Freezing in NH

I have a small business on the side with a couple partners.  We haven’t put much time into it yet (this year will be different) and therefore aren’t really making a profit.  But even though it’s a small amount of money we still should be paying attention to it.  So I’m taking an accounting class at a local college.

So far it’s been surprisingly fun.  I don’t think it would be as fun if I didn’t have the business, because I can relate lots of what we learn about to the business, and I can see how this is really going to help us understand what’s going on.

 However tonight during a class discussion our instructor admitted that at one point he’d used the courtesy checks that sometimes come with a credit card statement to pay the credit card itself.  So now I’m wondering if I should really be paying attention to the guy…

My chronically late borrower (Who hasn’t made a payment since Sept 06) was a credit grade E, homeowner, verified, with a 7% debt to income ratio.  Correction, the borrower has never  made a payment.  Most of the other loans fluctuate around “on time” and “<15 days late”, and the other rather late one is a C credit grade.   

My HR (high risk) borrower with 30% debt to income and 6 delinquencies is currently paying on time, and the NC (no credit) borrower is chronically just a bit late (the < 15 days).  So I’m not sure that credit score is helping me here.  I’m kinda disappointed, I wanted Prosper to work out.  Maybe if I’d stuck more money into it and had a bigger “portfolio” of loans the one person who is apparently never going to pay wouldn’t have been as big a deal.    

The high cash balance is mostly because I had made a sixth loan that was paid in full after a couple of months.  Now I’m not sure whether to pull that cash out or to put a bit more in and try one more time.  Probably I’ll just wait around a bit until it comes up to $50 and loan it out again.  I want this system to work, I guess there’s just a high risk with the high reward.

I’ve been reading through some older posts on personal finance blogs and came across one from Nina at Sitting Pretty on Expense Reimbursement 

I spent quite a bit of time looking around online to see if any of the finance sites had calculated personal costs the average business traveler might incur by fronting money for business travel. And there wasn’t anything written about it. Am I the only one thinking about this?

I think her point about how expensive it might be if you get behind on submitting reports is valid, but I’m guessing that most people who worry about personal finance are going to try to get them in within a reasonable amount of time. 

I did some recent travel on business, and submitted the report about a week after I got back.  I could have done it the day after, but I was lazy and trying to catch up on other things.  I’ve signed up for direct deposit of the reimbursement checks, and if you fill the form out exactly correctly, scan your receipts (if you fax things and they’re blurry, someone has to call you to get the details), my company is pretty good about getting you your money in 7-10 business days.  In my case that was before the credit card bill was due.  So I didn’t have to carry a balance or spend any of my money, and thanks to Discover’s current promotion for 5% back on travel expenses, I’m getting a couple of $25 Borders gift cards out of the whole thing.  I could have taken the cash, but since I spend a lot of money on books anyway, $25 in gift cards made more sense than $20 in cash.  

So for me it was a win/win situation.  Someone else paid for me to fly somewhere warm, and I got free books.  I can submit virtually all of my expenses (tickets, hotel, meals, rental car) and I get to swim in the pool in the evenings.  I’m sure I’d hate it if I had to do it all the time (lots of wasted time in airports) but once a year it’s pretty nice.

I wish it was my problem.  I’m referring to an “Ask The Expert” article at CNNMoney.  Inflation and such will really eat up your cash in the long term.  For a long-term goal like retirement, you need to be earning more than money market rates.  Obviously with higher returns comes higher risk, so for money you’ll need in the short term, you should stay out of the stock market. 

But what is short term?  1 year?  3?  And what about medium-term goals?  Right now I have a house that I’m renovating and hoping to sell when finished.  I’ve got some cash hanging around that’s earmarked for repairs, plus my emergency fund.  For a while I was keeping that money in the money market account at my bank so I’d have fast access to it.  But eventually it occured to me that I really didn’t need to have my whole emergency fund available 24/7.  I could stash most of it somewhere like HSBC Direct, where it might take 5 business days to get ahold of it.  If you’re holding six months of emergency funds, you really can put five of them into something slightly less easy to get at, like a CD or an online bank. 

