Monday, April 30, 2007

3 Tips to Maintain Healthy Habits

This weekend I was looking forward to a great time. I had lots of stuff going on and the weekend just sort of got away from me. On Friday night I got absolutely slammed with work and it turned out that I really didn't get out from underneath it until Saturday night. To add insult to injury, I was experiencing a bit of discomfort from a muscle strain in my back that was presumably from working out on Friday night. Truthfully, I am fairly timid when I exercise and I am surprised that I hurt myself, but then again, it was bound to happen sooner or later, right?

So I've taken a break from exercising for a few days but now I am out of my routine. And just like anything else for me, once I get into a routine, the inertia of it all makes it simple for me to continue. But then again, once I find myself outside of it, it is hard to recover. But I've recovered before and so I am going to get back on the horse again.

Similarly, at one of my jobs I made a financial mistake which cost me some inertia. I decided to stop my 401k contributions for a short period of time. And during this time I said that I was going to pay off my credit cards. But deferring or pausing or stopping your retirement contributions in order to pay down debt just doesn't make sense to me now. And I don't know why it ever did. (maybe it was those predatory interest rates?)

At any rate, before I started rambling --- the point is that I really need to guard my inertia when it comes to developing good habits. So my strategy is this: eliminate excuses before they become convenient outs.

My Three Tips to Keep Exercising --

1. If you don't have time to do something like exercise -- go on the offensive and get things done ahead of time. I try to do work, clean, etc so that I have no excuse not to do it.
2. If you don't want to do something but really should, doing it right when you get home might be the best thing. For me, I find that this is the ideal time. I haven't totally transitioned into "me" time yet, so I don't feel quite so resistant.
3. Smaller increments are better. The habit or "inertia" is what you are guarding, not the actual act. Therefore I'd argue that 3-20 minute sessions of exercise are better than a single 1 hour session because 3 develops more of a habit over a week. So that is what I try to do. Plus 20 minutes doesn't seem like a burden.

Friday, April 27, 2007

Making a Million -- the Hard Way

Many of us dream of being millionaires. And although we are in an age in the United States where a million isn't "what it used to be", we still find ourselves dreaming of the possibilities that our lives would hold if we somehow came into that kind of money. And is the opportunity going to be made even easier by new legislation to allow online gambling?

Now when I said "The Hard Way" here in the title, I don't mean working, at least not in the typical sense of being a CEO or marketing exec who grinds out 12-14 hour days, or being a salesperson who is a perpetual road warrior. Instead, I am talking about taking big risks.

Since it is Friday, I figured that I would take a moment to highlight one of poker's newly recognized players: Joe Pelton. He is an avid amateur player who has made just shy of 2 million dollars in the past six months, mostly on two tournaments played in 2006 where he had breakout performances.

Amateurs or Professionals?

Pelton played a fearless game and even at times when he was down and out, played an amazingly agressive and fearless game, especially in his second tournament where he finished in third place. Although many people when it comes to aspects of their life play not to lose, Pelton took huge risks and played to win. Clearly in this second tournament he didn't win, but in the first tournament, he did so he was hardly shooting from the hip.

Thousands of people are professional gamblers. That is, they are literally putting thousands down on tables either at casinos or at home via gambling websites in order to make money to pay their bills and expenses. For a select few who are talented and lucky, they make a million or more as a result of their efforts. Most, however, have to be content with making a more modest living. An entire cottage industry has sprung up around online gambling, with a significant focus on Texas Hold'em and other types of poker in particular. Its not just online casinos themselves, but also a vast array of online blogs, databases, and software developers all devoted to serving the players of these games at all levels.

Online Gambling's Risky Future

But where does it end? This is exactly the question that was asked recently when President Bush signed a law into effect that bans these types of financial transactions, leaving many in this industry feeling chuffed. In the end, there is a push back now, however. A recent movement by Barney Frank to allow online gambling brings the issue back to the fore.

It is still unclear to me as to whether or not the benefits outweigh the costs when it comes to legalization of gambling in terms of social and political policy. And since all politics is local, it is always going to be a local discussion. But it seems certain that there are strong voices on both sides of this issue. And with people like Joe Pelton making millions after playing as an amateur, its not hard to see why.

Thursday, April 26, 2007

Retirement Musings

As I generally keep a pretty good eye on my retirement, I find it interesting now to see all of the stuff that is going on in terms of the markets. People acknowledge that the markets are doing much better than the economy. Last night I watched a news report that showed that the increase from 12k to 13k for the dow has only taken the last 7 months whereas the previous increase of 1k took 7 years. Now granted, I will give you the fact that compounding helps, but the power of compounding (in the short-run) for 11k is not all that different than 12k. So that is not the whole answer.

