sell your home besides what is on the HUD-1. The most notable of these includes the balance of your escrow account. Luckily, the mortgage companies will automatically send this check to you. But you'll still want to perform your own due diligence to make sure you collect all the money you are due.

I recently sold my first home, so wasn't sure what to expect. While there are less papers to sign at the closing table, there are still many things to take care of. One of the big ones is calling your mortgage company and telling them your new address so they know where to send the escrow check! While a mail forward at the post office will probably catch this, it's not something you wanna take chances on. Furthermore, the mortgage company can tell you how much the check will be even if you won't see it for several weeks. Balance of my escrow account? A cool $912.33.

Another source of money, and one that I didn't consider, was the balance of my home insurance premium. Since they are billed annually out of your escrow, you often don't even notice when they get taken out. Well, mine got paid about a month prior to the sale. So when I called recently to notify the insurance company that I had sold the home, they told me I'd receive a refund for the remaining time on the policy. They even said they'd prorate it based on the day of the sale if I could show proof of it by faxing over the first page of my HUD-1. That value of my premium? A nice $435 that I almost lost because I didn't know I could get my it refunded.

Finally, you'll want to call your utility companies before you reach the closing table. Most of them require a day or so notice before they can shut them off, so if you stall, you'll be paying for them up to several days after you no longer own the home. Cancelling the water bill even scored me a refund on the deposit I put down when we bought the home two years ago. Score another $18.50.

Wednesday, July 26, 2006

Online Banking Security

Well, EmigrantDirect and INGDirect have both revamped their websites this week to be more secure. This morning I decided to give them both a spin.

Emigrant Direct
Emigrant asked a lot of questions, as expected. I had to verify my SSN, provide them my full date of birth, and even enter in a 10-character code the mailed me last week. After it verified who I was, they prompted me to change my password and pick between 5 and 10 random security questions for which to provide answers.

After getting through that, I was presented with the new layout. Wow, what a difference. They really made up for the poor and barren UI they had prior to this update. And they've increased the functionality quite a bit.

I took advantage of the new options to set up a beneficiary. Unfortunately it doesn't allow me to enter multiple, nor does it allow you to edit all of the details of them once you've entered it. I'm hoping they'll correct this in the future.

I also updated my mailing address, which I noticed a couple weeks ago was incorrect. The UI confused me a little here, as apparently there is a section for your account mailing address and the my primary residence address. The account can simply inherit the primary residence one. So I only had to change my address in one place. But I picked the wrong place on my first try :)

Also, they allow account nicknames now, which I like. It's much easier to do my transfers when I can say "savings to checking" instead of "12348661 to 1068661" or whatever random craziness it was before!

All and all, I give it 4 out of 5 stars. With a couple tweaks, it will even surpass the user friendliness of ING.

ING also updated their site. They have split their login across several screens, which seems to be the new thing lately. They've also added a security picture/word concept.

So, I picked a new picture and a word, and filled out a number of pre-canned questions. Unlike ED, there was no opportunity to create my own questions, but they did have a decent selection.

After filling out the question section, they asked me if I'd like to "register" my computer to avoid typing in my questions all the time. I'm not too keen on that idea, as it means anyone who sneaks into my room could potentially access my accounts. So I decided that feature isn't for me.

That was pretty much the gist of the changes. When I logged in I was greeted with the same UI as always. A little disappointing after the ED goodness, but to be fair, ING was already a great UI.

Anyway, the only thing I found weird about the picture thing is that it doesn't make me verify my picture really. If you answer the questions properly, the picture is just always the right one in my testing. Um, and that helped my account be more secure how, exactly?

Financial Hurdles

It's been a while since I actually was worried about money. Generally my e-fund can absorb any problems I encounter. But with the fire sale going on in the stock market, my savings account is pretty barren lately.

So it came as a bit of a shock when my GF told me that her tuition was due next month. I remember her telling me about it months ago, and I knew that I'd need to save up for it. But, I kept putting it off.

