Easy Change

For several months I've been reading money magazine. While I thought initially that it was a good option, I felt that it was a little bit junior for the more seasoned pf enthusiast like myself. In reality, I think it is a difficult market right now for pf. The market is down and asset classes have been hammered everywhere. The majority of places are talking about harvesting losses and doing rebalancing while avoiding wash sales. These make for interesting chat but it is not new. This month's issue of money mentioned an interesting topic though which might be worth considering. Put simply, people who have converted to a roth ira earlier in the year may want to switch back to the type of account they had preiously to save tax costs if their accounts have tanked. I will leave the process of finding the article in the Jan 2009 issue as an exercise for the reader. Even though this doesn't apply to me, it was still great info.

Yesterday, I was in the position of wanting to make the most of my day off and I decided to try and refinance the mortgage...or at least learn what the steps would be if I chose to do it. So what caused me to think this would be a good time to refinance? I have been watching the financial shows very carefully and I thought that the rates had dropped into the mid fives and a rate that low would be a big savings. My experience showed however that the experience described on TV is not available for everyone. I placed a quick call to my mortgage company and learned that there was a limit now for people refinancing. This limit for my bank is a limit of ten percent equity...which would be an easy goal if we did not have the housing bubble collapse. And in order to determine whether or not I met the criteria, I would have to front the cost of an appraisal...a risky venture. The point of this post is simply to share my experience. Perhaps this will motivate people to check on refinancing for t

Normally, I try to keep things upbeat here in this blog. Today I want to remain positive while still taking on an important and difficult issue, namely, job loss. Personally, I am quite fortunate. I have not lost my job and no one that I know has lost theirs either. Recently I read a poll on the cnnmoney.com website that showed close to 75% of the people have either lost a job themselves or know a close friend or family member who has. Dealing with unexpected job loss after it happens is a topic that could easily span many posts. Here, I will focus on steps you should take if you suspect you may be vulnerable. First, and this is a good idea all the time, is to try to remain positive. Negative thoughts and actions help no one. Second, prepare a disaster list of steps. This should be a list of luxuries or lifestyle adjustments which you would start as soon as you lost your job. Update your resume and reconnect with old friends, collegues, and extended family to help a job search. ------

I think that it would be really easy to ignore budgets during this time of year. Some might say that this is obvious due to the need to buy gifts for the holidays. Looking at various sites and comparison shopping are always good habits. I think there is a factor for overspending that is being overlooked. That factor is monetary policy. Simply put, there is more money sloshing around than there has been in a long time. This is to combat the powerful wealth destruction of the financial crisis. But this makes things cheaper and you buy more and then when main items like food and gas go up again...as they surely will in the future...it sets you up for trouble. Just look at your spending and compare with your budget. It might save you more than just money.

Christmas is right around the corner and this year, I am getting an early start with Christmas shopping. Unfortunately, others in my family are the same way. In fact, some family members have already bought entire shopping bags of toys for the little ones in my family. So, to avoid adding to the clutter, I've decided to give zeros for Christmas. Zeros (or zero coupon bonds, in other words, EE savings bonds that you can get at the bank where there is no interest paid out regularly...) are a great option if you have someone in your life that already has met a quota of reasonable amounts of toys/gifts for Christmas. Deals abound this year, that is certain. So shop around both online and in the brick-and-mortar stores and resist the urge to buy lots of items that people don't need just to fill up the space under the tree. In the end, I think that nearly any decent investment aimed at the long term (like a zero bond) is the best choice for the little kids in my life. There may be so

A Freedom Fund is a great supplement to the Emergency Fund. It stands to reason that there are categories of upcoming expenses that are likely to come up within a year or two and you can easily save for these expenses, a little each month, above and beyond your normal savings. This past weekend, the cat got sick and required an ER visit which totalled over 300 dollars. This was an unexpected expense -- the reality is that most people can't easily absorb it. My budget is certainly tighter now this month, but it is not undoable in any way. Fortunately, the experience has showed me it is a good idea to review the expenses to see what, if any need to be revised. The first that you might be overlooking (if you're like me) is pet expenses. These can run into thousands of dollars, so it is important to budget for this so that a pet-emergency doesn't totally ruin your finances. The second is an inflation buffer. This seems a little strange, but the reality is that our normal adjust

