Quarterly Goals Review 2009 Q4
Items marked ? are ones I hope to finish before the end of December.
Items marked X* are finished, but occurred later than the designated quarter.

Q1 Goals 2009
[X*] Call will and trust lawyers friends have recommended, pick one.
[X] Fully fund 401(k): $4,125 per quarter
[X] 10% of DH's income to ESPP, to be added to his investment account
[X] Do taxes with TurboTax
[ ] Fund 2008 IRAs -- approx $10k
[X] Transfer money to SEP-IRA -- $19k
[X*] Review 529 funding, establish goal.
[ ] Review current portfolio and write down why we own each fund.
[ ] Create format for quarterly investment review
[?] Recalculate TPG (target portfolio goal) and TSG (annual target savings goal) for retirement


Q2 Goals 2009
[X*] Have initial appointment with will and trust laywer.
[X] Fully fund 401(k): $4,125 per quarter
[X] 10% of DH's income to ESPP, to be added to his investment account
[ ] Schedule annual review with stockbroker.
[ ] Perform quarterly investment review
[X] Pay fed and state 2008 taxes due
[X] Pay 2009 Q2 estimated taxes

Q3 Goals 2009
[X* ] Move house and investments into trust.
[X] Fully fund 401(k): $4,125 per quarter
[X] 10% of DH's income to ESPP.
[ ] Perform quarterly investment review
[X] Pay 2009 Q3 estimated taxes

Q4 Goals 2009
[X] Will and trust complete.
[X] Fully fund 401(k): $4,125 per quarter
[X] 10% of DH's income to ESPP, to be added to his investment account
[?] Perform quarterly investment review
[?] Review estimated tax payments in light of reduced income.

2009 Goals for the whole year
[X] Update will and trust
[X] Save 20% of our income -- 15% to retirement, 5% to investing
[X] Fully fund 401(k): $16,500
[X] 10% of DH's income to ESPP, to be added to his investment account
[ ] Traditional IRA contribution: $10k
[?] SEP-IRA contribution: 20% of contracting income
[?] Move $10k into 529 plan.
[ ] Meet TSG (annual target savings goal) of TBD
[ ] Follow up on stockbroker recommendations.

The biggest accomplishment for the year was getting our will and trust done. The house has been moved into it, but I still need to fill out the paperwork to move our investment accounts in. I also need update the beneficiaries on the retirement accounts to add the girls.

I took a quick look at our numbers for 2009 taxes. TurboTax is estimating about $31k will be owed, so we may be looking at a big refund even if I don't send in the Q4 estimated tax payment -- depends on the capital gains, I guess. (Our income is down at least $30k from last year due to maternity leave and smaller bonuses.)

It looks like our wages will come in at $161k. No idea yet how much investment income to expect -- maybe $6k dividends and $10k capital gains? We'll contribute about $16.5k to 401k and about $8.6k to SEP-IRA, so that's 15.5% of salary to retirement. Our money market fund that holds our emergency fund went up by $14k from DH selling his ESPP shares, so I guess we can say we saved 8% in addition to retirement.

I have not yet moved any money into DS's 529 plan. I'm waiting for the girls' social security numbers to arrive to open 529 plans for them. My dad generously set up DS's fund with $20k when he was born. He has not yet mentioned doing anything for the girls. While I can't imagine that he wouldn't treat all the grandkids equally, it's a bit awkward to ask him about it.

I still haven't figured out what I want to do for a quarterly investment review, beyond adding up the accounts to get our current net worth. There are so many funds and the total is substantial -- I get kind of paralyzed when I sit down to look at it. So the investment side is where I tend to fall down on the plan.

Quarterly Goals Review 2009 Q3
I wrote up this list of Goals for 2009 in February. Looks like I forgot to do my quarterly goals review in March and June! Now that it's September, let's see how we're doing. Items marked X* are finished, but occurred later than the designated quarter.

Q1 Goals 2009
[X*] Call will and trust lawyers friends have recommended, pick one.
[X] Fully fund 401(k): $4,125 per quarter
[X] 10% of DH's income to ESPP, to be added to his investment account
[X] Do taxes with TurboTax
[ ] Fund 2008 IRAs -- approx $10k
[X] Transfer money to SEP-IRA -- $19k
[X*] Review 529 funding, establish goal.
[ ] Review current portfolio and write down why we own each fund.
[ ] Create format for quarterly investment review
[ ] Recalculate TPG (target portfolio goal) and TSG (annual target savings goal) for retirement


Q2 Goals 2009
[X*] Have initial appointment with will and trust laywer.
[X] Fully fund 401(k): $4,125 per quarter
[X] 10% of DH's income to ESPP, to be added to his investment account
[ ] Schedule annual review with stockbroker.
[ ] Perform quarterly investment review
[X] Pay fed and state 2008 taxes due
[X] Pay 2009 Q2 estimated taxes

Q3 Goals 2009
[ ] Move house and investments into trust.
[X] Fully fund 401(k): $4,125 per quarter
[X] 10% of DH's income to ESPP.
[ ] Perform quarterly investment review
[X] Pay 2009 Q3 estimated taxes

Q4 Goals 2009
[ ] Will and trust complete.
[ ] Fully fund 401(k): $4,125 per quarter
[ ] 10% of DH's income to ESPP, to be added to his investment account
[ ] Perform quarterly investment review
[ ] Review estimated tax payments in light of reduced income.

2009 Goals for the whole year -- items marked * are on track.
[*] Update will and trust
[ ] Save 20% of our income -- 15% to retirement, 5% to investing
[*] Fully fund 401(k): $16,500
[*] 10% of DH's income to ESPP, to be added to his investment account
[ ] Traditional IRA contribution: $10k
[*] SEP-IRA contribution: 20% of contracting income
[ ] Move $10k into 529 plan.
[ ] Meet TSG (annual target savings goal) of TBD
[ ] Follow up on stockbroker recommendations.

With the twins coming, I will stop working on Oct 2. We will still contribute to DH's ESPP, but not all the funds from the sale of the shares will go into his stock-trading account -- we will need some of that money to replace my income while I am a SAHM.
Since our annual income will also be significantly lower than last year (DH got large bonuses in 2008, and the company probably won't give much out this year), we'll need to re-estimate our 4th quarter tax payment to avoid having a large refund.

I've decided I want to add $10k to DS's 529 plan.

I try to download all our transactions and update our YNAB budget twice a month. I'm not rigorous about it by any means and sometimes do it just once a month. Just by luck, I happened to update it on Friday, and discovered a fraudulent charge that occurred on Thursday -- $255.42 for RYANAIR. I had no idea what that company was, and neither did DH, so I called the credit card company to ask. Turns out it's a British airline, so we've cancelled the card and are waiting for the replacement. Now DH thinks I'm brilliant for catching it so quickly.