Where does that leave me? It leaves me $771.22 short because I didn't set aside money along the way. Now, I could tap the e-fund and cover the cost, sure. But right now, that happens to be a significant percentage of that account. And I could split the payments up using her university's payment plan, but we'd have to pay some additional fees.

No, it looks like I'm gonna just have to suck it up and pull some contracting hours to cover this. I don't think I can quite pull off the hours to cover all of it, but I can get close enough that the rest will only cause a small impact on my paycheck.

I guess I'm fortunate that I had work available to me when this hurdle presented itself. But that won't always be the case. So I'm gonna take this as an opportunity to remind myself (and you!) why an e-fund is so important and why we should plan ahead for hefty bills we know are coming up. Putting $50 aside every paycheck could have solved this problem before it became one.

Next time, I'll be better prepared. Hopefully you will too :)

Sunday, July 16, 2006


So, in the first Festival of Under 30 Finances, Kira posted an entry about pre-nups. My girlfriend and I have talked about it in the past a little, but I decided to see how she stood last night.

Here are the highlights:

"i refuse to do a prenup"
"if you screw me over, im going to take all yer money! HA"

First line was her actual answer. The second one was her teasing me ;) Her take on it is if we don't have a pre-nup, I won't cheat on her. My take on it is that if we have a pre-nup, we're not serious about the marriage.

I should also point out that the theory that you're protecting your assets seems strange to me. If you are married, and your spouse has access to your money anyway, they could take it while you are married. Why would they wait? Even if they don't have access, what kind of man would I be if I didn't share my wealth with my wife? If she wants some new shoes and it's within my power to give them to her, why wouldn't I want to see her happy, assuming it doesn't compromise our financial future?

I can live with losing my money. I can't live with knowing I didn't love her more than that money.

Friday, July 07, 2006

401k - the tax gamble

RunBlog made a post asking if it was better to invest in a 401k or to pay the taxes now and save in other ways.

His quote about the radio station, in my opinion, only shows their failure to see the big picture. They suggested paying the taxes now.

My answer? Do both.

There is no smoking gun to retirement savings. Fact is we don't know what will happen to our 401k programs or to our new-found love, the Roth IRA. So how do we, as future retiress, plan for such things? By diversifying our assets across retirement vehicles just as we do across asset classes.

So, contribute to your 401k. If you have money left over after reaching the company match, contribute to a Roth if you are eligible. Still got money left? How about investing in some low-expense mutual funds? Still more? Tax-friendly municipal bonds or a treasury bill perhaps?

Remember that 401ks also provide some other benefits that make them attractive even if you think you should take the tax-hit now. There is the forced savings that RunBlog mentioned. Also, for those of you close to a income-tax bracket, they can help you get under it by lowering your Adjusted Gross Income(AGI), avoiding a higher tax rate. By that same token they lower your Modified Adjusted Gross Income (MAGI), which is the number used to determine Roth IRA eligibility. They also allow you to potentially get free money through company matching of contributions.

Make sure as you are exploring these different places to put your money that you don't forget to keep some of it in guaranteed accounts, such as CDs or savings accounts. You don't want all of your money tucked away where you can't get to it if you are able to retire early!

Thursday, July 06, 2006

Bought some stock

My check to Scottrade hasn't cleared, but the funds were in the account anyway. I watched the market this morning for a bit, though, and noticed the trend was up overall.

So, I picked up 50 shares of Microsoft at $23.50. I might just be overly optimistic, especially with the recent news that came out, but I think they will bounce back above $25 by the end of the year. The only reason they had the big drop was because of Bill's announcement. Their products haven't changed, and the new Office suite is pretty nice. We'll see how I do!

Wednesday, July 05, 2006

My Income

Jonathan discusses a sensitive topic, even given the relative anonyminity we all believe we have on the internet, in his post, What's Our Income?

I think my income is probably hinted at a bit in my previous posts, but I suppose I've never really stated it directly. I wasn't opposed to posting it before, but as I mentioned in his blog, I recently discussed it with a coworker, which was probably a poor decision. The problem is that he makes the same as me, although he should make more based on his credentials.

