If You Can't Sell That Empty Nest, Repurpose It

Image via WikipediaI think a lot about retirement. I have been working full time in the construction business since I graduated college and I look enthusiastically toward retirement. It's still 10 to 15 years away but it's often on my mind. One part of my retirement plan is to downsize on my home. We have a fairly large home because we were raising six kids, now 3 are in college and 2 are on their own. I like the home, I like the space, and the neighborhood. But eventually we will sell just to save the money. Moving to a condo or an apartment rental isn't for me, I would like a small 3 bedroom 2 bath home, something easy to take care. If I sold my home the equity I have would be enough to pay cash on a smaller home.

I believe most people have the same goals as I do. But in todays housing market prices have dropped so low it may pay to wait. In my area the real estate market is terrible. Not many homes are for sale. When I drive through my neighborhood, I would be lucky to see a hand full of for sale signs, people are just not selling now. My neighbor had a for sale sign out for 3 months and the only offers he got were investors looking to steal the home. It's definitely a bad time to sell.

Eventually, I believe prices of homes will begin to rise. It definitely will take years at the rate we are going. So what do people do till the home makes sense to sell?

Many innovative homeowners are reinventing their homes for comfort and to save money. It's going to be a waiting game so why not be a little more comfortable. When all our kids are gone we will have 3 empty bedrooms to repurpose. I can think of a few ideas to try out.

A Home Office. My home office today is in a room barely bigger than a closet. Taking one of the empty bedrooms redecorating with a coat of paint, a few new shelves, and a nice desk would be perfect for dad. It would be a great place to get some work done. Sorting the mail and managing the home finances, or even a hobby or craft. There could be a nice open work surface, generous storage spaces, comfortable seating and ample lighting. I could eliminate the clutter and chaos of a small shared space and create a dedicated office all in one room.

A Sewing or Hobby Room. If mom likes to sew,having a dedicated sewing room will allow you layout your projects in a comfortable place. You won't have to use the kitchen or dining room table anymore. Also this could be a crafts room for the hobbiest in the family. When the grandkids come over this could be a great room to make crafts in. All the hobby equipment could be in one room with a dedicated closet containing all the paraphernalia that goes with it.

A Great TV Room. This would be great for mom or dad to have a special place only for TV viewing. A rectangular room with a nice 42" LCD panel hanging on one wall with two comfortable recliners on the other. Of course satellite or cable hooked up. Watching a nice movie with some popcorn would make a great evening. It would be easy to decorate with a fresh coat of paint and minimum furniture.

The Ultimate Guest Bedroom. Your guests won't have to sleep on the couch anymore. The decorator of the family would have a field day decorating this room for comfort. Guest would be knocking down the door to stay over night here. This is where you can go over budget to make a show room with a comfortable bed with nice bedspread and tons of pillows. Lots of wall decorations, really go all out. You won't have the kids around to mess it up. Make it a fun room.

With all this re-purposing you may decide to never sell your home, it will be so comfortable. Many people as they get older lose a spouse or special someone. Even in my family I have a couple of Aunts who have decided to share expenses. One aunt sold her home and moved in with the other. They share the home expenses. They both are saving money and the bonus is they have each other for company. There are ways to make the home you are in now work for your situation.

The Simple Light Bulb Just Got A Lot More Complicated

Image via WikipediaWhen I needed a light bulb I would either use a 40 or 60 watt bulb and I was done. But those days are over. Thanks to regulations, taking effect in January, under the Energy Independence and Security Act of 2007, shopping for light bulbs is fast becoming akin to choosing a new car. The upside is the new fangled light bulbs may last longer than you do.

I was worried because I heard some rumors that people were going to stockpile the old incandescent bulbs because they would not be manufactured anymore. But this is just wrong.

Starting in January, any bulb that can generate the amount of light produced by a conventional 100-watt bulb, but do so with roughly 30 percent less energy, will be eligible for the market. The new law is gradual — in 2013, the rule will be extended to 75-watt bulbs, followed, in 2014, by 60- and 40-watt bulbs — but the point is that nothing is outlawed if it meets the new mandated efficiencies.

