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… to have two posts in a row titled “can’t sleep.”  I haven’t posted in a couple weeks.  I’d like to say it was because I was too busy, but I think it has more to do with being too lazy.  I’ve been off my normal schedule ever since getting back from the Bahamas last month.  I’m unbelievably envious of people that can maintain a constant weight.  I’m either losing weight or gaining it.  I’m currently on the later half of that cycle.  Rach and I have several weddings coming up, so I figure it’s time to buckle down and start getting back in shape for the upcoming craziness.  I have to say I’m more than a little excited for the couples.  In just a little over two months Rach and I will be attending no less than 3 weddings (and we’d really like to attend 4 if 2 of them didn’t happen to be on the same day). 

Outside of work, which has been particularly busy recently, Rach and I have been re-watching West Wing and 24.  We finished West Wing a couple of weeks ago, and just finished season 2 of 24 this weekend.  West Wing is definitely one of my favorite shows of all time.  The beauty of the show is that it makes me believe in our government.  It’s obviously idealized, but I love that regardless of whether I happen to agree with the point that the character is trying to make, they are all incredibly competent.  It’s so easy to be cynical about what happens in D.C. and pretty much every time I hear Palin talk I want to gnash my teeth and gnaw at the furniture, but I continue to believe that with enough time and energy we can make progress.  You may hate the healthcare legislation but it gives me hope.  It gives me hope outside of the specifics; it gives me hope that our government isn’t so impossibly paralyzed by partisanship that it’s possible to tackle a problem of such infinite complexity and contention.    So thank goodness for Obama, and thank goodness for West Wing.  Hesiod was right, the box contains more than just earthquakes, snowstorms and war.

Rach and I have also been playing a fair bit of Xbox.  We just finished off King Kong, Lego Indiana Jones, Teenage Mutant Ninja Turtles, and Assassin’s Creed 2.  King Kong was terrible… terriiiible.  It was a pretty easy 1000 gamer points, but they forgot to add the fun before releasing the game.  The problems are too many to list, but the highlights are the poor controls, amazingly poor combat, and a boring story.  It gets slightly better towards the end but it’s not worth playing unless you want quick points.  The rest of the games were all fun to varying degrees.  Teenage Mutant Ninja Turtles was a very fast play through, but had a lot of fun moments.  It reminded me of the first time I saw TMNT on television; Aaron and I thought they had a misprint in the TV guide.  It’s geared towards kids, but Rach and I had fun playing it together.  Probably the biggest problem with the game is that the last boss is 10x harder than any other part of the game. 

Lego Indiana Jones was fun but definitely less enjoyable than Lego Batman.  LIJ follows the first 3 Indy movies very closely so there aren’t a lot of surprises.  The puzzles are also a lot less intuitive (in a puzzlehunt we would say they are ‘un-clued’ meaning that you just have to try different things until they work, there is no hint that points you in the right direction).   The other problem with LIJ was that there were too many achievements for which you really didn’t make any progress at all on during story mode.  I don’t mind a few, but a play-through probably only gave us half of the achievements, and the rest were things like ‘swing with Indy’s whip 250 times’. 

Assassin’s Creed 2 was amazing.  It’s one of the best 360 games that I’ve played.  I highly recommend it.  It has a good story line, phenomenal graphics, great game play, intuitive controls and a nice progressive talent disclosure system.  The achievements are a lot of fun, and there are really only one or two ‘annoying’ ones.  Grab this game if you haven’t played it yet!

I just started playing Mass Effect (the first one) and so far it’s really, really good.  It’s a ‘space opera’ RPG and the universe and story line seem great so far.  The game play takes some getting used to, and I currently have it on casual and still end up dying a fair bit, but I’m slowly learning how to control the squad, upgrade items, manage inventory, etc.  It’s funny because it reminds me a lot of one of my favorite games – Star Flight 2.  Star Flight 2 was a DOS game released in 1989 and I played it constantly when it came out.  Obviously there have been changes in 20 years, but it makes realize how astonishing SF2 was for its time.  It had hundreds of worlds to explore, and something like 30 alien races to interact with.  Its graphics are atrocious by today’s standards, but the scale of the game was epic for something that came on a 1.44mb floppy.  Ah, nostalgia…

I can’t sleep for some reason, so I figured I’d write a post and then start work early.  Honestly there hasn’t been a lot going on since we got back from the Bahamas.  Both Rach and I have been focused on work.  We did meet with an attorney to draft up wills, which puts us close to finishing the set of items that we wanted to take care of this year for our personal finance.  I still need to set up our money market account for our emergency fund which I’ll likely do this weekend. 

The wills process was interesting.  The part that we probably understood the least was the estate tax.  Apparently this year the federal estate tax has ‘expired’ such that if you were to pass away now, then you could leave your inheritance without that tax applying.  In general the tax is stupidly high; in 2001 for example, the estate tax was 55% of your ‘taxable estate’ – which that year was anything over $657,000.  In recent years it’s been more reasonable, in so much as the exclusion amount (the amount of money you can leave without being taxed) has gone up.  In 2009 the exclusion amount was $3.5 million and the tax was 45%.  Who knows what the estate tax will be like in 150 years when I might have to worry about it, but given the trend it will 1) exist, and 2) have a “low” exclusion amount, and 3) be a stupidly high tax rate.  This isn’t even considering a tax levied estate tax.  For WA the estate tax is decoupled from the federal tax, which ranges from 10-19% depending on your taxable estate.  So if you own property in WA and you want to leave $10 million dollars and you die next year, you would be taxed 55% on $9 million of that, and another 19% on $8 million.  That’s a lot of tax!

The investigation was enlightening.  In general I think it’s perfectly reasonable for the govt. to impose an estate tax.  I think a $1 million threshold is too low however; minimally the threshold should increase over time, and yet it 2011 its scheduled to ‘reset’ to $1 million instead of the $3.5 million that it was in 2009. 

