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November 21, 2011


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Similar to you, I'm staying the course and making just a few changes. Like this year, next year I'll contribute the max to my 401K, continue contributing to the kids' 529 college accounts, continue prepaying my mortgage on a schedule I worked out a few years ago, and I'll also continue my other investments. In addition, we're debating once again whether cable TV is worth keeping for our family, and I set up a health care FSA new this year to save a few dollars on prescription drugs.

I'm also considering investing in more stocks before the end of this year instead of waiting until next summer as was my original plan. The down market seems like a good opportunity...

I've been having problems with what to do with an excess of cash (currently making up about 16% of my net worth, the rest in retirement accounts, long stocks, and property).

-I might see if I can figure out how to contribute to my 401K outside of my paycheck (not sure if that is allowed).

-One of my houses is down $60k, the other is up $10k, and they both have ~4.5% loans. Trying to decide if I want to invest the excess cash into paying down one of the loans a lot. I don't think I would want another mortgage without one of these being paid down or off. I was shopping, as I would like to move out of my area, but I don't plan on selling.

-I used to play the market a lot, but I don't have the time these days. However, I'm not well-read on more conservative investments (bonds, etc.). Perhaps I'll figure out a nice bond-ladder.

Maybe I should send in as one of your reader profiles...

M --

It's probably more of a "help a reader" post, but feel free to send me your situation and questions -- and I'll post them.

If you haven't already, spend some time with Quicken's custom reports. I've got a whole bunch set up to answer questions like what's my net worth with just a couple of clicks. A couple of others help me figure out what I'm spending monthly for a quick gauge on how I'm doing i.e. if I wanted retire and maintain my current lifestyle, what would it cost me?

I continue to use two rewards checking accounts with 22 debits a month between them. One account earns 2.5% and the other earns 2%. I don't use my credit cards much except for big purchases because I need to make debit purchases to meet the checking account rewards requirements. But I have bigger balances in the bank to earn interest on as compared to the amount I could put on a credit card per year.

I bought a $5,000 Electronic I-Bond via Treasury Direct and then bought a $5,000 paper I-bond. My first I-bonds.

I am putting more of my savings into Lending Club (up to $6K invested now) and I am investing in loans that pay me higher interest. The Lending Club statistics show that even with default rates taken into account, the loans rated C,D, and E still return higher than the A,B ones. I only invest the minimum of $25 per loan to keep the number of loans high with the risk diversified. I am trying to get my Lending Club account into my revocable trust now.

I max out my TSP and Roth IRA account (with Vanguard).

I have my account and passwords in an electronic file on my thumb drive and I am thinking about maybe using one of the password keeper software tools like Keepass. But I am extremely cautious about having my passwords somewhere that they could be at bigger risk than the risk of someone getting a hold of my thumb drive.

I keep tracking all my spending using Excel spreadsheets. I started doing this in 2009 because I wanted to really see what I needed to live on when I retire.

I keep updating my electronic file of important information for my executor and successor trustee. It seems I have to update something every month. I like it because it is a one-stop reference for me too.

Sometimes I play around with my spreadsheet I developed to figure out how long my retirement money will last when I retire. Then I worry about what will happen if I get laid off as federal employee. I stumbled across a document at OPM that has reduction-in-force (RIF) policies. It seems that if I did get riffed, I would be able to take voluntary retirement early because I have enough years of service.

I am shopping at Costco more to save money. The last few years I had stopped going as much because it is such a big effort to shop there and haul everything home and parking there is a hassle (very busy Costco). But if I am paying for the membership then I need to take advantage of it.

I found a different hairdresser who is a little cheaper than the one I was using. Get my hair highlighted is expensive but worth it to me- I can't do it by myself.

I am doing my year end planning. Tax deduction calculation, FSA adjustments etc. and oh yes market is down again, good time to buy some large caps...personal opinion though

Darren --

I use those as well.

I update my emergency file at the end of every year. It has all my updated financial information, insurance policy information, passwords, etc. in case something happens to me. I have already put together the budget for next year as well as a 5 year plan (savings estimates, major purchases, etc) and will review it with my wife at the end of the year.

I am finalizing the details of my IRS audit and watching my net worth decrease daily in this crazy stock market. Good times!

Currently I am involved in making our Minimum Required Distributions (MRD) from our IRAs. These are required on regular IRAs starting the year you reach 70.5.
I use the MRD calculator on Fidelity's website to find the amounts. You can then transfer either Cash or other assets (in kind) from your IRA to a taxable account to fulfill your obligation to the IRS.

I sold a bond mutual fund in our IRAs and then moved the exact amount of cash into our Trust account. I then reinvested the cash into a selection of individual municipal bonds with 5% coupons, priced below par, and maturities from 2032 - 2037. By holding them until they mature I receive slightly over 5% in interest for years to come and a small capital gain when they mature. If you have your brokerage company pay your estimated taxes by sending them off to the State & Federal governments in December it also saves you from the nuisance and bother of having to file quarterly returns after you are retired.

The IRS hope that your IRA is depleted before you die but if it isn't you can leave the IRA to a younger relative and they will carry on just where you left off.

My husband and I use KeePass to keep track of all our passwords (banking and otherwise). I've found the best password to use for KeePass isn't a word--it's a phrase or sentence complete with punctuation. We use Dropbox to keep the files up to date on multiple computers.

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