Thursday, March 29, 2007

time off and two links

In order to take advantage of some of the slowdown at work, I've decided to take tomorrow off. This is something that you might want to consider as well. You don't need to take a week off to be in need of a break. Personally, I've been going on all cylinders for many months now and I am starting to take a hit for it. But I think that I am coming to the end of this long run of work and then there will be a break before the big batch rolls around again.

Employers Cash In when you don't use your paid time off that is allocated to you. I'm not telling you to fake sick to get time off. Rather, im telling you to be aware of your company's time off policies and ensure that you don't lose any time as a result of "capping out" on your accruals. For me, this is not the case, but I work with people who for one reason or another feel the need to constantly keep the maximum amount of banked vacation days. Then each month or two they are scambling to find some way to get time off because they will lose it otherwise. Don't fall into this trap. Space out your time off and if you have a generous accrual or time off policy, be sure to take a day here-and-there in addition to regular vacations.

I noticed a couple of interesting links that I thought I would share as well. Without further ado:

A painfully expensive chess set:
http://most-expensive.net/chess-set

A list you just shouldn't miss:
http://www.thestreet.com/_tscrss/newsanalysis/opinion/10345796.html

Wednesday, March 28, 2007

Lack of Insurance Gets Crazy

I just have to share this article I read this afternoon. What would you do if you got run over by a car? Perhaps you would just see if you felt ok and walk home? What if you got a bad cut on the job or at a party? Perhaps you might try to stitch it up yourself, apply some iodine and a bandage and you're all set?

In the end there is a crisis of lack of health insurance among young adults. Read more stories and learn more about the problem in this article from New York magazine. http://nymag.com/news/features/29723/

Balance Transfer Woes

Working toward controlling debt is not easy. But it must be done. For me, getting a handle on debt has meant looking at all of the interest rates that I am paying on my debt. After tackling the real credit card debt, I realized that I would be able to get a credit card that gave me a zero percent interest rate. This was a transfer over to my chase credit card from my student loan. So, I moved all of the debt from one of my student loans onto a credit card at zero percent and paid a 75$ fee for the transfer.

Unfortunately, I goofed. I paid my bill online and the payment posted one day late. Interestingly enough, the due date actually moves. I never knew this. So, it was something like the 3rd one month and the 2nd the next month. As a result of this late payment, they incurred a late fee and the 0% rate ended. This was a nasty bit of reality for me but I learned a lesson: always pay the credit card bill at least a week before the due date.

The late payment didn' t hurt my credit or anything, but the really annoying thing is that I also had to start paying finance charges on the late fee!!! But I called the card company and got it handled. They re-instated the zero percent and removed all of the fees. This obviously was a huge win for me and I didn't even have to get nasty about it. So, when something like this happens, call them up. Often, the customer service reps would like to help you and this means that you can make a good amount of money by simply asking for fees to be removed or for rates to be changed.

But finally, the normal rate period expired and I was on the prowl again for a new transfer. I opened a new citibank card and was somewhat dissappointed to learn that my available credit limit was only 1/2 of the balance that was on the other card. But I proceeded with the balance transfer to this card, which should last about a year. That was an even better deal since there was no fee for the balance transfer. The negative here though was that Citibank's Customer Service Rep was not that great. He tried to pressure me to buy the credit protector fee and then he hung up with me when I strongly resisted. It was a bit unnerving, but I refuse to be pressured into that junk. But now I am done, and I am only paying interest on 1/2 of that debt for the next year. And it is a great feeling.

Friday, March 23, 2007

All Done For March! The Good, Bad, and Not So Ugly

I can't believe it, it is only March 23 and the books are closed for the month! It is a great feeling to be paying things online now. I can immediately get things paid as soon as there is available cash. For those of you who have not started paying your bills online, I would encourage you to give it a try. I've been nothing but impressed by the system since I started doing it. I find that I can easily keep track of what is due and make sure that it gets paid on time, every time. Not to mention the amount of money I am saving in stamps.

As for the actual numbers, those are good as well. Total expenses for the month are down about 200 bucks from last month.  And debt is continuing to decrease as loans are payed down. There's still a long way to go, but the extra money coming in recently has really helped out a lot. The one negative though is that the average so far for this year seems to indicate that household expenses have gone up way more than the 0.03 percent that I expected due to inflation. This means that there is either too much extra spending going on or that I need to re-think my value for inflation on household expenses.