This evening, I decided I would log in and check on my current portfolio of prosper loans. Not long ago, I railed against prosper and now it appears that there is definitely something big going on over at prosper. The message from their website: start of message Prosper Filing Registration Statement; Enters Quiet Period Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account. If you're a borrower with an existing loan, you will continue with your current borrower agreement and be

I'd like to say that this was going to be good news. It isn't. I just found out, on the way home tonight, that my parking as a commuter in the great state of taxachusetts is going to be going up by 40% starting in less than a month. MBTA Increases Already Exorbitant Parking Fees is the link to the web page where they shamelessly announce it. My curiousity gets the better of me though. Do they really think, in this economy, in this recession that it is a good time to charge even more for these services, the services that help people work and actually generate real tax revenue? I'm not completely oblivious; Massachusetts and California were both in extremely dire straits and they needed to get short-term loans at high rates. Details are available at la times website . But in the end, it is not the increases that bother me so much as their size. People can absorb a small increase of a few percent. You adjust your budget, you make small lifestyle changes. However, this change

One of the more advanced topics in personal finance is the use of credit cards for your own benefit. Some people are involved in applying for credit cards and moving the balances around to get balance transfers. Others are simply using cards that have the best interest rates and reward programs. Now that I am credit card debt free, I have chosen to continue to use a single credit card because I get rewards on the card which can be used later on for higher-education related expenses. So, this is what I have been doing for the past year or so. Every time I buy essential expenses like gasoline or groceries, I buy them with the credit card and pay the balance each month. Recently though, I've become aware that credit cards have resumed their dirty tricks and have started moving around the due dates of the statements. This means that inadvertently, you can miss the payment date and be slammed with late fees and extra interest. So, I decided to fight back. I wanted the rewards but I didn

You'd have to be living under a rock at this point to be unaware of how scary the situation is with the global economy. That's right, GLOBAL. Even though we like to segment our countries into developing and developed...and give them even fancier names like 'frontier', the reality is that this current situation shows just how coupled all of the world's economies still are. The big concern for many at this point, and many of the government officials is the fact that the credit markets are not yet flowing. Instead, all of the money is being locked up nice and tight at banks and they are not lending. In the end, I am interested in considering prosper and some of the other peer-to-peer lending sites. In the event that these banks do not open up lending, we will be in a severe recession quite fast. But for the average person, there is a genuine concern that there might not be enough money for their boss to get enough cash to make payroll, or that there might not be money

In the craziness that continues to happen in this economy, it is important to stay focused and remember to review your overall plan. Focusing on this plan is a big part of making sure that you are able to withstand all of the news and panic that is running amok lately. For me, personally, the plan is pretty straightforward and so I figured I'd share it with you. 1. Pay all bills. Not just on time. Early. Period. 2. Never commit to debt that I am not extremely comfortable with paying off in 3 years or less. The only possible exception to this is a mortgage in the event of a move. 3. Continue paying down outstanding debts, focusing mostly on the smallest debt until it is paid down. Personally, I do not focus every free penny on debt paydowns like some personal finance experts advocate doing. I think that the importance of a significant emergency fund is just ignored during these broad statements about debt reduction. 4. Continue building the emergency and freedom funds with approxima

This week has been quite a ride already and we're not even half done. Lehman Brothers is bankrupt , B of A buying Merrill Lynch , and AIG not looking so hot, searching for some emergency money ..... One of the most important things you can have in this kind of uncertain time is an emergency fund. Not only should you have it, it should be big. The next best thing you can do is cut expenses and do all that you can to shore up your financial footing because who knows where the financial axe is coming from? I know that for many people out there, it is simply too late to do much in the short term about their emergency fund and way too difficult to figure out what to do to move their money around in any significant way. There are 3 things small things you should consider doing though, right now, before the summer ends in order to start picking up some stability in these uncertain times: 1. Make sure that your "safe" money is really safe. If its safe money, it is in an account t