I do all of the bill paying and financial tracking for our family. I also try to track our investments (outside of DH's stock trading account) but still don't have the confidence to make any major moves. I mentioned what a PITA it is to close the credit card, becuase there are several items that automatically get billed to it, and I have to make sure to remember what they all are and get them changed when we get the new card. DH offered that he should help out more to "take the burden off you". Shudder. I can't think of anything worse than each of us trying to do part of the financial housekeeping. We'd be stepping all over each other, and neither would have the full picture of what was going on with the bills.

Then DH said well maybe he could take it over entirely. Double shudder. It's not that I don't trust him. The bills would all get paid and we'd be fine financially. He just wouldn't do it MY way. There would be no budget, it would all be his intuition based on the current checking and savings account balance. I would have no idea where all the money is going every month. We have a running joke that every time we go to make a major purchase (new car, kitchen remodel, etc.) I have a minor panic attack and have to go triple-run the numbers to make sure we can really afford it. He just looks at the account balances and has been right every time. I'm not sure that he would do any long-term planning, looking at 401k and 529 and so forth. He's had $20k in his stock trading account for many months now, and wants to add more, but hasn't researched any stock or made any trades in a long time.

And the paper clutter...he tends to open the mail and just leave it piled on the counter, envelopes and junk flyers included. I immediately throw the excess into recycling and place the billing statements into an accordian folder. (Well, to be honest, I do have a "to file" pile of bills that sits ON TOP of the accordion folder...)

I have to admit, I have a bit of a control streak in my nature. I can't stand the idea of not being the one to manage the money. I get that DH feels out of touch with our finances, and have promised to sit down and go over everything with him -- all the accounts, passwords, automatic billing, etc. I've tried to get him to sit down with me and go over the budget every two weeks after I update it, but I can never seem to catch him when he's in the mood to look at it, so I don't know when it will actually happen. But hand over the financial duties entirely? No way...

We do have the management of investments split. I manage the money in my IRA's and taxable investment account, and DS's 529 account (a gift from my dad). He manages the money in his 401k, IRA's, ESPP/stock option account, and a stock trading account. We have a joint money market that holds our emergency fund and joint checking and savings accouts. My investment accounts are worth about twice of his because I started my 401k earlier and contributed more, and bought a house before we married that almost doubled in value. His 401k should eventually catch up to my IRA's due to the years that I am either not working or am working part-time. He's chosen more specialized funds in his IRAs (emerging markets, Asia, etc.)to balance out the more conservative/mainstream mutual funds that I have in my accounts.

When I started my blog 2.5 years ago, one of the first goals I listed was to get our wills updated. Talk about procrastination! We finally met with a lawyer yesterday, and should have everything signed in a month. I had set up a will and trust before we married, and DH had never set anything up. At one point I bought Quicken Will & Trust and we went through the whole program, but didn't actually sign anything. I later saw some details about A&B trusts either here or somewhere else online that made me realize that it was likely I was making some mistakes that would have big tax consequences.

The lawyer was recommended by a friend, and charged $2,000 to do both wills, a living trust, power of attorney, and healthcare directive.

I learned a few interesting things from meeting with the lawyer. The current tax law that doesn't tax estates under $3.5M is due to expire after 2010, and is likely to go back to taxing estates over $1M. Since our net worth is right at $1M I hadn't worried about it. It turns out that any insurance payouts are included in your estate, and the full value of your home is taxed, not just the balance after the mortgage is paid. This brings our estate up to $2.6M!

If we hadn't done anything and both DH and I were killed in a car crash, roughly $600k of our estate would go to taxes! With the trust he is setting up, that will go down to about $200k. It's funny, I don't get too upset at the idea that when my parents pass away the government will take some of my inheritance, but when looking at my assets, it feels like they're planning to take food out of my minor chilren's mouths!

There's another quirk about life insurance that I need to look into further. Apparently if you have individual term life insurance there is a way to shelter it within the "B" part of a trust so it won't be taxed. Group life insurance that you get through your employer can't be sheltered this way. DH gets $400k from his employer, and then we each have $500k of "group term life" from IEEE (a professional organization for engineers.) The rates we're getting for the IEEE insurance are really cheap, something like $150 every six months for $1M in coverage. But I think it may be the same type as what an employer offers. It may make sense to pay more for individual term insurance that can then be sheltered and reduce the tax burden of the estate.

After tracking our spending for August, I took a glance at the various accounts we have at E*Trade. We sure have a lot sitting in cash, and getting lousy interest rates:

Money Market: $33k @ .4%
DH investment: $20k @ .4%
Savings: $17k @ .8%
Checking: $ 7k @ .4%

I like having everything in one place so I want to stay with E*Trade, but I think it's time to look at some better options for how we are holding the cash.

The money market holds our emergency fund ($19k) and the proceeds from a recent sale of ESPP stock and stock options ($14k). I'm thinking perhaps we should move the emergency fund into CD's -- it's only to be touched in a major emergency like a job loss.

DH has his own account for stock trading. He just hasn't been active lately and is letting it sit in cash. That's fine, his choice. I just wonder if there are more money market options where it could sit and earn more interest until he spots a stock he wants to buy...

The savings account currently holds money for the following:
* $4k money accruing for the semi-annual bills (property tax, insurance, etc.)
* $4k money accruing for estimated tax payments
* $3k reserve to cover minor emergencies (car repair, home repair, medical deductibles)
* $6k short-term savings (Christmas, birthdays, vacation fund, etc.)

The balance in the savings account has fluctuated between $7k - $33k in the last year. I don't want to tie it up in anything where I have to remember to transfer balances around when big bills come due...

The checking is of course just a holding place for all our monthly spending. Paychecks come in, a portion gets sent to savings, and the rest flows out to pay bills. Any interest earned here is just a bonus.

Just checked the E*Trade CD rates -- not very promising:
Term Length 3-month 6-month 1-year 1.5-year 2-year 3-year 5-year
APY1
3 month: 0.15%
6 month: 0.20%
1.0 year: 0.45%
1.5 year: 0.55%
2.0 year: 0.65%
3.0 year: 0.75%
5.0 year: 1.40%

Any suggestions?

DH invests 12% of his salary into the company employee stock purchase plan (ESPP). Every six months, the plan purchases shares. My understanding is that they look at the market prices on the first and last day of the plan period, and then take an additional 15% off the lesser price.

The latest period closed on 7/31, and was one of the best periods we've seen. The ESPP purchase price was $29.99, and the current market price is $46.97. This period, DH put in $7827, and if he sells now will realize a gain of $4432. 56%return for a six month investment!

Of course this isn't typical, but in general we can count on a 15% return, although there is always the risk with stocks that a very sharp downturn could turn it into a loss in the few days between purchase and when the shares reach our account.

