Wednesday, February 28, 2007

Suze Orman Live and Other Notes

This weekend I am quite excited. I will be taking my mom to see Suze Orman give a talk about her new book about Women and Money. This past Christmas I gave my mom Suze's book about the 9 Steps to Financial Freedom which I liked. My mom devoured the book and has been taking steps to get her finances in better shape ever since. This book promises to focus on women's issues and will probably delve more into the emotional/psychological issues that many women have with regard to their money. But I'm ok with that. I think that many people out there need to hear some of these things and I think that changing your thinking is the critical first step to affect a positive change in your life -- whether its financial or otherwise.

In general terms, people are creatures of habit. And yet we expect to do the same things again and again and again and somehow get a different result. It usually doesn't work. Instead we are stuck in cyclical behavior and thought-patterns and then are stuck with the same shoddy outcomes. Personally, when I started taking more responsibility for my financial situation, I started to feel much better.

The market tanked yesterday, but I am generally not worrying about it. Just out of curiousity I wanted to check my 401k balance but it seems that the Fidelity website was down this morning, undoubtedly because of the high amount of traffic. On the upside though, I do have a fairly large contribution coming up, and it may be that this amount could go through when the market is down. Wouldn't that be nice?

Tuesday, February 20, 2007

No Credit Needed Mentioned in New York Times, Other Updates

Recently, I joined the blogger network No Credit Needed. It is similar in function to the NetworthIQ site in that it provides charting for your progress toward your financial goals. But in general, rather than tracking net worth, it usually tracks progress toward paying off debts specifically. In addition, it provides a forum where users can update/change/and provide comments on each others' progress.

And I am excited to see that it got mentioned in the article. Here is the link:  http://www.nytimes.com/2007/02/18/us/18debt.html This is an excellent step toward broader recognition for all the work that NCN does in terms of keeping members updated and encouraging one another. As for me, I need to get my chart updated at No Credit Needed because this month, I took a big chunk of the tax return money and eliminated a small student loan that I'd been chipping away at for a few years. This was a huge step for me since I know now that I have one less bill to worry about each month and it increases the monthly household cashflow.

Thursday, February 15, 2007

Zero Percent Car Loan?

I've been thinking about moving yet another of my debts to a zero percent credit card: my car loan. As of last night, I found out that the payoff on this loan is hovering at just under five thousand dollars, with just over 300 bucks-a-month as the payment. For those math whizzes out there, thats about 17 more months of payments. After some back-of-an-envelope math (isn't that the best kind), I discovered that I could save myself more than 20 bucks a month by switching to a zero percent credit card. Thats about 350 dollars in interest.
 
So this leaves me wondering. Are there any downsides to doing this, provided that I can find a deal where I can transfer this non-credit-card-debt to a credit card and I am able to get myself a card with enough of a limit? Again, I'm not racking up new debt, I am transferring existing debt (secured by my car) to an unsecured credit card. I still haven't decided if I am going to go for it or not. I like the the idea of saving money, but I recently moved one of my student loans to a zero percent card as well. I'm looking for ideas/comments about this; if anyone else has done it before....please let me know.

Monday, February 12, 2007

Net Worth Update - January/Passive Income

Net Worth is just one measurement of wealth, of progress toward goals. However, it is just as important to consider other measurements. This thought came to me recently as I was updating net worth for January. You can see the latest info here: http://www.networthiq.com/people/easychange
 
At any rate, one of the more interesting things to consider is how much progress has been made with regard to savings to income ratios and debt to income ratios. By age 30, according to some estimates, there should be about 100K of savings in order to stay on track. But I don't know if that is going to happen; the best way I can get further on this is to increase income.
 
On that note, I thought I'd start thinking about small business/new business ideas. Currently there are various things that I am using for income streams but unfortunately, not enough of them are passive income. Ideally, I'd like to figure out some new businesses that can generate more passive income for me. I'll likely be exploring this in later entries; if anyone has any ideas with relatively little in terms of startup costs, let me know!

Friday, February 09, 2007

I Disagree With Fidelity

Retirement planning is a tricky business, and I guess when it comes right down to it, I should trust the experts. But when I do these online retirement planners and calculators, I cannot help but feel annoyed. The latest one I tried out was a basic one on the fidelity website and according to them, I will have somewhere between 700k and 1.5 million when I retire, even though I need about 2.5 million (according to them). But the flaw with most calculators, this one included, is that you don't understand enough of how they got to their conclusions.

