Medicated Money

Friday, May 26, 2006

Medicated In San Francisco


"I have always been rather better treated in San Francisco than I actually deserved." -Mark Twain

We are heading out to San Francisco today for a conference this week. We are looking forward to the many good restaurants, Napa Valley, and to see some of our old friends from school. We will be there until Thursday of next week. Have a great Memorial Day, and we'll talk to you next week.

Thursday, May 25, 2006

Book This - The Total Money Makeover



For our first book review, we wanted to start with the book that started it all for us! I found Dave Ramsey by mistake, but it probably was one of the best mistakes of my life. After listening to his radio show, I purchased The Total Money Makeover. I read it from cover to cover in 6 hours. Not to hard of a read and that is what makes it a great book. Dave Ramsey does a great job of breaking down personal finance, which is probably not a top priority for 99% of Americans, into a simple, basic plan that is easy to understand and just as easy to carry out.

The Total Money Makeover preaches that personal finance is easy if you understand a few simple ideas. First, take everything that is discussed in personal finance forums, credit card reward articles, and the search for low interest rates discussions and throw it out the window. Next, you need to learn to understand that financial discipline is 90% action, 10% reason. Dave Ramsey believes (and we believe it) that most Americans will continue any action if they see positive results. The Total Money Makeover teaches the reader to perform simple actions that will show quick results. Thus from these positive experiences, the reader will continue to perform the same actions over and over.

The Total Money Makeover talks about financial denial, the myths of debt, the importance of starting a small emergency fund, paying down debt with the debt snowball, maximizing retirement investing, and paying off the home mortgage. What is interesting is that Ramsey throws in many personal experiences and experiences of his listeners to help the reader understand that if they can do it, so can you.

What I love about The Total Money Makeover is the fact that it is the quick and dirty entrance key into the world of personal finance. If one reads the book, they will have a written game plan that shows results immediately and does not confuse the reader. Dave Ramsey stays away from the complexity of finances that in my opinion bring many people down. Granted, most readers reading this and personal finance bloggers will find that The Total Money Makeover is too simplistic. The Ramsey's theories of becoming free from all debt, basic investing strategies, and funding retirement are not all mathematically correct and go against many personal finance theories. However, The Total Money Makeover shows the average American, who is more interested in discussing who is the next American Idol then their finances, the path to financial security is obtainable with financial discipline, living below your means, and becoming/staying debt free. For this, we give the Total Money Makeover by Dave Ramsey 4 stars out of 5 for personal finance information and knowledge.

Wednesday, May 24, 2006

To Know Is To Read

The more that you read,the more things you will know.The more that you learn,the more places you'll go.~ Dr. Seuss ~

Mrs. Medicated and I laugh quite a bit when we sit back and remember the hours and hours we spent sitting in our medical school library, reading and studying. It was typical that we would spend 50-60 hours/week at the same desk, in the same chair, reading and studying. After graduating, our readings cut down, but we still spend a good amount of time reading articles and journals in our respected fields. The reason for this entire information overload: knowledge.

Since starting this blog, we have spent endless hours trying to learn the ins and outs of personal finance. Most of our knowledge has been gain through reading online articles and personal finance blogs. One source of knowledge that we have just tapped into is personal finance books. We decided to start a reading list of books that range in the personal finance world; from budgeting to investing to taxes.

We are planning on starting a little book review of these personal finance books to discuss what knowledge we have gained by reading the topics discussed and how it may affect our current situation. Our first book that we plan to review is: The Total Money Makeover by Dave Ramsey.

Tuesday, May 23, 2006

What A Long, Strange Trip It's Been!



First things first, we have been extremely busy for the past 2 weeks, and therefore, our postings have significantly decreased. We are trying to get back into our normal posting schedule, but it has been difficult. Thanks for stopping by and reading though!

This past weekend we headed back home to the Northeast for a graduation party as well as an engagement party of our friends. We take the same scheduled Continental flights every time we go home. We check in online for each flight hours before the schedule departure time and for the most part, we are extremely please with the service with Continental. Unfortunately, for our return flight, this was not the case!