The one wrinkle is taxes. We could hold it for two years, and then only have to pay long-term capital gains tax. Since it's a high-tech stock, this is kind of a risky move. If we sell it within a year, we'll pay income tax on the 15% discount, and short-term captial gains on the rest.

It does make it a little more complicated when we go down to one income, since I need that $1300/mo to make our budget work. If we sell immediately, I'll set aside $7800 and treat it for budget purposes like $1300/mo income. If we don't sell immediately, I'll "borrow" the money from the emergency fund and repay it when we sell.

DH and I need to talk about what do do with the $4400 gain. After setting aside some for taxes, the rest could either go into his stock-trading account, or into our vacation fund. He wants to take a big trip (possibly a Mediterranean cruise) when we turn 40 next year, but I don't currently have funds allocated toward that, nor room in the budget to save the amount we'd need.

Other good news -- with the stock market recovery, our net worth just topped 1 million again.

The twins are due in November, and I'm planning to quit working Oct 1, so I've been looking over our budget to figure out where to cut back. I think we need to cut about $675 per month to make it work. Here are some numbers based on averages for Jan-Jun this year.

DH pay after taxes $7900
401(k) $1318

Needs Accruing (Total $875):
Car Ins $560 Jun/Dec $93.00
Car Regis. $440 May $40.00
HOA $105 quarterly $35.00
Home Ins. $770 Apr $66.00
IEEE dues. $180 Nov $15.00
Life Ins $150 Mar/Aug $25.00
Property Tax $3600 Nov/Mar $600

Needs/Contracts Monthly (Total $3250):
Cable TV $45.00
Cell Phone $77.00
Electric & Gas $146.32
Gas Car $180.62
Groceries $488.94
Home Security $28.99
Mortgage $1,990.00
Phone/DSL $84.61
Water $210.00

Vacation (Total $200):
In-laws overseas $0.00
Relatives USA $100.00
USA travel $100.00

Wants Goals (Total $150):
Charity $600/yr $50.00
Christmas Gifts $100.00
Big Purchases TBD

Wants Montly (Total $2800):
BevMo $43.65
Cash $237.00
Cleaning $200.00
Dining $278.64
Home Depot $200.97
Kid stuff $173.60
Misc $663.22
Netflix $25.95
Preschool $380.00
Target $318.03
Trader Joe's $200.00
DH Clothing/haircut $50.00
Zetta Clothing/haircut $50.00

Total Income $7900
Total Savings $1300 (16%)
Total Needs $4125 (52%)
Total Wants $3150 (40%)
Shortfall $675

This doesn't account for the two extra paychecks (DH is paid biweekly) because it's easier to just stash the extra than to try and spread that income out over several months. We'll probably set it aside for the next trip to visit the in-laws overseas. I'm also assuming DH's withholding is correct and my pay until Oct will cover the estimated taxes for 2009 -- if not, they will come out of the emergency fund and get repaid when we get the refund.

Under Needs, the first place to cut is Groceries -- almost $500 for 3 people is crazy, I think there must be a lot of impulse purchases there (and produce that goes bad and is thrown away). I place Trader Joe's under Wants -- that's our fun food like favorite cereals, wine, good cheese. I hate to cut that out, but it's another $200.

Phone/DSL breaks down as follows:

Internet: $25
Local measured rate: $13
Plan + calls to Australia: $47

The need for a landline is driven by calling DH's parents in Australia. The local service is nice to have in case cell phone towers are down due to wildfires or earthquake. We could add international to our cell phones for $4 + taxes + $0.23/minute. Our current service is $7 + taxes + $0.09/minute. Last month we used 234 minutes. We use skype occasionally, but would actually rather talk on a phone than do the video calls. I should look into calling cards...

Most of the cuts need to come from Wants. I'm going to do my best to cut elsewhere so I can keep the cleaning lady! From our experience when DS was born, I know that Dining and Home Depot will go down on their own (no time to eat out or work in the garden), and that Target is likely to go up due to diapers and formula (I breast fed as much as I could produce but still had to supplement.) We're not going to do cloth diapers with twins, so don't even go there!

Kid Stuff is clothing/haircuts for DS, fun classes (music, swimming, etc), toys, and small misc baby items (extra bib, pacifier, saftey latch etc).

The areas that always get me are Misc and Target. It's the impulse purchases that I really have to watch. $20 here and there really adds up. Our fun money also gets lumped into Misc -- a model rocket here, a massage there. Then there are those one-off but necessary purchases -- stamps, TurboTax filing fees, over-the-counter medicine, annual fee on a brokerage account. I wonder if splitting out these catagories would help us stick to them???

The other place this budget falls down is that I haven't set aside anything for Big Purchases. An example would be where we just spent $600 for a patio set. I should set aside a set amount and let it build up so that we have it available when we are wanting the next big item.

I guess I just really have to move from a tracking mode to a true budgeting mode. Set limits on the discretionary spending and stick to them.

I finished the taxes a couple of weeks ago, but only now am getting around to blogging the results.

Gross Income: $244k
Adjusted Gross Income: $229k
Taxable Income: $157k
Total Federal Tax: $44k
Payments: $38k
Federal Tax due: $6k
Effective Federal Tax Rate: 13.94%

State Taxable income: $180k
Total State Tax: $11.6k
Payments: $12k
State Tax refund: $397
Effective State Tax Rate: 9.3%

We paid 110% of last years tax and so did not have a penality. California is holding on to refunds this year so I showed them by applying the refund to my 2009 estimated tax payments.

The difference between gross income and adjusted gross income came from self-employment tax adjustment ($5k) and IRA-SEP contribution ($14.5k). I'm not sure how it figures into the numbers on the W-2, but DH also contributed $15.5k to his 401k.

Income was as follows:
DH salary: $120k
DH bonus: $20k
DH ESPP sales: $5k
DH stock options sales: $6k
My business income: $77k
Dividends: $9k
Capital Gains: $4k
Interest: $500

DH did same-day sales on his employee stock purchase plan and stock options, so they were taxed as income. With the stock market so crazy it seemed better to take a profit immediately instead of holding the stock for a year. We paid more taxes, but didn't run the risk of losing money on the stock.

Here are our deductions:
Medical expenses: $15.7k
State income taxes: $14k
Property taxes: $6.6k
Mortgage interest: $19.6k
Charity: $500
Total Deductions: $56k

Self-employment tax was $11k.
We got hit with AMT this year -- $2k.

We recaptured $9.5k from AMT carryover, and have $9.5k credit left to carryover to next year. (In 2000 I had to pay $40k in AMT due to selling some stock options and holding the stock, and I've been slowly recapturing the credit ever since. Looks like next year or so I may finally finish recapturing it.)

