My Personal Finance Journey

All posts by Jacob A Irwin

Welcome Free From Broke Readers!

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Welcome Free From Broke readers! Thanks so much for stopping by my site by way of the my guest post today over at Glen’s blog listed below. I’m very happy to have you here! 🙂

What is the Most Efficient Way to Use Dollar Cost Averaging?

If you’re stopping by my site for the first time, I just wanted to give a little guide towards what I offer here, since information overload can occur quickly and time is our most valuable asset.

To introduce myself, my name is Jacob. I started this site back in January of 2010, and since then, have poured my heart and soul in to the site to produce a product I am proud of and I think adds value to the world. You can read a little more on my background and even see a picture of me on the “About” or “First-Time Visitor” pages to find out more about us.

WHAT I WRITE ABOUT HERE AT MY PERSONAL FINANCE JOURNEY

In short, I like to offer actionable personal finance advice with the goal of achieving long-term success. 

Specifically, I really enjoy writing about the following areas (I’ve also listed several posts related to each topic in case you’re interested in reading more):


ARTICLES SIMILAR TO MY GUEST POST TODAY AT Free from Broke


Additionally, if you liked the theme/topic (investing strategy analysis) of the guest post I wrote for Free From Broke today and are interested in similar posts I’ve written in the past, you might want to check out the ones below:


WAYS TO STAY IN TOUCH WITH NEW CONTENT


If after sampling some of the content above you think that my posts will add value to your life, there are many easy ways to stay in touch with new material when it goes up! See below for details:


10% MONTHLY BLOG INCOME GIVEAWAY

Also, each month, I give away 10% of any income I make from this site, with 5% going to blog readers and the other 5% going to a charity selected by the grand prize winner. You can read about all of the details by clicking here.

So far, we’ve given away:

  • Current total given to charity = $617
  • Current total given to blog readers = $650


During the August 10% give back, we gave away a total of $120 – with $60 going to a blog reader, and the other $60 going to benefit the charity, Meals on Wheels.

Thanks for visiting! Keep on learning!

    ***Photo courtesy of http://www.flickr.com/photos/rameshng/5930493923/sizes/l/in/photostream/

    Review of Gmail and Other Email Account Scheduling and Streamlining Tools

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    Back in June of 2012, I published an article comparing Google’s Gmail and Calendar features to Microsoft Outlook’s Calendar and email management capability.

    After posting the article, I received a great comment from Robert of The College Investor saying that he really enjoys using Gmail, but wishes that a “Send at a Specific Time/Date” or “Send Later” feature came built in to Gmail as a default when you sign up.

    Having remembered AOL having this feature back in the “stone-age” (a.k.a. the 90’s), I figured that SURELY some individual or company had thought of building an application or add-in to email applications that would provide this functionality.

    In doing some searching around the Interwebs, I did find quite a few different applications that provided added email functionality (complete with Send it Later/Email Scheduling capability) to Gmail and other email providers.

     Listed below is a summary of my findings of the different options available for people looking for email scheduling capability. 

    Gmail Email Scheduling Applications

    In today’s society, Gmail is arguably the most popular web email Internet provider. I know that myself and pretty much every other personal finance blogger around uses Gmail. Heck! Companies have even thrown in the towel in trying to create their own email applications and instead just have their email hosted with Google Apps. Not that I can blame them – Gmail is fast, simple, and free/very cheap!

    Because of Gmail’s prevalence, it’s not surprising to find out that add-ins have been created specifically for Gmail to provide email scheduling and other capability.

    Streak

    From what I could tell, Streak is the only Gmail scheduling add-in that is currently totally free (as of September 2012). Generally, what seems to have happened is that all of these add-ins start off free during Beta testing, but once they gather enough subscribers/users, they start charging a monthly fee. Since Streak is still totally free, it is the Gmail scheduling tool I chose to install on my computer.

    Streak offers a nice email scheduling tool that integrates right in to the “Compose an Email” window in Gmail (see screenshot below). To schedule an email, you simply click the “Send it Later” button and specify the date and time. The only critical remark I have of this scheduling program is that the time/date format is very specific, and you must follow their template suggestions to the letter.

    For example, tomorrow at 8am would work fine for scheduling an email, but if you typed tomorrow, 8am (with a comma), it might not work! Just be careful here with the formatting, and you’ll be fine!

    In addition to email scheduling, Streak also offers a very nice CRM folder system. Personally, I didn’t look in to this very much since I have a custom folder system that I use in Microsoft Outlook, but it might be worth exploring if you desire some more structure in your Gmail inbox.

    Boomerang

    In general, I would say that Boomerang is much more popular and well-established than Streak. However, this popularity also comes at the price of $5-$15 per month if you’d like to have unlimited email scheduling. But, Boomerang does have a free option which currently gives you only 10 message credits per month.