Should I be discounting?

What I am considering is actually padding my retirement spreadsheet by adjusting my retirement account figures down by 5% in order to "buffer" for the coming storm. Frankly, I am glad that the market is seeing all time highs, but I think in that sometime in the next 30 years there is going to be some kind of correction for this kind of growth. It's just a little too much, to fast, I think.

Are we catching up for lost time, maybe? I mean, we had 7 years of rather lackluster growth largely due to 9/11 and the dot com nonsense and the fear that housing is going to bust us all is not really materializing so far (thank goodness). So I am inclined to think that a large part of this growth is just making up for those bad years we had.

On the fence

As you can see, I am planted firmly on the fence about this. As for my roth money though, I am making my contributions but not investing them until I have a better sense. I put in a chunk last month anyway and I think it is far more likely that I am going to see things either stay flat or go down at some point before the end of the year rather than continue their astronomical growth. Plus, I'm dealing in hundreds, not thousands, of dollars. So a little bit either way doesn't really matter.

Thursday, April 19, 2007

Selling Stuff Online -- Is Ebay Really Worth It?

Recently, I tried selling a few printer ink cartridges online and I was really dissapointed. I tried both and ebay (which charged me a listing fee) and neither one has worked. I'm not really sure how to feel about the whole experience, but I know that there are many pf bloggers out there who have much success with buying and selling stuff on ebay and/or other websites.

How do you do it?

Is it worth the time?

Where do you acquire the stuff to sell?

Personally, I think it is likely that this will be my first and last experience doing this. It took me about 15 minutes to setup the auction on ebay and I found that there were way too many options and it was confusing as a first-time user. Finally, I got the item listed only to realize that I was going to be charged a listing fee -- all for an item that might not ever even sell.

Since I have so many other things that I could be doing with my time, doing auctions that only make me 5 or 10 bucks a pop just doesn't seem to make sense. Even if I were doing 4 of those a week, it would still only be about 15-20 bucks per hour. And then, you still have to pay taxes on that money. All of you professional ebay and/or online sellers out there are paying taxes on all that money you make, right? Subtract from that the costs of the merchandise that you're selling and there goes the viability, right?

I'm dying to hear a counterpoint here, so if you have one, please leave me a comment.

Wednesday, April 18, 2007

The Thing You've Overlooked About Retirement Planning

This week I received an invitation to go to a family member's 50th birthday celebration. It really just cements the idea that I have that we are absolutely responsible for our retirement. Now although this seems painfully obvious, it seems to me that if you are really interested in protecting your retirement and your savings you need to start getting agressive -- with your family! The issue here is so common, but I don't see many people talking about it in the PF Blogging community.

Just imagine the scenario: You are a twenty-something or a thirty-something. You delay gratification so you can save. You pick good investments, mutual funds, and have a nice healthy e-fund setup so that you generally pay cash for your large purchases. And good thing too. You've saved yourself about 100k in compounded interest over the course of your life by avoiding car loans and credit cards like the plague. Ok sure, not everyone is in this situation, but many people do a good job managing their finances and accumulate significant wealth for their retirement where they expect to take trips and the like and maybe even retire at 55 or 60 or 65 with no trouble.

Then reality sets in when this person is in their mid-forties. Their mom or dad has started running out of money. They are struggling to make ends meet because of low social security income and lack of savings. Its 2020 but now its too late to do anything in terms of saving. But you can't very well let your mom or dad live a life without having cable tv to watch or a decent car to drive or something to eat besides tomato soup and tuna fish every day. So, you (like a good kid) start supplementing their income with a few hundred bucks a month. And although it seems like no big deal at first, Mom or Dad starts to feel entitled and before you know it, you are in for quite a sizeable chunk of change.

The major issue is not that you keep tapping the bank of mom and dad (although there is plenty of that going on as well) but really that mom and/or dad could be tapping the bank of you -- if they don't have money for their lifestyle. So what is the solution?

Start talking to your parents about money now. Be agressive and be insistent. If you have a good relationship and love each other you need to do this fast. Ask about debts, mortgages, insurance, and savings. All of these things need to be tackled. Help them plan their retirement if they haven't started yet.

 It might simply be that they should stop living at their means because their means are going to drop by 50% the day they retire. Or, it might be that they are more than fine and you have nothing to worry about. But for me, the opposite was true when I had this discussion a little over a year ago. Some real heart to heart conversations left me very scared about retirement for my parents and I have started taking steps now, more than 10 years before they retire. Because its not too late yet. And simply having this conversation has changed behavior; it has allowed people in my family to start thinking about supporting themselves in the future. And that means that the drain on my own savings and retirement will be smaller.