Thursday, March 22, 2007

A Vacation From The Freedom Fund?

So one big question I have now is about the Freedom Fund. Suddenly, it doesn't feel so free. Not "free" in either sense. Not free as in free beer because I am "spending" money each month on this Freedom Fund. And not free as in liberty because I feel like I often times finding myself foregoing things that I probably could just get and not even have to pay on credit for them.

I have been using the idea of a freedom fund for months now in budgetting for big, but predictable expenses. The idea of the freedom fund is that you can set aside a small amount of money for these expenses each month in advance of the cost actually coming up. Then when that big car repair bill comes or that "surprise" of your dishwasher breaking happens, you have money saved for it already and it doesn't blow your budget. Since the money is presumably in a high-yield account, it is also making some interest income.

Taking a Vacation from the Freedom Fund

I guess the current debate going on in my little head is the thought of taking a vacation from the freedom fund. The main reason for this is that I am thinking about a vacation to Hawaii. Expensive is not even the word. It will cost about 2x what I had budgetted for a vacation. And even with trying to save more between now and the trip, I think that it would put me over-budget by about 1000 bucks. So, the debate now is, do I just say screw it and go anyway? Or should I just suck it up and go someplace that is nice, but not quite as expensive?

How Much Should You Spend on a Vacation?

Personal finance loves budgetting. It loves rules of thumb when it comes to savings, investing, and 401k matching. It does not, however, talk at all (from what I have seen) about how much you should spend on luxury items. We're not having the debate about whether or not a vacation is a luxury. I've conceded in my brain that a Hawaiian getaway is a luxury. A trip to someplace else that would not require travelling across 50% of the surface of the earth would be considered a necessity though -- since I have not taken a real trip in about 3 years.

Currently, I've expected to spend about 2 weeks pay (net) + spending money on my vacation. Hawaii would be more like 3-4 weeks pay + spending money. So I am curious to think about how much other people are spending either in dollars or in percentages. It might give me some sense of whether or not I was just in plain old denial about how much vacations really cost.

Wednesday, March 21, 2007

Live Long, but what about Prosper?

One of the more interesting developments in the world of personal finance has been Prosper. Prosper has done right by me so far. So I figure that I would talk about my small experiences related to prosper. I'm just your average pf blogger who learned about prosper and thought it would be a good idea. When I went to college, there were tons of places that advertised payday loans and such and I always got a little peeved at the idea of predatory lending. Don't even get me started about this whole sub prime mortgage mess. But now that I've been using it for several months, I thought I'd provide an update:

Right now I have about 300 bucks in prosper loans. Each loan is 50 bucks a piece. I slowly am filtering in some of my side income into these loans. And overall these loans are earning an average of 13 percent each. Surely it's not big money, especially when compared with possible long-term returns of the stock market or of the safer returns of a high-interest savings account or money market fund. But I still think that prosper has its place. It is a nice way to diversify your portfolio (albeit just a little bit).

1. TIME - If you're in it to make money for small amounts of time invested, prosper might not be the best thing though. I personally try to read each loan and related endorsements and comments before bidding -- even for a 50 dollar loan. I like the personal touch and I am ok with spending the time. But it certainly isn't very efficient. You might have another strategy, but this has worked for me so far.

2. RATING - I don't bid on anything below a C-level. Too risky, enough said.

3. FUNDING - If the loan doesn't already have a significant amount of funding, I won't bid. I bid to undercut on a juicy rate. That is the beauty of the auction process. And I often can steal 50 bucks of a nice juicy loan from someone because they aren't paying attention.

4. SELF PERPETUATING - My goal in the next year or two is to make enough money each month so that I can self fund new loans using only interest from existing loans. To that end I generally wait a month or two between each new loan and deposit only a small amount of money to add to the existing interest to make my next chunk of 50 bucks. This makes me comfortable that I am not putting too much of my money at risk. The build up is slow this way, but since I am not really "counting" on it, its fine with me.

