Friday, May 27, 2011

Life Insurance

I haven't really talked about life insurance.  But with the death of family friend and many recent deaths this year and last, I have to face reality and look at what I am leaving my family in the case I die. When we first got married, I think we got 200k for me and 100k for my wife.  After two kids, we upped it to 300k for me and 150k for my wife.  My policy allows me to get up to 1/2 of my current coverage.

I'm told I should get 10x my current salary.  I'm thinking I need to up it some more.  Maybe to 400k or 500k, but not 10x my salary... I definitely can't afford that.

I'm currently paying $28.25 for 300k/150k.

If I up it to 400k/200k the premiums would be: $37.61
If I up it to 500k/250k the premiums would be: $47.08

So yearly payments:
300k/150k = $339
400k/200k = $451
500k/250k = $565

That means for each extra 100k I want to insure, it would cost an extra $110 each year.  In the case of my death, I know 500k would help my wife and kids tremendously.  For the past few years, my insurance has refunded up to 25% of premiums.  So in actuality that $565 is actually $423... which means it's not as bad as I first calculated.

How much are you covered for in case of death?

Tuesday, May 24, 2011

Productivity: Maximizing Time

Time is another commodity that we have that is limited.  Like money, unless we budget it and know where it is going, our time will slip right through us.

The past couple of weeks I have encountered this verse in scripture. Psalm 90:12 Teach us to number our days, that we may gain wisdom.

Our life is finite.  We will die someday.  We need to balance the possibility that we may die tomorrow with the fact that we may live to 80-90 years old.  It requires wisdom to say "yes" to important things and "no" to not so important things.  It requires wisdom to put down toys and other time wasters to spend time with loved ones and building relationships.  It requires wisdom to say no to good things, and say yes to best things.

Here are some tips I've been reading about:

- Wake up an hour earlier
- Streamline email
- Do similar tasks in blocks
- Use a TIMER
- Learn how to delegate
- Hire Great People

Another great technique is mapping out your week.

Setting a weekly schedule like this and seeing where you are wasting time and what times you are most productive helps.  I set my workout in the mornings, and so every morning after waking up I go straight to the basement to get it done.

Gray: Personal disciplines exercise and reading
White: Flexible time with family
Blue: Work
Blue striped: work, but flexible
Red: meal times with family
Yellow: Church time

Overall, I've noticed that as I get more systematic with my budget, other areas of my life becomes more disciplined as well.  This includes diet, exercise, spiritual activities, family time, etc.

How do you number your days?  Are you using it to further your goals or are you wasting it away?

Your life is limited.  You may die tomorrow or in 80-90 years.  What will you do with it?

Monday, May 2, 2011

Net Worth 4-30-2011

Net worth. Mint's been acting up. Our credit card is actually $2.6k not the $4.7k. Some retirement stuff down due to bad investment.

Overall spending has been down thanks in part to living close to family and lots of church activities.

For some reason being part of a community helps in sharing the cost of things... especially food. Go figure.

401k Loan Repaid

Back in late 2008 we purchased a house with 10% down. We decided to renovate the house so that required taking out a loan. We took it out of our TSP, the government version of 401k.

THis was a little hasty and poor decision mainly because the stock market was at its bottom at that time. Late 2008 and early 2009, had we left the money in the stocks would have doubled by 2011. In any case, what's done is done.

At that time we had about $28k and they allowed for the residential loan to take up to 50% of value of the account. So we took out $14k.

Currently our account value is nearly $63k, thanks in part to a rising stock market and early repayment of the loan. But it would probably be well over $100k had we left the account alone. Lesson learned: delay gratification is usually wiser.

So the loan began in Feb 2009 and we finished paying it off in May 2011. 27 months. Two years and three months. Even though the loan interest was only 2.75% and we had 15 years to pay back at $47 a bi-week, it was a waste not to accelerate the repayments especially with the rise in the S&P and small cap stocks.

So over that 27 months, we averaged $518.52 a month or about $240 per bi-week. It could have been much faster, but emotionally, at times I wanted to have more paycheck/emergency fund. At times the low payments of $47 didn't seem that bad (had we waited for 15 years to pay back). The past half year we had been paying about $800 a bi-week or over $1600 a month. This was a large chunk of change each month, but a necessary sacrifice... however we did not even feel it. The only thing that felt it was the relatively small balance in our checking account each month. But again, well worth it. And thank God we did not have any major emergencies.

Looking back:
- We should not have borrowed from the retirement.
- We should not have waited so long to pay off.

So what about that other big debt we have? the HOUSE? We will accelerate payments as well. And make sure we are saving 15% for retirement.

That's that. Let's celebrate!