I paid $139 for the ticket after court costs and other fees. I expected my next insurance bill to be slightly higher, but wasn't sure what to expect.

Our annual car insurance bill in 2012 went up $172.05 to $963.17 for my wife & I. I believe 100% of the increase is due to my speeding ticket as I can't find any other indication of a rate increase, but I guess there is a chance some of it is a rate increase.

I did a quick search at it looks like a speeding ticket typically affects your insurance rate for 3-5 years. The premium due to the speeding ticket might decline a bit each year, but I haven't found anything from my insurer that would indicate this so far

My estimated cost for this speeding ticket:
$139 for the ticket + 3 years of $172.05 increased insurance premiums = $655.15. Speeding is expensive. This is good motivation to keep my speed well in check going forward.

Highlights for January

• We like to take advantage of 0% APR balance transfers and other credit card offers for free money. We are actively looking at taking advantage of new credit card arbitrage opportunities.
• We are in the process of earning 50k in Chase Rewards (or ~$500) on a new Chase Ink credit card offer after we spend $5,000 in 3months. We are using Amazon Payments to maximize our credit card spend to qualify.
• Our properties are listed on our balance sheet based on their cost basis, not current market value. I believe real estate is too illiquid to list based on recent sale transactions.
• We made another significant principal payment in our Rental #1 primary mortgage. Our current focus has been to pay off this mortgage loan to improve our monthly cash flow. I'm hoping we can regularly paydown approx. $2,000/mo which should eliminate the mortgage in less than 2 years. This will be our default investment for free cash each month unless I see a much more attractive opportunity.
• January was a strong month for us driven primarily by stock market gains. We already grew our net worth about 40% of what we did in all of 2011 ($72k) so we are off to a good start. Our taxable investments did slightly worse than our benchmark (VTI) in January. I'll post additional details of our investment activities in January later this month.
• I gave some thought on how we would react to a job loss to minimize our financial hit.

One of the things we have been working over the years is to expand our multiple streams of income as this is by far the best way for us to divert a potential disaster. Reduced reliance on a single income could be a huge safety net for us. However I recognize we are not in a comfortable position yet.

Ideas for Immediate Actions to Minimize Financial Impacts From a Layoff:

• Cut Cell Phones: We'd take a hard looking at canceling our cell phone plan or at a minimum put them on reduce rate suspend to minimize expense.
• Reduce Internet: Internet ranks up their with food and energy in our household so not sure we could cut it out completely, but we could reduce our service level a bit to cut our bill.
• Discretionary Spending Lockdown: Change our spending mode to only purchase basic groceries and gas. Get family agreement we aren't going to spend money on anything else till we get in a better position. Would need a better long term plan but this should be a reasonable immediate reaction I think.
• Eliminate Eating Out: All meals made at home for the time being. Again long term would likely need a better plan, but think this is a reasonable short term action.
• Switch to High Deductible Insurance: We are currently on the most expensive health insurance plan through my employer because my wife and I regularly need medical care for chronic conditions. We'd take a hard look at switching to a high deductible plan recognizing we'd likely need to make some sacrifices in terms of the level/regularity of care we current receive.
• Stop/Reduce 401k Contributions: With a job loss comes the immediate need to conserve cash and with any remaining paychecks I want to maximize our incoming cash. I think if we were faced with a job loss the immediate needs are more critical than long term. I would at a minimum drop my contributions down to the company match level and might cut further if we thought we needed to.
• Stop Roth IRA Contributions: We currently contribute roughly $800/mo to our Roth IRAs. Again same as 401k - our immediate needs become key and I would stop contributions to conserve cash until our income situation recovered.
• Cut Additional Principal Payments: I would shift focus from eliminating debt to retaining as much cash as possible and not paying anything above the minimum debt service payment required.
• Cut Back Thermostat: This would be a tough adjustment for the family, but I'd propose we cut our thermostat back to say ~60/winter, ~80/summer. It would be tough on all of us, but I think we could manage and I would need to negotiate a family agreement to make this sacrifice to minimize our energy bills.
• Reducing Driving Trips: Today we run errands as they pop up because we are busy. With a job loss I'd think we should really focus on optimizing and planning our trips to avoid additional gas expense.
• Stop 529 Contributions: I'd immediate pause our 529 contributions until our income situation improves. It is a cash conservation measure and I would look to make up lost ground when our income situation improves.
• Drop Umbrella Insurance Policy: I'd be willing to take more risk in the name of conserving cash and look at dropping our umbrella liability insurance policy until our situation improves which would save us about $200/yr.
• Stop DRIP Investments: We put $25/mo towards a Connoco DRIP. I'd immediately stop our DRIP investments until our situation improves.
• Collect all dividend payments: A temporary income boosting measure - I'd switch all our dividends to cash payments vs dividend reinvestments.
• Change Witholding on Remaining Paychecks: As a short term cash boost I could alter my witholding to boost incoming cash. This could cause longer term pain if not planned properly and we end up owing the government more money, but this tactic could help with short term from a cash management perspective.

