Quiz: What is Your Money Type?

I took a short MSN Money quiz, and got these results:

...which conclude that I'm 40% Saver, 20% Idealist, and 10% Empire Builder. (I'm really not sure what happened to the other 30% myself.) And I'm so glad that the test reflects that I'm primarily a Saver, because at this juncture, I've just been trying to save money and acquire income-producing assets, like stocks and bank CDs. I had wished that I'd saved up enough money saved to take advantage of the stagnant real estate correction du jour. Alas, I'm still trying to squirrel away nuts at the moment. But I'm hopeful - I shall purchase property in good time, I shall! I just hope it doesn't make me mean.

What is Financial Planning?

During my blogging hiatus, my life has encountered a few changes. One major change being that I'm now 2 months into my new job in - can you guess? - publishing! (See long story here & mid-way report here.) Having taken into account the state of starter salaries in the publishing industry (dismal), I've also kept my seasonal job. And if I may confess, although 6-day weeks have become typical for me, I still occasionally quite often toy with the idea of quitting my part-time job. But that's a story for another day...

Last week, after 2 months of waiting for direct deposit, 401(k) and FSA deductions to be activated, I was finally able to figure out my cash flow and craft a simple spending plan. (Note: While I enjoy using Excel to better manipulate my data, I highly recommend YahooFinance's cash flow calculator.) I'm really excited to report that I'm currently saving 60% of my paycheck! Of course, that includes allotments for my new 401(k) plan, and House, Investment, and Savings funds.

One of my primary concerns in the last two years has been being my own financial planner. I found that my focus shifted as I went through various stages of employment. When I was working full-time, I focussed on:

• Goal setting: clarifying goals that are financial "biggies," e.g. buying a house, getting married, retiring
• Retirement planning: setting up & managing 401(k) & Roth IRA accounts
• Investment planning: for a non-retirement portfolio

While I was unemployed and the economy took a downturn, my focus shifted to:

• Investment review
  Including: diversifying my portfolio, weighing the trimming of riskier stocks with acquiring "discounted" stocks
• Insurance needs
  A piece of advice from someone who decided to forgo this - health insurance is something everyone should have. If you ever find yourself without health insurance, pay for COBRA, sign up for HealthFirst. Do what you need to in order to be insured - it's worth the peace of mind of knowing you can get sick!
• Funding future education

Some present (and ever-present) concerns include:

• Cash management: emergency fund, spending (including price shopping, impulse shopping, setting credit/cash/spending limits)
• Diversification: During the market flux, my networth moved in tandem with the erratic stock market - a sure sign that I needed to spread my eggs in different baskets!
• Estate planning: a will, a living will, power of attorney of healthcare
• Tax planning

As I continue to plod along in my quest to be an efficient financial planner for moi, I'm sure my priorities will continue to shift as well. Goals like buying a house will definitely open up worlds of concerns. But with the wealth of information available, I'm sure I'll be able to muddle through somehow. What concerns have you had as you moved through various stages of employment and life?

Revving up the engine

Posts here have been sparse since I quit my last job in July 2007. Please chalk it up to channeling my best efforts into my jobsearch, and not an utter abandonment of the blog once I stopped having income to "plan" for. Because, in fact, as anyone who's ever been unemployed can attest to, I've had to step up my financial planning game especially while I was unemployed. But I'll save that discussion for another post. Instead - because what financial blog worth its salt doesn't address jobs & careers!?! - here's goes my first toe back:

I knew my job wasn't what I wanted to do. Why did I stay? A litany of reasons: To save for the future, to get my investments started, to fund my retirement early, to take advantage of the generous pay, etc. I was a good worker, and the company loved me; I could have made a career out of it, just for the money. Then what , you may ask, tipped me into quitting with no safety net with no next job lined up, no classes registered for - nothing, in short, that could be confused with even a semblance of a plan?

It's simple really: Twenty-five years old is too young to settle.

I said previously that I wanted to go into publishing, but I had really no idea what that entailed. So, I went from a generous paycheck, benefits, and a 401(k) match all the way back to Square 1: an internship. In fact, I'm still there now. And I'm loving it.

The company barely pays enough to get me into the office, but the work, the company culture, the people, the working environment - it's the entire package. In taking a bold step, I have found such joy in my work that I finally understand what it means to "love" your job. And trust me on this one, that's priceless. And while calling it a happy ending would be grossly premature, I did want to share my story so that young career-changers and job field-hoppers chancing upon this fledgling financial blog could be encouraged by a true story. Even if you need to take a job at a chain retail bookstore to fund the holidays and buy lunch to get to your work-for-free job, it's temporary and completely worth it to do work you enjoy doing.