Overall, this probably doesn't make prosper a worthy investment for tons of money. Unless you are like "pensioner", the guy who can afford to dump literally hundreds of thousands of dollars into prosper, it really doesn't matter. Prosper is really nice, and its a fun little investing 'hobby' but I don't think I will be getting rich off of it anytime soon. But it beats earning nothing on my money, and if it helps people avoid payday loans and other predatory lending, so much the better.

Tuesday, March 20, 2007

The Coming Crises - Investing For the Future

So this weekend I listened to Bob Brinker's Moneytalk radio program and although I was aware of these issues before, I think that there is significant money to be saved and/or made on opportunities for the medium to long term investor when it comes to several major issues that are going to become pressing in the not-too-distant future. Without getting into too much detail in this post, I simply want to list them for you and provide a brief description. Finding opportunities around these issues is, of course, no small task.

Additionally, these issues are somewhat speculative. If you are planning for a disaster, you really are just hoping that one doesn't happen. So, I have to say up front that I hope none of these issues really develops into a catastrophe, but I also need to acknowledge that there is a strong likelihood that at least one of them will. Without further ado, I list the issues in my own subjective order: worst to not-so-bad.

1. Medicare - There is a huge, huge problem with the current medicare spending in the United States. Recent information that I heard on T.V. from the head of the US GAO indicates that the medicare problem is somewhere on the order of 5 to 6 times worse than Social Security. This problem is due to the fact that there are more and more old people and our medical system is getting better and better at keeping people alive for long periods of time. From a medical ethics standpoint, many people argue that we are now keeping people alive long after their lives are enjoyable. But this trend is likely to continue as we develop more medicines and cure diseases.

2. Social Security - This has about a 100% chance of being a major issue within the next 15 years. Politicians are scared to touch this and Medicare but like many financial issues, this is getting worse every day we don't do anything about it. I'm currently just hoping for about 50% of my estimated benefits when I retire, but even that might be overstating things.

3. Energy Crisis - Regardless of how you feel about Peak Oil and the theories that surround it, you cannot deny that we are facing an energy crisis. In part, this is because production is down in some parts of the world that we have come to rely upon. Vast amounts of research has been started, but there has been very little notable progress made by those researching biodiesel, wind-energy, or solar power. Increased demand in the Middle Easy and Asia due to burgeoning populations will drive the price up as the supply dwindles. The forth component in this crisis is increased demand from environmentalists for tighter restrictions on ozone and carbon-based emissions.

4. Global Warming/Climate Change - Let me state for the record that I believe in global warming. I think that the earth is resilient, but that there is a balance. And while I do believe that we are changing the earth, I also believe that the earth is changing on its own as well. But to be completely in-the-dark and oblivious to the fact that our climate and planet can and do change is just utter folly. I don't expect a 'day-after-tomorrow' scenario, but I do think that it might make sense to be aware of the longer term effects on coastline, fishing, and agriculture that could be affected as a result of even a minor climate shift.

5. Avian Flu - Statistically, there will be a new flu virus in my lifetime. Will it be a horrible strain of H5N1? I certainly hope not, but you never know. Some people but worst case scenarios of H5N1 pandemics at 50-60% mortality. This would change the face of politics, economics and literally shake our civilization to its foundations. I simply have to believe that this kind of worst-case scenario won't happen. But do I think that we could have a nasty airborne virus? I sure do.

What do you think about this list?
Do you have any that you are considering?
Would you rank these the same way as I do?


As I move forward I will start scouting for opportunities that will be based around these scenarios. Not just the worst cases of each, but also opportunities that might make money on people's preparation efforts. In general, I think that looking at some of these bigger issues is one of the more interesting ways to invest and make money.

Friday, March 16, 2007

The Best 400$ I Ever Spent

Its my blog, so I figure I should share an early experience I had with money. When I turned fourteen, I started working. I can't even really remember why, but I had this desire to have money. I remember that once in a while I would do chores for money around the house. But it wasn't ever really that much money. Instead I found myself really struggling as a kid to get things that I wanted. I really really enjoyed the gifts that I got when I was younger: a new stereo that was waiting for me when I came home from my dads one weekend, a new bike that I got for Christmas. But none of these gifts compared to something that I contributed to myself: my first computer.