We arrived at the airport for our flight home an hour before the scheduled departure time. We had our printed online check-in passes in hand and needed to just drop off our luggage (I hate carry-on luggage and believe it should be banned. I have been on too many delayed flights because some idiot decided that his/her 3 pieces of luggage could fit in an area of 2 x 2 feet. But I digress!) After swiping our ID to finish the information, the computer screen and corresponding ticket agent told us to stand off to the side until she was ready to help us. We waited a good 15 minutes until she was ready for us (she had to finish telling her co-worker about her brother’s crazy wife), and we told her our destination and need to check our bags. She then proceeds to tell us that we will be unable to get on this flight due to the fact that our tickets were given away because we did not check in on time. Okay, when did this policy begin at Continental? When we tell her we checked in online and had our tickets in hand, she told us we did not ‘officially’ check-in 45 minutes or earlier from the time of departure at the airport. I laughed (bad move) and told her we were waiting for the past 15 minutes for her assistance per her request. She immediately got upset and tells me that she never said that to us. Trying to defuse the situation, I tell her that we are not going to check our luggage, go straight to the gate (we had e-tickets in our hands), and board the plane. She then tells that we could board the plane, but they have no room for luggage. I guess another new policy at Continental! Unbelievable! She then proceeds to tell me that Continental has the right to refuse e-tickets that you print from THEIR website, and that they will do this in this circumstance. She tells us that our only way home that night to Houston is through a different city. She said that we were very lucky she was able to do this for us because most times, they make you travel the next day. The final new policy just started that day at Continental. Instead of fighting with her and realizing it would go nowhere, we agreed to the re-routing. Instead of a 3 hr flight home, we were re-routed to Cleveland on a flight 2 hrs from our departure time with an hour lay-over, then a flight home to Houston. All in all, a 4 hr delay.

After arriving in the terminal, we immediately went to seek out a Continental Customer Service Desk and explained our circumstances. To his credit, this manager listened to our compliant, and apologized for the situation. He tried to get us on the flight to direct flight, but unfortunately, the flight had just left. He again apologized for the situation and ticket agent. He then compensated $175/each for the missed flight. All in all, we were amazed by the difference is professionalism of the two Continental employee’s. Had we been offered the compensation right from the beginning, we probably would have given our seats up. The fact that we missed the flight due to Continental overbooking the flight, dealing with and not be given a direct reason for the situation with the ticket agent was upsetting. However, we felt that the manager did everything he could at that point to help us from this situation. We joked with him and told him that because of his assistance, Continental would keep two more customers. He laughed and said the US bankruptcy courts would be happy to hear that!

Wednesday, May 17, 2006

One Step Up & Two Steps Back

Somewhere along the line I slipped off track. I'm caught movin' one step up and two steps back -Bruce Springsteen

Well, the month of May is killing us. Financially, that is! Unexpected expenses this month are putting a serious hurt on our monthly budget. Here is a list of just a few of our big ticket items that may put us behind this month:

  • In June, we are heading home for a good friend's wedding. When you include the flight home, the tux rental, and a wedding gift, we are looking at a total of about $1,200. Yet, we both feel that we would not miss it for the world.
  • We have our annual work conference coming up at the end of the month, and our work decided this year to reimburse all purchases (flight, hotel, and daily expenses) after the conference. All in all, about $3,000 that we will pay this month. We will be reimbursed in a few months though for these cost.
  • We have been extremely busy at work this month and with this we have been falling into those bad financial decisions; such as eating dinner out, not packing lunches, and just being undisciplined in spending

We still are planning to keep to our debt repayment plan, but our emergency savings may take a small hit to accommodate the additional expenses.

Sunday, May 14, 2006

Quick Thanks To pfblogs.com

Words are, of course, the most powerful drug used by mankind. -Rudyard Kipling

We just wanted to take a moment and say thanks to the folks over at pfblogs.com for adding us to their site. pfblogs.com does an excellent job of keeping track of many different personal finance blogs out in that place that they call the 'world wide web!'

Thanks again from your friends over here at Medicated Money!

Saturday, May 13, 2006

Long Term Goals - Part III

The future is something which everyone reaches at the rate of sixty minutes an hour, whatever he does, whoever he is. -C.S. Lewis

After getting the numbers correct (I think) thanks to MonkeyVersusRobot, we wanted to sit down and talk about reasons why we may not reach those numbers. It definitely is very easy (as I didn't show) to sit down, figure out what you should do in financial planning, plug those numbers into a calculator, and be amazed at what the results show. The problem is that in actuality, life happens and hitting those numbers many are quite difficult.