Making the Most of Time
The one positive of a job loss would be additional time. I am currently very time poor and I believe it would be critical to use the newly found time wisely to minimize our income loss and focus on restoring our major source of income.

Other than putting sharp focus on the job hunt, I could see these areas as potential opportunities to invest time:

• Have wife expand her side income (tutoring/preschool teaching) while I take on more housework.
• Invest labor into increasing energy efficiency of our house to reduce expenses (ex additional air sealing, etc)
• Expand our garden to grow more of the food we eat.
• Part time jobs - I hopefully wouldn't hesitate as a stop gap to pick up a lower paying part time job.
• Sell stuff on craigslist - It would be a good time as any to do some serious purging in the house and try to raise a little cash from those items we want to get rid of.
• Extreme couponing - I enjoy doing a bit of extreme couponing, but its not something I spend a lot of time doing currently. I could invest additional time in tracking coupons/sales to further minimize our food expenditures.

Any other ideas you would add to these lists?

We current live in an approx 2,600 two story traditional single family house on a crawlspace foundation with a 1994 gas pack HVAC downstairs and 2003 heat pump upstairs. We also have a circa 1994 electric water heater located in the crawlspace and a well for our water. My wife stays at home with my daughter during the day, otherwise our energy usage profile is probably very typical for an average American family.

Our energy improvement efforts began soon after we moved in and received our first utility bills. Heres a high level summary of our energy efficiency efforts:
2009

• Weatherstripping of exterior doors
• Installed programmable thermostats
• Replacing nearly all light bulbs in the house with CFLs
• Sealed electrical outlets

• Smarthome system pilot (07/2010-11/2011) which allowed us to have an equivalent water heater timer
• Added additional insulation and weatherstripping on our attic hatch

• New energy efficient refrigerator (replaced ~1998 model, which may save an est. $100/yr from per energystar website)
• Partial air sealing efforts in attic and garage with caulk
• Air sealed a major gap around a plumbing duct that was sending conditioned straight into our crawlspace
• Added 10 rolls of additional R30 insulation over our cathedral ceiling and 2 story foyer in attic
• Wrapped water heater blanket on side of water heater
• Water pipe insulation in crawlspace
• Converted gas pack fuel from propane to natural gas (~$1k investment)

• Resealed HVAC ductwork with mastic
• Additional weatherstripping on attic hatch to fully seal door
• Rigid foam board insulation on top of water heater

Annual Home Energy Costs
Recently I totaled our total electric, propane, and natural gas utility bills by year to see if we could notice a significant improvement in our energy cost:

Our Annual Home Energy Costs
2009	$ 2,797.77
2010	$ 2,992.30
2011	$ 2,685.78

Initially I was surprised that there hasn't been more of a noticeable energy savings looking at our utility bills. So I dug in a little further to understand our energy consumption which turned out was pretty consistent with our energy costs.

	Electric Kwhs	Propane Gallons
2009	14308	937.82
2010	16427	956.93
2011	14809	833.38

I've mulled it over a bit more after trying to explain the lack of obvious progress by offsetting factors like our expanding household, average temperatures, energy costs rising, and the onsite storage vs pay at consumption with propane which results in lumpy propane consumption and costs. I also need more years to get a better measure of overall improvement as many of the improvements in 2011 were done towards the end of the year and won't have a full impact on our annual energy costs till 2012 is complete.