My first job was at a local donut shop. I was effectively a janitor after school. The pay was awful and my boss was pretty cheap. Donuts were about 50 cents a piece back then and I was making 4.35/hr. It was basically slave wages. It would be like someone making 6 bucks an hour now. But considering I was happy to have a job, it didn't really matter. I did my time and not long afterward, I started saving my money in a savings account at the bank across the street. It was a great feeling to save my money and see the balance getting bigger and bigger over time. There really wasn't anything in terms of interest, but that didn't matter.

After working from October to about Thanksgiving of the following year, I had about 400 bucks in the account. It was then that I looked in the flyers for thanksgiving, interested in what might be coming out for Christmas (I WAS still a kid after all). And then, I saw that something I had wanted for a long time was going on sale at Wal-Mart. A Computer! For 999 dollars, Wal-Mart was selling a Packard Bell computer with a monitor, mouse, keyboard, basic software, and a dot-matrix printer by Epson. How dated is all of this? The computer was a 486DX with 33mhz processor and 4MB of ram. I'm laughing just thinking about this. But it got me my start on computers.

After much begging and pleading, my mother and other family members chipped in and I got it as my big Christmas gift. I used it all of the time and it was probably the thing that I ever got. I've had about a half-dozen computers since that one, but that was the first computer for me. And by age 16 I was already building web-pages, writing programs, and upgrading my PC.

Besides the value of getting something that has served me well in terms of a career, it was also important because I worked to earn the money. It was not something that I would squander. The best money spent is money that you've saved and worked hard to get. The price of that computer was not 400 dollars, but all of the stuff that I gave up, all of the time and effort I spent working to get the money. It clarified something for me that has stayed with me to this day: hard work is great; but often the reward for hard work is even better that something just given to you.


Thursday, March 15, 2007

Cost Matters? These Mutual Funds are Killing Me

So as I read John Bogles: Common Sense on Mutual Funds, the theme is clear. Costs hurt long-term returns in actively managed mutual funds when compared with index funds or the market as a whole. Free Money Finance wrote a great article on this and I posted a comment which nicely summarized the issue that I am having now that I am more aware of this concept.

Once you've paid the load and you're in the managed fund, does it make sense to move your money? Where is the tipping point? This issue seems to be particularly difficult if the net amount of percent gain is equal for both funds once you've accounted for expenses. Check out the link to read my comment. I'm interested to hear your thoughts.

Wednesday, March 14, 2007

Poverty Matters

Sometimes, it is just too much to bear. For years, (you heard it right, folks, years), I've been asking how people are getting by when they make so little. I ask this question because I have been fairly fortunate to have my own home, to make a decent salary, and to find myself able to  make a decent life for myself.

However, I know that there are people out there who are not making enough. This recent story from msn money explains one woman's life of living just above the poverty line, making 6.50 per hour, living in Montana.

http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/IMake650AnHourAmIPoor.aspx

The unfortunate thing is that I know there are many people in this situation. Through a network that I belong to, I found out about a local man who was in his fifties and had a problem where he and his wife now no longer have a car so that at least one of them could work.

This is the ultimate issue; people are not necessarily living when they make wages this low--they are surviving. And these are not lazy people either. They simply have had bad luck or need more skills to move up.

I talked to my mom about this and she reminded me of times when I was little when the money situation was tight; and I always knew as a kid subconsciously when money was ok or if it was tight. For me and my mom, education was the key. My mom became a nurse, and I got a bachelors degree with a double major and concentrated in several key subject areas.

Education was the key because it allowed us to discuss topics and have credentials to get interviews and jobs where we could actually afford things we needed to live. And the jobs it got us raised our standard of living and brought us both into contact with other wealthier, more educated people increasing our social network for other jobs, money-saving opportunities, and advice.

So while I agree with some of the core principals that this person states: you shouldn't define yourself based on income and that there is "no shame in being poor", I truly feel that being poor is ok if you are happy. But most people are like this woman who "envys her friends kitchenware". And I don't think we're talking expensive stuff from Crate and Barrel or Williams Sanoma here.

If you really don't have enough money to go out to eat once every few months, or buy a new shirt or pair of jeans when you could really use one, or to buy yourself pots and pans while everyone you know is able to do those things, I don't think that it is a situation where you can really say you are happy. (I'm not talking about foregoing these things because you are saving for something like the recent trend of 'buy nothing' months; that's a different ball of wax.)