For next year, to avoid penalities we have to pay $38k. DH's withholding is going to be about $13k, so our federal estimate taxes will be $6,300 per quarter.

Our state estimated taxes are $12.8k. DH's withholding comes to $4,875. I'm not sure why the payments are different amounts, but Turbo Tax said our state quarterly payments will be $2000, $2400, $1600, and $1600.

It's hard to predict what the actual 2009 taxes will be. DH's company gave big bonuses last year instead of pay raises. This year pay is frozen and there are no bonuses, so that's at least $20k less in income. My income is likely to be $5k less because we're taking a 3 week vacation. It's likely the stock options will be underwater, so no income there. It's completely unpredictable what dividends and capital gains will be. We won't have the medical deduction next year. AMT recapture will be somewhere between $5-$10k. Our taxes have gotten too complicated to get a good estimate from online calculators -- I never know what's going to happen until I run the final numbers through Turbo Tax.

There are rumors that there may be layoffs at DH's employer in 3 months time. We don't think he is likely to be affected because he is in an engineering group designing a core product -- the support staff and less central projects are likely to get hit first. But it seems a good exercise to do a financial fire drill to see what steps we would take if he did get laid off. I estimate in this market it would take DH 6-12 months to find a new job in his field. CA has extended unemployment benefits to 10 months.

Unfortunately I lost the last two years of budget data due to the death of my old laptop, so I have to use my memory and our January spending (rather than an average over many months) as a starting point.

Income
Unemployment benefits: $1,800
My gross income: $5,600 (20 hr/wk)
40% set aside for my taxes: $1,870
My takehome (after taxes): $3,730
Total Income: $5,530

Needs
Childcare: $1200
Monthly Needs: $3500
Monthly Accruing: $830
CORBA or health insurance: $600 (estimate)
Needs Total: $6,130

Monthly Needs includes: car loan, cell phone, electricity/natural gas, auto gas, groceries, home security fee, mortgage, phone/dsl, water, and cable TV. (Yes, I know cable is not a need, but we won't cut it unless our situation gets truly desparate, so this is where it lives in the budget.)

Monthly Accruing includes: car insurance, car registration, HOA fees, home insurance, life insurance, property tax

I'm going to assume the layoff happens after we've paid our 2008 taxes and made 2008 IRA contributions, and so subtract those from our current cash. I also subtracted the money already accrued for property tax, etc., because it will be spent as those bills come due.

Cash Available
Checking/Savings: $17,000
Emergency Fund: $14,000
DH Investment Account: $23,000
Total Cash: $54,000

So with no changes, if we both lost our jobs, our cash will cover almost 9 months of purely needs spending. If only DH loses his job, my takehome is $2400 short of our needs. If I increase to 34 hr/wk, my income can cover the needs without digging into our cash reserves.

Realistically, our wants won't go to 0 so let's take a look at what we're currently spending and an estimate of what we might initially reduce it to.
Monthly Wants current/reduced
Christmas savings: $100 reduce to $50
Vacation fund: $700 to $0
Cash: $200 to $100
Cleaning: $180 to $180
Dining: $300 to $100
Home Depot: $100 to $50
Kid Stuff: $150 to $50
Misc: $600 to $200
Netflix: $25 to $25
Preschool: $165 to $165
Trader Joes: $150 to $0
Clothing/Haircuts: $300 to $100
Total wants: $2970 reduced to $1020

So it would take an extra 6 hours of work per week for me to meet a greatly tightned wants budget. Even though DH could theoretically do the childcare and cleaning while he's looking for a job, I wouldn't cancel these immediately. The cleaning lady really needs this job, and DH would need distraction-free time to search for a new one. The babysitter is pregnant, due in July, so it would make sense to just not replace her at that time.

So here's the plan if DH gets laid off:

Immediately: Increase my work to 30 hr/wk, ask manager if I can increase to 40 hr/wk. DH begins looking for job locally. Tighten wants spending as outlined above.

3 months: don't replace babysitter, consider letting cleaning lady go. Tighten wants spending further.

6 months: recalculate estimated taxes for the year, set aside less.

9 months: DH starts looking at jobs in other cities.

I decided to reformat my 2009 goals list to make it quarterly. Hopefully this will motivate me to check it quarterly, instead of waiting until the end of the year.

Q1 Goals 2009
[ ] Call will and trust lawyers friends have recommended, pick one.
[ ] Fully fund 401(k): $4,125 per quarter
[ ] 10% of DH's income to ESPP, to be added to his investment account
[ ] Do taxes with TurboTax
[ ] Fund 2008 IRAs -- approx $10k
[ ] Transfer money to SEP-IRA -- approx $15k
[ ] Review 529 funding, establish goal.
[ ] Review current portfolio and write down why we own each fund.
[ ] Create format for quarterly investment review
[ ] Recalculate TPG (target portfolio goal) and TSG (annual target savings goal) for retirement


Q2 Goals 2009
[ ] Have initial appointment with will and trust laywer.
[ ] Fully fund 401(k): $4,125 per quarter
[ ] 10% of DH's income to ESPP, to be added to his investment account
[ ] Schedule annual review with stockbroker.
[ ] Perform quarterly investment review
[ ] Pay fed and state 2008 taxes due
[ ] Pay 2009 estimated taxes

Q3 Goals 2009
[ ] Move house and investments into trust.
[ ] Fully fund 401(k): $4,125 per quarter
[ ] 10% of DH's income to ESPP, to be added to his investment account
[ ] Perform quarterly investment review

Q4 Goals 2009
[ ] Will and trust complete.
[ ] Fully fund 401(k): $4,125 per quarter
[ ] 10% of DH's income to ESPP, to be added to his investment account
[ ] Perform quarterly investment review

2009 Goals for the whole year
[ ] Update will and trust
[ ] Save 20% of our income -- 15% to retirement, 5% to investing
[ ] Fully fund 401(k): $16,500
[ ] 10% of DH's income to ESPP, to be added to his investment account
[ ] Traditional IRA contribution: $10k
[ ] SEP-IRA contribution: 20% of contracting income
[ ] Move TBD into 529 plan.
[ ] Meet TSG (annual target savings goal) of TBD
[ ] Follow up on stockbroker recommendations.

I decided to look back at my 2008 goals and see how I did. (Hmmmm...sounds like I need to involve DH more so that in 2009 it will be "our" goals and the review will be how "we" did!) Although I know our gross income for the year, I won't really know our net income until after we do the taxes. (My part-time income is about double of last year, and DH got a big bonus, but our investment income should be less, so it's hard to estimate what will happen.)

Goals for 2008

Overall Goals
[?] Needs/Wants/Savings at 50/30/20%
[ ] Target Portfolio Goal $4.3 million
[X] Target Annual Savings $13,200

Using my best guess at our take-home, our needs were 40%, and our savings 21%. Portfolio is currently about $500k, and net worth $840k. If we can get 3 doublings, we'll meet the portfolio goal and retire by the time DS finishes college.