After discussing the numbers, we created a list of life events that could negatively affect these numbers. Our list included many personal problems such as job loss and health concerns as well as national concerns such as the stock market crashing and burning. In the grand scheme of things, it is quite difficult to plan for every twist and bump in the road to retirement. Our plan and, therefore, our 'Number' are very difficult to put our thumb on, and almost impossible to predict at this stage of our life.

After much discussion and 'working the pencil,' instead of finding our 'Number' and long term goal, the goal found us. We decided that our long term goal should be divided into two segments and involve ideas instead of numbers!

So without further ado, we present our long term plans in order for us to achieve these goals:

Our first goal is to raise a loving family with Ms. Medicated as a stay-at-home mother and working part-time when our schedule allows.

Our second goal is to be completely debt free by age 35. This includes everything from our current personal debts, student loans, and future mortgage. In order to do this, we plan to use the following financial plan to obtain this:

  • Retirement - 25%
  • Taxes - 21%
  • Living Expenses - 27%
  • Paying Off Debt - 27%

Our last goal is to retire from our current working situation at age 60. At age 35, we plan to switch our current percentages to look like this:

  • Retirement - 25%
  • Taxes - 25%
  • Living Expenses - 30%
  • Savings & Investments - 20%

With this plan, we anticipate that our true 'number' can be fairly close to the 'Number' discussed in our previous post. We feel that with this plan, it will be easier to take each twist and turn in the road easier because we are not trying to hit a goal, but rather living a lifestyle that is comfortable at the moment yet is planning for the future. Only time will time, though, whether this is a solid plan or not.

Wednesday, May 10, 2006

Are Any Of These Numbers Right?

I like to think as myself as someone who is fairly good with calculations and forecasting numbers based on certain assumed numbers. However, after our last post, I spent a good 2 hours last night starring into the darkness thinking if the calculations for our long term plan were right. We used all the ‘trendy,’ (read: basic) calculations to determine our numbers. Yet, something does not ‘feel’ right! So we are asking our ‘trusty’ readers to help correct or point out any oversight or miscalculation that we may have made in our forecasting. To help, here are our predicting numbers:

All of this based on 25% tax rate, and inflation was not included:

  • Pre-Tax: 403(b) currently at $43k, contributing at least $30k per year for 32 years, at 8% rate of returns, and 0.5% expense rate/year
  • Post-Tax: Investing $37,500 in investment vehicles, at 6% rate of return, for 25 years
    If possible, minus from total $8,000/year to Roth IRA’s, 8% rate of return, for 32 yrs

I recheck the numbers this morning, and everything seemed right. Maybe we feel this because to state these numbers is one thing, to actually produce these numbers is another.

Let us know if you see problems or oversights, though.

Tuesday, May 09, 2006

Long Term Goals - Part II

In our last post, we discussed our long term goals. In order for us to achieve those future goals, we need to create a plan to give us the financial backing to live out those goals. As previously stated, our current long term goals are the following:
  1. Raise a loving family with Ms. Medicated as a stay-at-home mother and working part-time when our schedule allows.
  2. Completely debt free by age 35. This includes everything from our current personal debts, student loans, and future mortgage.
  3. Retire from our current working situation at age 60.

In order for us to achieve these goals, we need to create a 'financial number' that will sustain our retirement years (planning for 30+ years) with an annual income that provides a comfortable living situation. Our plan comprises several different accounts to achieve this goal.

The first account we will discuss to help us reach this goal is our current 403(b). We are currently contributing the maximum in these accounts. We are planning to continue to contribute the maximum allowed for both of us over the next 32 years. Currently, we have $42k in these accounts. With an additional $30k/year for 32 years, at a moderate 8% return on our investment, 0.5% annual investment fee, our 403(b) could be worth $4,346,000

Our second account that we plan to take advantage of is after-taxed money investments. We plan that after subtracting 70-80% (of which 20% is 403(b), 20-25% in taxes, 30-35% in living expenses) from our net income, we hope to save 20-30% of our income in these vehicles. At a moderate 6% rate of return for 25 years, 25% tax rate, our projected investments would be $1,746,400.

