The last two days diet wise have been not so good for me. I had a co-workers baby shower and there has been a ton of food around the office lately. More on this later.

Lets discuss personal finance and the family! BF is currently up at his parent's house discussing retirement with them. They have inherited some money, but up until this point had no retirement savings (with the exception of social security of course). His parents are not into personal finance like we are. They hardly talk about money. They are of the opinion that things will just "work out." My parents are the total opposite, but we'll save my parents for another post. I think most people are like BF's parents. They don't want to think about money because it will cause them such a headache and they will realize that they can basically never retire.

A bit of background on BF's parents: They have never had any money. They raised five children, BF is the oldest (28) and the youngest is about to graduate from high school. They have never helped any of their children with school in any way because they could not afford to. That is not the problem, just the realities of being poor. They have always spent more than they earned because BF's father was the only one who worked, while his mother stayed home with the children (again, not a problem just the truth). I guess they could not make ends meet on one income. Recently, they inherited a large sum of money and immediately paid off their mortgage and two equity lines of credit. They also went on a trip to China and bought 2 (new to them) used cars. They continue to spend down the money monthly because they have yet to live within their means. This has left them with about half the money left, a decent sum if they stop spending it. They are letting this money sit in 3 different banks in savings accounts. yes i said savings accounts. The money has been sitting in these accounts for about 8 months now, earning little to no interest. They both don't understand the money and are too afraid to move the money to a higher interest yielding account. We have encouraged them to open Roth IRAs but BF's father is afraid of banking on the internet. We have encouraged them to get the money working for them, but they still resist.

BF's parents are in their mid-50s and have no retirement, except for social security. Even social security won't pay them much because BF's mother has not worked the 40 quarters needed in order to qualify. BF and I are fairly successful people and make a decent income. We also have large law school loans that we are paying off as fast as we can. BF's other siblings do not have their finances in order and likely won't for a very long time. My main concern is that I don't want us to become his parent's retirement plan. I want them to have a nice, self suffient retirement.

So, needless to say, this has been a big issue for BF and I. We want them to start having the money work for them and to stop the "bleeding" each month. We put together an outline of topics for him to discuss with them. It included getting them to talk about their retirement goals. This included being finanacially independent and not having to work until you die. But also how much traveling they want to do and how much they want to help their 5 children. The next topic of discussion was personal finance basics. truly, the basics here: spending less than you earn, tracking expenses, budgeting, emergency fund, having a monthly and yearly savings goal, etc. They had 5 children and never did any of this! I can't believe they survived. I would die without my little "spreadsheet." (My spreadsheet comes later.) Anyway, BF also talked about some basic investing concepts. They have 10 years to retirement. BF told them all about risk, asset allocation, nest eggs, and all their investing options: money markets, treasuries, bonds, stocks, mutual fund, and the return that those might give. The next step was scaring them. This was sort of my favorite part, is that bad? :) I made 4 charts. Charts 1,2, and 3 were what would happen if they went into retirement (which is 10 years from now) with $300,000 (chart 1), $500,000 (chart 2) and $700,000 (chart 3). we think they currently have about $500,000 but who knows what will happen in 10 years. anyway the x and y axis' on all the charts was the same. the x axis was -1% return, 2% return, and 5% return. the y axis was withdrawing $12,000 a year, $24,000 a year, and $36,000 a year from the principle (which differed with each chart). The chart showed how many years the money would last on the % return and supposing they withdrew X amount per year. They need the money to last for at least 30 years, so any number of years that was less than 30 was in red and any number of years that was more than 30 was in blue. red = bad, blue = good. The $300,000 chart was mostly red. the $700,000 chart was mostly blue. They really got to see why return on investment and the interest % an account earns is so important. I hope this helped them understand. The last thing BF discussed with them was an action list, i.e. what they need to do NOW. He got them to start trying to track their expenses, form a budget, and make monthly/yearly savings goals. Next they need to call Vanguard immediately and open Roth IRAs or money markets or whatever. And third is to TALK about their progress. BF told them to have weekly meetings. It might be painful now, but this is going to save you a world of hurt later if the money is gone.

Phew! Glad to get that off my chest. It has really been bothering me. Do any of you worry about your parents in retirement? If so, have you had any conversations with them? What types of things helped your parents see the light, so to speak?


Spreadsheets?
I have recently been reading some blogs on spreadsheets. Stacking pennies recently posted on this. It got me to thinking, "why don't I have a spreadsheet?" All my loans are accessible online, so I go to the website and enter my password any time I want to see how much I owe. It is mighty depressing. I might do spreadsheets in the future, when I am not in debt and have more assets to track, but right now my "spreadsheet" is a yellow legal pad in which the whole year is represented on two pages. Page one is jan-june. page two is july-dec. I have every paycheck that I will receive written down. Starting on the left side of the page is the date of the paycheck. I'll give an example from my last paycheck, the entry goes like this:

1/9/09 272 + 1790 - 335 - 75 = $1652 $1000 to loan
$500 to ING

The 272 is my bank account balance carryover from the last paycheck. 1790 is that week's paycheck. 335 is my graduate leverage federal loan monthly payment. 75 is my monthly ballet fee. And 1652 is what is remaining after my monthly expenses. very simple and very easy for me to modify. Obviously, the $1000 to loan means I put $1000 towards my last private law school loan and as I posted about earlier, the $500 to ING is for my 2008 taxes. The next entry will look a little different because I have adjusted my federal withholding. $1790 was federal withholding 2 and state 2. I adjusted to federal 3 and state 2. There are more exemptions at the federal level so I feel fine doing that. Also, I would rather owe a little bit to the government at the end of 2009 than have them owe me money, because the way things are going these days, there won't be any money to reimburse me with! Yikes! wouldn't that be horrible. I mean, if the country's finances are heading towards hell in a handbasket, it doesn't mean that mine have to. :)

If readers are interested, I would be more than happy to post my whole 2009 yearly budget on this blog. I have it mapped out through December, along with all my fixed monthly payments (loans, ballet, etc.) and also on the left, how much of each paycheck is going towards 2 2009 Roth IRAs ($10,000) and how much is going towards my $13,000 debt. Both of which should be paid off by December 2009! Yay! It helps me feel like I am accomplishing something, little by little, to look at my nice yellow legal pad. I know its not fancy, but if I go out of town or something, it comes with me so I can stay on top of paying my bills and my expenses.

For the more minute monthly expenses like groceries, eating out, gifts, car insurance, gas, internet, etc. BF and I have a joint credit card that we charge everything to. We get 1% cash back on everything we buy. The cash back is applied to the january statement for the previous year's cash back, i.e. this month (jan 2009) we get ALL the cash back rewards that we earned during 2008. On this statement we are getting back $227.31. That is pretty awesome and definitely helps with the bills!

So, are you spreadsheet people? Excel has never really "done it" for me. but, eh? I could be converted if you say it is that awesome. more posts about my diet to come, but never fear! I am tracking calories!