So, tonight on my way home, I needed to get some gas. I pulled in off the highway and stopped at a small gas station and figured I was in for a good 45 bucks to fill my tank. I squeezed the pump and let my mind wander and then the pump popped because the tank was full. I hung up the pump and looked at the price and was shocked. It was less than 40 bucks to fill my tank. Normally, when you pay less for something, it is a thrill. And I was quite pleased as I pulled away. The annoyance only came once I realized that I was so happy. I was completely snowed. After months of paying higher gas prices -- prices that were around four dollars per gallon -- it felt great to pay 3.60. This is not a blessing or a deal though. This is still painfully expensive. And I don't think that these temporary decreases in price are a very good indication that we'll have cheap fuel for long. I'm with other people that think that our heating bills this winter will be significantly more than we had p

In the latest net worth post I made, I found, unsurprisingly, that my household net worth continues to decline. This in the face of a painfully slow economy, a housing slump, and a languishing stock market. Here's the link to the details: https://www.networthiq.com/people/easychange In short, this month marks a nearly 3.5% decrease in overall net worth. However, all that being said, I feel richer and more secure than I have in a long time. So, what does that tell you? I've made two interesting observations from this: 1. People are aware of the behavioral finance concepts now...especially those who are really 'in tune' with personal finance. That is, if me and my neighbor each has 100k, I feel worse than if I have 50k and he has 10k. The idea being that it is not simply enough to have lots of money, you need to have more than your neighbors to feel good. On some level, it feels a little sad to me, but alas, this is how most people feel/think...and I confess, I am not ver

Lately, there has been a huge change in lifestyle for me. My side work has declined in volume (largely by choice). As a result, I have the tradeoff of less money and more free time. The realization of this new lifestyle came to a head this past week when I was on vacation at home. So, I thought that this would be a great time to find some things that needed to be done around the house that I had not gotten to lately. I fixed up the front garden and was able to also work on my back deck and get it stained. I am also looking at ways to improve and make even more out of what I have. Lately I've become seriously addicted to rolling change. Saving change is a great way to save money without noticing it. In my house I have a 5 gallon water jug that gets all the extra change and occasionally a dollar bill. But, the problem for me now is that I know that this money is money that is not "earning" anything. If you find yourself having extra time on your hands, consider getting your

I think that the goal of personal finance in my life is to help me live a better life. I am not talking about just having more money and being able to buy more stuff. Although there is an obvious component of being able to purchase more goods. But I think more important than the stuff is the ability for me to know that *I can* purchase these things without worrying. Removing my fear about spending money is one major goal of my personal finance journey. The second goal is to incrementally make my life better. Whether it is to have more choices for food, more places where I can travel, or even more people I can help with various issues in their lives, these things are all things that come from having more money. And the abundance in my life is due to better financial skills. Realizing weaknesses and improving myself is another goal of personal finance. I notice this trend more and more in the PF community at large. Even my mother is a good example. Once you tackle your finances, taking o

It has been quite some time since I wrote about Prosper loans. Prosper, like many sites now available, is a site where peers can lend to other peers. Prosper effectively removes the banks from the transaction and that is the value that they are selling. The upside for the borrower is a lower interest rate than would be possible through a conventional loan. This is ultimately where I think that the average lender is starting to get screwed. I don't blame prosper here. As a borrower, it is enticing to see that you have a chance to make serious money in double digit percentage rates on a loan when your high-yield savings account is yielding only 2 or 3 percent. The upside for the lender is supposed to be a higher interest rate and therefore more income per dollar invested. However, it is easy for the average investor to consider returns without considering some of the more fundamental concepts of Modern Portfolio Theory . Risk and reward are related, even within the Prosperous world o