    Nevertheless, Boomerang boasts some very useful email reminder and follow up features in addition to “Send it Later” capability. For example, I email back and forth with many people whom generally require multiple follow up emails to elicit a response. To handle this, I have an automatic reminder set up in my Outlook calendar that pops up once a week to follow up on emails in my “Waiting For” folder.

    However, Boomerang does this automatically for you – directly from your Gmail Inbox. You simply click a button on the email window to specify the time and date that you’d like the email to be sent back to your Inbox so that you can follow up if you have or have not heard back yet.

    Right Inbox

    The next Gmail scheduling add-in that I came across in my search was Right Inbox. From what I could tell, not only is Right Inbox cheaper than Boomerang ($5 per month or $40 per year), but it also has all of the features that Boomerang boasts and then a few others!

    As with Boomerang, you can schedule emails to be sent at a specific time and date and also mark email to be returned to your email inbox for follow up later if someone or no one responds. In addition, you get email tracking functionality, which allows you to be notified if an email is opened and even shows you which links within an email are clicked! This is pretty cool if you ask me! 🙂

    Other Email Account Scheduling Tools

    Microsoft Outlook

    Interestingly enough, Microsoft Outlook features a fairly good email scheduling tool already built in to it! To access this option, simply open up a new email, click the “Options” menu, then “Delay Delivery,” and then select the time and date that you want Outlook to wait to send the message until. Please see the screenshot below for an example of how to do this. This link also gives a nice description of this process as well. 
    Side note: You can easily integrate your normal Gmail email account in to the Outlook program. I did this about 2 years ago, and it has VERY much streamlined and organized my life! 
    The only thing I don’t like about Outlook’s built-in email scheduling tool is that your computer has to be ON/working and Outlook placed in the “online” state in order for your messages to actually be sent at the time you specified. 
    In other words, unlike Gmail scheduling which runs all of the time on Google’s remote servers, your scheduled emails in Outlook are stored on your local computer only until the “send” is completed. This means that your email won’t be sent if your computer falls asleep, you shut down your computer for the night, or you simply work on Outlook in the “offline” state like I do all of the time in order to minimize distractions from incoming emails. 

    In addition to this existing Outlook scheduling capability, Boomerang also has come up with an Outlook integration version of their email reminder tool. The cost of this is a one time fee of $30, but there is a 30 day free trial available!

    AOL

    Good ole’ AOL uh?! It seems like it has been around forever – because of course, it has! Right under our noses, AOL has featured a “Send it Later” feature for MANY years!

    To access/use this feature (completely free mind you), simply create a free AOL.com account, and then download the latest free AOL desktop software. Once you sign in (remember the sound of the old dial-up modems when we signed in in the late 90’s?), click the “Write Mail” button and then find the “Send Later” button on the “Compose Message” screen that pops up (see screenshot below).

    After clicking the “Send Later” button, you then click the “Auto AOL” button in order to decide when things are sent and received.

    How about you all? What provider/program do you use for email? Are you pretty satisfied with the system that it offers? If there was one thing you would change about it, what would it be?

    Share your experiences by commenting below!

    How Identity Theft Can Affect Your Credit

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

    The following is a guest post by Chris Holdheide of Stumble Forward.com. Enjoy! 

    How Identity Theft Can Affect Your Credit 


    Most people don’t quite realize the turmoil that identity theft can cause with your credit until it’s too late. Instead of being proactive about their information and their identity, they wait until someone steals it and costs them thousands of dollars or more. Why wait until something horrible happens? Why not learn what you can do to take a better approach to protecting yourself?

    Maybe it’s because you may not understand what all identity thieves can actually do with your information to tank your credit. Let me show you some of the different ways that your information can be used to really hurt your credit and some quick ways to prevent them:
               

    Credit cards – 


    Once an identity thief has your information, they can then open new credit cards in your name that come to their location. They then set the pin number and set it up to where they can use it and you get the bill. When they get the card, they go crazy spending until either they hit the limit on the card or they are finally cut off. No matter how much they spend, it’s going to affect your credit when you get a bill you cannot pay.


    To prevent this from happening you keep track of your credit cards closely by monitoring you credit reports and bank statements for any suspicious activity.  You may also want to consider a credit monitoring service such as CreditKarma.com, which is total free.         
       

    Utilities – 


    If you are unlucky enough to have your identity stolen, someone can put utilities for their home in your name. They then run up a bill until it gets turned off and you are stuck with the bill. Sometimes, you may not know this until it appears on your credit as the identity thief ignores calls and bills for the amount.

    To prevent this from happening to you, simply check over your utility statement with a fine tooth comb, but sometimes this isn’t enough to catch the criminals before it’s too late.  This is where an identity theft protection program can come into can come into play and inform you of these issues before they become a problem.


    Checks – 


    Gaining your identity can also open the door for them to order checks in your name. They can then use these anywhere they want that doesn’t take too much in the form of identification, allow the checks to bounce, and then the amount to be placed on your credit. What’s even worse is that you can also get criminal charges out of this as well, and depending on how large the checks are, they can be felonies that remain on your record forever.