I'm still just as focused on getting a significant long term improvement in our energy usage, but its clear it is going to require a lot more work to get there - there is no silver bullet.

One thing that stuck with me was the paradigm they operate in when spending money. They viewed time as an abundant resource as they had a lot more time than money. The decision criteria they used is very different than ours these days in which I consider us very time poor.

These globe trekking couples happily trade time for lower expenses in their journeys. Often they would go out of their way to trade a lot of time (sitting in the airport on standby, taking a local bus or walking versus taking a taxi, etc) to save just a little money in their travel.

It was really refreshing for me as I currently have a completely different view on time. I am time poor and now regularly make decisions to save time even if it costs me more money. Applying this to our financial freedom its a good reminder that when we get financially free, time will be an abundant resource and money would likely be a much more limited resource. We would likely make very different decisions when we are financially free compared to our current, very time poor, lives today.

It kinda reminds me of a propaganda sign that I often saw while we were on our temporary assignment in Shenzhen, China:

"Time is money, efficiency is life."

Our dividend income improved in 2011, but it was less than anticipated and as a result a disappointing year for me. We peaked our dividend income in 2008 and we are still trying to catch up and then continue to build past those income levels. After all passive income from stocks/bonds are a critical part of our financial freedom plan.

Our dividend income increased about 10.6% in 2011. Its decent, but we'll need to increase at a higher annual rate to generate the income we'll need in the next 10 years if we stick to our current financial freedom plan.

Here is a look at our annual dividend income in 2011:

	Annual Dividends
Investment	2008	2009	2010	2012
Sold off Equity Holdings	$ 576.28	$ 135.81	$ 29.44
Pepco	$ 22.67	$ 22.68	$ 22.68	22.68
Argo International	$ -	$ -	$ 10.84	$ 14.63
AT&T	$ 20.80	$ 21.32	$ 21.84	$ 22.36
Bank of America	$ -	$ 1.00	$ 6.65	$ 20.15
BP	$ -	$ 11.02	$ 9.40	$ 16.80
Connoco	$ 44.78	$ 106.56	$ 156.58	$ 211.65
Chevron	$ 34.16	$ 37.17	$ 41.19	$ 46.35
Duke Energy	$ 100.98	$ 111.83	$ 122.30	$ 131.90
Edison	$ 15.57	$ 16.35	$ 17.28	$ 18.16
ExxonMobil	$ 80.66	$ 88.24	$ 94.80	$ 103.31
Fairfax Financial	$ -	$ -	$ 260.00	$ 450.08
GE	$ 114.97	$ 102.07	$ 199.00	$ 281.29
Healthcare SPDR	$ -	$ 173.76	$ 175.93	$ 200.42
IBM	$ 555.74	$ 520.33	$ 394.42	$ 241.02
Lowes	$ 14.59	$ 15.72	$ 18.28	$ 23.10
Medtronic	$ 53.74	$ 68.70	$ 76.82	$ 84.97
Merck	$ 212.83	$ 222.68	$ 229.84	$ 229.84
P&G	$ 46.94	$ 53.52	$ 60.49	$ 68.03
Pfizer	$ 972.66	$ 255.60	$ 247.48	$ 114.96
Radian	$ -	$ -	$ 1.14	$ 1.52
Spectra	$ 45.07	$ 49.54	$ 51.97	$ 53.15
Microsoft	$ 0.75	$ 0.86	$ 0.93	$ 1.17
Johnson & Johnson	$ 16.13	$ 17.88	$ 20.21	$ 65.09
Union Bancshares	$ -	$ 6.00	$ 25.21	$ 39.30
VXF	$ 66.84	$ 55.31	$ 62.46	$ 1.75
VWO	$ 108.32	$ 52.62	$ 79.73	$ 99.23
VTI	$ 96.93	$ 337.00	$ 370.01	$ 419.20
KBE ETF	$ 92.58	$ 208.17	$ 68.17	$ 198.78
Total	$ 3,293.99	$ 2,691.74	$ 2,875.09	$ 3,180.89

Fixed Income
In 2011 we invested in our first fixed debt instrument - a "bond" traded on the NYSE of an insurance company - Markel. This "bond" pays 7.5% annually at face value and we've basically picked up small quantities when it was trading around or below par - $25/share. I've started toying with this even though debt yields are very low currently because we'll need to significantly increase our ownership over the next 10 years to add additional passive income to meet our financial freedom plan. When the return vs risk calculations improve we'll be evaluating heavier investments in this area.

