Friday, June 29, 2007

You CAN Start When You're Young

When I was younger, I used to talk to my grandfather quite frequently about money and money issues. He started teaching me this stuff when I was in high school and college mostly. But it was really interesting when I look back on it because I always felt like he was out of touch. I always felt like he was not really able to understand how difficult it was to actually save money and have that much "extra" left over. I mean, even during my best times, I had only a few hundred dollars of extra money. In fact, it wasn't until I was out of college that I actually had more than 1500 dollars to my name at any one time.

My grandfather was wise, however. He touted the idea of index funds. He described to me the ideas associated with great books from Mr. Bogle. And the ideas make sense to me now more than ever. Unfortunately, I didn't jump on them at that point in my life. It wasn't until I was in my mid twenties that I really started to realize the real importance of investing. I still have enough time to do some amazing things with investing and working hard, but the main point is that you CAN start when you're young.

If you don't have the minimums for some of the mutual funds you want to invest in, don't be discouraged. Instead, try to save up over 100 dollars (better yet two or three hundred) and then deposit the money into an online brokerage account with low trading fees.

I don't get any kickbacks from these companies, but I've been using Sogo invest for my personal stock investments (non retirement) and sharebuilder for my roth. Since sharebuilder has a fee for roth accounts, you might want to consider simply opening an ING account until you get to a few hundred dollars.

Start small. When you're a kid or young adult in high school or college, there are many times that you get small amounts of money for special occasions. Instead of spending all of it, simply take a dollar once per week out of your discretionary income and put it aside. Then when you get large chunks of money either as gifts or paychecks, try to save 10 dollars per chunk.

Each time you get a decent amount set aside, put it in the a high yield savings account. In this way you won't have to change your habits very much but in the course of 6 months if you have some sort of job, you will likely have between 100-200 dollars to start with. I wish that I had started this kind of habit earlier on in life. I don't really think that I've done that badly with my money, and I am doing better each day. But what seemed impossible when I was younger--saving money and investing--now seems simple and obvious.

For a great example of how young people can become investors on their own, check out <a href="http://www.pencils2.com/pencilsfund.html">Pencils Fund</a>

Thursday, June 28, 2007

8 Reasons You Don't Like Yahoo Finance

From reading various comments, I've decided that it is time to put together a list of reasons that Yahoo! Finance is somewhat annoying to many pf bloggers and other readers out there. With any luck, this will help to improve the finance writing that is being produced. I find it quite annoying actually that many of the ideas and comments go ignored and unanswered by the people in charge over at Yahoo Finance and the authors. These are not all my opinions, they are pretty much gathered from the various comments for the articles.

1. There's nothing new. -- This is by far the complaint that seems to top the comments list. I see some variation of this complaint on almost every single article that is written. This is something that I absolutely have to agree with. What is most interesting about this complaint is that very few of the writers really make an effort to develop original advice content. Most of the writers who are developing new content are using their personal experiences to "spice up" the same old advice.

2. Everyone's in bed together. -- This is another common theme that pops up on the comment section. Often, people are talking about careers, or about money, or relationships and the article becomes a sales pitch for their latest client or some new product that is being offered. This really offends lots of people, myself included. Your clients should not be mentioned by name in the article, in my opinion. The information can be made just as valuable without selling the client. The problem with mentioning by name is that people don't know whether or not the authors are doing it to be "shmoozy" or to genuinely feed information to users.

3. Oversaturated -- Theres too many career columns. There's too many columns that deal with investing. Its really that simple. There just isn't that much to write about that you need 3+ columnists in each of these categories, especially when you take point one into account.

4. Non-Expert Experts -- The problem with most of the "experts" on yahoo finance is that they are not all really experts, per se. This is a major theme in many of the comments. These people have become successful finance writers. That is certainly true for most, if not all of them. And perhaps that is why Yahoo! Finance wants to talk to them. However, when it comes to being interesting and providing clear content, it makes sense to get financial gurus who have *made* it before. One person who is notably absent is Jim Cramer; this is likely because he has non compete deals with his other organizations, but it makes sense when you think about it. He is someone who has made large sums of money by investing. Certainly one or two of the others may have made significant sums by investing as well, but largely they are making money by writing. There is certainly nothing wrong with that, but they are not what some of the people are looking for -- financial gurus who can talk to them about investing etc.

5. Great Expectations -- Regardless of whether readers admit it or not, we expected Yahoo! Finance to be different. Not different from other services out there, different from what it is. I think there is this expectation that we are going to get content like Jim Jubak et al. from MSN Money or The Fool writers etc. These types articles talk about investing and understanding the market, all with the assumption that you know how to manage your money at this point for the most part. The tough part is that most of those types of investing articles come with a subscription to a service that you have to pay for.