    Again, to prevent this from happening, it comes down to monitoring your banks activity with your account.  The other problem is that it’s way too easy for criminals to order these checks, so make sure you keep all of your statements this way you have proof it wasn’t you writing the checks.


    Loans – 


    When a thief gains your information, they can then apply for loans in your name. These can be anything from small loans to larger, home or car loans. When you then default on these loans (as they have no intention of paying your bill), it goes on your credit, and collection agents will then start the process of suing you for the amount.


    To prevent this, monitor your credit reports by checking them as often as possible.  However, this isn’t always possible, and this is why I suggest you also look into a credit monitoring service or identity protection program.


    Online accounts – 


    Normally, an identity thief can gain all of the information they need to allow them access into any of your online accounts. PayPal, eBay, Amazon, and many other sites that hold your financial information can be hacked into using the information that they have. Then, they can gain access to your credit cards, debit cards, checking account numbers, and order things in your name shipped to their location.


    To prevent this, first off, make sure that you create strong passwords for your accounts.  The best way to do this is to make sure your password is at least 10 digits long, contains upper and lower case letters, numbers, and at least one symbol.  Finally, make sure your online accounts are all different from any other accounts you use. Doing this will make it nearly impossible for any hacker to break.


    Crime – 


    If someone using your identity is arrested by the police or other law enforcement, they can give your information to the police. They can bail out of jail with your information, skip bond, and run up bills in your name as well. Or, they can use your information to commit a crime and then the police are looking for you instead of the actual criminal. This can cause you severe problems with law enforcement and cost you thousands of dollars in legal fees to clear it up.


    This is probably one of the worst case scenarios that could happen to you.  In fact, I’ve seen situations where the police have even arrested the wrong person for writing bad checks in their name.  Preventing this can be tough to do, and this this is where a good identity theft program can come into use to help you along the way.


    Conclusions


    Of course, on top of these areas, the lost money that it will cost you can total thousands of dollars or more. It will cost you time to dispute charges, time to go to court, time to file paperwork and reports, and to deal with fixing the mess that they have left behind. It can cost you more than just time and money; it can cause you to lose your house, your car, your job, and more.

    The good thing is that if you simply start to be proactive in protecting your identity, you can put a stop to all of this before it ever starts. Protect your information online and be careful when giving out or ordering anything over the phone, online, or through the mail. You can also safeguard your email by changing the passwords constantly and deleting emails that have any type of personal information or links to it. At home, ensure that you are checking your mail and not allowing it to sit in your mailbox for any length of time.

    As I also mentioned early, a great step that you can take is to enroll identity fraud insurance that will help to keep your information safe as well as provide protection for you if someone tries to steal your identity. There are several excellent companies out there that provide different types of identity theft protection, helping you to take a more proactive approach to keeping your information safe.

    I recommend to everyone I know this type of extra protection for your information. Not only can these companies notify you if someone tries to use or gain your information, but they can offer piece of mind. Protection against identity thieves can help to save your credit, your money, and your time.

    How about you all? What steps do you take to protect yourself and your credit history from identity thieves? Do you feel that identity fraud insurance and other protection programs are worth the money?

     Share your experiences by commenting below!

      ***Photo courtesy of http://nopsa.hiit.fi/pmg/viewer/images/photo_5166889979_038b630e4f_t.jpg

      Save Money on Your First Car

       

      Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

      Save Money on Your First Car
      Getting that first car is an important moment in a young person’s life, as it symbolizes freedom and independence. Once you are able to purchase your first car, you will no longer have to rely on your parents for transportation. Indeed, purchasing this new car has become one of the first steps into adulthood, making it very important to teenagers.

      At the same time, however, a few things could quickly turn this into a negative situation, so it is vital that all first-time car buyers know what they are getting into so that they can save some money.


      Research

      Before selecting a car to view, research the make, model, and year for any problems that have arisen in the past. In some cases, it is possible to spot a pattern of issues with a particular car that you will want to avoid. For example, if you see that multiple 2000 Ford Taurus’ cars have ended up with engine failure after 12 years on the road, purchasing that type of car 12 years later is not a good idea.

      Budget

      Planning a budget is also necessary, since young buyers generally have less money to spend. Set a budget and stick to it, even if you are only browsing through potential cars. That way, you are not tempted to spend more than you can afford. Car salespeople are great at convincing young people to spend more than they can afford, so stay away from cars that are too expensive.

      Get an Inspection

      The first thing to remember is that any used car must be inspected before it is purchased. While taking the car to a mechanic before agreeing to purchase it will cost some money, it can also be a money-saving endeavour in the long run if there is something wrong with the vehicle. There are many cases where a seller will fix a car up just enough to sell it, knowing full well that a number of things are wrong with it. Young people who are buying their first cars are especially susceptible to this kind of fraud, which is why it is vital that you have the car looked at by an expert before making the purchase.