Calling all ING account holders...

ING Direct's Road to Happiness Contest starts today! Let ING know what your savings goal is & how you intend to achieve your goal and you could win one of 26 $10,000 prizes! See rules here.

Your Gucci or Mine?

After attempting the challenging read of Malkiel's investment classic, I opted for some light personal finance reading by David Bach. In Smart Couples Finish Rich, he stresses a very important principle:

"Money is a vehicle for our values and the goals that help us live those values."

I'm sure we all couldn't agree more. But am I the only one who finds it hard to adhere to that principle when you can't help but run into at least 7 Gucci's or Kate Spade's within a half hour on Broadway in SoHo? Trust me, I was there two nights ago - I counted. (And I was standing in a fixed spot, not trolling for luxe bags!) There's no harm in admiring a nice bag...as long as I haven't sacrificed $67k in retirement savings to own it, right?

What Does It Take to Be Rich (link):

"In the end, of course, what it takes to feel 'rich' today, or even merely comfortable, is largely a matter of personal perception.

"Kathy Shoeny is a single mother in El Monte whose income drops her squarely into the ranks of the working poor by government standards. But she owns a small home, a car, two TVs, a VCR and a computer. Her two children have health insurance and decent schools. She has a job decorating cakes at a bakery. "She occasionally dreams about what her life would be like if she won the lottery--an impossibility, she says, because she never plays--but has concluded she’s already pretty rich. " 'I’ll admit to feeling some pangs of jealousy when I read about 'wealthy' people and their 'problems,' " Shoeny said. 'However, what I mostly feel is incredulity.' "

Jealousy? Sometimes. But it's easier to overcome those few moments when I know that I will be able to reach my financial goal of supporting myself adequately later in life. And it always feels way better to simply admire someone else's arm candy than to get one for myself & fret about how much buying a bag has cost my retirement!

Pursuit of Happyness

I have pondered quitting my current job for quite some time, but I never buckled down to plan my direction; however, some recent changes at work in the past two weeks have been leading up to Friday, when I will be giving my official 2-weeks.

Logic says I should find another before quitting my current job, but immediate personal safety concerns at work renders that logic trivial. I had asked to be transferred to another site two weeks ago, but the boss/company has yet to address this satisfactorily. Luckily, this just may turn out to be the catalyst (read: kick in the bum) that I needed.

Leaving a job is a tough financial decision, but I'm lucky to be living at home relatively rent-free. And free rent in NYC is...well, after seeing Pursuit of Happyness this weekend, let's just say I'm doubly grateful for this. Although Chris Gardner was a single parent of a toddler who struggled with an extended unpaid internship while working as a medical supplies salesman on weekends in order to achieve a dream job that he both enjoyed and was very good at, the movie was only "inspired by" his life story. And if he could achieve a multimillion dollar company starting at homelessness, I sure as heck can manage something.

Luckily, my financial goals will stay on track, since I've a small "Freedom Fund" saved up for times just like this. I'll definitely need to deploy my best self-discipline to make the most of my hiatus from the paycheck world, but I consider it a good sign that I'm stoked to start working on my writing portfolio!

Networth Milestone

It's been 12 months since I started using NetworthIQ.com. My networth has since increased in the last year, not by the 100% I had wanted, but by a respectable 75%!

Last year, I cancelled my subscription to Lucky & Glamour to save $20; however, as a "good job!" to myself, I ordered a two-year subscription to just Glamour for $15 - all the more special for the discount, a link that I've saved in my email for at least 2 months now. And in case anyone's interested in subscribing: When you order through this link, you can also add a third year's subscription for $6 more. But remember to cancel your subscription punctually or you'll be charged the going subscription rate when this teaser rate expires!

Take out the yardstick

My goals sidebar was birthed in January, and it looked something like this:

• 6-month budget
• New job/ career
• Start Roth Target Retirement Fund
• Start investing
• Buy a house

Now, standing at the 4-month mark, I've:

• stayed on a disciplined savings plan in lieu of a budget (this may seem a matter semantics but it's effective...PTF!);
• only just started feeling that maybe the financial safety net (built on the back of my "job" for the past two years) can weather a $30k per annum entry-level "career" -- see GRS's post & the ensuing comments on this!
• I'm $1k away from maximum Roth contribution for 2007;
• just recently opened a taxable, non-retirement account; and
• I'm still looking to buy a home, although not necessarily a house...

