One of my goals this year is to become better prepared for retirement. I’m the first one to admit that I’m starting late. I have a small pension plan set up, but I don’t feel confident enough to completely rely upon it come 20-25 years from now. I’ve also had some close friends recently retire and realize that poor planning can cause undue anxiety and uncertainty; something I don’t want to worry about when I reach retirement age. For September, I marked down in my calendar to begin a 403 (b) to help support my piddly pension plan. Though I won’t be able to contribute to it as much as I’d like in the beginning, at least it’s a start!

Learning from others mistakes, here are my top ten signs you’re not (or I’m not) prepared for retirement:

10.) “Gone Fishin’” or camping is a slogan you wish to live during the retirement years. Reality check: Though camp site fees range from free to $20 a night, camping every night in a tent or camper is unrealistic. Most camp sites have a maximum-night stay and the large, comfy RV’s are expensive (about $275K for a base model!). I love camping, but when I’m 70 I may not want to be warming myself over a camp fire every night.

9.) You don’t plan to live long after retiring. Reality check: People are living much longer these days. Even if you retire at 65 or 70, you might have another 15-20 years of living to do. Trying to eek out an existence for an additional 10 years on an income you originally thought you’d need for only 5 years is tough.

8.) You plan to work until you drop dead. Reality check: People have many different definitions for retirement, such as working part-time. This is a great way to supplement a retirement fund, but deciding to NOT plan for retirement because you think you’ll just keep working isn’t a plan at all. Though people are living longer these days, illnesses and disabilities are a reality of growing older. (I just rode my bike a few miles the other day in 100+ degree heat and let me tell you: I’m too old for that crap!)

7.) You’re banking your nest egg on the sale of your home. Reality check: Prior to the real estate’s bubble rise and fall, most people didn’t consider their home or property their retirement fund. However, during those few years, people began thinking more about how the sale of their home could be their nest egg. Unless you purchased your home many, many years ago at a bargain-basement price, counting this as part of your retirement fund may not be such a good idea due to the volatility of the real estate market.

6.) The federally-funded nursing home is looking more appealing every day. Reality check: No one plans on ending up in a nursing home before the age of 65. However, poor planning combined with poor health equals limited options.

5.) You’ve lately found yourself eying your grand-kid’s bedroom counting down the days until they move out. Reality check: Depending on your family’s culture, moving in with immediate family may be a reasonable option. However, if it’s not considered the “norm” within your own family or culture, you might want to have a sit-down discussion with those you intend to intrude upon share space with and make sure everyone is in agreement.

4.) Commune-style living is something you’ve wondered about, and are now thinking you’d like to try. Reality check: I don’t know much about commune-style living. Those words alone conjure up images of hippies growing their own food. Who knows, maybe it’s a great option for retirement!

3.) You plan to stay young forever. Reality check: Unless the fountain of youth has been found, chances are we are all going to get old sooner or later. As the saying goes, “It’s better than the alternative!”

2.) You’re still waiting for your ship to come in. Reality check: The ship’s not coming!

1.) Too many of my top ten signs are eerily hitting the nail on the head! Reality check: Like me,  you’re running a bit behind. It doesn’t mean you can’t catch up or at least begin a solid plan towards your retirement. Start today or mark it down as a “to-do” on your calendar to start this year. The key to compound interest is TIME, something that begins to run sooner than you think!

Though many of my signs are very tongue-in-cheek, the bottom line is retirement planning needs to begin before retirement begins! I’ll be following up this post with  my detailed plan in the next couple of months (keeping me accountable for my goals!)

Do you have a handle on your retirement? What advice would you give someone starting late?

Each month, I chip away at a little bit of principal on my Crummy Line of Credit. Little by little, the total balance due shrinks. However, the process has been slow-going and quite frustrating. The loan itself is a monster, and with an interest rate at almost 30% (29.99% to be exact) it’s disappointing to see how much interest I’ve paid over just this year alone: a whopping $1,557.98. I’m terrified to actually pull a Quickbooks report and find out how much I’ve paid on the life of this loan to date.

But……I’m happy to report I managed to secure a much, much lower interest loan and pay off more than HALF of the crummy line’s balance. Whoo hoo! Of course, I’m just moving half the total balance due to another financial institution that I have to pay as well, but at an incredibly low rate (and zero percent to start), I can focus on getting the crummy line’s balance paid off.