      Remember Fuel Costs

      Another thing to consider is the cost of fuel; the vehicle becomes useless if you cannot afford to put fuel into it. A small vehicle, like a used Suzuki Swift, will save you thousands of pounds per year on fuel when compared to a much larger vehicle. Money that is not spent on fuel is free to be spent on anything else that you want, making efficiency something to consider before making a purchase.

      Making a Decision

      Use all of the information that you have gathered before making a final decision. If you research and buy carefully, you are much more likely to save money on your purchase. You are also less likely to end up purchasing a vehicle that will break down soon after you buy it.

      How about you all? In what ways do you save money when purchasing a car? Do you negotiate the price very much?

       Share your experiences by commenting below!

      ***Photo courtesy of http://www.flickr.com/photos/gareth1953/5159348513/sizes/l/in/photostream/

      Managing the Costs of Car Ownership

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

      I think that there aren’t many people today who would argue against having a car as being a major financial commitment – both in terms of time and cost of ownership.

      However, there are several things that can be done to wisely and efficiently manage these various costs so that they don’t defray your personal finance goals. Three of these car costs and management strategies are discussed below:

      1. Fuel

      With gas prices being what they are in the world today (~$3.50 per gallon in the United States being some of the cheapest prices of any country), people who drive a lot each week have to commit major financial resources to filling up their car with fuel.

      The unfortunate truth is that short of trying to drive less (which is often very hard for normal folks to do), there is no simple way that is going to automatically save you hundreds of dollars each year.

      However, the most effective way that I’ve personally found to easily save at least SOME money with gas is to use a cash-back gas credit card. The one I like the most is the Chase BP Gas Credit Card. It gives ~5% cash back for all BP purchases I make!

      2. Periodic Car Repair

      Without a doubt, if you own a car, it will NEED to be taken in to a repair shop for both routine/scheduled and emergency maintenance. This is especially true with older cars. When I take my car in to the Honda Repair Shop in town, I generally walk out of there spending no less than $200 each time.

      To help manage the cost of car repair, there are two important things to do. 

       First, it’s important to have a certain amount of money in your emergency fund that you can access if your car (that you depend on for your livelihood) breaks down and needs repair.

       Second, when you take your car in to be repaired, make sure that you have a LIMIT in mind about how much repair work they will do. If you’re like me, when you take your car in to the shop, the ENTIRE car is by no means in perfect working order. For example…

      • Maybe the A/C needs to be recharged? 
      • Maybe the tire rim is slightly dented? 
      • Maybe the drive belt is slightly worn? 
      • Maybe the check engine light is coming on? 
      The car mechanics have a fiduciary responsibility to their company/boss to make as much money as possible. I get and accept that. And, as such, it is their job to point out what is wrong with your car, but it is up to YOU to decide whether or not it is required to fix based on what you can afford and what you think is required for the car to run safely. 
      To try to save some money, one question I often like to ask to the mechanic or service rep when they call with the laundry list of possible repairs is the following – “I’m running pretty low on money these days, so what repairs are ABSOLUTELY required to make the car run safely that you, the mechanic (or service rep), could sleep at night if you were in my shoes?”

      When I ask this, I generally get a feel from them what is truly required to repair and what is not. Or, another thing you can do is simply only fix the one thing you took the car in to repair in the first place. 

      3. Car Insurance

      Whether you pay monthly or twice a year, car insurance is a significant expense associated with owning a vehicle. However, this expense is also somewhat of a necessity since it is one of the types of insurances that you are most likely to have to tap in to because car wrecks (whether large or small) happen frequently. By having auto insurance, you only need to have enough money in your emergency fund to cover the deductible, instead of the $15,000+ that it would take to purchase a new car in the event that your current car is totaled in a wreck.

      To save some money on this expense, it’s a good idea to shop around and get auto insurance quotes from multiple online quote providers in order to make sure your insurance needs are met while also ensuring that you pay a reasonable price year-to-year. Often times, by simply searching for a quote online, you can save $200 on average from your current policy. 

      How about you all? What car ownership cost is the most significant for on a monthly basis right now? What steps do you take to work that cost in to your financial planning?

       Share your experiences by commenting below!

        ***Photo courtesy of http://www.flickr.com/photos/uggboy/4460795995/sizes/l/in/photostream/

        Who Manages Your Investments?

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

        For the past several months, I’ve featured a reader poll on the upper left sidebar on this site seeking feedback on the question below, with the possible answers listed underneath:

        Who Manages/Directs Your Investments?

        • Self-Directed Using Individual Stocks
        • Self-Directed Using Mutual Funds
        • Friend or Family Member Manages Everything
        • Stockbroker Directs Investments
        • Fee-Only Financial Planner
        • Using Investing Newsletter / Column / Blog Recommendations

        After the poll closed this past week, I went in and tallied the results. They can be seen on the pie chart below:

        Self-Directed Investing in Mutual Funds Takes the Top Spot! 