Please note, in some cases, there's nothing to be done. The obvious one that jumps to mind is Medical emergencies. There's not much to be done unless your parent is engaging in really bad habits. But in the case that it is unexpected, you just have to roll with it. In reality, it would be wonderful to help my parents, if I have the means to. Its just that right now, I cannot be sure that I will.

Tuesday, April 17, 2007

Freedom Fund Saves The Day

As many people in PF blog land have already discovered, having a freedom fund ( a separate savings account for 'expected' expenses ) earmarked for big future purchases can really be a life saver. Since it has been about 18 months since my last vacation, I have finally decided to take the plunge, as it were and book a trip. Of course, there is not really an easy way to pay for a trip like this using cash when booking over the internet. But, since I had money stashed in the Freedom Fund, I was easily able to book the trip. I have now transferred money from my freedom fund over at ING Direct and paid the credit card bill for the trip all well in advance of the arrival of said statement. In the end I will likely pay a few dollars of interest, but that sure beats the regular amount that I would pay if I kept a running balance for the trip over many months like I used to do.

The positive steps that I have taken with my debt have given the monthly budget a lot more wiggle room this year and that makes me feel great. For the first time I am consistently finding that there is enough money to pay bills well in advance every month, even after savings goals are met. This is fantastic.

Furthermore, I have just increased my 401k contribution at work up to 8% (although that almost got messed up and didn't go through for this quarter, much to my dismay), which is going to keep the retirement nest egg extra warm, just the way I like it. Now if only there were a company match......

And now that things are going so well, I am not afraid to improve my lifestyle just a little bit. I've been going out to eat a little bit more and taking a little bit of money and splurging here and there. I try to keep it low key, but I find that doing this once in a while gives me a sense that it is actually worth working this hard.

Friday, April 13, 2007

These People Are Looney Toons

Not long ago I was riding the commuter train home from work. And while I was on the train I remember someone discussing their retirement account that had about 70k in it. This seemed amazing, if not impossible since I knew that I was only able to contribute a mere fraction of that. I felt discouraged as I went home. All of this despite the fact that this was a guy that was at least 10 years older than I was. But here I was thinking that I should have much much more in my account and that there was no way for someone like me to achieve this.

If you're looking for a great ending, stop now. There isn't one. I don't have that kind of money....yet. But I have learned to let go of this fear, this resentment toward people with nice and fat net worths. It seems all too easy for people to give up or become resentful against the rich since they think, hey, I can't even do that if I wanted to.

Laura Rowley takes this attitude on with an amazing column on Yahoo Finance this week.

The one point that Laura made that really makes sense:

Moonlight when you're young, and invest the income.

The reasons this make sense are as follows:
1. You budget only using your primary income. So it almost instantly keeps you within your financial means.
2. You learn about investing and this changes your attitude about money.
3. By starting when you're young, even a few extra dollars a week makes a big difference, even if invested in something basic.

This is what I have been doing for the past year - splitting my 'side' income between paying down my student loan debt -- you can see my chart over at NCN .

I've also been investing with prosper.

Both of these moves have made a huge difference for me financially. I pay much less interest and I pay more attention to household finances. Now I am becoming obsessive about it -- always looking for a way to save or invest more or pay off debt faster. But all of this is not just so I can have that mythical 70k in retirement savings. Instead, it is about self-control. It is about having the power to decide the way I will live for the second half of my life.
And for what it's worth - people like Yahoo! Finance User who made this comment on the article -- "Exchange federal reserve notes for silver and sleep well at night knowing that the US government can not so easily steal your wealth. Silver to $20 this year." -- are looney tunes. Seriously. They should have a cartoon. Will metals go up? Maybe. Is the stock market the way to go? Probably, but not definitely. How about energy? Possibly.

But the bottom line is that any investment that I've seen that is worth it's salt carries some risk. People that think metals are safe from the government should consider that gold was once confiscated by the government.

Thursday, April 12, 2007

Prioritizing: 5 Ways to Think About Tasks

One of the most challenging things in life is prioritizing. I find this is true for me particularly during the holidays and during the summer. There are so many things to do and see and just not enough time to do them. This is slightly different from time management in that time management is really the art of taking the time that you have allocated for a particular task or set of tasks and using techniques to ensure that this time is used for the tasks that you have decided on accomplishing.