In the meantime, perhaps people that want real personal finance types of advice should be looking at quality blogs like The Simple Dollar and Free Money Finance rather than Yahoo! Finance. And if they want investing information, they can read Jubak and a few others over at MSN Money. I've liked their stuff so far, and it's free. There's also several good blogs that deal with this content as well; although the overwhelming trend from the PF Community seems to be leaning to passive investing and no-load index funds and index etfs.

www.thesimpledollar.com
www.freemoneyfinance.com

6. Concrete v.s. Concept -- Many of the articles are written in a boiler plate format. When writing to a large audience, it is quite tempting to provide these kinds of boiler plate articles. The article is generally setup with a simple amount of information and then follows with a series of themes on how to change your thinking, each backed up by some prevailing wisdom or explanation from the author or link to some resource where you go to learn more. Many of these articles assume that people have everything that they need in order to be successful, but instead, it is often the case that people need concrete steps that they can take to improve their situation, not simple advice to change their thinking. Readers yearn to learn new concrete things they can do in their life to save money or earn more or become more productive. Most of the articles just don't offer that.

7. Bait and Switch -- Often a title is catchy and the content of the article doesn't even come close to meeting the content implied by the article. Granted, this is not a problem that is specific to Yahoo! Finance, it is simply something that seems to be an obvious complaint that pops up in their messages.

8. Out of Touch -- The problem that seems to creep in for many comments on these articles is somewhat difficult for others to appreciate, but for those that write it, it's the cold, hard truth. That won't work for me. The reasons and descriptions and litany of explanations differ, but the end result is simple. The comments describe a person who doesn't make enough or who is in a place in their life where that advice just doesn't work. I will grant that some people are just making excuses. Others are genuinely in the wrong place to take the advice and the articles don't connect with the readers who leave the comments.

One classic example follows: "Try being a single parent of three, making almost minimum wage, and SHOW me how to save a penny. Some people have more bills than they have money. Even with government help." --Ms Playful

I think that is a great example. The issue here is that this person is already underwater. Telling someone to start saving 10% of their money when they are already underwater is a great way to seem out of touch. Ms Playful probably needs more substantive, personal advice and help than this. It is quite possible that she is in serious debt and feels totally overwhelmed, having to support 3 children and herself on meager wages.

So that's it: my list of why you don't like Yahoo! finance. If you think these reasons are not valid, please leave your comments. I'm really interested to know why you don't like Yahoo! finance or perhaps even why you do!

Tuesday, June 26, 2007

Taking A Break

This weekend was pretty good, but there is definitely still some stuff that needs to be done. I have caught up on a bunch of things lately though so I feel pretty good. Due to a slight injury, I've stopped exercising for the next week or so. I'm hopeful that my body will heal and I will be able to resume afterward. We'll see.

In other news, this weekend was a great opportunity to relax and take in some sun. I enjoyed sitting out with my plants and having coffee in the early morning. And a quick walk down the jetty where I live without treating myself to a lunch out was a healthy and frugal activity this weekend. I also was quite productive on the side in order to move some projects forward for side income which is a huge part of paying off debt at this point.

Amazingly, this month's finances were all but wrapped up by the 15th of this month, so I am looking forward to getting the final pay of the month and 'closing out the books' lol. It marks the halfway point for the year and I think that there will be quite a few causes to celebrate in terms of financial progress. Moving forward, I think that there is a ton of work that still needs to be done, but it is really important for me to remember that it is a process.

To ensure that my plants don't all get eaten, I am planning to mix up a soapy water mixture as an alternative to an insecticide to save money and also make sure that my veggies stay as natural as possible. Believe me, I was rather chuffed upon discovering a bug on my nice lettuce this weekend!


Saturday, June 23, 2007

Not Getting Discouraged

Lately I've been somewhat discouraged. In short, I hurt my back while exercising so my exercise routine is down the drain and while I tried to 'work around' the problem, I'm convinced that I am making it worse, so I have decided to stop exercising until I feel better.

Yesterday, I was out for lunch with an old college classmate. It was a great time and we were able to catch up about friends and people we knew etc. But after a little bit of time, we talked about finances. During the lunch I discovered that despite how well I was doing with paying off my debt, I was apparently quite behind.

He did an amazing job of paying off his college loans right after college. I had mixed emotions at that point. I was happy for him, but irritated that I hadn't done the same thing. I guess this is why it ranks as one of the biggest financial mistakes I've made. It is also why I crusade against student loan debt and work very hard to talk to people I meet about their college debt situation.