Investing:
[X] DH's 401k at 10% (12% stretch goal)
[?] Max out IRAs ($10k)
[?] Non-retirement contribution $3k
[ ] Net worth increase by $40k
[ ] Portfolio return of 12%

We maxed out the 401k. The IRA and taxable savings will depend on the tax bill -- I have $19k set aside, so anything left over will go into the IRA's first. (We don't qualify for ROTH.)

As for increasing the net worth by $40k and getting a portfolio return of 12%, all I can say is: HA HA HA HA HA HA HA!

Short-Term Goals:
[X] Taxes due ($10k)
[ ] Will and Trust ($2000)
[X] Overseas airfare to visit family ($4500)

We got a deal on the airfare -- only $2600! I actually saved $5000 over the course of the year, and moved the extra into another vacation fund.

To Do List:
[X] update W-4 (federal and state)
[ ] update wills and trust
[X] invest IRA rollover money
[X] review life and disability insurance
[ ] earthquake/disaster box
[ ] move $40k from taxable account to 529 plan

Gotta get those wills updated -- I've been procrastinating for 3 years now. 529 plan is currently about $22k (given to DS from my dad), I just need to figure out how much top-up will be needed to completely cover college costs.

My neighbor is a real estate agent, and a few days ago he emailed a bunch of his friends and clients to say that interest rates had just taken the biggest single-day drop he'd ever seen, and he thought it possible that conforming loans (< $418k) might briefly go below 5%.

It sounded interesting, so I contacted the mortgage broker he recommended. She said that currently a 30-year fixed is 5.375, with closing costs of $2k-$3k. She asked me at what rate we would be interested in refinancing.

We are 5.5 years into an ARM loan that is fixed at 5.125 for 10 years, and then can only adjust 1% max per year. My first instinct was to go ahead and lock in at 5.375. Then I decided to play around with some mortgage calculators:

Payment calculator:
http://www.hughchou.org/calc/missing.cgi

Loan comparison:
http://www.hughchou.org/calc/loancomp.cgi

It turns out that at a fixed rate of 5.375, we'd pay an extra $5,500 over the next 4.5 years (plus $3k for closing costs), and then it would take another 3 years before we'd be better off than leaving the $3k in a savings account earning 3%. (I assumed the adjustable rate stayed at 6.125). So it doesn't seem worth doing right now.

Of course, the story might be different if interest rates spike sharply 5 years from now, so that we ended up paying 6.125, then 7.125, then 8.125, etc.

I haven't played with this ARM calculator much yet, because I need to look up some of the details like which index we're using:

Advance ARM calculator:
http://mortgage-x.com/calculators/pay_option_arm.asp

The worst I could do with the calculator was raise the index by .5 per month. Here's how the payments might go up in that case:
Jun 2012: $2,254.18 (5.125%)
Jun 2013: $2,412.80 (5.946%)
Jun 2014: $2,605.85 (6.946%)
Jun 2015: $2,798.56 (7.946%)
Jun 2016: $2,990.05 (8.946%)
Jun 2017: $3,179.47 (9.946%)
Jun 2018: $3,212.48 (10.125%)

The worst case in 2018 looks scary, but I feel pretty comfortable sticking with the current loan through 2014. There's a chance we might decided to move to a better school district between now and then.

If a fixed-rate loan went down to 4.75, on the other hand, we'd break even after 2 years, and it would be worth it to refinance.

Here's another ARM vs fixed calculator:
http://www.dinkytown.net/java/MortgageArmvsFixed.html

I took advantage of Morningstar's open house to try out the portfolio tools and x-ray. It will take me just as long to manually enter it in instant-x ray (which is free) each time so I'm not going to pay $160/yr for the premium membership.

Here's our current allocation according to x-ray:
U.S. Stock: 34%
Foreign stock: 46%
Bonds: 9%
Cash: 10%
Other: 1%


Here's the target I came up with:
stock: 75%
bond: 10%
cash: 5%
real estate: 5%
commodity: 5%

So I'm not too far off. I've decided I'm only going to rebalance my portfolio if it strays more than 10% from my target, and not at all when the market is going crazy like right now. Instead of selling stock to invest in REIT and commodity, I'm going to direct new investments in that direction. I have $9k in cash in the investment accounts right now (which is only about 2% of the portfolio) -- so I'll start shopping around for a REIT. The rest of the cash is from mutual fund managers deciding to hold cash. I figure I'm paying for them to use their judgement on that, so I won't argue with them.

The style allocation for the stock matched very closely with the Wileshire 5000.
value blend growth
large-cap 26.5 27 23
mid-cap 5 4 9.5
small-cap 1.5 1.5 2

The international stock has a large-ish bet on Asia:
US & Canada: 45%
Europe: 26%
Japan: 3%
Latin America: 5%
Asia & Australia: 16%
Other: 5%

My average mutual fund expense ratio is 0.69%, which I was pleased to see.

Starting to think about my goals for 2009:
[ ] Update will and trust.
[ ] Save 20% of our income -- 15% to retirement, 5% to investing
[ ] Fully fund 401(k): $16,500
[ ] Traditional IRA contribution: TBD
[ ] SEP-IRA contribution: TBD.
[ ] 10% of DH's income to ESPP, to be added to his investment account
[ ] Invest $5-$10k in a REIT fund.
[ ] Move TBD into 529 plan.
[ ] Review current portfolio and write down why we own each fund.
[ ] Meet TSG (target savings goal) of TBD
[ ] Investment return >= TSG
[ ] Have annual review with stockbroker. Follow up on recommendations.

I like the way Merch was very specific and quarterly about his goals, and would like to convert my list to his format.

Notes:
Will and trust: DH doesn't have a will, my will still names the wrong person as guardian, my trust (which I set up instead of doing a pre-nup) needs to be converted into a joint or AB trust, and our house needs to be moved into the trust.

SEP-IRA: To take advantage of the tax break, I currently sell shares in my taxable account and contribute to the SEP-IRA. It's really just moving existing money around rather than investing new money.

ESPP: Buying stock through the employee stock purchase plan is a guaranteed 15% return on the money -- you get the stock for 15% less than the market price on the purchase date. In some ways the ESPP is an extra emergency fund for us because if DH were to get laid off we get the current balance back immediately. DH usually sells the stock immediately. In 2008 we used the money for some big one-time purchases. My goal for 2009 is that this year the cash will go into the stock-trading account that he is free to invest as he pleases. (This account is our solution to our big disagreements about investing philosophy and strategy.)