For me, the problem isn't so much with time management. I've gotten better at that recently and I know how my body and mind work so I can handle that much of the time. Instead, the problem is more upstream -- prioritizing. I enjoy doing many different things throughout the day. I don't have ADD or ADHD or anything like that, but I really like switching gears often. I notice a significant reduction in my productivity if I have to do the same thing for more than 2-3 hours straight. I instead prefer to have 'organized chaos' with lots of little things going on all at the same time.

Rarely, I do find the need to focus - but this is rare. Most of the stuff I work on either in my job or at home is not too taxing and therefore doesn't require significant concentrated effort. But without further ado, here are my 5 tips for prioritizing quickly and easily:

-- Time: How much time is the task going to take? If it is a short task (less than 15 minutes, do it immediately. If you put it off, you will likely spend more time procrastinating than if you just did it.

-- Deadline: If there is a deadline to the task, particularly a monitary deadline, get it out of the way. In order to be certain that there is enough breathing room for these kinds of tasks, try to get these done a week ahead of time. Its not always possible, but if you get in this habit, you will notice that you are always ahead and therefore there is much less stress.

-- Iterations?: If this is a task that will require many meetings, (going back to the river, as it were), you need to determine your team or other people. If the people or person you're working with is notoriously late or changes his/her mind frequently, it is likely that you will want to put this on the back burner. On the other hand, if the task is something that will reduce work later on and will likely reduce overall iterations, then get it done soon.

-- Importance: Often times, things are very important, but they have no deadline or person clamoring for them. So, they get pushed off. Wills, Trusts, estate planning and retirement are the ones that spring to my mind. People think there's plenty of time and the only person getting hurt is them so they don't care. When something is important, you need to do it quickly. Sometimes, you might have to be late on other items if it is the only way to get to these things. Don't short change yourself or people you care about on items that are critical.

-- Flexibility: Are the requirements/deadlines/time constraints set in stone? If not, consider which tasks you might be able to push back on. It is often an 80-20 situation. If I can find that by pushing back on 1 of my tasks I can get 4 others done to meet the deadlines and constraints, that is a likely course of action.

so there's my five tips for thinking about tasks. Use them however you like, but you'll find that if you think about these ideas when it comes to deciding what needs to be done, you will have a much easier time setting your priorities.

Wednesday, April 11, 2007

Everything I know about Investing I learned from Texas Hold'em

Ok ok. Its not entirely true. Lately I've been playing quite a bit of poker online. Although I've played cards for over 20 years (poker for many of them), I've just recently fallen back into poker. Just with fake money, but I've been doing rather well. I like poker quite a bit because of the social aspects as well as the mathematical aspects of it. Since I am naturally drawn to numbers, statistics, logic, etc, it is not a big shock that I find poker...Texas Hold'em in particular to be so much fun. But when it comes to keeping your mind sharp, especially when it comes to investing I find that Texas Hold'em does a great job:

-- Texas Hold'em Poker forces you to think quickly about your chances of winning the hand. Being quick-witted is a skill that is useful almost everywhere in life.

-- Texas Hold'em Poker forces you often to be patient and wait for the right opportunity. Players that don't do this are considered loose or live and will lose most (if not all) of their money over the long run. Investing is no different. Patience is critical.

-- Leverage vs. Accumulation Understanding the power of leverage when it comes to investing is similar to the number of chips you might have in front of you. A short stack is similar to a leveraged position where you must make every chip count. A large stack shows the value of having accumulated wealth -- you can use it as a weapon to accumulate even more.

-- Diversification vs Overdiversification: Picking more than one opportunity to put some money into is important in investing so that it is not all lost on one bad investment. But if you divide each dollar into 100 different investments, none of them will have enough money to grow into anything significant. A balance is critical when it comes to investing. Picking several of the best investments is likely the best strategy. In poker, its like putting up money to see the flop; its likely to cost you, but if you pick only the most choice hands to spend the chips on, you're going to be way ahead.

-- Guts: There's not much to explain here. When you know that there is a good opportunity and you have done your homework, you have to have the guts to pull the trigger and go "all in" on it. Because its better to have tried to go for it and have lost on a bad beat after you were confident that everything was right....than it is to be stuck watching the perfect opportunity pass you by because you were too chicken to jump on board.

Tuesday, April 10, 2007

Casey Serin Gets Saved?

I had a moment around lunchtime today so I figured I'd check out Casey Serin's blog. Casey Serin. You know, that guy who bought like 7 properties using shady (if not completely fake) information to get the loans and is now stuck between a rock and proverbial hard place when it comes to moving forward financially.?. Anyway, he writes on his blog that he is going to be getting some help from Suze Orman. I watch Suze's show though and I didn't see him on there so I must have missed the episode he was on.

