I recently received a notice from my lender that I had overpaid my Escrow account last year and I was due a refund.  Woohoo!  Due to my plunging home values, my property taxes have been decreased.  Even better, my mortgage payment was adjusted to $55 less per month (double woohoo).

These are obviously welcome developments, although I’m not sure how much there is to be excited about in light of the vaporated equity in my home.  Oh well.  I live in Florida, therefore have higher property taxes than many other states, so some of you may not have received similar adjustments even if your situation is similar.  Please leave a comment and let me know your state and if you received an adjustment.

So, I just got a check for a little over a thousand bucks (from overpaying last year) that I can throw into savings (no, I’m not going to buy a new Apple iPad with it).  Also, I have about $55 extra in my monthly budget.  Or maybe I should continue to add the $55 as “extra” payments on my mortgage?  Check out my recent post on how much money is going towards paying down the loan balance.

I’ve recently had a double whammy of a tax return and an Escrow refund in a single month.  While this was my money to begin with, it’s nice to have an influx of money come into the picture.  The key is to not go blow it on a trip or a new shiny gadget.  If you’re in a similar situation, use the money to fully fund a Roth IRA for the year or put it towards a down payment.  Or, maybe you need to pay off a credit card.  Do the smart thing for your financial situation!

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1813Comments (0)http://20smoney.com/2010/03/11/one-positive-result-from-plummeting-home-values/One+Positive+Result+From+Plummeting+Home+Values2010-03-11+10%3A12%3A38Kevin

I’m thinking of launching a new online income experiment by writing at Hubpages.com.  If you have in the past or are currently creating hubs, can you leave a comment or contact me and describe your experience in the following areas:

• What kind of money are you making?
• How many hubs have you made?
• Would you be interested in participating in a hub challenge (group writing exercises designed to help each other out)?

Be sure to include the link to your profile page.  If I launch this experiment, I will become a “fan” of yours and try and link to some of your Hubs.

Thanks for your input!

Popularity: 1% [?]

1849Comments (0)http://20smoney.com/2010/03/10/reader-question-do-you-write-at-hubpages-com/Reader+Question%3A+Do+You+Write+At+Hubpages.com%3F2010-03-10+21%3A56%3A58Kevin

It’s been a while since I’ve done an update on gold.  Maybe part of that is because it’s been fairly boring in recent months.  Since it’s massive run above $1200/oz. in early December, gold has settled into a fairly narrow range around $1100.  You can take a look at the following chart for SPDR Gold Trust (GLD):

So where does gold go from here?  I still hang on to the belief that the overall market / economy will experience a “double dip” or a correction (doesn’t matter how you label it) where stocks and assets across the board will suffer.  Gold will probably go down as well in such a correction.  As such, you could very likely see more attractive entry points should you want to pick up some gold (or silver).

If you’ve read my recent article on Gold as security, not speculation, you will know my strategy on holding physical gold.  The short term price of gold is fairly irrelevant as I’m attempting to hold this asset more for insurance versus a quick buck.  With regards to insurance, I still think it’s a policy worth holding.  Fundamentally, nothing has changed in my eyes and a day of reckoning for the U.S. economy is coming.  It might be this year, or it might be in 2012, but I do believe it’s coming.

The biggest threat in this so-called day of reckoning is the potential for a currency crisis.  This is why I want to own gold.  Marc Faber recently said that you should buy gold continuous “forever” because you can’t create gold as fast as central bankers can print money.  The idea is that your gold will hold its value better than your paper money.  I tend to agree with this, although it can take years for this to pan out.

Gold will likely stay around current levels for the short run.  Looking several years out, I very much like it’s fundamentals to be significantly higher.  I recommend a course of action of easing into the position slowly, buying chunks over time.

Popularity: 1% [?]

1831Comments (0)http://20smoney.com/2010/03/10/whats-up-with-gold-these-days/What%27s+Up+With+Gold+These+Days%3F2010-03-10+09%3A34%3A46Kevin

Since the 7% correction last month, stocks have shot higher coming close to highs for the year.  Consumer discretionary stocks have helped lead the charge higher with big gains recently in stocks like Macy’s (M), Brunswick Corp (BC) and Williams-Sonoma (WSM).