If I can help anyone through the pain I've dealt with, I will. But after dealing with it, I realize that my situation is not bad since I have been aggressively paying off debt. Sure it wasn't a great situation, but the money wasn't wasted entirely since I own a condo.

The important thing to realize about your financial situation is this: there's always someone doing better and doing worse than you. Look to those doing better for inspiration, not a measuring stick. And look to those doing worse as someone who you can educate (if they want it) not scold or discipline.

Removing the self-judgment once the problem is identified and being worked on is key in order to progress financially and feel stronger emotionally going forward. But then again, sometimes I need to be reminded of old lessons.

Wednesday, June 20, 2007

Planting Vegetables in a Potted Garden

Well, not long ago, I decided to plant some big pots of vegetables while I did some landscaping in my front area. I had two nice big pots that were already available and so I decided that it would be a good idea to go ahead and plant some vegetables so that I would have some nice eats during the summer. For the vegetables that I picked, I decided on peppers, cucumbers,  string beans, and lettuce.

Of course, one of the pots was unfortunately one that had no holes in the bottom and lots of rain threatened to wash out these newly germinated plants. But, after a trip to the store and a quick transplant, they seem to be much better. Now all of the plants are doing well 3 weeks into the planting process. Although some of them are a bit close to one another so I might end up moving them apart to give them more room. But the news so far is encouraging and I am hoping to save some money on groceries in the fall with lots of nice, fresh vegetables.

Understanding the up front costs is a major issue though. First there was the dirt at about 5 bucks per bag. Then there was the seeds at 1.29 per package. And then there was the pot which was like 5 bucks. So it is not likely that I am going to "save" any money this year. (The water is a non issue because the regular usage falls under the cap so it is a flat fee.)

Next year is when I expect to hit a good upside. There will be no up front costs and it will be all profit since I didn't use all of my seeds from any of the packages. One good thing is that the seeds for the beans were from a couple years ago and they germinated just fine.


Vegetable Swapping is also a likely possibility if I get enough because my neighbor is also doing a garden and so is my mother and some of the veggies that they are planting are different than mine. That might also save money.

Monday, June 18, 2007

So Much For Delayed Gratification

This morning I was flipping through the channels and saw MTV had a marathon of Super Sweet Sixteen on. For those of you who don't know what this show is, it is a reality show where the star is a fifteen year old girl who is planning her sweet sixteen party.

Of course, the do tons of little segments with the girls asking for various gifts and different entertainment for the party etc. And I've seen the show before and although it is something that seemed a little ridiculous, I always just figured that was how the "other half" lived. This morning, however, was the topper for me.


::climbs on to soapbox::

It was a girl named stephanie who came across as an absolute spoiled brat. Who knows if that is really her personality or if that was just selective editing and the stress of the situation. But, even assuming that it was not all her fault, the situation just seemed absurd. She had an "invitation" party where she had a special costume and performers etc just to hand out the invitations.

And we're not even talking about the actual party itself. It was a themed costume party with dancing and masks and the whole deal in a very fancy place. Total price tag? 300,000 dollars. That's right. Three hundred thousand dollars. I wanted to be sick. What any sixteen year old girl could have done to deserve that kind of party at age sixteen is impossible for me to comprehend. Most kids are lucky if they get a party that costs more than a thousand or two thousand dollars. Instead this girl is getting one that costs 200-300x what most lucky kids are getting.

We really need to reconsider what we are doing as a society when we have these kinds of outrageous expenses. I am the first person that will defend your right to have extravagant parties and spend your money the way you want to.

But I think that doing things like this is harmful for the kids both financially and psychologically AND also bad for society in general because it sends this message that this is normal and that things like this should be expected to be done by parents for their kids. Neither one of these statements is reasonable or fair.

If you're going to spoil your kid, at least lets not make a display of it on TV.

::off soapbox::


Goodbye PMI?

PMI, as most of you probably already know, is Private Mortgage Insurance and is basically designed to protect the lender so that if anything happens to the borrower, that the lender is assured to get the value of the loan back. Unfortunately for me, when purchasing the condo I live in, it was not with enough money to avoid the PMI. The PMI is no laughing matter as it sucks away close to 150 dollars per month. Since I've lived here over three years, that calculates out to about 5400 dollars. It is a horrible waste of money. Unfortunately, the real estate market has been relatively flat where I am and the appreciation is going slower than I would have liked.