Progress continues to be made, but the better part of 2011 appears to be a wash. Perhaps an important observation is net worth growth is looking a lot more linear compared to the exponential net worth growth we've aimed for. Key drivers of our net worth change in 2011 include:

• Acquisition of our 3rd rental property.
• Significant declines in international stock values. We have a significant portion (25-35%) of our overall investments in international stocks.
• Flat returns in domestic stocks which includes the largest portion of our investment holdings.
• Selling our remaining employer stock options during the year.

Some financial stats for 2011:

• We maxed out my 2011 401k contribution @ $16,500.
• We nearly maxed out my wife and I's Roth IRA contributions @$9,600 for 2011. We'll get the remainder in the next couple months.
• My 401k return was -5.8% for 2011.
• Our overall taxable investment holdings and IRAs return was -0.45%.
• We paid $19,939 in principal on our rental mortgages (between regular mortgage payments and additional principal contributions) not including the $40k down payment on our 3rd rental property. This has been part of our focus to paydown debt to improve free cash flow.
• We recognized our largest single monthly net worth gain ever in October of 2011.

• We like to take advantage of 0% APR balance transfers and other credit card promotions. We are actively looking at taking advantage of new credit card additional arbitrage opportunities. We recently earned 200k British Airway miles for $190 which we used on our transatlantic journey
• We are in the process of earning 50k in Chase Rewards (or ~$500) on a new Chase Ink credit card offer after we spend $5,000 in 3months. We are using Amazon Payments to maximize our credit card spend to qualify.
• Our properties are listed on our balance sheet based on their cost basis, not current market value. I believe real estate is too illiquid to list based on recent sale transactions.
• We made another significant principal payment in our Rental #1 primary mortgage. Our current focus has been to pay off this mortgage loan to improve our monthly cash flow. I'm hoping we can regularly paydown approx. $2,000/mo which should eliminate the mortgage in less than 2 years. This will be our default investment for free cash each month unless I see a much more attractive opportunity.
• December was a surprisingly strong month for us especially given all the holiday spending. Our taxable investments did significantly better than our benchmark (VTI) in December. I'll post additional details of our investment activities in December later this month.
• We spent some time performing investment loss tax harvesting in December and sold positions in Lowe's, Radian, and Dryships to harvest some tax losses. We didn't make any notable investments other than our normal DCA investments in the month.
• This wraps up the finishing touches on another positive year for us. Our net worth grew $72,974 in 2011.

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Happy New Year!

I'm happy owning what investments we have now, but all things being equal it makes more sense to sell these holdings with significant unrecognized losses and invest the proceeds in an equivalent or peer investment so we can gain the immediate benefit of the tax loss.

I ended up selling our investment holdings in Radian (RDN) and a portion of our holdings in Dryships (DRYS). Both of these stocks have been very volatile this year and our average cost basis for each holding is significantly higher than the current market value. We only sold our early investments in Dryships and continue to hold our more recent purchases which have a much lower cost basis.

As far as the proceeds I'm thinking we will just invest those in the Vanguard Total Market Index (VTI) for now.

Happy Holidays!

November Highlights:

• After a strong market climb in October, November gave some back, but less than I would have expected. We posted a -0.39% decline in our portfolio compared to our VTI benchmark decline of -0.37%.
• In early November we picked up some additional Bank of America shares to add to our position.
• We also made our regular monthly investments in our Roth IRAs and Conocco Philips DRIP, and had some dividends and dividend reinvestments.
• Our recent monthly returns were: Jan 09 -4.98%, Feb -9.94%, Mar +8.45%, Apr +10.88%, May +4.65%, Jun +0.89%, Jul +9.94%, Aug +4.36%, Sept 3.15%, Oct -2.34%, Nov +5.83%, Dec +1.85%, Jan '10 -2.34%, Feb +2.25%, Mar +5.88%, Apr +2.54%, May -8.13%, June -5.64%, July 6.17%. Aug -4.87%, Sept +8.48%, Oct 2.47%, Nov -0.96%, Dec +8.01%, Jan 2011 +2.06%, Feb 2.57%, Mar +0.15%, Apr +3.04%, May -1.56%, June -1.63%, July -2.71%, Aug -5.42%, Sept -7.06%, Oct +9.88%, Nov -0.39%.....