The third account is a mixture of retirement vehicles and post-tax investment vehicles. If we our eligible to invest in Roth IRA, and we do invest the maximum in Roth’s, then our numbers change to the following:

  • Post-tax Investments (Same criteria as above) - $1,373,800
  • Roth IRA Investments (Calculated at 8% rate of return for 32 years) - $1,435,600

If everything holds true, we are looking at the following investments when we retire at age 60.

  • 403(b) & Post-tax Investments: $6,092,400
  • 403(b), Post-tax Investments, & Roth IRA’s: $7,155,400

In discussing the two much different numbers, our goal is to be able to reproduce the second number. This is just a rough estimate. In our next post, we want to look at what major decisions can effect that number, what retiring with that number means, where does Social Security fit in to this calculation, and what we need to do now and in the future to achieve this number.

Monday, May 08, 2006

Long Term Goals - Part I

While currently reading 'The Number,' we sat down and discussed what our number is and what it should be. As the book discusses, the Number is the 'amount of money you need to secure the rest of your life.' That is definitely a difficult answer to derive! This discussion has led us to try to determine our long term goals. Most financial advisors argue that without a true plan, you will never get to a 'financially secure' location. The first step is to determine where you want to go.

We both love our careers and the work that goes with it. However, we both are very family orientated and our first long term goal is to raise a loving family. Money can buy many things, but the love of a family is one it cannot, no matter how much you have. In saying this, we feel that one parent at home with children is a must. This will be difficult due to the fact our education was both expensive and long; some would argue that this is not financially the wisest move. However, we both feel that it is most important that our children are raised by us instead of by others. In discussing this, we feel that Mr. Medicated will most likely continue to work full time while Ms. Medicated will most likely work part-time to help stay current in her field. Our goal is to arrange our work schedules around times when one parent is at home with the children at all times, and/or both be working when they are in school!

Our second long term goal is to become completely debt-free by the age of 35. As many of our readers know, we are currently undergoing a debt repayment plan. This does not include our student loans and/or our future house purchase. Our goal is be completely debt-free by the age of 35 to allow for 25 years of financial growth without debt. At that point, our goal is to have our net income to resemble this:
  • 30-35% - Living Expenses
  • 20-25% - Taxes
  • 40-50% - Savings

Our third long term goal is to be able to retire at age 60. This word 'retire' is probably not the best to use in our plan, but for us, it means to reach a point where working is by choice, not by mandate. We both will most likely continue to 'work.' Mr. Medicated would like to eventually go into the academic world of our occupation, while Mrs. Medicated sees herself working in under-served areas. Our goal is to be able to still have a paycheck available as well as some benefits, but to give back to our field as well as enjoy our 'retirement' with family and friends

In order for us to 'retire' at age 60, we plan to have a certain Number to allow us to live for 30+ years and not having to worry about our money running out or downgrading our lifestyle significantly. In Part II of this post, we will discuss what we think our Number is and how we plan to get there.

Thursday, May 04, 2006

Expenses For April 2006

"Beware of little expenses: a small leak will sink a great ship." - Ben Franklin

In continuing to monitor our net worth and our monthly expenses, we are using this post to discuss the expenses of April 2006. As discuss in our March Expense report, our goal is to lower our everyday bills as best as possible month to month. Here is our expense report for April:



At the beginning of each month, we discuss our budget together and make any changes to the numbers as we see fit for the month. Our budget goal this past month was $3,395. Unfortunately, we didn't succeed in staying under budget. We were 6.96% ($236.17) over our budget. We are still looking to see some of the benefits of our 'cutting the fat' from our bills over the next few months. So far we have seen the results in:

Our hope is to create a post showing 20% decrease in many of our bills in the near future. Our next goal is try to lower our monthly expenses to under $3,000.

Wednesday, May 03, 2006

To Sell Or Not Sell, That Is The Question

I (Mr. Medicated) bought my vehicle as a rush decision after moving to a city that encourages driving by offering poor public transportation options. Fortunately, I was smart enough to realize that even with a new job about to start in the upcoming weeks and with that, my first real paycheck, buying a new car and dealing with the high monthly payments was not an option I was willing to entertain. After much negotiating, I struck a deal for a 1-yr old SUV that was in great condition for a total price of $17,500. To the dealer's dismay, I already had financing through my bank for a loan of the total price at 4.5%. All in all, I am very happy with my decision, however, if I could do it again, I probably would have bought a older, cheaper car, and have the loan paid for after the first few paychecks. However, that is another story. Well, 3 years later and undergoing some life changing events, ie marriage, personal finance awakening, moving closer to work, I have realized that maybe we don't need the car anymore.