I'm still dragging my feet on breaking into publishing...I've been sending out my résumé and reading up on the editing profession, but I have no internships or practical, documented experience! Where to start, where to start...maybe some writing gigs on craigslist?

Giving Back

Make Love, Not Debt's 5/8/2007 post brings up a subject I'd always considered a foregone conclusion: Second-generation APIA's giving to their parents as a token of respect & appreciation.

But judging from the content of some of his 33 comments, I should beg pardon for being mistaken. Is it because my significant other is also an APIA? We're not yet engaged and have no immediate plans to change this, but we've already discussed how we would feasibly support both sets of parents and ourselves in the future. We've decided to get ourselves on more financially stable ground before getting engaged, but that caring for our parents figure into the relationship? It's always been a given! The question is when, not if.

I have friends who started paying all household bills at home the minute s/he graduated, who pay rent, who pay the mortgage, and even those who give their parents a stipend on top of any mixture of the above-mentioned. I'm actually an odd duck for *not* having to pay bills at home. Thanks to my parents' generosity, I only pay for household groceries bi-weekly. For now. And that's only because my parents know I'm still at a "job," and not a "career." But it's still a foregone conclusion that my parents will someday live with me after they've retired & I'm on more financially stable ground. In fact, it's their downpayment fund I've been saving for first, not my own...do you mean to tell me that this isn't how the rest of the world lives??? =p

ISO: Free Financial Advice

I remember, during Financial Literacy Week last October, there were some free financial planning services available, but I didn't take advantage of those because I didn't have any clear investment goals pinned down at the time, or enough money to worry about (or so it seemed). However, I've since outlined and fleshed out my financial goals and, as an added bonus, I've saved enough $ now to feel that I may actually have assets requiring management! =)

I know that Charlotte Observer columnist, Amy Baldwin, is looking to trade a free financial makeover for a story, but I think I need less makeover, and more check-up & planning. I've also been to SCORE, and its focus seems to be on small businesses...definitely worth a look-see by the way.

I have a pretty simple financial picture - a few investment goals (both long- & short-term, with figures attached), no outstanding debt, a handful of retirement investments to date, and I recently find myself with a little extra $ to invest, SO...

Any ideas or leads on how/where I can find a financial planner to offer a free financial check-up? I wouldn't mind some guidance with future planning either.

Thanks in advance!

Update: For those in the Boston area on August 4th, there's a free financial planning clinic at the Sheraton Boston Hotel... plenty of time to get your numbers in order & the perfect time to see a planner!

Market Timing

Okay, I'll admit it: Even though every investing handbook advises that investors steer clear of market timing, I do it anyway.

Not that I buy a lot of stocks (you'll notice my "start investing" goal still up on my goals sidebar), but I always figured that, even if the difference between the stock price over two days is just $0.25, when you multiply that nominal amount by the # of shares you're buying, it kind of adds up!

But today, I finally took the more pragmatic approach - I'm actively taking the advice of Ric Edelman and Eric Tyson, and bought shares of an index fund while the market appears to be on it's way up. While it goes against all my penny-saving instincts, Edelman has a really good illustration of the nature of the stock market in one of his books, called The Truth About Money.

And now, an excerpt from Chapter 33, aptly named "Focus on the Hill, Not the String":

"People fear the stock market because stock prices are volatile. Prices can fall, and people fear falling.

"Yet this fear is misguided. By focusing on the daily ups and downs of the market, people forget the more important point: Stocks rise more than they fall. Imagine a boy walking up a steep hill while playing with a yo-yo.

"If you focus on the yo-yo, you'll become obsessed with its wild gyrations -- while ignoring the fact that the boy is steadily climbing higher. True, the yo-yo will always reach a low point, but each low point will be higher than the last low point, because the boy's now on higher ground. So it is with the stock market."

I'm taking advantage of Vanguard's new fee structure changes, so the fund transfer from the bank should go through tomorrow. And I just checked, and the market is still on it's upward trend today, which means the fund should also have gone up. It's sure harder to ignore the yo-yo than I thought...

Bills, Bills, Bills!

With car insurance & mounting repair bills, it's been a bad two billing cycles. But since I haven't done much (any!) shopping for myself in a long time, I splurged this week. And with an impending alum trip & continuing car repairs, I anticipate a third cloudy billing cycle in the works.