What’s more, the looming rules have triggered rapid advances in a number of lighting technologies. Halogens, a type of incandescent that delivers light the way Edison intended, with a tungsten filament, are now available in the standard bulb shape. Compact fluorescent lights, or C.F.L.’s, have gotten better at delivering good light quickly, and without the buzzing and flickering for which they were known. And some bulbs with light-emitting diodes, or L.E.D.’s, now cast their light in all directions, not just one.

With all this new technology, how can you know what would be an equivalent to the old fashion 60 watt bulb?

Home Depot and Lowe’s are working to simplify shopping, with better merchandising and displays with samples of the forthcoming bulbs. Sylvania, Philips and General Electric, are already putting “lighting facts” labels on at least a few bulbs, even though new labeling requirements do not take effect until January.

The new packaging will describe the new bulbs by their lumens, the measure of light produced. But don't be discouraged, the package will also describe the bulb in "watt equivalents".

Does this mean I have to go out and buy all new bulbs? 

No but it does mean you will have to do a little more shopping and comparing to get what you want. Remember these new bulbs will be energy savers and have a working life, longer than maybe the fixture they are in.

So don't panic, like every government program to help us, this one will also take years to phase in. Here are a few things to keep in mind when you finally go bulb shopping.

• When you feel like you want to stick a toe into the waters of these new bulbs, just wade in. If you don't want them you still will be able to buy the old reliable one for many years to come. As we wait for the new bulbs to pop up in stores you will see many commercials and magazine articles touting their effectiveness. You will be shown what types of bulbs work best for what lamps you have in your home. So only replace bulbs as needed and when you understand what you are purchasing.
• At first the new bulbs will be sold only by your usual bulb manufactures like GE, Sylvania, and others. Stick with these because we will be seeing cheap overseas knockoffs coming soon.
• Consult sources like energystar.gov, energysavers.govand homedepot.com, which offers a video tutorial on the new law.
• Try the new bulbs in different lamps and fixtures in your home to see which work best in that location.
• Remember these new bulbs are going to save you money in the long run.

I remember when  the compact florescent bulbs came out years ago. They were very expensive and didn't shine a very attractive light. But the price eventually came down and the quality came up. This will also happen with the new lights coming. In the long run, we will have better and longer lasting bulbs

Has The National Debt Killed The American Dream For The Next Generation?

The recent downgrading of the nations credit worthiness, by the credit rating agency Standard & Poors, has many more people thinking about the federal debt. It used to be something many of us didn't understand and didn't think we needed to be aware of. We worried that it might affect us with higher interest rates in the near term, though that hasn't happen yet. But today the threat has grown large enough that the future generations are going to have to pay for this debacle.

It reminds me of how I used to be in credit card debt. I went along casually spending and buying things over the years. Always thinking just a few more payments it would be paid off. But there always was that emergency like the car needing tires or repair work. The kids needing something. The washer or dryer breaking down. It was always something. The years passed and the payments on the credit cards were so much I couldn't pay my regular bills. It was a scary time with 3 kids, a wife, and a big mortgage. I was worried my kids would have to do with less because of my mess.

This is how I relate to the current debt crisis. To much free spending, all being borrowed and not seeing ahead to the future. Like me, the government has reached it's tipping point where something has to be done. But the government's problems are much larger and the family affected, is not three kids like I had, but 250 million people.

The solution to this incredible problem is to cutback spending and pay down debt. It's simplistic and many people, smarter than me claim that it's OK for the government to have debt. But wouldn't we be better off if the Federal budget was smaller, so Washington needed less of our money to function. The other side of the coin is to raise taxes. It should be on the table if necessary but lets try cutting back spending and see what the results are.