And I don't think it's greed either. There are tons of people that have less than even the most poverty stricken people in the united states, but we have a culture and society that surrounds us with rich people. And for anyone to be working very, very hard in this country and end up barely able to survive, it is a sad situation.

The far more likely situation, based on my personal experience, is that people make choices to stay in poverty. They won't work hard to get educated. They won't take a second  job. They won't ask for help with babysitting, transportation, etc. They enjoy being victims of their circumstances, a bad divorce, a bad breakup, a broken home, or a medical situation. And worst of all, many people live and wallow in the regret, shame, and blame of their past choices.

The only way to make progress is to move forward; learn from mistakes and make better choices in the future. Just doing this myself over the past year has been a huge positive step. This change in attitude helped retire 2 credit card debts and 1 student loan so far in just about 1 year. With another debt payoff on the horizon, things are looking good.




Tuesday, March 13, 2007

Great News About Social Security

Well, I've just done some research and I am pleased about what I learned about social security. I knew that there was a downside to retiring early. The check you get for an early retirement significantly reduces the benefits that you might have received if you waited until full retirement. However, I also knew that there were rules about what you could and could get in terms of income while still collecting social security. However, I discovered that I was wrong.

The limits come into play only for people who are NOT at full retirement age. If you are at full retirement age, you can earn as much as you want with no penalty. So these wierd limits only apply to people who are "younger than full retirement age during the whole year".

http://www.socialsecurity.gov/pubs/10069.html

And even better, investment income, capital gains, 401k and IRA distributions etc are never counted as earnings that could reduce your social security benefits. Instead, the only things that are considered to be part of the earnings that reduce your benefits are actual earnings. That is, money that you get for working.

http://www.socialsecurity.gov/pubs/10069.html#count

So, it is generally easier to retire early as long as you can cover your expenses etc. from the time you retire up through the point where you get medicare. Obviously, health insurance is the big expense there. Many people look at a secondary insurance anyway in order to cover expenses that medicare doesn't cover so I don't think (I hope) it will be that big of a shock in terms of coverage.

The reason I was so happy to read this is because I truly think that I will be "earning" money until the day I die. But I am not sure how much of that money will be money I worked to get. Since I really like to focus on passive income, it would appear that this means that I am in good shape with regard to the current setup of social security.





Wednesday, March 07, 2007

Chuck Jones paints too rosy of a picture of the Economy

Most everyone is aware of how the markets tanked last week and now are somewhat struggling. I am still checking my 401k every day or two and I am not really doing anything much as a result of the markets, but I am keeping an eye on things. So, the big question for me right now is, do I believe Greenspan? Greenspan was in asia not long before this whole market downturn happened and he said that there could be a recession this year.

Of course, for some people, even the faintest whiff of recession can make them throw the baby out with the proverbial bathwater when it comes to investing. So a selloff was not exactly rocket science. Similar to other downturns, many of the trades were automatic as a result of stocks tumbling down to preset levels etc. But, here we are and now the market is just sort of going up and down a little like a fishing baubble.

All that said, an article I read on MSN money was interesting. http://articles.moneycentral.msn.com/Investing/Extra/GreenspanVsBernanke.aspx

A quote from the article really struck me, "This time, any difference between Greenspan's remarks and Bernanke's doesn't seem to have left the market with too much lasting damage. 'It just so happens that (Greenspan) made one comment that ends up being right in front of a big stock market move,' says Charles Jones, a finance professor at Columbia Business School. 'I think that's more coincidence than anything.' "

Now, I know that this guy is a professor, but I really think he is part of the wishin', hopin' , and prayin' crowd that thinks that these numbers can continue this way for ever. And just because Google http://finance.google.com/finance?q=goog went up on news that one analyst thinks its a good buy as a result of the market correction doesn't mean that is the same for everyone.

I personally don't think that this correction is over. The picture Chuck Jones is painting leads you to the conclusion that this correction is a coincidence. I don't think that is true either. I think that it was a house of cards just waiting to collapse and Greenspan dropped a brick on it. Now I'm just wondering how much of a correction this will turn out to be; with the mortgage/lending crisis we are dealing with now (Sentry closed down something like 60% on Monday), I think we still have some dark days ahead.





