New Rules for Money Market Accounts

I had to laugh when I read the Kiplinger's article on the new rules for money market funds. You can find the full article here. You see, the one money market fund I participate in, American Funds Money Market Fund, hasn't paid out a dime of interest since July of last year. They're struggling to hold the value of my dollars apparently. I know not every fund has taken their returns to zero, but they're probably close. Bankrate tells me the average money market account is giving out .79% right now. But I tend to have a bias for American Funds, my humble opinion only of course. Plus it is a super-easy to access portion of my emergency fund. When my 32 year old, oops, going on 33 now, water heater finally kicks the bucket, I'll be able to whip out my checkbook and write a check to the plumber.

Anyway, the new rules are written to protect us but in the end they'll take away another .1% of our return. The rules in a nutshell require increased liquidity, better disclosures, and higher quality. If I wanted a super safe spot for my money I would have put it in an FDIC insured savings account. I think the benefits of most money market funds are enough to overcome the small risk that your dollar might turn into 99 cents for a short period. I tend to be a firm believer that if you're going to put your money somewhere, it's your responsibility to understand where you're putting it. If you need help, hire an adviser. I must have missed the news on the money market crisis that ruined everyone's life.

Monthly Update

I'm doing my monthly update a little early. I don't foresee anything changing in the next 3 days besides the usual stock market swagger.

Pay off car loan - 70% (Up 3.4%)
Pay off student loan - 12.4% (Down .1%)
E-fund 2 - % (Up 2.9%)

Unfortunately I'm still treading water on the student loan while I work on the car loan but I'm making good progress. 9 short months to go..

Not reflected here is my employer's yearly gift into our 401k. It came this month and it always excites me. Kinda like something for nothing.. On the flipside I tend to wonder how many more years we will have this policy..

Car Loan

Have I mentioned how super excited I am to be on track to pay off the car by the end of 2010? It's like giving myself a $300/month raise. It will probably be the only raise I get this year. My mind is drifting ahead to how I want to allocate that money. So far I know I want $100 to go to my Roth IRA. I also intend to use $100 to use on house projects. I'm not sure how I want to use the last $100. Part of me wants to bolster my cash-equivalent savings and the other part says I'm already contributing the Roth so why bother. Maybe it will be split between the Roth and the house improvement fund.

Offhand here are some of the things I know I would like to accomplish-
New windows
Refinish hardwood floor in the office
New kitchen countertop
Carpet the upstairs
Grade soil around house
Replace two fans
Cabinet for the bathroom
Table for the living room
Tile tub surround
Replace parts of sidewalk
Replace parts of driveway
Replace back stairs
Siding and gutters on the garage and maybe a small window
Fence
Kitchen cabinets/remodel - someday

As you can see, no shortage of ideas, and probably some are missing. And always I'm torn between handling the things that are more important to me or handling the things that will improve the value of the home/look good to a future buyer. Fortunately many overlap.

Also I bit the bullet and bought a refrigerator to replace my ailing unit. Unfortunately I dipped into the piano fund when I spent more than I originally planned. I think the piano will wait until fall, because I'll be busy outside this summer and hopefully by then my workplace will be on more firm ground. Maybe I will have replaced the $ I used on the refrigerator too.

Monthly Update

Pay off car loan - 66.6% (Up 2.9%)
Pay off student loan - 12.5% (Up .2%)
E-fund 2 - 58.6% (Up 11.2%)

My tax refunds arrived, including the amendment due to TuroTax's boo boo. They are nestled safely in savings but already itching to spend those. We'll see..

How Long Could I..

afford to eat if I lost my job? I decided I better sit down and find out. First stop, my spreadsheet tracking what I spend. Unfortunately I've been half-assed at the whole tracking thing lately but it's the best I have. It looks like I've been spending around $2200 a month. Now some of that is a student loan that could be deferred or put into forbearance if needed. Another chunk of that is me paying over the minimum on my car loan. Another chunk of that is home improvements that, let's face it, I wouldn't be doing if I were living on my savings. So we'll say $1900 if I had to cut back.

Next stop, let's check the touch-able assets. 6 and a half months in cash and cash equivalents. 3 months in taxable investment accounts. When I move my refund as needed that will be another month. So 10 and a half months. Not too bad. Kinda makes me want to spend my refund as previously planned. But for now I'm making note of it and sending it away to savings.. I dunno when I'll feel comfortable spending it.

Unexpected News

The company I work for started layoffs this week. By my calculations they've done about half of the planned layoffs for the year. I survived the first round but no one knows when/who will go next. The good news is my tax refund, most of it at least, landed in my account today. Unfortunately TurboTax mucked up my state refund. I live in one of the four states that counts HSA contributions as taxable income. To top it off, TurboTax counted it twice. Then instead of admitting the mistake, it just automatically corrected it - after I filed my returns. So now I can't even use TurboTax to amend my state return since it still believes nothing changed. I love TurboTax, but that is a stinky bug. I filed my amendment today at the state's website so hopefully I have the rest of my refund soon. Mental note for next year - use the state's website to e-file my tax return and save $20!

Anyway, now I'm becoming very indecisive about what to do with the refund. $1000 is definitely spoken for - having been spent already or being spent soon. The rest I feel should be put in savings but in my heart I still want my piano. And the freezer on my refrigerator is not behaving. To be honest I'm sure it's been that way for awhile. I may just ignore awhile longer. Yay for having money to be indecisive about :)

Tax Refund Time

Yay, one of my favorite times of the year. Now I know there are naysayers out there who think you shouldn't give the government an interest free loan. If you're one of them, you'll be disappointed to find the interest rate on my savings account is just over 1% at this time so I'm missing out on like $20 worth of interest. Seriously. I'll rethink my strategy when the interest rate nears 5% or if I ever have high-interest credit card debt.

So my plans are like this. 1/3 is going to my emergency fund to replace what I borrowed last month. 1/3 will be split between getting the tree trimmed and paying some down on my car loan. I'm about 90% sure the last 1/3 will be getting me a piano. My refund is around $2500 this year so I'm talking starter piano. I was delighted to find it will be much cheaper than I had figured to trim the tree, provided the neighbors let me use their backyard. They ought to, since they use my driveway at will and since they requested the tree be trimmed..

Hope your tax season is going well!