We currently live 1.2 miles from our workplace. Mr & Mrs. Medicated actually work at the same location, and since Mrs. Medicated car gets better mpg, drives better in the city, and easier for Mrs to drive, we drive her car 85% of the time. As for my car, it sits in the garage except for those times when we need 2 cars (rarely ever), when we need the extra space it provides, or if we are going on a trip due to its extra comforts.

So the question: Is it worthwhile to sell 1 car and live with just 1 car?

So far I see the pro's to selling as:
  1. Selling the vehicle would eliminate the $8,428.59 we currently owe on the car. The car is currently worth $13,325, a difference of $4,896. The monthly payment of $346 could be applied elsewhere to our debt repayment.
  2. We would be able to lower our current auto insurance by only having 1 vehicle on the policy.
  3. Our auto maintenance bills would be lower by eliminating 1 car from scheduled maintenance costs
  4. More space in the garage where Mr. Medicated has free range to decorate the only place in the house without asking the wife :^)

The con's of selling:

  1. We would have only 1 car and any auto emergency or accidents would put us without transportation.
  2. We live in a large city and enjoy the ability to each have a car to drive when needed.
  3. The car we would like to sell is an SUV and may be difficult to sell due to the current gas situation and mpg of the car
  4. We love the SUV for trips, and we enjoy going on day trips/weekend trips.
  5. Eventually, we will need a second car, and the plan is to have the car paid in the next 6 months. Having a solid running car available when the time comes is a strong feeling to hold on to the car.

As you can see, we are unsure if we should sell or just keep it? What do you think?

Tuesday, May 02, 2006

Net Worth - April 2006

The month of April was a really good month for us. We both received raises at work, we reach our budgeted amount towards our debt repayment, we were able to go on 2 small vacations for minimal costs, and our net worth increased by 10%.

Here is the breakdown for the month:



A couple of comment regarding this past month's progress:


  • We changed the format of this spreadsheet this month. Instead of looking at the Rate of Return of our money, the last 2 columns represent the monthly % change over the past month, and the yearly % change is in comparison of our money from the beginning of this blog (March 1, 2006).
  • We are extremely happy that our net worth increase over 10% this past month. Our goal is to have our net worth increase between 9% - 11% per month.
  • We were able to make a total of $3,678.10 towards our debt repayment plan this past month. We would like to pay at least $3,500 to $4,000/month towards this goal.
  • We are hoping that we can pay off Student #2 ($3,061.43) by the end of next month. We received raises during the month of April. With this additional money and the difference from our emergency account, we are thinking of paying the loan in total!
  • We are thinking of possibly selling one of our cars, which in turn, would be a major factor in our debt repayment and overall net worth. As you may remember, we do not include the worth of cars in our net worth. Why not? Well, see here! We look to discuss this issue in our next post.

Overall, we are happy with our progress this past month, but we are determined to do better.

Monday, May 01, 2006

Medicated In The 'Big Easy'


We had a great time in New Orleans this past weekend. We drove to New Orleans after work on Friday afternoon, attended Jazz Fest Saturday, and then headed home Sunday. We spent some time walking around the French Quarter as well drove around some of the harder hit areas of town. Overall, the city is definitely rebuilding, but it looks to be a slow progress. We think the French Quarter will get back to pre-storm status, but it is hard to say the same for the other areas. On the way home, we discussed with our friends if we were from the city, would we move back? The majority of us probably would not go back! If everything was lost, we all stated we would move on in a different city. It is sad to say this, but the destruction is that bad. Yet, the people of New Orleans seem determined to rebuild and this was readily apparent at the festival! A few photos of the festival and the destruction of the city!

Jazz Fest 2006


The Rebirth of New Orleans Stage


One of the marshals of the parade






Dave Matthews Band


New Orleans - Post-Katrina




Rite Aid is reduced to this trailer:


The Super Dome