Sold the Bimmer

I got a head start on my 2010 goals Tuesday night: I sold the Bimmer. This happened faster than anticipated and not exactly according to plan. I was listening to NPR en route to work Tuesday when I heard a story about GM's "Fire Sale" to move all remaining new Saturn and Pontiac models from dealers' lots.

I knew I was upside down on the Bimmer and I knew I wanted to reduce my debt load. I spent a good part of my day researching the Pontiac G5. I'd driven the G8 several times. It's a sexy car - I even took it for a test drive and compared it to the Bimmer earlier this year, but picked the Bimmer at the time because of the uncertainty around the future of Pontiac.

Now that its demise is official, I did some research and decided I was comfortable buying a car from a brand that has ceased to exist. The G5 is identical to the Chevy Cobalt, which is still in production.

According to Edmund's True Market Value estimate, the $13,300 I paid for the car (after a fat $6,500 rebate from GM) is within a few hundred dollars of what I should have paid. On the other hand, I received $1,800 more for the Bimmer than I was offered by Carmax in October.

I debated the wisdom of taking the negative equity in the Bimmer and financing it with the purchase of the G5. In total I had over $5,000 in negative equity. That I could finance this - basically no questions asked- surprised me in light of today's credit markets.

My monthly car payment will be less than half what it was, saving me over $400 per month. At the same time my total debt load has been reduced by over $17,000. My plan is to keep paying what I had been paying, as well as applying any excess funds I have, in order to pay the car off ASAP.

Additionally, I will completely "write off" the value of the G5 in Quicken in 2010. This will affect my net worth calculation but I want to be super conservative, particularly considering the Pontiac brand is fading away.

Moving to Tampa

I first visited Tampa six years ago. Two girls from school and I decided to go on a cruise together. Instead of flying we took a road trip, spent the night at a cheap motel and headed to the port the next morning to enjoy seven days at sea. It was fabulous, though I didn't get to see much in Tampa that time. Fortunately that wouldn't be my last visit to the Suncoast. My job required annual visits to Clearwater Beach for a conference, so I normally would spend an extra couple of days before or after the conference vacationing in the area.

I haven't decided yet whether I'll even move. I've been living in the same place my entire life. Until recently I always felt tied down to the city I'm in. But now I've been thinking about what it would take to uproot my flag and plant it somewhere new.

Things to Consider

• Money magazine forecasts Tampa home prices will fall over 50% from peak to trough. Some people get scared by that. I see an opportunity to find a bargain.
• Columbia restaurant. Their original location in Ybor City opened in 1905. I prefer the casual experience of eating on the patio overlooking Tampa Bay at their Clearwater Beach location. I could eat there every day.
• Lots of sun = positive mental attitude. There's a reason they call it the Suncoast: there are 238 sunny days every year. Of course, the down side is that it's pretty damn humid in the summer. There's a lot of humidity where I am now, so not sure I'd notice much difference.
  
• So much to do. Would I get bored eventually? It doesn't seem possible: beach, casino, botanical gardens, Orlando, Miami, beach, Ybor City, beach. Did I mention the beach?
  

My thinking is that I would basically start over with a much simpler life: sell some or all of my rental properties, use the cash to buy a foreclosure outright. Own a car outright. Those are my two biggest bills now. Without them, I think I could live comfortably even at a minimum wage income. I could find work in the tourism industry, something where I'm active and can lose weight. Something I can do during the day and not think about at night.

I still have to do more research:

• Taxes and the overall cost of living. There's no income tax in Florida, not even on dividends or capital gains. Some things, like gas, cost more. Unlike where I live, there is no sales tax on groceries. I still need to look at property taxes. Property taxes will be about double what I pay now... all the more reason to find a modest house. I suspect insurance will also be higher... I'll be subsidizing the "Q-tips" drivers.
  
• Unemployment is over 10% in Tampa. Will it be hard to find a job?
• Assuming I don't sell all my rental properties, how much of a burden will it be to manage them remotely?

I get that giddy feeling like I used to as a kid on Christmas Eve whenever I think about moving to Florida. But I have to be sure I've considered all the pros and cons before doing something so drastic.

My Frugal Miser: 2010 Goals

2010 is a transitional year for me. My earnings from working have been drastically reduced. The upside to this is that it has given me a chance to pause and seriously consider what I want to do with my life. Before, while I did truly enjoy what I did, I was a slave to my job in the sense that life revolved around it. I was always traveling, and when I was home I was usually writing proposals or preparing for our monthly metrics meeting.

Now I am free. The downside is I can't afford to be careless with money. Mistakes are forgiven when your next monthly commission check will be close to five figures.

My Frugal Miser's 2010 Goals

1. Lose 26 pounds. That's 1 pound every 2 weeks. I need to lose more, but I want to lose weight and keep if off so I'm going to try a more careful approach.
2. Increase my net worth by $25,000. In past years this was a cinch. 2010 is a transitional year for me, as I'm earning considerably less at my job.
   