So are there decent ways to minimize the estate tax?  I think so.  First, why die with that much money?  Amassing wealth for the joy of watching your the numbers on your bank statement go up seems silly.  I, personally, believe that if you end up collecting a lot of money, then you should try to spend some of it!  Outside of potentially helping you relax and have fun, it helps the economy when you spend money.  Second, you don’t have to wait until you die to start distributing your wealth to your heirs.  You can hand over a certain amount of money as ‘gifts’ tax-free each year.  Why not do that?  You then get to leave more money and you get to see how your heirs use it!  Third, in general it’s probably better to leave most of your money to the youngest/younger generation.  That way it’s most likely longer before that same money gets to a point where it could be eligible for the estate tax again.  Finally, there are various tax shelters that allow you to leave more money, given certain restrictions, without the estate tax applying.  For example, our lawyer suggested that one such mechanism was to create a trust if either Rach or I died.  We could ‘leave’ that trust up to $1 million (depending on the estate tax threshold at the time) without worrying about the estate tax.  In addition, another $1 million could be left tax-free to whoever is living longer.  The survivor could draw from the trust for various things (though not for everything) – medical expenses, ‘life-style maintenance’, but not things like extravagant vacations.  When the survivor passes away the money in the trust would automatically pass to our heirs without being taxed, and would no longer be limited by any of the trust restrictions.  That’s in addition to the normal amount that could be left to our heirs without being affected by the estate tax. 

I think Rach and I will mostly try to avoid dying with a huge amount of money.  We’re pretty successful at spending money to date, so maybe it won’t be a problem longer term  

Rach’s poem of awesomeness:

Twas the week of the wedding, and all through the Bahamas
Friends and family all gathered, despite weather traumas
Swimsuits were worn as we soaked in the sun
Knowing the wedding was soon to come
On Monday guests gathered to meet and greet
At a local bar with decorations so neat!
Tuesday’s rehearsal dinner was super
Anson snuck in ketchup for his burger and grouper
Wednesday brought with it a weather surprise
We awoke to see trees bend before our eyes!
The staff at the resort were calm with assurance
That the wind would not be a wedding deterrent!
“Now Jane! Now Eric! Now All! Stay calm!
We shall move the ceremony to the resort’s side lawn!
Among the buildings, the wind will be the norm.
And a reception indoors will keep everyone warm.”
So, with hairspray and pins we made preparations
To share in all the wedding elations.
Out to the lawn, we all made our way
To watch Eric and Jane on their very special day.
Jane walked down the aisle with beauty and grace
While Eric had the most blissful look on his face.
They said their  “I Do”s, then we headed indoors
To watch the newlyweds on the dance floor
The entire evening was amazing, no doubt.
It reminded us all of what love is about.
So, the rest of the stay was spent with good friends
And it was so sad on Saturday when it all had to end
Back to the real world we flew on a plane
But as we left, if you listened, you could hear us exclaim
“Congrats Jane and Eric! You’re married! Woo! Woo!
We couldn’t be more happier or more ecstatic for you!”

Rach and I are now on the plane flying back from the Bahamas.  We had an amazing time; in fact, you can tell just how amazing a time we had because I’m writing this after about 17 hours of flying and layovers (with another 2 or so to go!).  The Bahamas were our first international destination vacation and actually our first time out of the country ever.  It was definitely a new experience to go through customs and to see how different life is in another part of the world – even a part as close to the US as the Bahamas.

Of course, the Bahamas are pretty straight forward with respect to international travel.  Getting through customs going into the country was a snap.  They asked us a single question, and were mostly interested in getting data on us for increasing their tourism (which is obviously their biggest industry).  The islands have their own currency, but it exchanges 1 for 1 against the US dollar.  That made it super easy to spend money, which we happily did   The only issue is that if you use credit you get charged an international exchange rate on purchases, though with First Tech that rate is only 1%.  Of course, an ‘exchange rate’ when the currency is 1 for 1 seems a little silly.

We landed in Nassau, the capital of the Bahamas, last Saturday and then took a small propeller plane to Marsh Harbour on Abaco.  We then had a van drive us over to Treasure Cay (pronounced “key”) where we spent the vast majority of our time.  We shared a beautiful condo with Dave, Sarah and Chris at the Bahama’s Beach Club.  The condo looked out over a pool and then directly onto the ocean.  We ended up getting a super great deal on it because of the time of year and economy, so it was only about $110/night.  Getting a condo was awesome; it had a full kitchen and a washer/dryer.  We actually made dinner most nights there.  It’s hard to describe how beautiful the area is; but it looked so incredible that it was like standing in a stock photo picture of ‘paradise.’  It was almost unreal:

The island itself is definitely one of the more out of the way places in the Bahamas.  It’s decidedly different than the places that Rach and I have vacationed in the past.  First off, there was only one real restaurant.  Luckily that restaurant had pretty excellent food; I had an amazing lobster tail there the Sat. we landed.  It had been forever since I had lobster, so I was unsure whether I was going to like it – but it was amazing.  I originally thought crime was going to be an issue in the area, but it was clear after a couple of days that at Treasure Cay it isn’t a concern at all.  It’s basically a small little retirement/resort town.  The grocery store was also in walking distance of our condo so we bought a lot of stuff from there over the week.  The prices for food, despite having no tax, were anywhere from 2x-7x as much as they are in the states.  It was pretty crazy.  Abaco is geared towards golfers and fisherman, but it’s a pretty perfect place if you want to lie back and relax as well.  We essentially had the resort to ourselves for the first half of the week which was great for reading, sunbathing, and relaxing.

Obviously the main reason for heading to the Bahamas was to celebrate with Eric and Jane.  The wedding was beautiful.  I had the occasional responsibility as best man, but mostly I just hung around and provided moral support for Eric (not that he really needed it, he was having a great time with virtually zero jitters).  The ceremony itself was on Wednesday and was held outside.  Unfortunately a freak wind storm blew in that required moving the location around a bit, but the resort folks and Jane pulled it off amazingly well.  The reception ended up being held inside a large condo which actually allowed everyone to be seated at essentially the same table.  The photographers must have taken several thousand pictures; I really can’t wait to see how they turn out!  Given the beauty of the location, the skill of the photographers, and the amount of joy at the ceremony and reception I think they are probably going to have one of the best wedding albums ever.  After the ceremony, we had some appetizers at the reception; there were enormous shrimp that were amazingly flavorful as well as a really great tasting mushroom stuffed with crab.  After mingling for a bit we sat down for dinner and then speeches.  I finally got to give the best man speech that I’ve been working on for a while and I think Eric and Jane liked it, so I’m pretty happy about it.  After the speeches Eric and Jane cut the wedding cake, which was 3 layers (coconut, chocolate, and red velvet).  Rach and I can attest to the fact that the chocolate and red velvet sections were very, very good.  Finally there was the dancing, which despite desperately trying to avoid, I ended up doing some of.  I’m generally not a huge fan, but for the few dances I went out for I had a great time.  All-in-all it was fantastically memorable, and hugely fun.