        As you can see, the most popular method (almost 60% of readers) of directing investments among blog readers by far is making your own choices through a mix of mutual funds (red on pie chart). Of course, since I’m a big fan of passive investing as a long term saving strategy, I hope that a lot of you all are using passively managed index mutual funds (such as the low cost options at Vanguard and Fidelity).

        Self-Directed Investing in Common Stocks

        Self-directed investing using individual stocks came in at the second most common spot (dark blue portion). Given the historically bad track record that professional money managers and stock picking newsletters have in failing to beat the overall market, it’s great to see that everyone is avoiding the management fees and directing their own investments!

        Differences in Pay Structure and Objectivity Between Stockbrokers and Fee-Only Financial Planners

        A somewhat fascinating result of the poll results above is that the % of people that use a stockbroker and fee-only financial planner to direct their investments was equivalent. I would have expected many more people to be using a fee-only financial planner than a stockbroker because a stockbroker is paid by a commission on how much TRADING he or she executes, not how much money they make you. And, often times, stockbrokers are more of a salesperson than a knowledgeable investing professional.

        On the other hand, a fee-only financial planner will provide a much more impartial perspective on your finances since they are only paid on their time they take to help you, not by what products they get you investing in.

        Comparison of Blog Reader Results with the Rest of the United States?

        When I started writing this post, my original ideal intention was to compare the site reader poll results above with a more complete study published online about how people manage their money. Unfortunately, I was unable to find a robust enough study in searching online that I could publish here.

        As a far-from-perfect proxy, I figured that instead, I would take a poll of how my family, friends, and co-workers manage their investments. The results are shown in the pie chart below:

        Again, we see that self-directed investing using mutual funds carries the largest % occurrence by far. In second place this time is employing a stockbrokers to direct one’s investments.

        A big thanks to everyone for participating in my reader poll. I should have another one up very soon. Also, if you have any specific requests for poll results, please feel free to email me!

        How about you all? How do you manage your investments? Do you use individual stocks or mutual funds? Do you make the decisions yourself or enlist the help of a stockbroker/financial planner/newsletter?

         Why did you choose one specific method over another?

         Share your experiences by commenting below!

          ***Photo courtesy of http://www.flickr.com/photos/12738795@N00/3474012583/sizes/l/in/photostream/

          Financial Considerations of Getting a New Pet

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          Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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          Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

          Previously on this site, we have reviewed several topics relating to the joys and pains of pet ownership. We have reviewed the decision points around if you need to purchase pet insurance, helping out with dog fostering as a low cost alternative to pet ownership, and looked at the costs of different pet products. In addition, we’ve discussed whether or not Petco or Petsmart is a cheaper place to purchase your monthly pet supplies.

           Today, I wanted to add to this running pet-financial discussion by sharing the story of how my girlfriend and I decided that we could financially handle adopting a second dog and how I account for the cost of dog ownership in my personal finances. And, by sharing our story, I hope to provide a template that you all can use if you are considering adopting or getting a new pet.

           At the beginning of June 2012, my girlfriend and I decided to adopt a second greyhound dog, named Coat (shown in the picture below!). He’s a big sweetheart and very much likes to cuddle! I really don’t think he knows the definition of a “personal comfort bubble,” as I can sleep with my feet on top of him and not phase his snoring.



          One Time Expenses Associated with a New Pet

          The first step in determining whether or not we could afford a second dog is to sum up any one-time expenses needed to obtain and get a new pet situated in our home. Since we already had an existing greyhound, Charlie, our house was already equipped for dogs, and little extra outfitting was needed. 

           Listed below are the various things we considered for one time expense items and the corresponding amounts we paid:

          • Adoption fee 
            • $0 since we adopted him from some friends. 
          • Food bowls, water dishes, sleeping beds, leashes, collars, doggie clothes/jackets, etc
            • $0 since we already had all of these things from our current dog.
          •  One-time vaccinations
            • $0 since these had already been taken care of by our friends we adopted him from.


          Planning for Regular Monthly and Yearly Pet Expenses

          The next step was to tally up the regularly-occurring monthly and yearly pet expenses that we knew for sure would be incurred by having another dog.

           Since my girlfriend keeps exquisitely detailed records for her current greyhound, Charlie, this step was pretty simple. By looking at her existing past receipts from Charlie’s routine expenses, we came up with the following expense amounts shown below on a per dog basis:

          • + $50 per month for high quality dog food and toothpaste (since greyhounds have special dietary needs and very bad teeth).
          • + $350 per year for regular basic annual checkup and bloodwork.
          • + $250 per year for Frontline and Interceptor to prevent against parasitic intrusions. 
          • Total = $1200 per year, or $100 per month in guaranteed expenses per year for each dog. 
          Having tallied up these expenses, we then assessed our current income, expenditures, and financial priorities to see if we could accommodate these requirements. 
          Even though $2400 total per year for both dogs is, without a doubt, a good chunk of change, we decided that it would be worth it for the happiness we get from having dogs around and to provide a greyhound with good quality of life. 