3. Stick to a budget in key areas including food, gas and entertainment.
   
4. Lose the Bimmer. It's the Bane of My Existence.
5. Consider moving. I've given a lot of thought to moving to the Tampa area over the last few months. I'm not there yet, so I want to carefully lay out the pros and cons of this and, if I decide to move forward, I want to execute on this by yearend.

I haven't made much (if any) mention of my desire to move, mostly because it seemed like such a long shot until recently. I'll explain more tomorrow.

Reviewing My 2009 Goals

Each year I keep a rolling Word document outlining what I hope to accomplish over the next 12 months. I got serious about this starting in 2006 and it's neat to look back and compare the goals I had four with ago with those I have today.

2006 monthly income goal (net): $3,000
2009 monthly income goal (net): $5,000

2006 investment strategy: dump all free cash into Prosper.com P2P loans
one of my 2009 investment strategies: slowly exit Prosper.com portfolio of loans

My performance on Prosper was poor. Lesson learned: a lot of individuals don't share the values I do about honoring one's obligations. I personally believe those who refuse to pay their debts should be criminally charged.

My income grew handsomely until I lost my job in August.

I achieved several of my other goals: 1) buy 2-3 rental properties (I bought 3); 2) pay off Rental Property #1 (I did); accomplish my 2009 net worth goal.

I failed at two of my biggest goals: 1) weigh 165 pounds by yearend (haven't lost a pound) and 2) earn $125,000 gross income (was on track until August).

I'm taking a few days off from the blog but will be back next week to post my 2010 goals. In addition to the traditional family things for Christmas I am trying to put together a mystery shopping road trip or two. There's not a lot out there but hopefully I'll round up a little work.

Aggressive Tax Avoidance: Donate Unwanted Items Before Year End

A major motivator in my quest to eliminate 100 pieces of clutter from my life is to increase my tax deductions for 2009.

I use Turbo Tax's It's Deductible software to track and estimate the value of my donations. One nice surprise I found was that the value of my items is often higher than if I were to sell the item myself. I imagine that's because the thrift stores do such a good job and bringing in the target customer for my used goods.

For example, I donated several perfectly good polo shirts that were valued by the software at $9 each. Considering I only buy clothes when they've been sitting on the clearance rack long enough to gather dust, I most likely spent a lot less than that to buy them new. I consider the cash value of my tax deductions to be 25% of the amount, or $2.25 per shirt in this example. I doubt I could fetch $2.25 at a yard sale.

For me, every $1,000 in donations yields me $250 in cash money when I get my tax refund.

Here's another trick: I keep a lookout for super bargains when I go shopping. That $1 hardcover book at Dollar Tree is worth $4.00 according to It's Deductible. 25% of that is $1, so as long as I keep it in great shape, I'm basically getting to read a free book. Even better, the 10 CD audio-book I bought at Books a Million for $1 on the Clearance shelf last week is worth $8 at a minimum, 25% of which is $2. So here, I get to enjoy the audio version of S is for Silence by Sue Grafton, and make a dollar when I donate it.

Conquering Clutter: Roundup 3 (5 items)

As I mentioned before, I am eliminating 100 possessions in December. For the first installment, I found 12 items worthy of removal. Then I found 7 more for round 2. For the latest roundup, I present to you 5 new items:

Trash: old, well-used t-shirt rags, mop.

Donating: 3 stainless steel coffee mugs, pants

Selling (possibly): a stack of Berkshire Hathaway annual reports along with photos I took of Warren Buffett and Bill Gates playing bridge.

Since I can read the annual reports online I don't see the need to continue collecting these (even though I treasure their content). I'll see if anyone bites on an ebay auction before tossing them out. I now have 76 items left to dispose of before the end of this month! Need to work harder if I'm going to make it.

I'm Still Here!

Wow...it's been a week since I posted anything on My Frugal Miser. Last week was quite busy:

• I helped my mom move to a new place.
• I survived the third week at my new job, and attended my first Chamber of Commerce luncheon. I'm never one to pass up a free meal. Plus I ran into an old friend/co-worker I hadn't seen in a couple of years.
• I won a door prize at the luncheon which included two movie passes. My partner and I went to see Twilight: New Moon at the Rave theatre for free Friday night, then treated ourselves to sushi using a restaurant.com coupon I had purchased several months ago (we spent $17 but without the coupon it would have cost $42).
• I earned almost $150 mystery shopping on Saturday. While everyone else was out Christmas shopping I was shopping for income.
• My neighbor proved that good deeds are rewarded: my partner and I "secretly" carry the neighbor's newspaper to their door (he is handicapped). I guess the neighbor knew it was us all along because his wife brought us a Christmas gift basket yesterday. That made my day.

I'll post an update to my Clutter Roundup tomorrow. I realize I'm running out of month and have a ways to go.

Conquering Clutter: Roundup 2 (7/88 items)

As I mentioned last week, I will eliminate 100 possessions in December. For the first installment, I found 12 items worthy of removal. Last night I rounded up seven items for the second round:

Trash: shredding 2007 taxes. You can't tell from the photo, but the stack is about 5 inches high! There has to be an easier way! By the way, I know it's a little premature, but 2010 is right around the corner. Besides, I was already audited for 2007 and since I satisfied the auditor I assume I won't be audited a second time.