There were lots of things I really enjoyed about our vacation, but a few really stood out.  First, it was just great to be down there hanging out with friends.  We ended up playing a lot of a game called Zombie Fluxx which Dave and Sarah introduced us to – we’re big fans now!  Second, the place was laid back and relaxed.  It was easy to just doze off, read a lot, and generally unwind.  Third, the gym looked out over the beach and when I went in the mornings I would get a beautiful breeze off of the ocean.  Finally, renting a condo that had a kitchen and laundry meant we could pack light and eat reasonably healthy and cheaply while we were there.

After this trip we definitely want to try out Hawaii in the future.  The only really frustrating part about the trip was giving up two whole days for the flight.  It actually took us 24 hours from when we got to Seatac to get to the condo.  Rach and I are definitely not used to that much time spent in airports and planes, but it ended up being surprisingly bearable since a lot of us had the same flight so we could entertain each other during layovers.  Hawaii seems like it would be similar in some ways, and a lot closer.  We’ll have to see when we’ll the chance to try it!

You’ve won a brand new car!  It can replace the Donkey that you’ve been riding around on. 

I’ve been driving a 1996 Honda Accord for several years now.  It was a great car.  It was very reliable, extremely economical, and hideously boring.  I honestly didn’t mind that much since I wasn’t driving very far at all on any given day.  Basically I’d drive to work and back which consisted of a total of an 8 minute drive… assuming there was heavy traffic.  It was also nice to basically ignore the car and have it continue to hum along.  That said, the car had all kinds of issues.  It was stupidly loud – most people thought I had intentionally removed the muffler so I could out decibel a motorcycle.  It was a manual transmission which meant Rach couldn’t ever drive it anywhere, and that I quickly got tired of driving it in any sort of real traffic.  It had a big rusting dent in the side from when some kids in our old neighborhood decided to try to break into it.  It didn’t have a stereo because, perhaps the same kids, would steal it every time I got a new one (lost two that way).  The ‘defogger’ would frequently reverse itself and decide to fog up all of the windows instead.  Oh, and it was a nice shiny color of Old.  It likely would’ve lasted another 100k miles, but Rach and I had been saving up some money for a new car for a while and we decided it was a good time to go looking.

My new car is a 2007 Acura TSX, and I love it.  I love it for all kinds of reasons, not the least of which is I feel like I got a super good deal on it.  It’s got about 50k miles on it, but it shines like its brand new.  I convinced the dealer to take my ‘96 Accord as a trade-in for over $4k.  Given that we only paid 10k off the lot for it originally, and its bluebook value was closer to $2k of scrap metal, and it looked sort of like it was taken care of by a semi-domesticated band of wolves, I was pretty stoked.  In fact, overall, we ended up paying enough under the original sticker price on the Acura that KBB actually told me the trade-in value of it was almost equivalent to what I paid.  I expect this means that the engine will fall out in a couple of weeks, but for the moment I’m ecstatic.  Two important things that I learned about negotiating for a car is that it’s critical to start at a super low price point in the bargaining process (you may get it), and second to always negotiate on the “Out the Door” price, particularly if you live in a state with a 9.8% sales tax on autos.

I had no idea how many advancements they have made to cars since ‘96.  I thought it was pretty advanced to have power windows; after all, my car didn’t even play music any more.  My TSX has so many cool features that I could probably go on and on about, but there are some which are just super, super cool.  It’s automatic.  I know, I know, simple right?  I love it.  I just got so tired of dealing with a manual transmission.  It has heated seats which are just absolute paradise in the mornings.  It has auto climate control, and individually customizable heat/cool for the driver and passenger.  Now I don’t have to stew in my own sweat when it’s 70 degrees out and Rach decides to put on the heater .  It has seat memory so that you can set it once and if someone else drives your car and adjusts your settings you can just hit a button and it reverts to your saved configuration.  I don’t know if anyone has noticed this before, but Rach and I aren’t the same height.  This feature is inspired.  But wait, it’s even better – it’s tied to the keyfob.  So if I use my keyfob to open the doors (yep! remote entry) then when I open the door it updates to my settings.  The car has a hands-free link and I can’t remember the last time I used my cell phone so often.  It’s great to be able to chat with family and friends while I drive home.  It has different programmable voice prompts and commands in an extremely calming voice.  I sometimes hit the push to talk button just for the extra company.  It has a system called ‘home-link’ which is basically a programmable transmitter that I can use to open our garage door, so I no longer need to hang anything on my sunshade.  The car has an auto-dim rearview mirror – I don’t understand how it actually works, but I dig that I never end up blinded by the SUV’s headlights behind me.  It has built in sensors that monitor things like tire pressure, and a trip computer that shows fuel economy and estimates remaining range before a refill is needed.  It automatically resets the tripometer when you refill the tank.  It has comfy leather seats with at least 8 million adjustable settings.  It has cupholders in the front and back.  It has a 6 disc CD changer, built in XM receiver, and radio controls on the steering wheel.  It’s got a sunroof, heated mirrors, fog lights, interval wipers, 6 air bags and it comforts me when I’m feeling down. 

Here it is

As most of you know we recently sold our Redmond house.  We now have a stack of cash sitting in the Savings account of our bank depreciating daily, and that prodded me to do some research around personal finance.  I posted last week about analyzing our spending over the last year and deriving what I consider to be a pretty realistic budget.  That was our first step to putting together a plan moving forward. 

We have several goals.  The first is to establish a reasonable plan for retirement.  The second is to rein in our discretionary spending; or at least minimally track it better.  Our third is to make the money that we do have work for us.  Finally we want to make sure to protect against various catastrophes that might otherwise cause financial hardship/ruin.