          Pet Emergency Fund vs. Pet Insurance


           Having determined that we could afford the regularly-occurring expenses of having a second dog, we then needed to decide how we were going to plan for the unexpected expenses. 

           To do this, the first step was to determine how far/how much we are willing to spend to treat a dog in the event of a sudden life-threatening injury or illness. As I mentioned in the pet insurance article I wrote in 2010, I believe pet insurance is a good idea for people who feel that they would do and spend ANYTHING in order to save a pet’s life – chemotherapy, exploratory surgeries, multiple visits to the emergency 24 hr vet, anything.

           For me, I simply was not raised this way, and instead believe that you should enjoy the time you have with a pet, but that you shouldn’t go to severe financial extremities to save one if a terrible illness occurs. Some veterinarian treatment is absolutely OK, but there is definitely a financial limit. Because of this belief, I knew that we would need a doggie emergency fund to account for unexpected injuries and illnesses for each dog. 

           To get a feel for how much we’d need to save up for each doggie emergency fund, my girlfriend again went back in her receipt records for our current dog, Charlie. She then tallied up the total vet bills from the past 3 years she has had Charlie to determine what unexpected expenses tended to pop up over time.

          • As it turned out, there was a pattern of expenses that revealed itself. About every other year, unexpected vet expenses of about $1500 per year would pop up. 
          • Most often, these expenses were due to dental work (extraction of teeth, etc since greyhounds have very bad teeth) or leg injuries (since greyhounds run very frantically and can injure themselves).
          • From this pattern that emerged, we determined that each of us would need to carry a doggie emergency fund totaling $1000 at any time.

          how I save for yearly and monthly pet expenses

          Having figured out the amounts of regularly occurring expenses and doggie emergency fund we would need to expect, I then turned my attention to the question of how to most effectively save up these amounts and integrate them in to my personal finances. 
          Regarding the monthly basic expense of $50 for dog food and toothpaste, I would simply incorporate this in to my zero-based budgeting system each month. So, no problem there. 
          However, saving for the yearly expected expenses ($600 per year) and doggie emergency fund ($1000 at any time) would require one extra step. Since I am a big fan of automatic savings for financial goals, it was a natural step for me to simply set up an automatically recurring transfer from my checking to savings account each month in order to save up the required $1600 total. For me, I opted to spread out the savings over a little more than one year, so I set the total automatic transfer amount to $111.00. 
          So far, it’s been working very effectively and haven’t yet missed the money one bit!

          Real-time record keeping of expenses

          Having gotten my pet savings plan figured out, the next step was to create a spreadsheet and tracking system to maintain good visibility on actual expenses as they occur.

          This tracking system took the form of a simple Google Docs spreadsheet containing 3 columns:

          • Date of expense item
          • Expense item description
          • Expense item category (food, household items, health, and pet sitting)
          • Expense amount
          Whenever a new doggie-related expense is incurred, I simply record the item on the spreadsheet, and boosh! Done! I get to see the total spent and what categories incur the most money! 

          Comparison of Actual vs. Planned Expenses So Far – Two Month Check In

          Having had the two dogs now for almost 2.5 months, I figured it would be interesting to summarize our current expenses to date and how they compare with how I planned above.

          So far, we have spent $766.21 total on the two dogs since the beginning of June 2012.

          • Food – $213.15
          • Household Items – $26.24
          • Health Expenses – $466.82
          • Pet Sitting – $60

          The pie chart below shows a % break down of the expenses.

          As you can clearly see, health expenses have been by far and away, the most expensive item. However, this is in line with what we were planning, and we have not yet needed to dip in to our doggie emergency funds.  Food is the next highest expense thus far, but the amount (~$200), is almost perfectly in line with our budgeted amount.

          So, overall, it looks like we’re doing a good job planning for the cost of owning a second dog.

          How about you all? How you do you plan financially for pet expenses? Do you have a pet emergency fund or insurance? 

           Share your experiences by commenting below!

          Help a Reader: Estimating Monthly Living Expenses Before a Move Across Country

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          Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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          Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

          Happy Sunday everyone!

          On Friday, I received the following question/message from a reader:

          I was wondering what you think is a safe estimate for monthly living expenses for a 26 year old moving to Washington DC? 

          This boggles me due to living expenses beings higher in that area. In college in the Kentucky, I could live on $1,000 per month in living expenses, making next to nothing in income. I am currently in Saint Louis and have $2,000 per month for expenses, making $62,000 total per year in income.