I’m a firm believer that the U.S. consumer will not, I repeat NOT, get back to previous levels.  It’s simply impossible.  Therefore, I’m very negative on these stocks like the ones mentioned above.  Nevertheless, these stocks have been on fire in recent days and weeks.

Maybe people are still buying crap because it seems nobody is paying their mortgage these days and banks are overwhelmed with the volume that millions of people are essentially living for free?  This allows these broke Americans to continue living the dream!  Even so, the numbers are not anywhere near where they used to be in terms of consumer spending.

I believe this rally will not be sustainable and eventually the reality will be evident that the consumer is not coming back.  Savings is in.  Paying off debt is in.  Spending and borrowing is no longer the path that all Americans are taking (although some still are).

Remember, stocks don’t reflect economic reality.  They reflect people’s perception of economic reality.  This perception may or may not be correct.  Invest with caution.

Disclosure: Short some of the stocks mentioned above.

Popularity: 1% [?]

1838Comments (0)http://20smoney.com/2010/03/09/consumer-discretionary-stocks-skyrocketing/Consumer+Discretionary+Stocks+Skyrocketing2010-03-09+18%3A55%3A48Kevin

If you have a mortgage that is only a few years old, then likely the majority of the payment goes towards interest.  While mortgage interest is tax deductible, it definitely is deflating to see how much money is going towards the bank and not toward paying down your mortgage.  It takes several years of paying out massive interest before you actually start putting a dent in your loan balance.

I have been thinking a great deal about paying down my mortgage and what that might look like.  The encouraging aspect of paying extra money against your mortgage is that paying extra money now will have an effect on every future payment – namely, by paying an extra $1000 today, every future payment will have more of my money towards the principal versus interest.

I decided to take a look at various mortgages and see at what point in the amortization schedule would I at least half of my payment go towards principal versus interest.  This “tipping point” is a great place to get to since more of your money is going towards your own equity / savings versus paying a bank interest!  The tipping point is determined by the interest rate on your loan as shown here:

• Interest rate: 4.75% / Tipping point: 34% of loan balance
• Interest rate: 5% / Tipping point: 36% of loan balance
• Interest rate: 5.5% / Tipping point: 39% of loan balance
• Interest rate: 6% / Tipping point: 41% of loan balance

These are approximate values and assumes a 30 year fixed mortgage

So, since my mortgage is a 30 year fixed, 4.75% interest loan, I am shooting for that 34% mark as my tipping point.  When I have 34% of the loan paid off, more than half of my payment every month is going towards additional principal on the mortgage.  As such, I may aim to viciously attack my mortgage until I get to that point.  By attacking the mortgage early on the front end, you make a difference for the remaining time that you service the loan (as opposed to waiting 10 years and then going after your loan).  The process is similar to compounding interest, the more you do early, the larger the impact.

The psychological impact of getting past the tipping point is fairly large.  Many people tend to talk about owning a home as this wonderful thing and renting as “throwing money away”, but most people pay tons of interest and hardly any money towards the equity of their home.  Passing the tipping point will allow you to actually get to a point where you’re not throwing money away.  Your monthly housing expense IS actually putting money away.  Psychologically, knowing that my payment every month is having a large impact on my financial picture would be huge.

Getting To The Tipping Point

Getting to this tipping point is no easy accomplishment.  Like most things in personal finance, the earlier you start and the more you do during the early stages, the better.  The problem is that the early stages are often the hardest times to make these strides.  During your younger years, your earning power isn’t as high and you might still be paying off debt or recovering from financial mistakes.

Couple this with a massive recession and decreased incomes everywhere you look.  How the heck am I supposed to pay down my mortgage these days?  Well, you might not be able to or it might just require some pretty tough choices.  I’m doing my best to sacrifice in some areas and move towards this goal.  I encourage you to do the same.

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1806Comments (2)http://20smoney.com/2010/03/09/how-much-of-your-mortgage-payment-goes-towards-loan-principal/How+Much+Of+Your+Mortgage+Payment+Goes+Towards+Loan+Principal%3F2010-03-09+09%3A33%3A38Kevin

When I grow up, I want to run the economy.  When I grow up, I want to be a central economic planner.  We all said those things when we were little, didn’t we?