It hasn't occurred yet, but all this money printing and borrowing economists claim, is inflationary. I agree with that because I have been to the supermarket and the gas station, prices are rising. This is one of my concerns for the future generations. Basic costs of food, fuel and goods are rising. The electric bill, water bill, and other necessities are increasing. All these basic needs are competing for the dollars from your paycheck.

What other problems will arise from the debt crisis? Will interest rates go up so the interest for future borrowing will be even costlier. State and local governments have debts to pay also. If their interest rates rise, won't we have to pay more taxes. Between Federal and State governments, taxes are definitely going to go up, taking more from peoples budgets.

We can be sure that the governments free spending will be paid for by future generations. There will be higher taxes eventually taking more money from their families budget. It seems to me we are moving towards a time where the next generation will be burdened with the problems of the current generation. If you factor in the future problems with Social Security and state pensions, the problems are much worse. I am afraid we have dug a large hole that our children and their children will have to clean up.

I hope the days of this massive borrowing is over but I am afraid it may not be. I read Paul Krugman's column titled "The Hijacked Crisis" in today's New York Times Online. The article was a typical Paul Krugman column, but something he wrote at the end worried me and I wondered if this comment, was the general theory of the current administration in Washington. Here is an excerpt from his August 12 column:

"What would a real response to our problems involve? First of all, it would involve more, not less, government spending for the time being — with mass unemployment and incredibly low borrowing costs, we should be rebuilding our schools, our roads, our water systems and more. It would involve aggressive moves to reduce household debt via mortgage forgiveness and refinancing. And it would involve an all-out effort by the Federal Reserve to get the economy moving, with the deliberate goal of generating higher inflation to help alleviate debt problems."

        Paul Krugman, New York Times, "The Hijacked Crisis"

Paul Krugman has a PH.d in Economics, he should be the one knowledgeable in getting the country back on track. It seems to make sense, but to do it would mean another larger stimulus plan with more debt. This kind of thinking just seems wrong.

All these decisions of what to do about the economy must be put in perspective of how it will affect future generations and not just today.

What are your thoughts?

Cable Company Comcast to Offer Discounted Internet Service

Image via WikipediaCable and Internet company Comcast is offering a discounted Internet service package to low income families. The new Internet service will be called Internet Essentials. It will provide low cost Internet access and also offer a netbook computer at a discounted price. To be eligible for the new service your child must also be eligible for the National School Lunch Program.

Internet service provided through Internet Essentials features download speeds of up to 1.5 Mbps and upload speeds of up to 384 Kbps. The plan costs $9.95 per month (plus tax) and is available for families that:

• Are located where Comcast offers Internet service (currently in 39 states)
• Have at least one child receiving free school lunches through the National School Lunch Program
• Have not subscribed to Comcast Internet service within the last 90 days
• Do not have an overdue Comcast bill or unreturned equipment

After you are enrolled you will have the opportunity to purchase a netbook style laptop computer for $149.99 plus tax. The computer comes with wired and wireless ability and the Windows 7 operating system and Internet browser software.

The program will continue for 3 years and is available now.

How to apply:

• Call 1-855-8-INTERNET (1-855-846-8376) to request an application
• Complete and return it, along with lunch program documents from your child's school
• You will notified by mail about the status of your application. Allow 7-10 days for a response
• Once you are approved, you will be mailed a welcome package with everything you need to set up your Internet service and receive free Internet training. If you choose to purchase a low-cost computer, your welcome package will provide details.

You can access the website at http://www.internetessentials.com/

Summer Camp Fees Can Qualify for a Tax Credit

Image via WikipediaSummer time is coming to an end and it's time to get the kids ready for the new school year. But before you put away the summer fun and start to get ready for the new school year, get out those receipts for the summer camp you sent the kids to. If you have enrolled your kids in summer camp and they attended while you were at work or while you were looking for work, you are eligible for a tax credit.

According to the IRS website, at IRS.gov, under the existing rules up to 35% of qualifying camp expenses is allowed to be claimed as a federal child care tax credit for children under 13.