Donating: neck pillow, reading light, odd collection of cups, leather toiletries holder, collection of wires/antennae, remote control

I now have 81 items left to dispose of before the end of this month!

Assessing my Credit Card Debt

My top priority is paying down my credit cards. These were under control until I had to access some cash advances to purchase Rental Property #7.

Total Credit Card Debt as of 11/30/2009: $37,913
Previously I reported the wrong amount for last month, so I actually only reduced credit card debt by $333 from October to November.

In December I will not reduce my credit card debt. Instead, it will increase, hopefully for the last time. I have over $6,000 in property taxes to pay and will have to pay these by credit. Unfortunately, this means I will exceed $40,000 in credit card debt for the first time.

My Financial Situation (update for December)

I mentioned last month that my #1 goal is to pay off my debt as fast as possible. I wanted to review the progress I made in November and where I stand today:

• $37,913 in outstanding credit card bills (a reduction of $750!).
  
• I prepaid 2 payments towards the $3,500 personal loan I took out to fund the rental property transaction.
  
• $95,738 owed on my house (a principal reduction of $538!).
  
• $33,787 owed on a HELOC used to purchase a rental property.
• $37,853 owed on my car (the bane of my existence).
  
• $17,558 owed on student loans.
• $179,890 owed on 2 other rental properties (a principal reduction of $673!).
  
• $38,000 in other obligations related to rental properties.
• $706 paid in cash for fire dues for four of my rental properties.
  

December Goals

During November I did okay with my goals. The accountability that comes with publishing my goals definitely helped me do better than I would have otherwise.


December Goals:

• Last month I earned $940 in mystery shopping income. I have started a new job and will have to cut back. I will earn $400 in mystery shopping income.
  
• Last month I spent $184 on food. I will spend less than $200 on food this month. I wish I could say I would bring my lunch to my new job every day, but most likely I will go out some. I have to get out of the office to maintain my sanity and eating out helps keep my sanity, as long as my spending is reasonable.
  
• Last month I spent $79 on fuel. In December I will spend $200 on fuel. I now have a daily commute of 90 miles, and I won't be mystery shopping as many gas stations this month.
  
• My #1 financial priority moving forward will be paying down my credit cards as quickly as possible, followed by a close #2 priority of selling the Bimmer. In December I will reduce credit card debt by at least $750.
  

December will be a tough month as I adjust to my new job. I will be driving - a lot. I don't buy too many Christmas gifts but will be spending a little, which will be reflected in my credit card debt reduction goal.

Reviewing My November Goals

Tomorrow I will post my December goals. Before I do that I wanted to review how I did in October:

How did I do on my October Goals?

• reduce credit card debt Yes
  
• $750 in earned mystery shopping income SURPASSED!
  
• maximum food expenses of $150; maximum fuel expenses of $100 FAILED.

I have a lofty "stretch" goal of reducing credit card debt by $1,500 per month. While I didn't reach it, I did manage to cut credit card debt by $775.

Because I canceled my San Francisco trip I managed to earn $940 from mystery shopping, but it was slightly less than my stretch goal of $1,000. I also earned $287 in reimbursements.

I did achieve my fuel goal by only spending $79 (thanks to a lot of mystery shopping at gas stations) but I exceeded my food budget just a bit. I spent $34 more for food than I had budgeted.

My November Income: $4,071

November was a decent month considering I was unemployed. My severance benefits ended November 10th. Since I wasn't actually working, I did a lot of mystery shopping.

$1,458 Severance Pay
$1,240 Mystery Shopping*
$414 Change in Value of Retirement Accounts (Roth IRA and Rollover IRA)
$959 Rental Income*
$4,071 Total Income for November
*note that the mystery shopping income will always vary from the weekly amounts I post. Here I report actual payments received (cash basis accounting) whereas weekly I report the amount I earned. Rental income was lower because of expenses associated with preparing Rental Property #1 for occupancy.

I started my new job December 1st. I am taking a large salary cut but will try to supplement it with as much mystery shopping as possible. I should also see a bump in rental income now that Rental Property #1 is rented.

Conquering Clutter: Roundup 1 (12/100 items)

As I mentioned on Monday, I will eliminate 100 possessions in December. For the first installment, I thought I would start with the low-hanging fruit:

Trash: 3 containers from the bathroom, calcium tablets, old Zicam chews, free samples of tooth whitening strips, broken DVD player

Donating: patriotic (but ugly) shoes, a few clothing items, 14 purple bracelets, stuffed toy, tennis ball, LCD TV, shower radio

The only item I regret disposing of is the portable LCD TV. I bought it on Black Friday, 2006. It is not digital ready so would require a converter box. Perfect though to pair with a DVD player or video game system. I bought it as a gift that I never gave, and I never used it myself.

Starting My New Job Today

I'm really excited that I'm rejoining the workforce today. Since I've got a lot going on, things may be quiet on the blog for a few days until I settle into my new routine.

Keep posted... I'll be updating my journey to Conquer Clutter, as well as my financial results, later this week.

Wish me luck!