What are we talking about, running the economy.  Nobody runs our economy, it’s capitalism for crying out loud.  Well, guess again.  When the stock market hinges on every Fed policy statement and examines its adjectives and nouns for insight into “future planning” and the market reacts with 100 point swings in either direction based on the analysis, we have some serious central planning going on.  When government bailouts determine what stocks survive and which ones don’t, we have central planning.

So, back to the main point of the article, how much money can you make to sit around and push the economic buttons and plan out the prosperity of the 300 million Americans moving forward?  Let’s take a look…

According to WSJ, members of the Fed board earn a salary of $179,700.  The chairman (Bernanke today) of the Fed earns $199,700.  Not too bad.

Turning attention to Timmay Geithner, the Secretary of the Treasury earns $191,300.

So obviously, these guys are making way more money than most average Americans.  With all the hoopla surrounding executive (over)compensation, you’d think that there might be some outcries against the individuals who have way more influence on the economy than a specific executive of a specific company.  Sure, Goldman Sachs helped cause the recession, but what about the people at the Fed who control interest rates?  Duh!

I’m tired of these academic types having way too much influence over the economy and earning a high tax funded salary at the same time.  Don’t even get me started on the performance of the Fed (Thanks for the bubble/boom/bust economy.

Maybe it’s time you raised your voice a little bit.  Or, the next time your little one says that he wants to be a fireman when he grows up, maybe recommend the consideration of a central economic planner?

Popularity: 1% [?]

1803Comments (0)http://20smoney.com/2010/03/08/how-much-money-you-can-make-by-running-the-economy/How+Much+Money+You+Can+Make+By+Running+The+Economy2010-03-08+09%3A08%3A44Kevin

Everybody believes in an emergency fund, but what if you couldn’t get access to such funds in an emergency?  There are many possible scenarios that could occur and prevent you from having funds needed in an emergency.  As such, I believe you should keep some cash hidden at home for use in an emergency.

In the event of a major disaster or blow to “the system”, you could easily see one or more of the following situations occur:

1. Bank failures which could delay withdrawal of your money while the FDIC sorts out the mess – If the FDIC goes under, it will be even more messy (unlikely due to the printing press)
2. Power outages – disable ATMs, online banking, computer systems needed to access funds
3. In such a disaster, vendors and retailers will likely not accept credit cards either, even if they’re capable of processing them.  You will likely need cash.

We heard in 2008 all kinds of threats about total financial system collapse.  Not sure exactly how that would play out but it likely wouldn’t be good for your access to cash.

So, how much cash should you keep on hand?  Most people say you need 3-6 months in an emergency fund, some say even up to a year.  For probably 99% of people, that emergency fund is a savings account somewhere which means you’re reliant on a functioning banking system to gain access to that money.  While, it’s unlikely that you would actually lose that money, the scenarios outlined above could definitely disrupt or delay your access to funds.

To get through a potential disruption or delay, you should consider keeping 10% of your emergency fund (or more depending on your situation) in cash at your property.

Keeping cash on your property of course comes with several risks, namely theft.  I recommend keeping cash hidden in multiple places.  A small safe that is visible is not a wise choice as thieves can simply remove the safe and take it with them.  Be sure to consider other risks such as fire as well.

In conclusion, if you’re truly planning financially for emergencies, then it makes complete sense to have at least some chunk of cash on hand at your house to get your through a disruption to the financial system or the regular day-to-day workings of the economy.  I’d recommend at least $500 and maybe up to 10% of your typical emergency fund in cash at your house.

Popularity: 3% [?]

1796Comments (3)http://20smoney.com/2010/03/05/should-you-keep-cash-at-home/Should+You+Keep+%22Emergency+Cash%22+At+Home%3F2010-03-05+09%3A12%3A22Kevin

If you follow this blog, you know that turning this blog (and other websites) into a sustainable, growing income stream is a huge priority for me. I document my progress each month with a monthly blog update. The blog updates typically include traffic growth, income numbers and other general strategic thoughts on the blog.

Traffic & Readership

I like to break my traffic down into three categories: visits, page views and eye ball time. Since page views per visit can depend on a look and feel and how a blog is organized, the eye ball time is probably the most accurate number when comparing blog to blog. Let’s look at each…

Total Visits

October 2009: 6,387 visits
November 2009: 6,996 visits
December 2009: 7,735 visits
January 2010: 12,354 visits
February 2010: 11,947 visits (3.3% decrease overall) but increase in daily traffic (427 visits per day vs. 399 visits per day – increase of 7%)

The above total visit numbers break into the following categories: search, referral and direct traffic. My goal is to show monthly increases across the board in each category.