          Reader Financial Details:

          • Reader will be splitting rent, utilities, and other household expenses with their significant other. The price range of the places he is looking at is $2,150 total per month (includes parking fees and utilities).
          • Has no kids. 
          • Has about $15,000 in student loan debt and will be attending graduate school in January part-time, getting a very low student loan interest rate.

          How would you advise this reader to proceed with estimating living expenses for the Washington DC area? 
          Please share your insight by commenting below!

            ***Photo courtesy of http://s0.geograph.org.uk/photos/59/51/595137_ca89e33e.jpg

            Should I Add Long Term Bonds to My Investing Portfolio and Asset Allocation?

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            Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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            Click here to enter my free $119.13 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is August 31st, 2012.

            Previously on My Personal Finance Journey, I have mentioned several times that I prefer to invest in short-term and TIPS (inflation protected) bond funds for the fixed income portion of my investing strategy and asset allocation and tend to steer clear of long-term bond funds.

            As I mentioned in Part 3 of Creating and Implementing Your Investment Strategy, the reason why I avoid long term bond funds is because it was recommended to do so in the investment books I used to develop my investing strategy (Stocks for the Long Run, A Random Walk Down Wall Street, and What Wall Street Doesn’t Want You to Know). The case that these books present against long term bonds is that:

            • Academic research has shown that short-term fixed income investment instruments have:
              • 1) Less interest rate risk, and 
              • 2) Equal, if not higher returns than long term bonds.
            • Because of these two factors, short-term (1-3 maturities) fixed income investments are considered superior to long-term ones.

            However, as I was conducting some research recently for a guest post on the topic of dollar cost averaging, I noticed that during the years of 1992-2012, long-term bonds actually OUTPERFORMED the S&P500 index by almost 30%.

            This finding got me thinking – does it still make sense for me to exclude long-term bond index funds from my investing strategy?

             As such, in today’s post, I wanted to take a look at each of the reasons given above for why short-term bonds might be potentially superior to long-term bonds and see if they are in fact valid. So, let’s get started!

            Do Short Term Bonds Have Less Interest Rate Risk Than Long Term Bonds?

            Interest rate risk (in the case of bonds) deals with the possibility that the price of your bonds will change (go down) if interest rates change. If current interest rates go up, the price for your currently lower-interest rate bond will go down.
            So, in plain English, increased interest rate risk with bonds can be translated as increased price volatility, or in mathematical terms, standard deviation of bond prices.

             In order to compare the standard deviations, or price volatility, of short-term and long-term bonds, I performed a 20 year (1992-2012) back-test performance analysis of a $10,000 initial investment in 3 separate portfolios:

            1. Investing $10,000 in the Vanguard Short-Term Federal Bond Fund (ticker symbol: VSGBX).
            2. Investing $10,000 in the Vanguard Long-Term Treasury Bond Fund (ticker symbol: VUSTX).
            3. Investing $10,000 in the Vanguard S&P 500 Index Fund (ticker symbol: VFINX).

            The resulting standard deviations/volatility of the different account values is shown in the table below. All pricing data was sourced from Yahoo Finance.

            fixed income investments, Treasury Bonds, short-term bonds, long-term bonds, investing strategy, asset allocation

            As can be seen in the table in red, the long-term bond fund had >2 times the price volatility than the short-term bond fund, a level almost equivalent to the 100% equity S&P500 index fund.

            This increased price volatility can be seen very clearly on the graph below, which charts the price change of both funds over the 20 year period. As you can see, while the blue curve (short-term bonds) increases smoothly over time, the red curve (long-term bonds) experiences a much greater degree of price swings.


             Conclusion: Short-term bonds do indeed have MUCH less interest-rate risk/price volatility than long-term bonds. 

            Do Short Term Bonds Have Higher Returns Than Long Term Bonds?

            Next, I analyzed the overall performance (% increase in portfolio value) that each portfolio realized over the 20 year period from 1992-2012. The results are shown in the table below.


            As was mentioned previously, long-term bonds realized higher returns than equities during the 20 year period and MUCH HIGHER returns than short-term bonds (almost 2.5 times more in fact!).

             Conclusion: Short-term bonds DO NOT have higher returns than long-term bonds. 

            Does Inclusion of Long Term Bonds Provide A Diversification Benefit?

            An important question to answer regarding whether or not to include any asset class in a portfolio is if that asset class will provide a diversification benefit.

            According to Modern Portfolio Theory (MPT), a diversification benefit is realized when any two assets have a correlation coefficient of their returns/price movements that is not equal to 1. This is due to the fact that assets whose prices move different helps preserve capital and provide a favorable shift on the Efficient Frontier.

            As such, I ran a correlation coefficient analysis on the 20 year performance data for the 3 portfolios mentioned above. The results are shown in the table below.

            As expected, both short-term and long-term bonds are weakly correlated with equity returns (0.75 and 0.79 correlation coefficients). However, short-term and long-term bond prices move together in the same direction 97% of the time (correlation coefficient of 0.97), meaning that they are very strongly correlated with each other. This implies that long-term bonds provide some, but not much, added diversification benefit if you already have short-term bonds in your portfolio.