Being Innovative Can Be Costly

Before you think about doing something that is innovative or frugal or environmentally friendly, you might want to think twice. According to this article, the guy that has done amazing things for both the environment (in terms of reusing) and also for issues when it comes to our dependence on foreign oil is being asked to post bond. He has been using vegetable oil as a fuel source for his deisel vehicle and it has served him well for many years. The full article explains it in more detail:

http://www.treehugger.com/files/2007/03/illinois_man_fi.php

The first comment that I read for the article seems to get it spot on: "I don't believe this had anything to do with oil companies. The state probably relies on those taxes for transportation costs, and is afraid of what will happen if everyone moves outside of the normal (taxed) supply chain to get their fuel." - Old Wolf

But now this guy is into it with the government. Regardless of your feelings on taxation/double taxation etc, I can only imagine that most people don't like to tangle with the government unless they have to. So the question now becomes for me, was it worth it for this guy to do what he did? Did he save enough money?

Tuesday, March 06, 2007

Exercising My Employee Benefits

A while back, I wrote about exercising and gym memberships: http://easychange.blogspot.com/2006/06/do-you-really-need-that-gym-membership.html

But frankly, I feel like these are cash cow businesses where the average joe gets milked for all he's worth and then ends up back in front of the t.v. on the couch, feeling badly that he wasted all his time and money. Bottom line: exercise is important for health, but keeping up with it is probably just as important as starting in the first place.

Personally, I knew I needed to get into better shape. My muscles literally had atrophied from doing nothing but being on a computer and barely even having to walk from my work to my car. So several months back I got a hand-me-down gym for free from a relative and was able to start working out at home. This was much better than a gym membership because it was free and it was convenient. The convenience of having it at home made it very hard for me to not exercise. Sometimes, if I get bored, I find myself drawn into it so it is a nice side-effect of having it right downstairs in my basement.

So, recently it occurred to me that I should really consider looking around at the local gyms. I've been consistently exercising at least 2x per week for about six months now and I could potentially actually benefit from going to a gym since all of the weights in my house keep me sort of stuck in the same 8-10 exercise rut. I've read in many different publications that this can often result in strange muscle tone as well. So perhaps getting a gym membership where there are other exercises that I could do would be a good idea.


Planning


Since I have a benefit at work for 150 dollars reimbursement per year, I am going to look into a place where I can join for that much or less. I'd really like to get more out of this benefit. The method I'm considering is finding a plan that I can join for about 150 dollars for a set amount of time and then cancel. I will thereby get maximum benefit out of this reimbursement.

Weather is a major factor for this plan though. I want to ensure that I am getting the most value out of this reimbursement by only using the gym money when weather would conditions would prevent me from getting "free" exercise outside. By considering a plan like this, I hope to make even more out of my employee benefits.

Sunday, March 04, 2007

Suze Orman Book Signing

So on friday, I went to see Suze Orman at a book signing/talk in boston. I had a great time and it was fun to meet Suze in person. Her book about women and money seemed to resonate with quite a few people in the audience; my mom is a big fan of Suze and has really started getting her finances in order as a result of reading Suze's books and watching her show.

It appears that Suze has changed her mind at this book in that she now believes that there are some fundamentally different things about how men and women handle money. I find this concept interesting but not *always* true.

I like many of the ideas in her new book though and I think that men and women could both often benefit from the advice Suze gives when it comes to money. And the concepts in this book are really no exception, in my opinion. Sure, most guys are probably not as "touchy-feely" and emotional about money as women are. But that doesn't mean that some of the same concepts cannot be applied.

One concept that Suze discusses is the idea of putting yourself "on sale". That is, by not making sure you are getting what you are worth, you really hurt yourself in the long run. I personally have experienced this, even though I am a man. Therefore, if you like Suze Orman, it might be worth giving her new book a read. You might find that there is something in there, even for men.

Friday, March 02, 2007

Net Worth Entry For February

Well, February has ended and the markets were less than kind this week. So I figured now that the carnage is over (hopefully), I figured I'd ask a question to my readers:



Net worth didn't fare so bad over in my neck of the woods since there were tax returns etc to offset the bad week in the market. If you are interested, here's the latest entry: http://www.networthiq.com/people/EasyChange

Happy Friday Everyone!