529 plan: My father set up a 529 for my son when he was born. The intial investment was $20,000, and he has added $1,000 every year on his birthday. (Thanks, Dad!!!) I just need to figure out how much I should add so that it will fully fund my son's education.

It's no surprise that all of our investment accounts have been hit hard by the recent stock market plunge. This morning I decided to bite the bullet and see how bad the fallout was. It turns out I'm no longer a millionaire -- net worth is down to $840k. All things considered, I can't complain -- it was just fun to call myself a millionaire while it lasted. I am confident the stock market will recover over the next few years and we will be in good shape for retirement 20 years from now. I guess my new goal can be to reach $1M net worth again by the age of 40.

I'm sure I'm making our money management more complicated than it needs to be. About twice a month I sit down for an hour or so to get the budget caught up to our spending. We're pretty comfortable financially so I don't have to keep as close an eye on the day-to-day spending as many do, but I like to have a rough idea of where we are so I can pull back the discretionary spending before it gets too out of line. Unfortunately this month I've made a large purchase which, although I know we have the money to cover it, is throwing my accounting system for a loop.

The problem is that I've got the cash money (non-investment) divided up into so many accounts (3 checking, 2 savings, 1 money market), and the budget divided into so many catagories (10 master catagories, 46 line items) that it sometimes gets tricky to confirm that the budget and the total amount of money is in sync. I'm in the process of consolidating the checking and savings accounts, so that should help matters significantly. On the budget I really like having the granularity of all the line items (for instance separate lines for phone, electricity, water rather than a single line for utilities), so I don't think I will change that much.

I use YNAB as my budgeting tool, and while on the whole I highly recommend it, you can't verify at a glance that the register and budget are in sync. They are disconned by design (which is helpful for people snowballing a large cc debt), but if you're not careful the amounts in the budget and the register can get out of sync. I finally set up a spreadsheet where I list all my account balances, add up the budget numbers and calculate the difference. The large purchase is throwing everything off because it ought to be paid for by money that is currently outside the budget software. According to the software I have used up all my primary income for August and am $3k overdrawn.

Currently we have $38k cash in hand, and a $17k credit card bill to pay in full this month ($13k due to the large purchase.) We normally have $10-$12k coming in each month. I need about $7k/mo to cover normal montly outflows. I save $835/mo toward semi-annual purchases, and set aside 40% of my contracting income each month toward taxes.

Currently my budget includes the following balances that absolutely need to stay in savings:
Taxes: $9k
Semi-annual bills: $5k
House/car repair reserve: $1k

I also have $9k earmarked toward near-term goals -- vacation, Christmas, updating the wills.

$4k of cash needs to go to last month's credit card bill, and we will spend our usual $7k this month.

I still haven't decided exactly where the money for $13k purchase is coming from. The original plan was to sell stock from my taxable investment account (currently $350k). But the market's been down and I've been debating about trying to cash-flow it instead, repaying my cash accounts when the market is a little more favorable. DH's ESPP just made a purchase, and the stock is currently on the high side, so another option would be to sell, which would bring in $12k. I don't track the investment account or the ESPP in the budget, so either way would represent an inflow.

I think I have enough on hand to be safe paying the cc bill out of current cash, but I haven't figured out how to represent paying it and then paying the budget back. Loose ends like this really bug me!

When I was working full-time I always had life insurance through my job benefits. I don't remember if I took the basic 2x or 3x salary or bumped it up enough to cover the mortgage. When I became a SAHM that of course ended.

DH has insurance for 3x salary through work, and also a group term policy through IEEE (a professional organization for engineers.) The IEEE insurance is a great bargain, only $77 every six months for $500k coverage.

DH originally felt funny about taking insurance out on me, because he felt he'd be able to provide for our son on his own with no problem. Then we attended a will and trust seminar where they made the point that if both parents die you should leave enough insurance to pay for the guardian to raise your kids, and that provided a rationale he felt good about.

So I've had adding spousal insurance on the to do list for a long time now. IEEE actually called one day and instead of blowing off the salesperson like I would normally do I asked for a quote. Since I'm working again (software contracting), I could join IEEE myself and take out an individual policy, or go on my husband's policy as a spouse, so I asked her to quote it both ways. She said she'd never been asked that before. It turned out that it was about $15-$20 cheaper to be a spouse, plus I wouldn't have to pay dues (although I might rejoin someday anyway if I decide to use the club for networking purposes.)

I think my policy is about $67 every six months for $500k coverage -- what a no-brainer! I should've taken care of this years ago.

So if DH dies, there's enough to pay off the house and income replacement for 4 years, and if I die he can pay off the house and have an extra 2 years of my current income. Plus of course we'd inherit each other's IRA accounts. $2M (half from insurance, half from our current net worth) should be plenty to raise our son if we both die.

I really should get a quote on long-term disability insurance as well. I think DH has 66% replacement coverage through work. Not sure if I am able to get it while working as a contractor.

This has been on my "to do" list since paying estimated taxes in mid-June, and I finally had the time and inclination to sit down and make an attept at it. I'm still in the process of figuring out exactly what to look at in these quarterly reviews. As usual, I find that I end up spending the majority of the time creating a new spreadsheet and manually typing in details that I later decide aren't really what I should be looking at.

I've been slowly making my way through Morningstar Guide to Mutual Funds, and taking notes on each chapter. I find it to be far better than the "learning" information on the website, which seems to be generic handwaving.

So in an attempt to understand what I currently own, I created a spreadsheet wtih the following columns (picked from my notes from the book):

* fund
* symbol
* account
* style
* stars
* sectors
* % assets in top 10
* asset allocation
* benchmark
* trailing annualized return (3, 5, 10 year)
* benchmark return
* 3 yr standard deviation
* expense ratio

Then I looked up each fund I own and copied the info. Putting in the sectors and the returns took the bulk of the time -- what a lot of typing! Not sure this was worth the effort. I noticed a little bit of duplication -- two large-value, and two world large-value funds -- but the holding in the second fund in each case were fairly small.

The only conclusion I came to was that, yes, American Funds has low expense ratios.

Next I made another worksheet for the current hodlings:

* fund
* symbol
* account
* shares
* current value
* amount invested
* amount withdrawn

My basis info isn't available on my brokerage website, probably because the funds were originally purchased directly from American Funds rather than through the brokerage. I later transfered them to the brokerage so everything would be on one statement. I need to call my broker and see whether the basis info can be obtained and added, or if I need to go back through 15-20 years of statements to figure out the basis for each fund.


Finally I went to Morningstar and used instant x-ray to get an overview of the whole portfolio (including DH's funds). The asset allocation is currently:
Cash 9.47
US Stocks 35.93
Foreign Stocks 43.51
Bonds 10.57
Other: 0.53

Next time, I'd like to work out a way to streamline transferring the current holding numbers from the brokerage to the x-ray tool.