To that end, I just finished reading Personal Finance For Dummies which I can now highly recommend.  It’s a fantastic survey of the various areas that people might classify as ‘personal finance’ and I find the author to be eminently pragmatic which I appreciate.  If you’re looking for a book to understand how to ‘beat the market’ this is definitely not it; this is more about understanding your options and learning what best practices are.

This post captures the set of things that Rach and I are considering implementing in the next month or so.  Another goal that I didn’t mention is that I’d like to get something in place soon that we will only have to monitor minimally.  For example, I have no desire to try day trading.  Outside of already having a day job, I remain convinced that day trading is tantamount to gambling.  I’d rather invest our money in the best way that we can reasonably figure out now and then check up on it every year to make sure that we’ve still allocated things appropriately for our goals.

Retirement

The first subject that I started looking at was retirement.  Retirement means a lot of different things to different people, but to me it means not being required to work a full time job.  In fact, in my current vision of the future I would still probably do part time work even after retirement, but I want that work to be optional.  Our goal is to be able to retire at around 60 years old (yay for 30 more years of work!).  I did spend some time crunching numbers to see whether it was realistic to retire before that… it doesn’t look good without more compromises than we’re willing to make at the moment. 

The nice thing about retirement is that the government offers some nice incentives to save for it.  Ever since I started working for Microsoft I’ve put 15% of my salary towards a pre-tax contribution to a 401k plan.  MS has a great package that includes a certain % matched.  The annoying thing about 401ks is that they have a pre-tax limit for contributions.  At the moment that limit is 16,500/year.  Rach and I have decided that for our 401k we will continue to contribute the max pre-tax per year.  The one snag that we have to be careful of is that if you happen to make enough to hit that limit early in the year, it’s possible to lose out on some of the employer matching money.  I looked around through the MS plan documentation and it turns out that it currently isn’t effecting us (yay!).

I looked into opening a separate IRA either Traditional or Roth to save a bit more, but unfortunately Rach and I cannot take advantage of any of the pre-tax benefits of those accounts because of the income limits imposed.  Frankly I think it’s silly, given the mess that is retirement for a lot of people to make it hard to save, but it is what it is.

At the moment our 401k will be our primary vehicle for retirement contributions.  When Rach starts to work full time, we’ll see if it’s possible to invest in any employer provided pre-tax program.  I’m currently unsure whether the 16,500 limit is per person or per couple.  Either way, it’s not an option for us at the moment.

Our 401k is currently split 40% in international growth stock, 40% in an index fund, and 20% in a midcap growth fund.  We’ve decided that we’re happy with that allocation.  Both Rach and I tend to be risk averse which is why so high a percentage is in an index fund. 

In case anyone is curious, the calculators that we used suggested that we have roughly $3m dollars for retirement.  Assuming consistent contributions, plus our current assets, with an estimated 8% return and 3% inflation we will get there if we wait until 60 to retire.  That’s based on a lot of things that will change of course, but it’s the best estimate that we have at the moment.  Note, I didn’t include Social Security in those calculations; when added if we start withdrawing money at 67 we’d be in good shape.

Emergency fund

We want to establish a well thought out emergency fund.  In the past several years we’ve kept our checking/savings balance quite high (over $20k).  Our checking gives us exactly 0% interest, and our savings account is currently giving us 0.25%.  In short, they are well below inflation and we’ve been wasting money by letting it sit there.  However, because of the high balance we have, in essence, had a nice cushion in the event of anything catastrophic happening (e.g. if I lost my job).  It wasn’t at all intentional though.

The recommendations for emergency fund ‘size’ range anywhere from 3 months to 1 year of expenditures held in a very liquid ‘instant access’ account.  Rach and I have decided to stow away roughly 5 months of current expenditures, though it would likely last  a fair bit longer if we did have any issue since a large chunk of those expenditures are reducible. 

I have had a heck of a time trying to figure out where to put that money.  Our credit union offers accounts that they call ‘Instant Access’ where we could get 1.15% return.  Honestly that return sucks.  Instead I started looking at Money Market accounts.  The major difference is that MMAs aren’t insured, and while they tend to contribute to low-risk investments there is always the chance that we can lose money with them – particularly if interest rates skyrocket when the economy recovers.  This is a risk that Rach and I have decided to take.  We’re considering one of two different accounts, and if anyone has a suggestion as to which would be better I’d love to hear it.  We’re either going to go with the Fidelity Money Market Fund (SPRXX) or the Fidelity AMT Tax-Free Money Fund (FIMXX).  This choice seems to have a lot to do with understanding the AMT and unfortunately I’m no tax expert.  To date, Rach and I have never had to pay the AMT, but this year we sold a large amount of stock to cover the down payment on our new house.  I don’t know whether that will affect our AMT status or not.  I am leaning toward the SPRXX account at the moment.

Insurance review

One of the fascinating parts about the book I just read was that it included a section on insurance.  At first I didn’t understand why that would be, but the author makes some fantastic points in the chapter.  Basically, his meta point is that insurance is the way you go about making sure that you protect yourself and your family against financial ruin.  He then enumerates the various types of situations which could result in ruin, and the various insurance that you can buy that helps prevent these situations.  A few things that I had never considered that he mentioned:

• Life insurance is pretty pointless if you’re single with no dependents; it’s also not all that interesting to splurge on life insurance if your spouse is completely capable of continuing their current lifestyle with you gone.
• One of the most important things to cover when you’re younger is your ability to work, so it’s critical that you consider things like accidental disability insurance (workman’s comp will only pay out if you’re hurt on the job, what if you get hurt elsewhere?)
• It makes sense to get enough liability insurance to protect your assets.  If you don’t have very many assets, then the default liability is fine.  What if someone sues you for $1,000,000 though?  If you have $500k of assets and only $100k of protection… well, you do the math.  As your assets increase, it makes sense to consider higher liability insurance, potentially under an ‘umbrella’ plan.
• People pay for silly insurance.  Insurance shouldn’t be used to try to smooth out every day life; if you can afford to pay a $1k deductible if you need to then get insurance that matches; only get covered for things that would be financial ruin.
• This also makes it an easy decision when asked if you want additional ‘warrantees’ on products that you buy.