In order to get PMI removed, you often need to have another appraisal done on your property. And luckily for me, a few things have been done to the property (new steps, new landscaping, and a new roof) which might improve the appraised value. But the first step is calling my mortgage company which I dutifully did this morning. The nice customer service rep told me that I will be getting a letter within 15-20 days explaining if it could be removed and/or the process to go about doing so. And with any luck, I will not be paying that nasty PMI for very much longer and can devote that money into paying off other debts and/or investing for retirement.

Thursday, June 14, 2007

Great News - Making Progress on Student Loan Debt

Last night I was trying to figure out what the balance on one of my credit cards that I had done the transfer for my unsecured student loans was and I found out that it was much less than I thought. Originally, I thought it was about 1600 and then on the voice machine it said that it was only 890 dollars. I was pleasantly surprised. I somehow thought that it would be more than that but I must have made some payments in there somewhere that really knocked the balance down. So finishing that bill off should be an easy feat for the second half of this month since there seems to be quite a bit extra in the checking account right now. Once that is done, more than half of the balance of that loan will be paid off. Now I just need to get my No Credit Needed chart updated again. :)

Friday, June 08, 2007

New Debt Snowball Plan?

Everyone who is involved in personal finance knows about the idea of debt snowballing. Well, this process has worked quite well for me lately. I've maintained a chart over at <a href=" http://www.ncnnetwork.com">No Credit Needed</a> and I find that it works quite well as a means of keeping track of my debt reduction.

I've made posts before on how I dislike student loans and the process and how my particular situation was handled. I graduated with tons of student loans and even after consolidation, there were too many bills and they cost me way too much in interest and there was no one there to be an advocate for me. But now that things are going well, household spending is under control and the emergency fund is growing steadily in a high-yield account over at ING (submit your email on the right for a link to open an account and get a bonus), I've realized that the finish line really is not that far away.

About 18 months ago, I got really serious about personal finance. I knew the principals already, but practicing them was another story altogether. Now, things are a very different story. Instead of scraping by each month, there is money to spare even after savings and funding the e-fund. Right now, I am considering something drastic: stopping all regular contributions to the e-fund and savings accounts.

Originally, if I simply pay all bills at the current rate without accelerating at all, my final payment for student loan #3 at the bottom of this list will be paid in 20 years when I am 47. This makes me scared and angry all at the same time. So, I'm wondering if it might not be a bad idea to simply try to divert all money to these debts now that there is some cushion in the savings.

1246 (3 months) - student loan 1 paid
1446 (3 months) - car 1 paid
1746 (6 months) - student loan 2 paid
1946 (6 months) - car 2 paid
2396 (10 months) - student loan 3 paid

zero debt other than mortgage = 28 months (less than 3 years just after age 30).
 = 62,628 dollars of debt in less than 3 years.

This plan feels too drastic and over-dramatic for me so I will probably not be doing it. On the other hand, if there are any emergencies that come up, I could simply push the plan back by a month and use that month's payment to handle the emergency. So maybe it isn't that bad of an idea.

I still probably wont do it though. But just seeing that there is the potential there to do it is amazing. I've felt trapped by that student loan 3 for quite some time. Now it doesn't seem like such a big deal.

Thursday, June 07, 2007

Troubles With Giving To Charity

Charity and donating is always an interesting topic when it comes to personal finance. Some people donate time, others money. And regardless of what people give away, the reasons for doing so are almost as varied as the donations themselves.

Recently I heard a report that discussed how local charities are being rated and there is a <a href="http://www.charitynavigator.org/">nice website</a> that you can go to to learn more about your favorite charities and determine how they are actually using your money. If you are anything like me, you want to make sure that your money is being used efficiently.

But getting to more pressing and current issues, the G8 summit is on. And one of the major issues being discussed is aid to Africa. I find this particularly interesting because people are actually working on providing more and more aid to Africa - often to combat the issue of poor medical care. But despite all the attention that Africa gets, especially now with the crisis in darfur, there is little opposition. But today, an article describing how <a href=" http://www.spiegel.de/international/spiegel/0,1518,363663,00.html">Aid to Africa hurts Africans</a>, I was amazed. Check out that article, especially the map for a different perspective.

This week, I discussed an issue that has been top of mind for me lately when it comes to charity. The issue is largely due to the fact that it was brought up in a book I'm currently reading: <i>Atlas Shrugged</i> by Ayn Rand. The idea is this: charity only matters (or has value in terms of virtue) when you give to someone that doesn't deserve it.

The book isn't clear as to whether or not the author believes this. The concept is brought up in a conversation in the book, but it really got me thinking. And I just don't believe that to be the case. A recent conversation with a co-worker really cemented the concept for me. In the United States, there are certainly people who are in bad circumstances beyond their control. However, there are also many, many people who choose to be poor, have a low quality of life etc. They do it out of complacency, out of boredom, out of laziness, or perhaps because their parents lived that way and they never really spent any time thinking about how to live differently. I can speak to this because I have people in my family who are in both situations. It is an interesting observation to make when it comes to people who 'need' help.

