2million's Personal Finance Blog

Our little girl is already 6 weeks old and before you know it I will probably be talking about her heading to college. Time is flying and I feel like now is the best time to get the game plan ready for college savings since I have time on my side.

I would have loved to be able to set aside $5,000 in a 529 plan at my daughter's birth for college. If I could have done that I think our college savings plan would be in good shape. However that didn't happen.

The good news is we have already set aside ~$1,000 in 529 plans for her college education thanks to contributions we made before she was even born and at birth. In the grand scheme of things I think that's a really good start, however I know its likely not enough to cover her college education expenses down the road.

I also started an automatic monthly contribution to her 529 plan. I started at $25/month thinking I just wanted to get the regular contributions started. However the more I think about it, right now seems like the best time to make more serious contributions. Her expenses will only go up as she gets older so I doubled our monthly contribution to $50/month. I think that puts us in a manageable position going forward. If our monthly cash flow improves over time we will up the contribution more.

Back in 2005 I converted the first house I bought into a rental property. I have made good progress in my journey to a $2million net worth since then, but I have had this nagging little worry that has been hanging about - to date I haven't been able to increase the rent on the property.

This has real bothered me at times because my expenses on the property have gone up every year (insurance expenses, increased property taxes, repair and maintenance expenses) so the net is I have been earning less and less every year.

The first year I renewed the lease and didn't feel like I needed to make a case of it - the renewal itself would save me several hundred dollars in rerent expenses.

The next year I was busy preparing for my assignment in China and ended up signing a new lease with a couple roommates (from the previous lease) that knew the previous rent so the rent was left untouched.

This past year I was still living in China and rerented the house out while I was back in the US for a visit so I jumped on the first tenant that was interested, but ended up agreeing to reduce the rent back to the rent I had been charging.

This year I vowed to raise the rent. I raised the rent amount by $100/mo on my initial ads. I still got a good response rate, but it was clear that their were other properties on the market that were a better deal. I waited a little bit and started re advertising it for $25/mo less. I finally got some traction, and yesterday I had a pair of professionals submit an application after I agreed to drop the rent another $50/mo.

However - that means I still was able to raise the rent $25/mo. While not as much as I would like, I hope this means that the property has finally hit that medium state where I should be able to continue to creep up the rental rate each year to improve our cash flow.

Its weird, I was able to raise the rent on our second rental property immediately after the first tenants after the rental conversion. However the increase maybe due more to me underpricing the rental to begin with rather than the benefiting from rental market rate increases.

Wow I started using Microsoft Money back I think back in 1998 when I got a free copy from a Discover Card promotion. After over a decade of use, it looks like the software is going bust. Here is a link to the MS Money Product page with the announcement.

Important notice: Microsoft Money Plus will not be available for purchase after June 30, 2009. All purchased Money Plus products must be activated prior to Jan. 31, 2011.

Im a little ticked that this is going to force me to migrate to a new platform to track my personal finances. I think that is literally going to mean at least a weekend lost in trying to get up and running on something else. I never really loved the software, but we have come to depend on it to track all our transactions and I would be lost without it.

I currently have MSMoney 2007 which I believe is only good for 2 years and will expire later this year. I guess the next question is should I go run out and buy 1 more copy of MS Money to extend the amount of time to make the transition. However according to the Announcement FAQs Microsoft does not recommending upgrading from MS Money 2007 to the latest version before sales end - hmm.

I distinctly remember a comment made by a college professor in a personal finance class I took during college. This professor had told our class how valuable his accrued leave was from the state benefits program. He was an older gentleman and must have worked for the state at this public university for 25+ years. During this time he had used very little of his leave time. Instead he took advantage of a perk the state employees that allowed him to build up unused leave time over the years. While I don't remember his specifics, I believe he was indicating to the class at the time he has accumulated over 6+ months worth of leave from his job when he retired. Quite a little perk if you ask me.

I was reading a newspaper article over the weekend that was highlighting the hidden costs of NC state worker's benefits such as leave accrual. The article indicated that NC offers compensation and retirement benefits that are much better than those offered in the private sector. Case in point, my employer does not allow any leave accrual. All unused leave (vacation, sick, etc) expires at the end of the calendar year if not used.

I find these leave accrual type systems interesting since I have never had the opportunity to participate in one. One the positive side, they offer employees a non-salary incentive that encourages them to stay with the employer (builds up over time) that the employer may not have to recognize the expense in the immediate year. Employees can build sometimes very sizable amounts of leave that give them added flexibility and security that is only a pipe-dream to someone like me who has no opportunity to build up leave like that.

However, they aren't something you can take with you so if your not going to stay in a job long they make work as a disadvantage. While my employer doesn't allow leave to accrue, its sick time is much more generous for brand new employees compared to places with leave accrual benefits. I am not sure which benefit system is best - clearly if you are going to work for the same employer for 30+ years I would much rather have the leave accrual, but I can't see myself working in the same organization for the next 20+ years. Even if I wanted to, things change; I doubt I would even have the opportunity to stay where I am at for that long.

About 1 month ago I received a terrifying phone call from DCS saying I owed a significant amount of money to the VA Dept of Taxation and needed to pay immediately or face wage garnishment.

Well as it turns out, after multiple phone calls to the VA Dept of Taxation, they did turn over an account in my name to a collections company. They claim I was delinquent on filing a tax return for YR2003 and the amount was turned over to collections was for amounts they felt I owed. The amount the collection company says I owed the VA Dept of Taxation was $11,033.19. How weird is that - down to the penny and that can't explain to me how that amount is really determined.

I told them I didn't understand why this was in my name as I had moved out of Virgina in 2001. While the representative didn't know all the specifics they claimed it was just likely due some flag on my federal tax return such as a VA address. They recommended I fax a copy of my 2003 Federal and NC state taxes to the VA Dept of Taxation for review.

I was quickly able to locate a copy of my 2003 returns (amazingly I had an electronic copy handy) and went ahead and faxed them to the VA Dept of Taxation.

I got a call back from someone at the VA Dept of Taxation claiming that Virginia still considered me a legal resident of VA even if I had moved to NC in 2001 and that they believe I owed back taxes for 2005 and there was a current review for 2006. I thought it was ludicrous and said that was impossible - I moved to NC in 2001, I work in NC, my primary residence is in NC.

However the VA Dept of Taxation had a record that identifies me as the co-owner of a car in Virginia. It is true - there is a car that I am listed as co-owner (with my father) in Virginia. How does this make me a legal resident of VA? Just because you own property in a state doesn't mean you are a legal resident - does it?

I sent a letter to the VA Dept of Taxation asking for an explanation as to their legal residency definition and what criteria is established to determine legal residency. We will see what they come back with.

Sounds to me like I am caught up in some government bureaucracy or wild goose chase by VA Dept of Taxation to boost revenue.