            Conclusion: Inclusion of long-term bonds along with short-term bonds provides minimal, if any, diversification benefit. 

            Overall Verdict on Long-Term Bond Funds

            While it is clear that long-term bonds have tended to produce higher long-term returns over the past 20 years, they do not provide much of a diversification benefit and also would expose my portfolio to a much higher level of risk and volatility than with the short-term bond funds I am currently using.
            So, since the main purpose of having fixed income assets in my portfolio is to provide safety (the purpose of equities is to give me appreciation), I feel that long-term bonds still do not have a place in my portfolio and will instead continue to invest in short-term bonds.


             How about you all? What type of fixed income securities do you invest in with your retirement/investing funds? Short-term bonds, long-term bonds, TIPs, municipals, or something else altogether?

             Share your experiences by commenting below!

             You can view the complete numerical analysis used in this post by clicking the following Google Docs spreadsheet link.

            How to Make Bathroom Updates that Break the Mold Not the Bank

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            Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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            The following is a guest post. Enjoy! 

            How to Make Bathroom Updates that Break the Mold Not the Bank
            Is your current bathroom out-of-date or lacking style? If you are ready to update your bathroom, you have a multitude of options – from a complete renovation to simply updating the decor.

            And, changes on any level can have a huge impact on the room. This is especially good news for the homeowner wanting to update their bathroom on a smaller budget. Even relatively inexpensive bathroom upgrades that focus on updating decor and functional elements, like hardware and faucets, can go a long way.

            Start your bathroom renovations with a budget

            Before you can start any remodeling project, you have to set a budget and create a design plan. First, decide how you are going to finance the project and how much you want to spend.  You have options from borrowing with a home equity loan or line of credit to tapping into your savings. If you choose to borrow with a home equity loan, it is always a good idea to talk with a mortgage lender or apply online first. Knowing how much you are able to borrow can give you the starting point you need to get planning and get on the road to creating the bathroom of your dreams.

            Tap into some inspiration from the experts

            Once you have your budget set, you can begin working on your design. This means coordinating colors, fabrics and artwork to complement each other without overwhelming the (possibly small) space. Browse through home decor magazines and clip out the bathroom designs that you like. Stick with photos of rooms that are relatively the same size and layout as your bathroom. Many designs that are attractive in large spaces don’t work as well in small spaces – and vice versa.
            Once you have selected a handful of bathroom designs, lay them out next to one another and identify the common themes. Are the walls a single color or are you drawn to an accent wall? Are the rooms modern or do they use bright and busy accents? Make a list of things that you notice and take them shopping with you.

            Update your bathroom detail-by-detail

            Now that you have identified styles that you are drawn to, you can look at your bathroom and start to fill in the details.  Bathroom design elements that can have a huge impact include:
            ·         Shower curtains: If you don’t know where to start your bathroom renovation, the shower curtain is certainly a practical beginning. It can play a big role in tying together a bathroom theme and is also one of the cheapest things to replace. Choose a color or pattern to build from for other bathroom design elements.
            ·         Wall color and texture: Get swatches or samples and try them out.  If you are working with a small space, stay with a soft color and use it on all four walls. In larger spaces, feel free to get more adventurous.  You can also consider adding layers of detail with paintable wallpaper or by creating a tile border with a punch of color.
            ·         Rugs, towels, and window treatments: These elements provide a great opportunity to bring both color and texture into the room. Don’t be afraid to experiment – you can return anything that doesn’t work and try again.
            ·         Faucet style: There are a wide range of options when it comes to selecting a faucet. Choose something that complements your decor, but also provides the functionality you need on a daily basis.
            ·         Lighting: Lighting can have a huge impact on any room. Look for fixtures and bulbs that provide the ambiance needed for the space. If this is your master bathroom, you might want brighter lights that can illuminate your morning routine. For a guest bathroom, you might consider dimmer lights or adding a colored fixture.
            ·         Hardware: It’s often the little things that make the biggest impact. Switch out handles on cabinetry with something that shows a little character.
            ·         Mirrors: The focal point in many bathrooms is a mirror. Invest in something that allows you to sneak a peek for vanity’s sake, but also contributes to the overall design of the room.
            ·         Artwork: Add a stylistic piece that brings together the colors in the room. It helps if you won’t mind looking at the piece multiple times a day.

            Get started on your bathroom updates today

            Bathroom updates can be a quick and relatively inexpensive way to spruce up your home. With advanced planning you can conquer your bathroom renovation in a timeframe and budget you can be proud of.

            How about you all? Have you ever renovated your bathroom? What techniques/strategies did you use to keep the spending down to accomplish the job?


            Share your experiences by commenting below!

            ***Photo courtesy of http://www.flickr.com/photos/mike_miley/7466757982/sizes/l/in/photostream/

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