Search Traffic

October 2009: 3,570 visits
November 2009: 4,075 visits
December 2009: 3,954 visits
January 2010: 5,922 visits
February 2010: 5,533 visits

Direct Traffic

October 2009: 1,245 visits
November 2009: 1,230 visits
December 2009: 1,738 visits
January 2010: 2,370 visits
February 2010: 2,035 visits

Referral Traffic

October 2009: 1,572 visits
November 2009: 1,691 visits
December 2009: 2,043 visits
January 2010: 4,060 visits
February 2010: 4,378 visits

Overall, I saw a small decrease in traffic, but much of this is due to the fact that there are 3 days less in February than there were in January.  As such, if you look at the daily traffic, the numbers were actually higher so February was a successful month.

Page Views

October 2009: 19,155 total page views
November 2009: 20,500 total page views
December 2009: 23,418 total page views
January 2010: 36,023 total page views
February 2010: 33,725 total page views

Eye Ball Time

October 2009: 1:44 per visit = 664,248 total seconds = 184.51 hours
November 2009: 1:57 per visit = 818,532 total seconds = 227.37 hours
December 2009: 1:48 per visit = 835,380 total seconds = 232.05 hours
January 2010: 1:49 per visit = 1,346,586 total seconds = 374.05 hours
February 2010: 1:43 per visit = 1,230,541 total seconds = 341.82 hours

Please note that I used Google Analytics for the above data. I tend to think Site Meter is more accurate, but I couldn’t get all the data that I wanted for the above metrics from Site Meter, so I chose to keep it consistent by getting all information out of GA.

Blog Income

Adsense Revenue

October 2009: $38.60
November 2009: $75.40
December 2009: $59.28
January 2010: $171.79
February 2010: $68.39

This month proves the volatility in Adsense revenue.  After a huge month in January, we dropped back toward a more normal month.  Perhaps, the best metric in this area is a 3 month average.  Three month average is currently $99.82.  We will want to see an increase over time in the 3 month average.

Private Advertisements

November 2009: $285.00
December 2009: $90.00
January 2010: $90.00
February 2010: $290.00

I had a good month with private deals and have definitely seen an increase in requests for advertising.  I have also raised rates recently.

Overall Thoughts

Nothing ground breaking this month, but simply continued progress.  Traffic held up great after a huge increase last month.  Blogging is all about steady gains consistently month to month.  We’re right on track.

2010 Goals Progress

As I mentioned at the start of the year, I have the following goals for 20smoney.

• Alexa ranking under 120,000 by the end of 2010 – As of writing, I’m at 126,857.   Almost guaranteed that I reach this goal.  I may adjust this goal to under 100k.
  
• Google Pagerank of 5 by the end of 2010 – I’ve gotten a lot more quality backlinks in recent months. I feel very confident about hitting PR 5.
  
• 25,000 visits a month by the end of 2010 – I believe I’m on track.  The next couple months will be very indicative of the likelihood of hitting this goal.
  
• Averaging over $100 per month in Google Adsense income by the end of 2010 – Very Likely.
  
• Averaging over $400 per month in total blog income by the end of 2010 – Very likely with the traffic growth trajectory currently.
  
• 1500 RSS subscribers by the end of 2010 – I passed 800 at the start of February and have tinkered between 810ish and 850ish for the month, I should probably hit 900 this month.  We will continue to monitor this progress.
  

Additional Resources That I Recommend For Other Bloggers

• My January 2009 report – similar to this one
• A blog post on a recent offer to buy my blog
• My thoughts on Blogging In The Personal Finance Blogosphere
• My article that explains a great deal of the growth process – “The Slow Grind of Growing A Successful Blog”.
• Recent article: “No Free Lunch For Aspiring Bloggers”

Do you have similar reports for your blog detailing your traffic and income? I want to know about it and link to it. Leave a comment with the URL.

Popularity: 3% [?]

1786Comments (3)http://20smoney.com/2010/03/04/monthly-blog-update-february-2010/Monthly+Blog+Update%3A+February+20102010-03-04+10%3A27%3A13Kevin