Here’s what I did; I paid off $3,500 of the remaining $7,626.77 using the new, low interest loan. Because I made a whopper of a payment, the financial institution offered me a “settlement” amount that is $1,480 LESS than the original loan balance for a total of $2,646.56 remaining. The $3,500 loan is zero percent interest for a year, then a low 7.5% fixed rate.

The remaining $2,646.56 is no longer generating interest charges, but it is generating a daily fee of $5.99. I agreed to make two more payments of $1,323.28 and will have this baby paid off by the end of October. Not too shabby compared with the 32 months it would have initially taken me and the interest I would have paid, $3,526. Yikes!

According to Credit Karma’s calculator, the $3,500 low interest loan will take approximately 10 months to pay off at a monthly payment of $350 and zero percent in interest if I stick to my plan of paying it off in 10 months. Here’s a quick comparison:

• Total paid in fees on the remaining crummy line of credit: $359.40
• Total amount of time until zero balance: 12 months
• In contrast, if I had kept the crummy line of credit I would be paying $3,526 in interest over 32 months. Yuck.

For those visual learners out there, here’s a quick visual aid:

Crummy Line of Credit Balance Due

Lower Interest Rate Loan: Switch and Bait

By calling the Crummy Line of Credit’s customer service and explaining that I wanted to make a large payment, I was able to negotiate a “settlement” amount. If I had been able to pay off the complete loan balance, I would have saved an additional $359.40. If I can pay if off sooner than expected, I save approximately $5.99 per day.

For now, I’m happy with the idea that this sucker will be completely paid in full and no longer generating balloon-interest payments.

Have you negotiated lower balances or “settlement” amounts to reduce a debt? What was your experience?

Tuesday Tips, Just Another Great Post from Little House. I'm so humble.

This week’s Tuesday Tip, black-out your windows to reduce cool air from escaping. Living in a rental house with older, drafty windows has made me aware of how difficult heating and cooling a house can be without good sealant. Since I’m not going to replace the windows in my rental home, I’ve had to come up with less expensive alternatives instead.

Tip #24: Black-out your windows using drapes, blinds, shutters, or reflective film.

• Reflective film: One of the least expensive ways (besides a tube of caulk!) to reduce heat seepage is by purchasing a self-adhesive reflective film that you can cut any shape to fit your windows. It’s not the most attractive option, but it has definitely kept the heat out of our east and west facing windows. Note to self: Do not purchase a home that faces west!
• Dark-colored curtains. Curtains and drapes may sound passe, but you can still score some modern-looking curtains that are more attractive than flimsy blinds. When we first changed out our cheap, flimsy blinds, we opted for a rust-colored drape for the fore-most facing window. The curtains, along with the reflective film, minimize the amount of summer sun that bakes our computers.
• Shutters or wood/faux-wood blinds. As much as I would have loved to install shutters on the outsides of our windows to block the heat, it just wasn’t in our budget and didn’t make financial sense considering we live in a rental house. Instead, we purchased faux-wood blinds for much less. The thicker, wider levelor’s block out quite a bit of heat as compared to the less expensive, thinner metal ones.

Keeping the heat out is better for the environment.

• Reducing the amount of heat that seeps in means using the air-conditioner less often. There are still days when I need to turn on the air conditioner. However, by blocking most of the sun’s heat out, I can turn the air on later in the day running it less often. This saves electricity, which means I’m reducing my carbon footprint.

The Yakezie.com

Last week, the Yakezie.com launched it’s website with great response. Today,  a few of our members and leaders are formally introducing themselves. Every week for the next few weeks the Yakezie Leaders and members will talk about how and why they started blogging about personal finance and share their individual stories. Stay tuned for some PF fun! First up, Budgeting in the Fun Stuff.

Town A: Deodar cedars on White Oak. Remember the scene in ET when they fly over trees on their bikes? This is the street.

The Deodar cedars line the sleepy street of White Oak to the north of where I live. The trees tower many feet over the well-manicured homes, set back far from the street. The wide avenue, built to handle plenty of cars, sees but only a few with one single stop sign at the end of the block. A couple walks their small, white toy poodle down a quiet residential sidewalk covered in a blanket of pine needles.