November 2011 Investment Report:

• Flights: We booked most of our flights with our airline miles without much shopping around. When the final bill was totaled I was surprised at how much cash we still had to outlay for our "free flights". Next time I will definitely need to do further comparison shopping with purchasing flights outright vs using miles rather than assuming using miles would be the cheapest way.
• Other transportation (buses, taxis, subways, etc): We spent approx $340 on other various transportation outside of the flights and cruise. $120 went towards a Panama tour that included transportation from Colon to Panama City. Our global trekking friends we met on the boat took local transportation (bus) from Colon to Panama City at a fraction of the price. While they didn't get the tour we did, I'm not sure we got a good value from it. We tended to utilize taxis on our trip as they were the most convenient and time saving option, but I believe we could have taken local buses to reduce our expenses.
• Hotels: We did pretty good job only spending $75 plus a bunch of hotel points for 5 nights lodging. However the high price we paid in points was still expensive if you translated the points to dollars. After all we ended up staying at major chains - Hilton, Wyndam, and a TRYP (a Wyndham chain) hotel. Looking for guesthouses or even hostels could significantly reduce our housing expenses on a future trip. Another very logical value I learned about from our globe trekking friends was that guesthouses/hostels are generally more adept at pointing travelers to low cost/high value restaurants, transportation, and things to do in the area vs full service hotel chains.

On the plus side the actual transatlantic cruise was an amazing value to us. We would jump on the opportunity to that type of trip again for the cost.

Some notes about our trip expenses:

• We used our hotel points/airline miles to cover 4/5 hotel nights. The 5th night we purchased a room on orbitz for $75.
• We took advantage of a recent British Airways credit card promotion to earn 200k airline miles which we used for nearly all of our flights on this trip (with the exception of our last minute name change on airplane ticket).
• No question about it we got a great deal on our cruise tickets. It was a tremendous value and I made the most of it eating steak 13 out of the 14 nights on the cruise :-). Wow it was good - I won't be eating like that again for a while.
• $3,000+ is a lot of money to spend on a vacation. That would go a long way towards paying down our rental mortgage, but I still think it was worth it - we had a great time. I'm interested in doing this type of extended trip again if we can get a similar amount of value out of it.
• We were very fortunate to have good friends available to care for our dog and family take care of our daughter while we went on this trip. Had they not been available we would likely not been able to take this trip. Certainly the expenses associated with the trip would have been much more than they were.

Highlights for November

• We like to take advantage of 0% APR balance transfers and other credit card promotions. We are actively looking at taking advantage of new credit card additional arbitrage opportunities. Our latest deal got us 200k British Airway miles for $190 which we used on our transatlantic journey.
• As I've been accustomed too after a record setting month, we had a bit of a decline in November. We've been busy enjoying our transatlantic cruise so don't fully understand the declines yet, but I suspect my record-keeping might be off a bit.
• The main thing we did in November was spend nearly 3 weeks on a transatlantic journey hitting Madrid, Palma in Spain; Tenerife in the Canary Islands; St Martin, Antigua, and Barbados in the Caribbean, and Panama City in Panama.
• Our properties are listed on our balance sheet based on their cost basis, not current market value. I believe real estate is too illiquid to list based on recent sale transactions.
• We made a significant principal payment in our Rental #1 primary mortgage. Our current focus has been to pay off this mortgage loan to improve our monthly cash flow. I'm hoping we can regularly paydown approx. $2,000/mo which should eliminate the mortgage in about 2 more years. Thats about 1 year too long - its been slow going and Im thinking about how we speed this up.
• The only notable investment we made for the month was we picked up some additional shares in Bank of America and our normal DCA investments. Financials overall look very cheap to me and every time they hit a recent new low I tend to pick up some more.
• Our investment portfolio fared a bit worse than our benchmark (VTI) in November. I'll post additional details of our investment activities in November later this month.