 Currently HSBC is doing a new money promotion where new cash gets 6% interest through the end of April.  It’s a great time to open an account and start getting more than 0.75% on your cash!

It’s that time of year again.  All the usual advice applies…don’t forget any credits you’re entitled to, make sure to include all your interest, etc, etc. 

You should already have a 1099 for any accounts where you’ve earned more than $10 in interest.  If not, you can usually find a “year to date” number on your Dec statement that’s pretty accurate. 

This year there is the telephone tax credit.  If you’ve kept every phone bill for the last three years you can find out the exact amount, but most of us are just going to be taking the $30 credit ($60 for couples filing jointly). 

Also new in the past few years is the energy credit.  If you replaced your furnace, hot-water heater or windows in the last year, or made other energy qualified improvements to your house, you may qualify for a credit of part of the cost of the improvements.  I replaced two drafty windows, and put some insulation into part of one wall when I had to replace the sheetrock, so I got a small credit.  Hey, every dollar counts. 

On paper you’ll need to get an extra form for the energy credits.  If you’re using a tax program, taking these credits should be pretty easy.  Many people qualify for freefile online, including just about everyone with an AGI under 52,000.  Just make sure the option you choose includes the energy credits.  I got most of the way through filling out my tax info on TaxCut (H&R Block) and discovered they couldn’t handle the energy credit.  The woman I reached through the live chat was friendly and helpful, but admitted that they hadn’t programmed that in yet and “should have it by March”.  I ended up filing with TaxAct.  The user interface is a little clunky, but they have all the extra forms (I also have a K-1 with a section 179 deduction on top of my W2 and 1099s, which complicates things). 

If you have student loans, that’s another credit you can take without needing to itemize, along with the Hope or Lifetime Learning credits if you’re still in school.  Plus a Saver’s  Credit for those in the lower income brackets.  I make too much for the saver’s credit but I’m taking an accounting class. 

If you itemize, you’ve got lots more things you can include.  For example taxes, including sales tax, state income tax, tax paid to other countries, property tax, etc.  Don’t forget the points on your new/refinanced mortgage along with the interest. 

Last week I realized that my parents have no idea how much money I make.  I know I never told them, but still.  For several years I was working part time, and living with a deadbeat boyfriend.  So I did a lot of complaining about money, but managed to scrape by on what I made and the savings I had going into that relationship.  Eventually I wised up and am now single and working another 10 hours a week.   

So I was having lunch with my parents at Panera and my mother paid for my lunch as well.  This led into a discussion of a woman I’m friends with (who is my parents’ age) whom I have lunch with once a month.  Every time she insists that she’ll pay and I can pay “next time”.  I was saying to my parents that I feel bad about this since I’m pretty sure I make more than she does.  They responded by saying that she’d worked at her job for a while and was good at it, etc, etc.  I named a figure and said “do you think she makes x?  x + 5,000?” and they agreed it was probably in that range.  My response “so I definitely make more than she does”.  Parents: <open mouth stare>. 

Hello, I have a house, a job that’s in demand that I’ve been doing for a bunch of years, and an employer that’s over a barrel because they’ve driven away just about every other employee who knows about the things I do.  I know banks will extend a mortgage to people who cannot afford them, but I’m pretty conservative about financial things.  Yes, my house was a dump when I bought it, but that was on purpose so I could renovate it.  I paid that mortgage on time for several years while working only 20 hours a week and supporting a boyfriend who liked to go out to eat and who required a storage space among other monthly expenditures.  I guess they just never thought about it. 

I know I make more than my mom, but less than my dad did (job change Jan 1, so I don’t know now).  I know they have credit card debt and a mortgage, and plan to pay both off before retiring (5 years or so).  I don’t know how realistic their plans are.  They have some retirement money, again I don’t know how much.  Their first meeting with any sort of financial advisor was within the last few years.  I’m really hoping they’ve got it figured out, because I really don’t want them to call me in 15 years and tell me they’re out of money. 

As you can probably tell from the above, we don’t talk about money.  I mean we talk in a general way, about interest rates and such, but not in specifics.  I’m not sure they would tell me if I asked them to sit down and show me their retirement plans.