So this question remains: When should you donate? Is one dollar of a donation the same no matter who it goes to? And what determines the "virtue" of donating? Is it the state of the recipient and how he/she got to be in need? Or, is it your particular state that matters more?




Wednesday, June 06, 2007

Awkward Family Money Situations

I was about to write this as a comment, but its quite long and brings up a ton of issues so here goes.

First, check out  <a href=" http://hereverycentcounts.blogspot.com/2007/06/money-and-etiquette-why-are-important.html">this story at here every cent counts</a>.

Now on to my response.

I am just mortified by this story. I cannot even imagine that people with kids would expect someone in college to pay for their own dinner. I'm assuming that this is an aunt/uncle/great aunt/great uncle situation and that you are a young college student in late teens, early twenties with no full time job. All of my answers below are based on those assumptions.

If that is the case, they should *splurge* the 20 bucks for dinner. They are an adult here and as much as I believe that you should be independent, while you are in college and struggling for money, you should be treated on an occasion like this.

Big Question: How do your mom and/or dad and/or other immediate family members feel about this situation? If it was them taking out your cousins from this other family and they were treated this way, I'm sure it would not go over well. In fact, if you were an adult and one of their little kids was in college and went out to a dinner with you, surely they wouldn't expect their kid to have to pay! This just seems really hypocritical to me.

On a personal note, I think I would say something to this family female in private. First I would thank the family member for her generosity and give the 30 dollars back, cash. If it is a check, it could get lost or not cashed. You want to give the money and be sure that it is taken.

Then I would simply state that I was budgeting my meal because I don't have a ton of money. In the future, I'd prefer to not order tons of communal food because I can't afford it -- and frankly, I'd rather not go to these functions frequently in the future because they're just too expensive. Depending on the mood, you can be a little nicer or a little more cold about the situation. But either way I would make it clear that you love them all very much, but this is not the kind of event that you can continue to go to in the future until you graduate. Do this in person or during a phone call. Anything else is going to seem too cold.

This is not a snub toward them. Nor is it a self-deprecating statement. Rather, it is simply accepting your position and learning to be happy about living within your means -- even if that is simply not being able to afford to pay for other adult's food that you didn't order. ;)

As an aside: The only potential reason that I can think of for someone being rude like this to a younger person in the family is that the family themselves didn't have much money. But if that is the case, then why in the world were they going out to eat with all of their kids.

Tuesday, June 05, 2007

Net Worth Update

This has been quite a ride. Net worth for this month is up again, thanks to the stock market and the continued contributions to retirement accounts. After doing some increased contributions at the beginning of last quarter, I'm noticing very little difference in my paycheck, but the increase in my retirement account is quite nice. Of course I'd like to have more money in there, but the balance is quite nice.

As for my situation with debt, it continues to get paid down. I'm tracking that separately over at <a href='http://www.ncnnetwork.com'>No Credit Needed Network</a>. It feels good to pay it down, so I've taken quite a bit of the money from my side income and put it toward this debt. There is still quite a bit of work to do, but I'm feeling good about it right now.

Total net worth for my household is topping 60K right now.

http://www.networthiq.com/people/EasyChange

Friday, June 01, 2007

Coping with Setbacks

Fortunately, there was a little bit of extra income in my household this past month. This was largely because of the way paychecks fell etc but now here I am trying to figure out whether or not it makes sense to pull the trigger on a major lump sum payment on a credit card (this was transferred debt from a student loan). But now, here I am, stuck because some money has been eaten up (quite literally) in a hurry.

1. Dinners out
2. Unexpected medical expenses
3. Landscaping
4. Birthdays
5. Water bills

Of course, some of this stuff was planned for and some of this stuff was actually handled via the normal buffer that is built into the budget. However, where I was quite eager to put a huge chunk down against some of this debt, these expenses, which total over 500 dollars make me somewhat more hesitant.

If I decide to pull the trigger anyway, it is probably not that big of a deal. But I will end up using some of the savings to do this deal -- effectively loaning myself the money. And if I choose to go that way, I think that I will probably pay myself some interest as well. So it is a tough decision. In order to get a better feel for what to do, I've decided to wait on it either way until about the tenth of June. By then I should have a better feel for what is going to happen.

Of course, liquidating savings reduces the safety net, but then again, removing a significant 200 dollar expense each month by paying it off will also make things easier; more wiggle room each month. And this makes me quite interested in doing it.