So, I won't say what my salary is at my company, but I will say that I expect to pull down six figures, factoring in my contracting. If you recall from this post, I originally thought combined I'd pull down about 85k. But the contracting has really taken off in a way I never dreamed could happen.

Monday, July 03, 2006

Credit Report and new VantageScore from Experian

So, I saw that the new VantageScore system was officially live in an article on I wasn't sure how long ago I'd last requested my free credit reports, so I figured I'd try for both at once.

I went to this site to request my free reports. Turns out I've already used up my Equifax one in the last 12 months, but Experian was available. I went ahead and checked it out. Seems like my first mortgage has shown up as paid off, but the HELOC hasn't cleared yet. Overall, my report looked great.

While I was there I saw the promo link to see my new VantageScore for $5.95. I decided to get it and see how I stack up. The last time I pulled my FICO was just before I requested my free BT money. Turns out it's had a hit. My FICO was around 780-790, which is pretty respectable. However, my VantageScore is only 749, which is a grade of "C". I'm in the 50% percentile ranking, whereas I used to be MUCH higher.

Here are the reasons they suggested:
-The sum of balances on your credit card accounts is too high. I only carry the BT money as a balance. I pay everything else in full monthly
-The average loan amount across open, recently reported real estate accounts, such as a mortgage, is too low. No clue what that means. Are they saying I don't have enough mortgage debt?
-The balance amount paid down across your open real estate accounts, such as a mortgage, is too low. We had an interest-only loan on the house, but as stated above, the HELOC should show up as paid in another month or so.
-Your report shows that the available credit across your open, recently reported revolving accounts, such as a credit card, is too low. Well, my BT card is at 71.7% utilization. My overall utilization is 27.2%. Seems like they feel that's too high. At any rate, it'll be gone next April.
-Your report shows one or more inquiries on file. There are four inquiries on my account. One is for the apartment I just moved into. One is for a credit card I opened with Schwabb last year. The final two will drop off in November and December.

So, for those of you playing the BT free money game like me, it seems the new scoring system is a lot less forgiving. I think I'll hold off doing any more for now and see how my score changes after the HELOC disappears and the inquiries drop off.

Credit Limit Meme

Tired but happy has started a credit card limits meme that I thought was a cool idea. So here are mine:


CC1:   14300.00
CC2:    3750.00
CC3:   20300.00
CC4:    8000.00
CC5:    5800.00
CC6:     100.00
CC7:     600.00

Total: 52850.00

My limits are that high because I actively try to get them higher. Now, some people might freak out and think that's a bad thing. And in some cases, it surely is. But if you understand that part of what determines your credit score is utilization, you'll understand why having a higher total credit limit is not necessarily a bad thing.

Now, don't go run off and open another $20k in credit to do this! You take a hit whenever you get a hard pull on your credit from applying for a new line. The trick is to space these out and only have a pull every 6 months or a year. So obviously if you are about to apply for a new car loan or a house loan, you don't want to be doing this.

Also, if you don't have the discipline to have large lines without tapping them, then this strategy isn't for you. You'll just dig a deeper hole to climb out of.

Anyway, since I started working on my credit I've raised it over 100 points. I'm in the 780-790 range right now. So it appears to be working out well.

Stock senses tingling...

Okay, they aren't quite as useful as Spidey Senses, but they've been pretty good to me so far.

I've been a little slow in making my purchases, mainly because I'm very particular about what stocks I watch, and how I see them changing in the future. So, the stock I'm currently interested in has already bottomed-out and is in an upturn. I've missed the first 7.5% or so of that, but I believe there is more steam left in it.

My current stock strategy is to find stocks that have dropped in price and are close to the 52-week low even though the company is still just as strong as it was at the peak. This, in my opinion, signifies there is a value to be had, provided there are no lingering problems that triggered the dip. In the case of Walgreens, the dip was greatly influenced by the success of CVS, even though Walgreens was still a fabulous company.