On the other hand, I know I'm saving as much as I can right now, so hopefully I'm just being willfully impatient that I'm not knocking out my goals as quickly as I'd like to. And maybe I can sell my car soon enough too...but I'm sure going to miss the door-to-door lifestyle. Been reading Charles Wheelan's Naked Economics: Undressing the Dismal Science, and he's right: Life is about foregoing the here-and-now for the sake of later; in short, trade-offs!

Target Retirement Fund 2045

Welcome...you're reading the blog of a proud new owner of a Roth IRA!

Two days ago, I opened a Vanguard account & max'ed out my Roth for 2006, not mention a small headstart on 2007. I contributed just enough to avoid Vanguard's low balance fee ($10 for accounts under $5,000). It takes about ten two days for my Vanguard account to be funded through my checking account, so now I'm just waiting to see how many shares of Vanguard's TRF 2045 I'll actually own.

Somehow, a lifecycle fund escapes any previous trepidation I had regarding investing...must be some inherent trust I place in "the experts" more than being my own stock picker/portfolio manager. At any rate...That's one thing off my Goals sidebar!

Grad School Dilemma

According to the Department of Census statistics quoted in a Yahoo! Finance article, the only advanced degrees that make a significant difference in earning power are an MBA or a law degree. Says investment advisor, Rob Bennet:

"[Young people] go to grad school to find themselves. Ultimately, they find themselves thousands of dollars in debt."

When I graduated with my bachelors, my intention was to work full-time for 2-3 years before going back to school to get a law degree. That was in 2004. Time has really creeped up on me whilst I was busy shoring up my financial reserves. But now that I finally feel financially capable of surviving grad school, I've realized that my intentions have reshaped themselves within the past few years.

Finally, over the summer, I read Gary Belsky & Deborah Schneider's Should You Really Be a Lawyer? By the end of Chapter Two, I realized that law school was not the place for me. I had wanted to go to law school for all the wrong reasons:

• Herd Mentality
  
  SYRBAL definition - the tendency to allow our actions and decisions to be heavily influenced by those around us
  
  Yours Truly: So many of my friends are working on their master's degrees. It seems like the natural next step!
  
  
• Regret Aversion
  
  SYRBAL - the tendency to avoid a decision or action for fear or regretting it later
  
  YT: What if I get passed over for a management position in 10 years because I don't have a master's degree!? By then, I'll have a mortgage & kids, and no time or extra $ for more school! I'd better go now, just in case.
  
  
• Status Quo Bias
  
  SYRBAL - the inclination to resist change, opting to stay with what's familiar
  
  YT: I don't feel qualified to do anything with just a bachelors. I can go back to school first, and sort it all out later.

So, after a close examination my desires and abilities, I decided that I would see if I could carve out a career that I love in publishing; hence, the "new job/career" goal you see on my sidebar.

As you can see from the book and the article, there are numerous cases of people who regret getting degrees when they weren't sure of themselves...so make sure you learn more about the field before committing yourself to so much debt. As for me, I reserve the right to consider more schooling at a later date!

New Goals Sidebar

In the spirit of making changes for the New Year, I've added a new sidebar to this page, called "My Goals." I've ordered them so that the more (relatively) easily accomplished tasks are on top, and the longer-term goals are on the bottom of the list. It should be interesting to see how (and how quickly) I can progress.


In a completely related topic, a friend clued me into a Paralegal Certificate Program. The program would end up costing what I had originally earmarked to start my Roth IRA. I'm going to an info session tonight to find out more about the program, but what I really have to weigh is whether the future benefits of the program outweigh the future benefits of the retirement fund...that's the problem with having a strict savings diet - there's very little wiggle room!

Saving vs. Investing

The 5-year mark seems to be the commonly accepted boundary between Savings and Investments. Up to this point, I've been focusing on Savings, since all my goals are (hopefully) attainable within 5 years. While I've tried to learn about mutual funds, index funds, and other stocks, investing hasn't yet turned into a primary goal for me. On the contrary, it seems quite the cumbersome task, like I'd be bogged down by feeling that I should be more au courant with company performances, industry outlooks, etc. Is this a completely unfounded fear? Logic says that I could invest in an index fund and just let it ride...right?

Impulse Buying - Update

The Shopping System works! Even though I've exceeded my goal of <$300 credit card spending per month for October, I am excited to report that the shopping system I invented for myself to beat impulse buying (one of last year's accomplishments) really does work.