After reviewing our insurance we’re covered decently well, but I plan on making the following changes:

• We had a rider on our auto insurance which pays for towing in the event of an accident.  Towing isn’t expensive, and it’s pointless to insure against it.  Particularly since we belong to AAA (duh!) so I’m removing it.
• We have Personal Injury Protection on our auto insurance.  Our health insurance will cover both of us in the event of a major accident so this insurance is redundant for us.  PIP would also cover people in our car that didn’t have good health insurance, but the fact of the matter is 99% of the time we drive each other around, and the other 1% of the time we drive folks that also have good health insurance.  It’s not worth it to keep this coverage (and WA doesn’t require it).
• We are investigating increasing our liability coverage, though I haven’t researched rates yet.
• We have gone through our house and recorded serial numbers and taken pictures of all high cost items and stored that information up on a protected share in the cloud.  It should significantly reduce the complexity of making a claim in the future if needed.

Additional investments

Outside of the 401k I mention above, Rach and I have a couple of other investments.  In the past couple years I haven’t been contributing heavily to our employee stock purchase plan.  In retrospect that seems silly.  The ESPP allows us to buy Microsoft stock at a discount rate at various set times during the year.  We can then sell that stock immediately if we choose and get an immediate return (minus income tax).  This is an amazing deal, and we’ll be contributing the maximum to that moving forward. 

After establishing our emergency fund we will still have a large chunk of cash from the sale of our previous house.  We have gone back and forth about what to do with it.  There are really two major options.  We either invest the money in the stock market (likely a mutual fund) or we use the money to pay down the principal on our mortgage.  If we had any high interest debt then the answer would be obvious, but our mortgage has a low interest rate and nice tax benefits.  However, I know that Rach and I will procrastinate if we decide to invest this money into the stock market.  Ultimately, we’ve decided to pay down our mortgage.  It’s almost certainly not the highest return move, but I think for us it makes the most sense.

Final actions

I mentioned we procrastinate right?  We still haven’t written up wills.  This is something that we’re going to throw into this bucket and take care of.  We’re going to write up normal wills, as well as put in place durable power of attorney. 

I’d certainly appreciate any thoughts people might have on our plan, particularly if you see something that you think is jut plain wacko.  Keep in mind that Rach and my risk profile is generally adverse, which means that we’re going to make more conservative decisions than other people (e.g. paying down the mortgage).

The blinds that we ordered in late Dec. finally arrived.  We’ve been pestering the lady for a while now to get them installed, but apparently the supplier that the material manufacturer used went out of business at the beginning of the year.  It’s taken them a while to find another materials provider, so they had about half of our blinds for several weeks.  Actually, they ultimately only installed the blinds themselves today – we still need to get the valances put in (the board that installs at the top of the blinds which covers lifting mechanism and provides a finished look).

It’s amazing to me that 1) blinds are so expensive, and 2) that there are so many options to choose from.  We initially decided to go with honeycomb blinds, but after visiting a couple different houses with slats we changed our minds.  Honeycomb seem really nice, and they are great energy savers since they can be closed, but still let light through.  The problem is that we wanted to be able to make our rooms super dark, particularly the master and the media room, but the only way to do that is to get light reflecting honeycomb blinds.  It’s possible to get a sort of two layer honeycomb, but they are quite a bit more expensive.  Ultimately we decided that slats were better since we could more easily control the light level in the room; we also tend to be very lazy so being able to turn the slats slightly instead of raising the entire blind appeals to us

After deciding on getting slats we still had to figure out whether we wanted to get normal wood, faux wood, or some combination on different windows.  For anything in an area with moisture you want to get faux wood; wood absorbs moisture and it can easily warp the blinds if they are over a sink or near a shower.  That made two of our choices easy, but for the rest of the windows it was still a question.  We decided we wanted a neutral color for most of our windows, so we went with an off-white.  There are really three differences between faux wood blinds and slat wood blinds (if you don’t care about moisture in the area): 1) faux wood blinds are cheaper, 2) faux wood blinds are heavier, and 3) wood blinds look more natural in wood colors.  The 3rd didn’t apply to us because we were getting white blinds, which narrowed it down to the 2 remaining pivot points.  Since faux wood is heavier it means that the number of ladder points you need is larger, and sometimes you need to get smaller slats for the ladder to support them.  Ultimately we decided to go with the less expensive option and get faux wood everywhere.

Outside of the choice of blinds, shape, color, etc. there are a lot of ‘options’ that you can get to enhance the appearance or operation of the blinds.  I was pretty psyched about trying to get motorized blinds, but after learning that it was $375/window to get a little motor that would simply raise or lower the slats (not even raise and lower the blinds) we decided to pass on motorization for the moment.  We did decide to get valances, because it lets us hide the alarm system detectors at the top of the windows and gives the whole blind a very finished look (oh, and because it was comparatively cheap .  The final option that we chose was to get the blinds without holes in the center.  Usually slat blinds have holes that the ladder is threaded through; the only problem with that is when you close the slats you end up with tiny pinpricks of lights shining through the holes; this is exacerbated by faux wood because they are heavier and as such the ladder is thicker… which makes the holes larger.  Anyway, the option we got makes it so none of the slats have holes (the ladder is threaded on the outside of the slat).

You’ve probably noticed that the kitchen blinds are darker; we decided to match the cabinets for those because we thought the white would stand out given how dark everything else is.  The small area of light at the top will be covered with the valance when it’s installed.  Notice how there are no holes in the kitchen blinds?  You might also notice that we still don’t have a dining room table

The final ‘window covering’ we got is for the back door.  We decided to try something a bit different, and I think it turned out rather nice.  We went with sliding panels instead of sliding slats.  They are super easy to open and shut, and they look very nice (especially shut).  They also don’t clink when they are opened or closed, or when beta decides to smash her head against them.  The downside is that even fully open we lose about 33% of the window since the panels are large.  In the future we might change out the panels for something with a pattern or a different color, we think the white was probably an overkill in this case.