Five miles south on the same block renowned for its cedar trees (yet are predominately lacking), I look out my window and see a beater van parked indefinitely outside of my home. A group of five men from the nearby wayside house, quietly disguised behind a large, black fence, saunter down the sidewalk. The alley where I enter and exit from my garage is riddled with graffiti of the unattractive kind.

Though only five miles apart, the scenes from my current neighborhood and the one I grew up in are worlds apart. The “Valley”, once known as a rustic get-away for the celebrities of yester-year, has grown into a hodge-podge of seedy neighborhoods intermixed with a “good” pocket every now and again. The valley is perplexing; a large, flat sprawling suburb built on a seemingly-endless grid system bordered with rolling hills and mountains. Without the obvious barriers, the cities merge into one another with barely a marker to distinguish you’ve entered into a new zip code.

But why is one town so well taken care of, while another just a few miles away without any geographic barriers, has become a dumping ground for litter, graffiti and over-grown lawns?

Due to the lack of physical barriers, cities seem to define themselves through subtle cosemetic differences: graffiti and litter,or statues, pergolas, and renovated shopping centers built to attract consumers willing to spend. Since I’m not a city counsel member, I can only assume a city’s budget and income are dependent on property tax, and the concept that the community will continue to generate income within its own city.

A few things I’ve noticed that may be directly related to the differences between these two towns (I’ll call them town A and town B) are:

Town A:

• A small, well-maintained business center reminiscent of the 1950’s. Though many stores have closed due to the recession, the landlords haven’t allowed strip clubs or Triple-X stores to open in their place. The town recently built a statue and seating area at the beginning of the 4-block district under a giant Deodar Oak to show their dedication to their small, yet clean business area. One can tell the residents pride themselves on these four blocks – very rarely do you see graffiti.
• Well maintained lawns. During the real estate boom, this area increased in price by a near 4-fold. Even though this area has been hit hard by the drop in prices, there aren’t very many homes for sale or overgrown lawns. Either people have lived in these homes a long time, or the people able to afford these homes are doing okay financially. I assume this area is financially stable.
• Renovated shopping center. Over the past few years, the city took a very old, vacant shopping center and completely renovated it making it the center shopping district complete with grocery store, home store, and plenty of fast-food restaurants. (The high school kids love it.)
• A renowned high school. It’s funny, I graduated from this very same high school many, many years ago. However, it has since turned into a well-respected charter school that is the envy of all who can’t get their kids into it.
• Movies filmed: E.T. was filmed all over Town A from the trees you see in the photo above to the homes being built in the surrounding hills in the late 1970’s early 1980’s. Fast Times at Ridgemont High car scenes were filmed in Town A’s business district.

Town B:

• A run-down business district. Back in the 1950’s, the area near my house was one of the first bustling business districts of the valley. Unfortunately, time has not been very good to this center. Riddled with graffiti, burned out buildings, and corner payday loan offices, the business district lacks a cohesive purpose.
• Over-grown lawns and vacant homes. During the bubble, prices in my area peaked over $500,000. I feel terrible for the people who purchased homes at these prices considering the area really isn’t deserving of those prices. I’m beginning to think they feel bad for themselves as well, as many have walked away from their homes.
• Corner Mini-Marts. Sprinkled at almost every busy intersection is a mini-mart. Great for a quick soda. Not so good for a community. How many liquor stores does one city need?
• Low-income apartment buildings for blocks on end. People from every economic level need a place to live. Unfortunately landlords often associate low income with low maintenance; uncared for properties quickly become the target for graffiti, broken windows, and littered lawns only further depressing an already depressed area.
• Movies Filmed: Boogie Nights was filmed on a busy street in Town B. The television show My Name is Earl was filmed extensively around my neighborhood as well. (Note the glaring difference?!)

What are the solutions for town B? Obviously, the economy picking up steam would help; fewer people leaving the area would fill the vacant homes. Home owners tending to their lawns and cleaning up the graffiti would also be a positive movement. I’ve found that if graffiti is painted over immediately in an area, the tagger usually moves on to another area that doesn’t seem to care as much.

Perhaps I need to make it a point of walking up and down my alley painting over graffiti-covered walls. Maybe I need to begin picking up litter within a 1-mile block range; my initiative alone could cause a much larger change by encouraging my neighbors to do the same. This may be my Labor Day Weekend goal.

What changes have you seen in your town? What is the solution? Is there anything you could do to help?