But in regard to the meetup of these two personalities, one commenter on Casey's blog seemed quite concise. A commenter named Segfault writes -- "Her financial advice is not always top-tier, but I'd rate her far above Robert Kiyosaki. I'd rate her below John Bogle, Ben Stein, and William Bernstein. That said, and not even having heard her specific advice to you, I think you should take her advice, because it will probably be the best you've gotten so far, and because you probably won't."

On the one hand, this stuff really sets my hair on fire, but then I just chuckle and try to not get too worked up about it. Nothing like this is worth damaging my health after all. ;)

If you want to read the post and all of the juicy comments (this guy gets major comments) check it out here.

Monday, April 09, 2007

Net Worth Surprises

So, I went to the mail this weekend and was pleasantly surprised to open up one of the statements and find that a retirement account had twice as much as I thought it had. I don't know if I messed up the spreadsheet I track with or something, but I was quite pleased when I plugged in the updated numbers. This month's net worth entry is going have a nice bump and I am excited.

And is it me, or is the market doing quite nicely? I just checked and on the year I am averaging about 5% in my retirement accounts. That is not too shabby; granted, you can make that in a savings account, but if it continues to grow at that rate I should easily get to over 10% on the year which is my target.

Friday, April 06, 2007

Benefits with extra fringe?

An article on MSN Money offers a few of the following "average" benefits from companies according to a recent survey. I thought it was pretty interesting to learn how my company benefits were compared to the average. How does your benefit package stack up? Fringe benefits can be costly for companies but significantly improve loyaly among employees.

  • Immediate eligibility for a health-care plan.
  • A 401(k) plan in which the typical match is 50 cents for each $1 an employee contributes, up to a certain percentage of pay.
  • Access to a dental plan with 100% of exams covered and 80% coverage for dental work.
  • Access to a vision plan separate from medical or dental coverage.
  • A group life insurance plan that pays a year of salary or wages as a death benefit.
  • Long-term-disability benefits with pay replacement of 60%.
  • On average, 11.7 days of vacation after one year of service and 15.4 after five years of service.
  • Eight to 12 paid holidays a year.
  • Dependent-care spending accounts and access to a health savings account.
For a full list and details about the research, check out the article on MSN money:

Wednesday, April 04, 2007

Monthly Net Worth Entry

Well its that time again. I've updated my spreadsheet and things are progressing along quite nicely. Currently, net worth is up about 1% over last month. This is largely due to savings deposits and such and was not really helped much by the fact that the market has been rather so-so of late. Most of this increase has been in the retirement accounts due to regular contributions.

But since I don't think I've really broken this down here before, and I think it is interesting data...

Percentage of Total Net Worth

Home Equity: ~40%
Retirement : ~40%
Auto: ~10%
Stuff/Cash: ~10%

Of course, this is going to change over time, I hope. It certainly doesn't feel very diversified to have nearly 1/2 of the total net worth to be tied up in a property, but then again, its home. So in that sense, it is totally worth it.

Tuesday, April 03, 2007

feeling the pinch - 401k contributions

So I will admit it. I am a little scared. Since the open enrollment for changing and updating our 401k contributions just happened at work, I decided to go up another point. I made the change online yesterday but it is a little scary. I did some quick math and I can afford it but I will definitely be tight when it comes to pocket money.

However, there is an upside!. If I am able to keep myself at this percentage, I did some calculating that with normal pay increases and compounding it could increase my nest egg by a couple of hundred thousand bucks in retirement. Thats no small change. So I am hopeful. Of course, there are tons of variables in the equation, but I never really thought that I would be able to increase my deduction three percentage points in less than a 18 months. It has been the result of careful money management and being very diligent.

Now lets just see if I can make it work :)

Sunday, April 01, 2007

Google Introduces New Feature: Gmail Paper

Google has introduced a brand new feature. They are allowing all of their users to actually print out all of their emails AND photos and have them shipped via regular post to you for no charge. Of course, the downside is that they need to make the money for this service to operate so they have decided to sell advertising on the "backside" of the documents and photos that are printed. But considering how cool this feature is, I am really excited to get my first photos.

Using gmail paper is very easy. Once you go to check your gmail, you will see advertising for it. Then you can learn more about it. But once you have signed in to your email, you must enable options under settings in order to get it to work. Obviously, the main thing that they need is your physical address so that they can send you the stuff. All in all, seems like a great service.

(btw, this is all a joke; it is google's April Fools Day Joke. If you want to read more, check this link: )

Happy April Fools Day