I read this article about inflation recently. In a nutshell, inflation is a serious concern at this point. And we're not talking about that wonderful 'special' inflation that excludes the cost of food and energy. This type of inflation is absolutely ridiculous because for most families, the inflation on those two items alone is what is effecting their heating, transportation, and food costs. This is not an article about inflation measurement. I think that everyone needs to accept the fact that prices have gone up significantly in a short period of time for the average US citizen. For the average person, this can be a difficult situation to deal with. So, I'd like to describe some anti-inflation strategies. Some of these were talked about this morning on Consuelo Mack: Wealthtrack as a means to describe anti-risk investments. The first basic idea is simple: If you know that the value of the dollar is declining and/or prices are rising, spend the dollars quickly before t

Well, with a recent windfall, it was possible to retire a significant bill which was costing about 250 minimum in cash flow each month. However, this was a bill that was being paid extra on, so strictly speaking, this is more like a 500 dollar increase in monthly cash flow. Getting debts paid off is really great for three reasons. The first reason is the increase in cash flow. The second reason it is great to pay off debts is the emotional feeling. In reality, the debtor really is a slave to the lender. And I know that people will feel that this is a somewhat dramatic stance to take, but I feel like it is true. Each time I pay off a debt, I feel more and more free. Finally, the great thing about paying things off is knowing that it is over. In a strange way, finishing a debt is like crossing the finish line on a long race. And when extra income comes in, it is like a windfall, a burst of energy that cannot be missed.

I've taken the first big steps this past memorial day weekend with regard to estate planning. I've drawn up a will and durable power of attorney and went to the bank to get the documents appropriately notorized. Since I am young, I truly do not anticipate needing these documents any time soon. But given that this has been on my list for a long time, it is good to make sure that this is taken care of. The next step is to get my own personal life insurance policy. I have some through work, but I want to be prepared and have that coverage even if I got laid off or something else happened. So, that process is now underway as well. In the end, just taking the steps themselves is extremely empowering. I've faced the fact that I won't live forever and I am ok with that. It makes me really grateful for every day I have and also makes me appreciate all that I have accumulated.

One of my favorite things to do on the weekend if I am not already busy is to watch Consuelo Mack: Wealthtrack on my local PBS station. This show features investment and finance gurus from all different major firms like Merrill Lynch, BlackRock, MorningStar etc. The reason that I really like the show is that it focuses on two very interesting parts of finance. The first is the economy in a macroeconomic view. Too often as personal investors focus on personal finance, they become deeply entrenched in the ideas around debt repayment, debt snowballing, 401ks, IRAs and other types of personal finance. While all of these items are critical to personal finance, there becomes a point where the average person begins to have money to invest. And in order to know where to invest, it is critical (in my opinion), to understand the global economy, particularly at a macroeconomic view. Of course, it is fairly well known that the past is no guarantee for the future, but I am still bullish on personal

As I talked about early on when I started this blog, I started my financial journey when I read some of the various big name personal finance books. I started with some books by Suze Orman and also with Rich Dad, Poor Dad. I still like these books and feel that they have their own viewpoints and information to offer. As I started branching out into various types of investments and more of this end of personal finance, I wanted to learn more about stocks and other types of investments. I went with a big name and read the current Jim Cramer book that was going on at the time. I like watching CNBC and the like but more than any specific show, I really feel like there's a major point that is critical to keep in mind with regard to personal finance. And this is it: You must continually educate yourself with regard to personal finance, reading, learning, and evaluating new ideas and investments with a critical eye. Its not simple enough to read these books, watch these shows, or consume

This quarter has held quite a bit of interesting stuff. As per usual, the updates to NetWorth continue. Although net worth got over 100k total, I was worried that things would become more difficult with the big drop in the markets. In a strange twist, although net worth dropped, it did not drop below 100k. Big expenses this month have included a new plasma tv (since the old tv broke with a big blue spot that burned in to the center) and a recent purchase of a sliding door. With any luck, things will continue to go well as the financial education continues and the debt continues to be reduced.