I'm considering eventually putting a 5-10% stake into REITs, but that's another learning curve in itself! My thinking is that real estate is an asset class that moves independently of the stock market, and the current bust may make the next few years a good time to invest.

The stock style is currently
size:value/blend/growth
large: 24/29/23
mid: 6/4/7
small: 2/2/3

Going forward I think I want to add more small- and mid-cap exposure.

The Stock Sector percentages were mostly close to the numbers for the S%P 500. Nothing struck me as terribly high, although I have no real opinions on which sectors should be 5%, 10%, or 15%.

World Regions:
US & Canada: 48.44%
Europe: 27.84%
Japan: 2.39%
Latin America: 2.82%
Asia & Australia: 14.45%
Other (Africa): 4.06%

Average Mutual Fund Expense Ratio: 0.68%

Stock Stats (ratio to S&P 500):
Price/Prospective Earnings: 13.27 (0.99)
Price/Book Ratio: 2.10 (0.91)
Return on Assets: 8.80 (1.03)
Return on Equity: 21.35 (1.00)
Projected EPS Growth - 5 yr% 13.00 (1.14)
Yield % 2.71 (1.25)
Avg Market Cap ($mil): 24,233 (0.49)

I'm not sure what to make of the Stock Stats section, but it seems to me to indicate that most stats are on par or a little better than the S&P 500.

As I was tracking our budget in YNAB, I grew concerned that we seemed to be spending all of the $2,000 net that I'm bringing in each month. We hope to have another child, and I plan to stay home full time again for a year or two, so it's important to me that the extra money goes to things that can be cut out later.

It was really bothering me -- why wasn't there a big surplus in the budget -- until I realized that because my income looked pretty steady we decided to increase my husband's 401k contribution from 6% to 10%, and to contibute another 10% to the employee stock purchase plan (which if you sell the shares immediately is a guaranteed 15% return.)

So about $1600 is really going to savings, and the other $400+ is funding vacations, trips to visit family overseas, and the ever-present Misc line of the budget.

Since my husband and I are both in a highly-paid profession (engineering), when we are both working we get hit at taxtime by the marriage penalty and the phaseout rules. I took some time off to be a SAHM during 2006 and half of 2007, then started doing contracting for 20 hours a week. I thought it would be really interesting to see the impact that the second income had on our taxes this year, so I saved a "what if" file in TurboTax and deleted all my business income.

I worked for 6 months, and earned $23,735. I can shelter $4363 of this in a SEP-IRA.

Our AGI increased by $17,477, our deductions decreased by $240, our federal tax increased by $7,877, and our state tax increased by $1625. This makes the marginal tax rate on my income 41%. The other big impact is that we are no longer eligible to contribute to the ROTH IRA.

I paid $1963 to a babysitter for 3 months at 10 hr/wk. (I increased her hours to 20 hr/wk in January).

So altogether our net income from my working was $12,030 -- an extra $2,000 per month. Let me tell you, an extra $2k makes the budget feel a lot looser!

After over a year of having this list in my summary, I've finally checked off one item!

Financial To Do
[ ] update wills
[ ] invest IRA rollover money
[x] stock basis into Quicken
[ ] annual review with broker
[ ] review life and disability insurance
[ ] earthquake/disaster box
[ ] move $40k to 529 plan

I finally bought the latest Quicken, downloaded all our investment info, and manually plugged in the basis for my mutual funds. Not sure why the basis didn't download as I was setting it up, but no matter. Now at least going forward I can try and use Quicken's analysis tools to look at the portfolio. (I tried using the Morningstar x-ray tools, but couldn't get it to save properly.) My goal is to review it quarterly, using the estimated tax deadline as a prompt.

Currently we have 10 different mutual funds, all American Funds, in 3 accounts with a full-service broker (taxable, my IRA, and my ROTH), and then 3 more accounds with a lot of cash in Etrade (taxable, DH's IRA, DH's ROTH), DH's current 401k, and I'll soon open a SEP-IRA.

Then we have 5 bank accounts -- checking, savings, and business with Wells Fargo, and checking and savings with Etrade. It's too much, really. I moved most of our checking/savings money to Etrade last summer, but haven't finished the process of cleaning up the old accounts.

I've decided to manage our budget and checking/savings accounts exclusively with YNAB, and only keep investment info in Quicken. I've been using YNAB for about 6 months now and am very pleased with it.

DH did a bunch of 401k rollovers into his IRA, but hasn't invested the money yet. Hopefully we can find the time to make some decisions on that money soon! It would be nice if that were the next box to get checked off...

Good news after our first pass through TurboTax. I had feared we were in big trouble after under-withholding CA state tax, and did what I could by sending in a big check for estimated state taxes on Jan 17. Right now it looks like we will owe about $1000 in federal taxes, and will get a rebate from the state for about $1200. The penality was only $36.

I've got some stock basis to figure out, and also need to open a SEP-IRA, so the news may get better yet.

It was kind of interesting to do a what-if to see what would've happened if I hadn't started consulting. We would've had very large refunds -- $6,600 federal and $3,300 state.

Fiancial Goals for 2008

Overall Goals
[ ] Needs/Wants/Savings at 50/30/20%
[ ] Target Portfolio Goal $4.3 million
[ ] Target Annual Savings $13,200

These targets come from the books All Your Worth and The Complete Idiot's Guide to Getting Rich.

Investing:
[ ] DH's 401k at 10% (12% stretch goal)
[ ] Max out IRAs ($10k)
[ ] Non-retirement contribution $3k
[ ] Net worth increase by $40k
[ ] Portfolio return of 12%

We've recently increased DH's 401k from 6% to 10%. Once that's comfortable we'll try for 12%. His employer has a match all the way up to the max contribution ($15,500)!

Short-Term Goals:
[ ] Taxes due ($10k)
[ ] Will and Trust ($2000)
[ ] Overseas airfare to visit family ($4500)

(So far I have $9500 set aside for the taxes, and $1500 for the wills.)

To Do List:
[ ] update W-4 (federal and state)
[ ] update wills and trust
[ ] invest IRA rollover money
[ ] review life and disability insurance
[ ] earthquake/disaster box
[ ] move $40k from taxable account to 529 plan

Notes
To set up the Target Portfolio Goal, I used this calculator:

http://www.hughchou.org/calc/retire.cgi. The assumptions I put in are an annual income of $150k, retire at age 60, live for 40 years, 3% inflation, and 10% portfolio return.

To calculate the Target Annual Savings, I used the PMT function in excel, with rate=10%, nper=23 (num years), pv= -364,000 (present retirement accounts), fv=4,300,000 (portfolio goal). Note you need to set the PV to a negative number and the FV to a positive value. The result will be a negative number, which is how much you need to contribute ($13,200 in my case.)