A few other quick updates:

• I finally finished the personal finance book (and the Dresden files #4).  We’re going to start putting to practice all of the things I learned this week.  It’s going to be a long week!
• Dining room table has been delayed again   We probably won’t see it until mid to late Feb.
• I finally got some pictures of my car in daylight, so I’ll be writing a post about that soon
• Rach and I leave for the Bahamas on Friday!!!

Oh, Happy Day!  The nice folks from Tuff Shed came and installed the shed that we had ordered today.  It’s certainly been a long process to figure out exactly what we wanted/needed.  It’s funny, this house is enormous compared to our last house – easily 500sq ft. larger, but ultimately we have fewer corners and crevices for storage. 

We initially considered the crawlspace conversion option, but so many of the people (including contractors) that we talked to said that was a horrible idea because of moisture that we started to look elsewhere.  Our attics have super low ceilings and aren’t suitable for storage.  Our garage is for cars — cars, and we already have about as much junk in there as we can realistically fit.  A shed seemed like a good idea at first but I couldn’t find anywhere on our property to put it.  Our backyard is very small, probably just 10ft. or so between our house and the property line; and the back of the house is lined with windows that we didn’t want to obstruct.  The front yard has all kinds of possibilities, but a large portion of it (easily 60%) is considered a wetland buffer zone which means we can’t develop or alter it in any way. 

The answer came in the form of a conversation that I was having with the city to see whether I could convince them that the skating rink my neighbor’s dad had built when he was a kid shouldn’t really classify as a wetland.  The city planner mentioned that it would be possible for us to build closer than 5ft to the property line if we applied for a buffer zone exemption.  He said that we’d almost certainly be able to get it because of the wetland on the front of our property.  As Rach and I trudged around the house we found that we had about 10ft between one side of our house and the property line; and that particular side of the house has only a single window that looks out over the kitchen sink.  Even better the windowless portion of the wall is easily 15ft on either side of the window, and we have no neighbor on the other side (well, we do, but that neighbor has a ton of land and his house is much closer to the road than ours is).  So we went shed hunting…

This is another one of those projects that I considered doing myself, but after talking to a ton of people I quickly realized that it was 1) almost certainly beyond my skill level w/o help, and 2) likely to cost more than it would to get someone else to do it because I don’t yet have anywhere near the set of tools that I would need to construct it.  We looked around for a while but were most impressed by the sheds that they have at Home Depot.  Every other store we looked at had sheds that were made of seemingly large Tupperware; while, many of Home Depot’s sheds were constructed of stout lumber.  These sheds are built by a company called Tuff Shed and they are assembled right on your property.  We started with the idea that we would get a 6×8 shed, but after looking at the pile of the stuff in our garage I really wanted to get an 8×10.  Ultimately we had to compromise, there simply wasn’t enough room on the side of our house for an 8×10 so we settled on the 6×10 version. 

The site for the shed needed to be leveled which was actually going to be a fair amount of work since our builder had left a sizable hill there and then planted trees on it.  We ended up using the landscaping company that used to mow the lawn at our old place (Smith lawn services) and they did an awesome job.  They suggested putting up a retaining wall of stone to make sure that the dirt stayed in place.  I didn’t realize how important this was until after I saw what it looked like when they cleared the area (they also put down a nice amount of gravel for us).  Below on the left is the original site, and the picture on the right shows the site after it was leveled and cleared.

The picture on the right was taken early this morning before the Tuff Shed folks got here.  They were right on time; I ended up leaving for work right when they got there so I didn’t get to see the next part happen but Rach took a picture every 45 mins or so.  It only took the guys about 4-5 hours to put the entire shed together, paint it, and get all of the extras added.  The shed was basically just pre-cut lumber, there weren’t large sections pre-assembled.  The cool thing about Tuff Shed is that they let you customize their base models pretty significantly.  We ended up getting the SR-600 because Kirkland lets you put up a shed under 120sq ft. in size and less than 8ft tall without a permit.  In addition we had them do paint matching so that we could make it the same color as our house.  We also added roof vents along the ceiling for air flow, a skylight and a window.  Last but not least we got Bluwood flooring which is supposed to be more highly resistant to moisture. 

The over time photos are below!

 

You may notice that the door opens towards the house; we asked for that so that it wouldn’t slam into the retaining wall   You can also see that the shed is super strong – look at the guy standing on the roof!   I have to say that I’m really happy with both Tuff Shed and Smith Lawn Services.  They both were extremely responsive, super fast, and appear to have done really high quality work.  The Smith folks even came out to readjust the retaining wall because we were worried that the shed was going to be too close to it.  If you’re thinking of getting a shed a few things I would suggest: 1) get the largest shed that you can reasonably put on your property – you’re always going to be able to use the storage, 2) make sure you build it at least a foot and a half away from your house in case you ever want to repair or repaint the siding, 3) consider investing in wood instead of the plastic sheds, they look nicer and hold up better.  The Tuff Shed folks said that if we ever move they’d be happy to come out and move the shed to our new house for us… something to keep in mind I guess

A few final pictures of the shed from different angles:

I’d like to retire someday.  Not tomorrow maybe, but say 30 or so years down the road.  It occurred to me recently, after having read story after story of an entire generation who is getting ready to retire and will either live near the poverty line or simply continue working well into their 70s,  that Rach and I really need to sit down and have a coherent plan to save enough of our earnings and invest it reasonably to have a fighting chance at retiring in our 60s.  I doubt the Lottery retirement plan is going to work out (but here’s hoping!).

To that end, I’ve been reading Personal Finance for Dummies.  It seemed like a good place to start.  I’m most of the way through it, and while it hasn’t been earth shattering, it has been a good refresher and I enjoy the pragmatism of the author.  I have several goals for this project including: having a much better organization of our income, to be able to answer seemingly simple questions like “how much do you save per month?”, to keep better tabs on where it is we’re spending our money, to choose better investments for the various ‘buckets’ of money based on the timeframe in which we intend to spend it, and to finalize a retirement plan that we can check in on every once in a while and make sure things are going well.