The IRS wants the public to know that a summer day camp does qualify for a tax credit. It's looked at as the same as a day care center or even hiring a baby sitter does just like during the school year. The federal child and dependent care tax credit allows a 35% credit. For incomes above $43,000, it's 20 percent. Qualifying expenses for the tax credit are limited to $3,000 per year for one child or $6,000 for two or more. So if you're eligible for the maximum 35 percent with one child, you could claim a credit of $1,050.

Also note that overnight camps do not qualify toward the tax credit. Only expenses that occur when the parent is at work or looking for work.

6 Money Rules For A Successful Retirement

Retirement is a fact of life, an event that someday will happen to all of us. We budget and plan for other situations like college costs, home purchases and life events but often we put off preparing for the longest lasting time of our lives. 

If I told you that you would be unemployed for more than 25 years of your life, wouldn't you prepare for such an event. Yes you would, but being it's so far away when we are younger we tend to put it off. I have listed 6 money rules that must be considered to have a great retirement.

Save Early For Retirement. Waiting to save for retirement is the biggest mistake you will ever make. When you get that first job always be putting money away for the future. Paying off debt is a a top priority, but don't let it get in the way of your long term goals. If your employer offers a 401(k) with matching, save at least enough to get the matching. It's free money and you can't get a sweeter deal than that. 

Your ideal goal is to save 15 % of your income. If you have maxed out the 401(k) then start a Roth Ira. Start small with a 3% contribution and work your way up slowly to 10%. As you eliminate debt bump up your savings.

Cut your debt, but not your credit cards. Cutting your debt to zero is a great idea. But don't cancel your credit cards, you could take a big hit on your FICO score. You still need to maintain a good credit score even in retirement. Also the cards are a safety net of last resort. Sure having a large emergency fund is important, but your credit cards are a second line of defense in an emergency. But never to be used unless for dire emergency.

Reasonable housing, not Beverly Hills mansion. Let's face it your home is not an investment and the less you put into it the more you will have for investing and retirement. The typical rule of thumb used to be, you could afford a home 3 times you annual salary. But that rule went by the wayside,  your house payment including principle, interest, insurance, and taxes should be no more than 28% of your gross income. This also goes long with a 20% down payment. 

You will find many mortgage brokers allowing you to borrow a lot more but you have to be smart and stay away from a too large home. You will end up putting too much money into your payment and don't forget all the never ending maintenance of your home. After making the mistake of not saving for retirement, buying a to expensive home will crash your financial plan leaving your retirement sorely lacking.

An emergency fund built for your individual situation. It was always called a savings account but it's better known as your emergency fund. We all can agree an emergency fund is a necessity, but how large a fund is the the question. If you work on a commission basis, have irregular income, or think your job is going to be eliminated you need a larger fund. It should be at least 6 months of expenses. If your job is stable then you only need 3 to 6 months of expenses. The goal is to keep enough cash available to see you through the emergency with out having to cash in investments or use credit cards. 

Renting is sometimes better than buying. In a environment of rising home prices, buying a house is better. If prices are falling or flat, like they are today, then only buy if you can get the house for a steal. Renting may be an option if you don't want to deal with the extra costs of home ownership or maybe you are tired of the constant work of owning a home. 

Renting does have it's advantages in lower costs and hassle. Find a renting vs. buying calculator and do the math before doing either. But home ownership is the American dream, but with the extra costs and hassle it does come at a price.

Quit your mortgage when you quit your job to retire. It makes sense to lower costs in retirement and finishing your mortgage when you retire would be the right thing to do. Many people argue that having all your money tied up in a paid for house is the wrong thing to do. They think you need to have your money working for you in investments. 

But for many, not having a mortgage gives a sense of peace that your home will never be lost through foreclosure. But mathematically, we all agree that reducing expenses in retirement is the safest thing to do.

Making good retirement decisions means following a plan. The plan must be based on a good financial foundation.