It's getting close to the end of the year, so I'm inclined to look at what I've done vs what I planned to do at the beginning of the year.

Here's the to-do list that I put in my profile:
[ ] update wills
[ ] invest IRA rollover money
[ ] stock basis into Quicken
[X] annual review with broker
[ ] review life and disability insurance
[X] review phone & cell phone plans
[ ] earthquake/disaster box
[X] replace Mvelopes software

As you can see, I have made very little progress on some very important items. I did review the phone and cell phone plans, and replaced Mvelopes with YNAB, but these items were arguably the least important on the list. I had the annual review with the broker in March, but didn't act on his suggestions. (I wanted to go over them privately with DH first, but life got busy...) We still need to update the wills, invest over $80k of money that is sitting in cash within our IRA's, and add life insurance on me.

Our home value has dropped between $25-$50k, according to www.zillow.com, putting it about $675 with the remodelling.

The biggest change this year is that I started working part-time in July. My gross for the six months was $24k, and I spent about $2k on the babysitter. It will be interesting to see what the effective tax rate (given the second-earner penalty) turns out to be on this money. Regardless, it's worth it to keep my skills current and preserve my future earning potential. It's amazing how much breathing room $2k a month gives to the budget (I've been setting aside 40% for the taxman.) At one point I was lying awake at night debating how to best squeeze $150 out of the budget, now I can make that in a few hours work. It's easier to fund vacations and the occasional splurge. We've increased DH's 401k contribution to 10% (his company gives a match!), and should also be able to fully fund our IRA's in 2008. (We probably won't qualify for ROTH IRA's anymore.) I just ran some numbers, and our new "All Your Worth" balance of needs/wants/savings should be about 49/33/18, which I'm pleased about. (I'm also enjoying the mental break. Caring for a toddler means you never get to concentrate for more that 5-10 minutes at a stretch!)

I haven't done a detailed analysis of our investments yet, but our net worth is still hovering around $1.05 M, despite the decline in home value.

I've just run some numbers through a tax forecaster spreadsheet that comes with YNAB Pro. Our federal withholding will hit 115% of last year's tax (as planned), but something got messed up with the state withholding and it's only 50% of last year's. I'll have to make an estimated payment in January and hope to minimize any penalities. Right now we expect to owe $10k. I've got $8k set aside, and so will devote my first few paychecks to the remainder. Obviously I haven't been tracking this as closely as I should -- it may be time to consider hiring an accountant. I've been trying to avoid paying quarterly estimated taxes by setting up the withholdings correctly, but it might be a good thing to do them to force me to review our investments and tax situation regularly.

My biggest disappointment for the year is that I don't feel any more able to look at a list of funds in Morningstar and decide which one to invest in. My self-education campaign ran out of steam around March or April. I'm getting to the point where it's at least as important to maximize my investments as it is to keep my spending in check.

The good news was that my husband made an extra $15k in recruiting bonuses this year (it's quite common in our industry for the company to pay you a bonus if you convince your friends to take a job that open.) The bad news was that this extra income plus our stock profits and dividends pushed our income into the range where you can't contribute the full $4k to a ROTH. The good news is that we decided to put $2200 each into our ROTHs and the remaining $1800 each into our traditional IRAs. What I hadn't realized was that a spousal IRA is deductible -- the contribution lowered our tax bill from $2200 to $1600! Perhaps I should've put the full $4k into the traditional IRA to really reduce the bill, but on the other hand I want to contribute as much to the ROTH as possible now because we won't be eligible when I start working again in a couple of years.

Not much progress on the investment front. We didn't talk about our portfolio as we had planned -- I'll have to make sure we do it next weekend. DH is so worn out from his last project at work, the poor guy just needs some downtime. Getting his resume updated to find a better situation was a higher priority. We did do the end-of-month budget review at least.

The original lawyer who did my will and trust never called back, so I called him today. $300 for an hour of his time just to change the executor and guardian. I really don't want to give any more business to this guy who can't even be bothered to return my call!

I asked some friends for recommendations for a wills and trusts lawyer. I called one of the names given to me, and he seems really good. He's both a lawyer and a CPA, charges a flat fee for the documents, and future changes are free. We talked for about 40 minutes. He said that if all I wanted to do was change the executor and guardian, that it was probably going to be cheaper to go back to my original lawyer. On the other hand, my original living trust was established when I was single, and he would recommend gutting it and converting it to a "double trust" where it is joint between DH and I. He very strongly recommended putting our house into such a trust in order to avoid probate, and naming the trust as beneficiary to all life insurance and retirement vehicles. He pointed out that if DH and I both die, my existing trust has provisions to prevent our children from inheriting and blowing all the money at a young age, but our retirement money currently would go to them immediately. His normal fee for a single trust is $1400 and for a double trust is $1800, but he said he'd do it for half that since I already have a trust in place.

Still, $900 is a lot of money right now -- either our laptop or vacation fund. How awful is probate anyway? Do we really need a trust at this point?

The existing trust has a bit of bad history behind it. When we got engaged I had a bunch of stock options that were going to hit it big (yeah right -- we all know how well that one turned out) and we compromised by putting my assets in a trust instead of drawing up a prenup. So now the stock options are a net loss, but this trust is sitting out there with about $300k of mututal funds in it and the wrong successor Trustees on it. DH hates to talk about the "what-if" details you need to go into when planning life insurance, wills, etc., so getting all this straightened out is not going to be fun.

In other news the 400 point drop in the market yesterday dropped my portfolio value about $15k-$20k. I didn't even think to check until other people mentioned how it affected their portfolios. I don't watch my investments much -- I tend to err on the side of inaction. Happily I can still call myself a millionaire because I'm just over $1M. I'm ok with being 100% invested in stocks because these kinds of drops don't bother me and because I have enough of a nest egg that even with a big correction it's still a good amount. DH will be happy -- he's got $55k sitting in cash in a rollover IRA, so it's a good time to invest.

I finally found the copy of PC Attorney that we picked up a few years ago. The install instructions didn't even list Windows XP so it's pretty old. It was on the $10 rack at Best Buy so I wasn't expecting much.

I was still disappointed.

Yikes. There are choices for "simple will -- all to spouse" and "create trust for children", but the children's one doesn't even have you name a guardian! Come on, that's really basic! There's no choice allowing you to leave it all to your spouse and then only if the spouse dies, leave it to the children.

I guess we're going to need a lawyer. My orignal will leaves everything to a living trust, and the trust goes to DH and then to children. I even have a clause that I like that says they get 1/3 at ages 25, 30, and 35. I just need to change the executor and guardian. Surely that won't cost as much as doing a new will from scratch. DH doesn't have a will -- do you think we should have him fill out the simple will just to have something until we find a lawyer? (I don't want to go back to my original lawyer because he was so sloppy.)