I thought I was going to spend this weekend putting these pieces together, but I realize now it’s going to take several weekends.  I decided to spend today focused on analyzing our monthly expenses for the last year to see whether they matched my understanding of where we were spending our money.  In the past, I’ve been pretty lax about keeping track of what comes in and out.  I generally know how much money we have in our various accounts and I know whether we’ll be able to afford new expenses, but I have never really looked at how much of that money is going into any particular category.  In fact, had you asked me what the top 5 expenses for us per month were I probably would’ve only gotten three out of 5, and I probably wouldn’t even have gotten those in the correct order.

For the past year our top 5 recurring expenses per month were: our mortgage, groceries, restaurants, energy & gas, and fuel.  The mortgage being the top monthly expense isn’t much of a surprise.  I was pretty staggered by how much money we spend per month of food though.  We do eat out often; though ‘eat out’ usually means ‘order in’, but that made me think our grocery cost would be comparatively low.  That’s just not the case.  We’re averaging $600/mo. in groceries alone.  That number seems shockingly high to me.

The illuminating part about this exercise is that it really helps to understand where to invest time if we’re trying to save money.  It’s pretty clear for us that the number one place to look at it is our food purchases.  We’ll almost certainly stop ordering out as much, but our plan is to spend the next month keeping a cost book for the grocery store.  Basically tracking the items that we buy most frequently, and see what prices we’re paying.  Then we’ll see whether we can do a better job buying those items more cheaply when they are on sale, or perhaps simply selectively changing our menus based on what the discounted meat/fish is for that week. 

It’s worth noting that the groceries number includes items other than food, like cleaning supplies, kitty litter, soap, etc.  Perhaps if we split those things out, and then shopped at a bulk store like Costco, we could lower our costs.  That will depend partly on how much additional storage space we get as a result of installing our shed (it doesn’t make much sense to buy in bulk if you’ve got nowhere to put it!).

I’m curious, do other people spend this much on food per month?

The next step for us in our personal finance journey is figuring out, in broad strokes, what we’re thinking about retirement.  Things like age to retire, how long we plan on living after that , general lifestyle that we’d like to maintain, etc.  That should give us a solid understanding of how much money we’re likely to need.  More on that when we get to it…

I wish the sun would shine on a weekend, even just for an hour, so I could take some pictures of my car and write a blog post about it.  Alas I haven’t seen the sun in what seems like weeks and for the brief periods when it’s not raining it’s always cloudy.  I generally don’t mind, but I’m a bit worried there will be flooding here.  It turns out the wetland next to our house really does get wet and last week we had to deal with a ‘high water’ alarm installed on the side of our house. 

Oh well, in the absence of some decent pictures I’ll write about what I spent most of the weekend on.  I mentioned in my last post that we put our newer TV into the master bedroom.  The master bedroom doesn’t have cable, so we have an XBox hooked up that lets us watch DVDs, play games, and stream Netflix.  It has been bugging me that we can’t watch recorded TV on it though (particularly shows like House and Fringe that we watch once a week in HD that would look amazing on this TV).  I researched it a bit a few weekends ago and it turns out that the Tivo exposes a REST API for querying the Now Playing list and for downloading the videos to your PC.  The Tivo folks have written some primitive software that lets you do exactly that, but it’s clunky and it doesn’t let you save the files into any other format than .Tivo.  In fact, because of some poor choices that they made the Tivo software doesn’t even let you save to network drives; so I couldn’t use it to save onto the media shares of my Windows Home Server.   I spent another few hours looking around for some automated solution that would let me simply get the files off of the Tivo and into a format Windows Media Center could stream to an XBox.  Sadly I couldn’t find anything that worked the way I wanted it to (the Tivo folks suckered me into paying $25 for the ‘Pro’ version of their software because it is supposed to transcode the video into formats like H.264; it does, but only at a small resolution for mobile devices).  I ultimately decided I was going to just replace the Tivo with a media center with cable card support, until I found out how expensive they were at the moment.

To make a long story short I decided to write something custom that would work the way Rach and I wanted.  I had a couple of goals for it.  First, it needed to be completely automated so that I could run it using the Windows Scheduler at night when we weren’t using the computers.  Second, I wanted it to have a snazzy UI (for no other reason than I wanted to play around with WPF more).  Third, it needed to be smart about what files it copied over so that it would only keep a certain number of any particular series.  Finally I wanted to get it up and running as quickly as possible, so I didn’t want to make it too complicated.  I was originally thinking of using a WPF grid to list the set of shows to be downloaded; but honestly  I couldn’t find a single Grid example which was anything other than hideous (that didn’t include an $800 component anyway).  I gave up on the Grid and decided to go with a very clean basic UI.  I’m pretty happy with the result.  This is a screenshot of the app downloading an episode of House:

The app works in the following way.  First, it starts by querying the Now Playing list of the Tivo through the rest API.  The Tivo’s web server is pretty basic, but you can see a simple Web UI by navigating to the following link: https://{0}/nowplaying/index.html where {0} is the ip address of your Tivo.  If you’re using IE it will recommend not browsing to the site because it can’t verify the SSL certificate, you can safely ignore that error.  You’ll also be prompted for a username and password.  In this case the username is always tivo, and the password is your “Media Access Key”.  You can find your Media Access Key on tivo.com under your profile or usually somewhere written on the tivo box or documentation.  You should now see a simple UI of your Now Playing list and download links.  With just that you can choose to individually download the files to your PC, though they will always be .Tivo files which are only playable if you have the correct codec installed.  There is a slightly different URL you use if you want the XML that represents the Now Playing list; it looks like this: https://{0}/TiVoConnect?Command=QueryContainer&Container=%2FNowPlaying&Recurse=Yes.  The XML is fairly detailed, giving you a list of all recordings on the box along with a ton of information about each.  My app currently only uses the Title, EpisodeTitle, Description, SourceSize, EpisodeNumber and DownloadLink.  Regardless, the app downloads the XML for processing.