So, with that in mind, I went down to my local Scottrade branch to add some funds.If you recall from this post, the house just sold, which gave me about $2k of money to divy up. So, I deposited a check for $1250, which should be enough to cover 50 shares if the price doesn't rise too much (it's up 1% today).

Anyway, the check won't clear until later this week, but if the price still looks good to me, I'll pick up my shares and see how they do!

House sold!

Finally, I'm free from that house. I haven't blogged about it much, but I really haven't had a great experience in home ownership. Bare with me while I recount what made it that way, and the lessons learned.

In early 2004, I started reading about real estate and was very interested in doing invemestments in it. I tried to do a short-sale on a property, but it fell through literally at the last minute. However, I was confident that I could make money in real estate, so decided I'd start off with my own home. This would allow me to take advantage of first-time buyer programs and to learn more about the loan process.

My friend and I decided we'd buy a house together, trying to get it under market value, and then rent it out after we'd lived there a year or two. Well, we bought a house, though I'm pretty sure we ended up paying 100% of market value. Our loan officer was either grossly inept or devilishy clever. I very much suspect the latter.

Anyway, from day one we had problems. The AC was very shakey. It broke on us no less than 5 times in the 20 months I lived there. Luckily the bulk of the repair costs were covered by our home warranty.

Other problems with the house were mainly due to the poor upkeep of the previous owner. We had plans to do this grand fix-up of the place, but it never happened. Neither of us were particularly experienced at home repair, nor did we have enough money to do it right. So our house was pretty crappy compared to the neighbors.

Finally, in February, I moved out and we began trying to sell the house. We painted most of it ourselves (and didn't do the best job), and then had new carpet/vinyl installed. Then we listed it with a friend and waited.

At the very end of May we got an offer, and they wanted to close on the 19th of June. The inspection came back with just two problems - a few blown off shingles and the AC was not blowing cold. Well, the shingle problem was only a $100 visit by a roofer. The AC problem of course ended up costing us $1500 to replace a leaking evaporator coil.

Anyway, the house did close on the 19th, even with my friend out of town. I ended up signing for him with a power of attorney. We lost $9400 in commission, which left us with a check for $4150. Definately not the greatest profit for almost two years of work. At least the mortgage company is supposed to be mailing us the balance in our escrow account, which is another $900 we can split.

Regardless, I've learned a lot from this experience. I learned that I'm fully capable of selling the house myself next time, saving half of the commission. I learned that loan people are shady, and you need to scrutinize what they tell you very closely. I learned that home warranties are very much worth it. I learned that you should keep your house in tip top shape at all times, as otherwise you end up with a much larger repair bill when you go to sell.

Next house I get, I'll be ready!

Net Worth - June 2006

Okay, my apologies for not posting much lately. A lot of things have happened and I've been incredibly busy. I'll blog about them today to catch you all up. But, as June just ended, let's start this off with a new net worth update.

One important thing that happened this month is my Rollover IRA process was completed. Last month's net worth was based on the check cut from Fidelity from my former 401k. This month, however, the Rollover IRA value is based on the holdings in that account. I didn't get out at the best time of the 401k, but I did get lucky and buy when the market was close to the bottom. So I've already seen a 6.47% gain in that account.

Also, you'll notice my mutual fund holdings increased a bit this month. That included an additional investment as well as an accidental purchase. Those two investments are now above water, though they were down for a bit. The original purchase is still in the red, but I'm confident that it will go black in the coming months.

I've also had a nice gain on my brokerage accounts. This is almost entirely due to the purchase of Walgreens. I got in at $40.50 on 5/12/06. I didn't quite catch it at the 52-week low, but I came pretty close. As of Friday, I'm up 10.72%. I could sell now and lock in my gains, but I think I'm gonna ride this one a little longer. I see another 5% or so in the coming months.

My savings went down a little due to the additional mutual fund purchases. However, I was able to cover most of that purchase cost out of contracting money.

Overall, it was a solid month. July probably won't be quite as good, as I don't have a big contract invoice outstanding. However, the trend is clearly going in the right direction.