The scary part for me is that I have done some basic calculations and I have found that I will more than handle the amount of money that will be needed. My conservative calculations put my likely retirement somewhere around 1.7 million for just my 401k and then 150K for my roth. And all of this is not including real-estate or potential social security. And all of these are conservative calculations where I only intend to increase my contributions at the rate of inflation/raises and also only consider about 8% gain. My real goals of contribution/savings/investment return are actually much loftier.

Is anyone else in the same boat when they use these calculators or is it just me?

Monday, February 05, 2007

Three Items Done -- How I did it!

Well this weekend I was quite productive. And I think that I should mention how I got through it -- perhaps these ideas will help you get through a tough day or week that you might be going through.

First thing, I got my taxes done. Getting those out of the way was not easy but I didn't do it all at once. If a project will take me more than 2 hours to do, I generally break it into 90 minute or less chunks. I find that I can accomplish the most in this period of time and then my mind starts to wonder. Consider doing some form of timeboxing if you find yourself distracted and feeling like you are 'missing out' on fun time for yourself.

I kept my eye on the prize. By getting through all of my tasks on Saturday, I knew that I would have Sunday for myself. So I did my onsite visit for a few hours, then I got home and did some programming that needed to be done and started wrapping up on my taxes. I knew throughout the whole process that I could get through it all because I knew that there was a day of rest for me on Sunday if I managed to get it all done.

After each major task, I gave myself a small reward. I played a game for an hour or read for a little while. Simple rewards can keep you energized to be productive on 'days off' to get things done. Whenever I am doing something like this, I like to remind myself why I am doing all of this extra work. So at the end of my productive day, I reviewed some of my financial info. Money and investing is the reason I work so hard to begin with, so this was a great way for me to feel good about spending all of this 'extra' time working.


Friday, February 02, 2007

Evaluating Income

One of the most interesting things that I've seen recently is the idea that people are actually tracking the percentage of their incomes across various income streams. That is, they are tracking how much they make at each job etc.

Personally, almost all of my income comes from my primary job (about 95%), which is one of the things that is generally frowned upon. I'd like to really work this upcoming year on developing more passive sources of income. Income that doesn't require my intervention or my physical presence would be ideal. Real estate is the one that often comes to mind, but dividend paying stocks might be more reasonable for me so far.

Not long ago, I wanted to get into buying a few shares of individual stocks and I bought a few shares of HD stock and its gone up a fair bit so that I've made about 12% on it so far. But right now I have no intention of selling. I bought it for the long-haul, not for the short-term gain.

Thursday, February 01, 2007

7 Unbeatable Tips For College Loans

This article over at FreeMoneyFinance really got me thinking about my student loan debt. The fact is that I have three different student loans right now (and that's after consolidating several years back). But the reality is that I still regret not paying more down on them. I know that I didn't totally mess up, but I feel like much of the struggle that I am in right now (and it isn't as bad as I am making it sound) is that I didn't get rid of the loans when I should have and instead I spent too much money on "stuff". I don't really regret anything that I bought, but I feel like I should have been able to retire that debt sooner.

The lessons I've learned, and I hope to pass on to other people that are taking student loan debt are the following:

1. Find out how much money you will owe. (do this while you are in school.)
2. Figure out whether the interest rates are fixed or variable.
3. Check with your financial aid rep to find out what loans are federally subsidized and which ones arent. You want as many federal loans as possible so that they are eligible for consolidation.
4. Go for consolidation fairly soon - and try to lock in a good fixed-rate. Also make sure you don't go for those graduated or balloon options unless you have to. That is money that you will spend on other "stuff" but it will cost you thousands of dollars in interest and lost opportunities over the long haul
5. Don't stress out over the loans unless you are majoring in something that won't be able to pay the bills. Pick a major or business that you can actually afford to support yourself doing. This may not be the "find yourself" attitude that some people have, but I am a pragmatic person. And I am glad that I did computer science and economics not just a foreign language. :)
6. Start paying extra on the loans immediately. Work a second job if you have to. (but don't do this at the expense of your 401k or roth. Those are more important.)
7. Get amortization schedules frequently so you know how much of each payment is interest, and how much of each payment is principal. that is a great way to stay motivated. It will also show you how long it will take to pay off the loan unless you pay extra.