The app uses an XML configuration file as input.  The configuration file tells the app which series it should download episodes from.  It basically consists of the series name, the total number of episodes to keep on the windows home server at one time, and the algorithm to use to determine which episodes to keep.  At the moment there are two algorithms to select from, either keep the most recently recorded or choose to keep the episodes with the highest episode numbers.  Rach and I generally watch two types of programs; syndicated things like the George Lopez Show or Wings for which we just want to see the most recently recorded (we watch them out of order) and the shows that we watch each week.  For those the Tivo may choose to record an older one during the middle of the week and I don’t want that overwriting the WHS version, hence the second algorithm.  The app reads this configuration file and builds a list of possible episodes to copy over.  It then filters this list based on a cache that it built from its previous run which contains the episodes it has already transferred.  The remaining episodes are the ones that will be processed.  This occasionally requires deleting episodes off of the WHS since there may be N new episodes which delete K old episodes.  The app takes care of that and then starts the processing.

The processing is straight forward.  There is a download link in the XML that can be used to retrieve the .Tivo file.  As usual there was a small complication.  For whatever reason WebClient doesn’t understand the format of the cookie that the Tivo web server returns on a request for this file.  Because of that the WebClient doesn’t include the session id as part of the header when it tries to actually get the bits of the file, which ultimately leads to a ‘bad request’ response from the Tivo.  To fix this I had to do a ‘fake’ request first, get the session id, and then set the cookie container manually.  To add another layer of complexity WebClient doesn’t support setting a cookiecontainer for some reason, so I had create a specialized version that would.  Honestly all that was cake compared to dealing with all of the asynchronous baloney that you need to do to keep a responsive UI.  I ended up using BackgroundWorker pretty extensively with what so far seems to be pretty good results.  I added support for cancelling the background work on exit, and surprisingly that has been working well.  Anyway, the app uses the modified WebClient to download the .Tivo file into a media cache that it keeps on the Media Center PC.  It then shells out to a program called tivodecode which converts the .Tivo file into an .mpg.  The app just directly converts it from the cache to the WHS, and then deletes the cache file.  After it’s all done the app writes out the episodes it has burned into the cache for its next run.

There are several things I need to finish and add, but sadly it’s getting late and I should probably get some sleep.  I want to add: 1) auto-shutdown after it completes after a 10 min wait, 2) finish implementing the algorithms mentioned above, 3) show summary information on completion, 4) log the major info and errors to a file, 5) remove the console window that appears when the app shells out to tivodecode, and 6) set it up to prevent the computer sleeping while it’s copying and make it so the WHS sends a Wake on Lan to the Media Center PC right before the app is scheduled to run.

Here’s a video of the UI: 

 

I’ve been meaning to write about our home network for a while now.  It’s funny, because as with most things getting it 90% set up was 10% of the work.  I’ve still got a ton of changes to make, but things are starting to come together.  I think I’ll keep this post mostly at a high level and then write more later about the specifics of how we set certain things up (like WHS and our multiple routers).  Our network generally looks like this:

We have FIOS for internet and TV which is piped in through coaxial cable into our master bedroom.  We have hard-wired connections between the closet and the living room and the office upstairs.  Unfortunately we don’t have it hard wired into the master proper, though that’s something I’m going to do in the next few weeks.  For the moment we have two routers, one which acts as the DNS server and has a coaxial WAN input and the other which proffers the N access point.

In the master bedroom we have our new TV which I’m pretty sure I’ve mentioned before.  If not, it’s one of the Samsung LCD LED TVs; it has an amazing picture.  We have an Xbox Elite hooked up to it for gaming, watching DVDs, and streaming content.  In the master closet we have our Windows Home Server which stores all of our media (videos, pictures, movies, etc.).  In the office we have my desktop which currently acts as our Media Center.  We don’t record TV with it at the moment, but it’s what we use to stream movies to our Xboxes.  The printer is also in the office.  Both the computer and the printer are connected to a switch which then connects to the router through the wall wiring.  We also keep the wireless picture frame that I have in the office, though with the changes I made yesterday it will stop working soon.  Finally we have a switch  in the living room with an Xbox and Tivo connected to it.

This configuration enables the following:

Automated backups: The Windows Home Server will back up every configured machine on the network on a daily basis.

Streaming media: From either the living room or master we can stream any of our videos or music by using the Xboxes as extenders (which connects them to the Office computer which then reads the content off of the Windows Home Server).  Our Zunes can auto-sync with the media center PC upstairs so they are always up to date with whatever music we may have downloaded recently. 

This also enables streaming of DVD content, so I have started to take our DVDs and burn them to a folder on our Windows Home Server so that we can easily browse and watch them from either the master, living room, or wherever we happen to have a computer lying around.

Shared devices

Any of the computers on the network have easy access to the printer upstairs.  They also can access each other for shared files.

Remote access

A Windows Home Server gives you the option to set up your network to be publicly accessible (even without a static IP).  If you do that then you’re able to remote desktop into any machine that is active in your house.  I use this every once in a while when I need something I left at home for work.  It’s extremely useful, particularly when paired with addins that let you remotely wake up computers that are on your network.

The interesting posts will come later I think.  I want to write about the best way I’ve found so far of encoding ripped DVDs for playback on XBox, how I’m copying and encoding TV shows off of the Tivo for streaming to the 360, and the best ways I’ve found to use your own router when you have FIOS delivered with coaxial cable.  On the other hand, I’ll probably write about our new car first

Family updates:

1) We got the recording numbers today for our old house.  We’ve officially sold it! Sadly we don’t get the check until Tuesday because Monday is a holiday.

2) I’m busy reading Personal Finance for Dummies on the Kindle app for the PC (on my Acer Aspire tablet) in order to figure out the best way to invest some of what we make off the old house.  If anyone has suggestions please let me know (on either good places to invest or good books about investing to go read).

3) We have most of the furniture we ordered but the dining room table isn’t going to get here until sometime in Feb .  As soon as it does we’ll post some updated tours.

4) We have the ground cleared, leveled, and set up for the shed that we want to get.  We’ll be working more on that in the next week or so (finalizing it with the city and actually getting something ordered).  We’re looking at using the Tuff Shed folks from Home Depot.  Here’s what the area looks like (cans represent 6’x10’ which is the size of the shed we want):

The retaining wall isn’t quite finished in that picture, but it will be soon

5) Our mole problem is slowly getting fixed.  One down, no more than 100 more or so to go.

6) We’re pretty sure we’ve got everything we need for our Bahamas trip next month.  Swimsuits, shorts, sandals, and our wedding outfits.  

More soon…