Gradually, my list was whittled down to a few wardrobe essentials, such as a black suit, sneakers, and work-worthy staples like sweaters. (Frivolous items like round-toe boots were bumped down to the "optional" list.) Today, I'm happy to report that my shopping list is a success, and as of this writing, it is down to the one wardrobe staple of every job-hunting post-grad: a black suit. And even more importantly, when I shop now, I ask myself if I truly need the item, or if it's worth the return trip before I buy - definitely slowing down my hedonic treadmill!

Update #2: As of December 3rd, one mandatory post-grad black suit, officially BOUGHT; the Shopping List has been cleared!

The Saver's Blues

Last week, I reached two of my savings goals from last year: my Emergency Fund and my trip to HK fund. (Pats self on the back.) After a little celebratory dance, I re-assessed my financial priorities, and ordered them thus:

• Open IRA account by April 2007 (PTF - PTF2) - Mission accomplished! (as of 1/2007)
• Increase Gift Fund savings for Christmas 2006 - Mission accomplished! (as of 12/2006)
• Start Car Expenses Fund - Mission accomplished! (as of 12/2006)

And then, I promptly came down with a case of the Saver's Blues.

You know, the kind that makes you spend your week reconsidering grad school, thinking about shopping and car toys, and, in general, thinking of all the wonderful things that you must be "missing out on" by your self-imposed savings diet. (And, of course, I didn't want to look at anything that had the words "finance," "budget," or "plan" on it all weekend.)

Today, however, I gave myself a little pep talk: "I am 24, and I am happy and proud to have done so well in reaching my savings goals thus far. Don't quit now!" So, I stopped moping for possessions that could have been, and re-focused on my goal; I put up some pictures of dreamy kitchens and living rooms on my bedroom wall, right next to my 43 things.

Saving starts as a goal, and becomes a habit. It's easier to save when you keep reminding yourself of what you're saving for. I will do this any way that I can - through ING account nicknames or magazine cut-outs on my wall or whatever works. I am determined to set up my retirement, buy my first home, and resist the sneaking thoughts that I am somehow deprived. I'm not deprived, I'm prioritizing!

Could've, would've, should've...

Like everyone else, I've always had perfect hindsight. For example, if I had known the importance a 3.0 GPA post-graduation, I would have postponed graduation or worked harder. (Maybe.) That's why I always find it useful to read about how someone else learned the hard way...especially when they want you to learn from their experience. I'm happy to say that there's only 3 major points on mymoneypath's list that I still need to commit to:

2) Read - Books, magazines or blogs about personal finance on a regular basis. - Mission accomplished! (as of 11/2006)
4) Update - Your net worth on a regular basis so you can see your progress. - Mission accomplished! (as of 10/2006)
5) Develop - A good meaningful budget. Do one at least 6 months out. Don't forget about expenses that only happen every six months or yearly, like car registration, insurance and maintenance.

I felt so on point after reading this that I'm giving myself the night off from reading pf blogs! (They're a great resource, but I drive myself crazy thinking about "miles to go before I sleep.")

Frugal is a Way of Life

What I do now:

Home...

• Live with parents.
• Use supermarket circulars.
• Pick up change.
  When your jar fills up, take a friend to the bank with you...the free change sorter at Commerce makes for a fun trip. Especially if you win a prize for guesstimating within $1.99 of your total.
• At-home manicures / pedicures.

Work...

• A safe car with good gas mileage.
• Group errands.
  e.g. going to the supermarket, library, or bank that's on the route home after work
• Bring lunch to work.
• Direct deposit paycheck.
• Contribute to 401(k).
• Automatic Savings Plans.

Other...

• Use public library.
• Pay credit cards in full each month.
• Use cash rebate credit card.
  Only a good deal for those who don't carry balances! But I hear the 5% cash rebate days with Citi Dividend Platinum are over even though I haven't received any notices...I'm eyeing the Citi Professional now, but I'm still holding out "in case." (PTF)
• Pay bills online.
  I made $5 signing up for online credit card statements...however, read the caveat in a later post! (PTF)
• One "spending" ATM visit per month.
• My shopping system. (PTF)
• Buy clothes in basic colors.
• Use digital camera.
• "Family Plan" cell phone.

What I should do:

• Drive less.
• Remember to use coupons.
• Learn to sew.
• Try haggling. Really.

What I should do more:

• Eat in.
• Explore Salvation Army.
• Invite friends to volunteer with me.
  We'd save $ together, get to spend time together, and worthy causes benefit - it's a win-win-win situation! (e.g. NY Cares)

There's no feeling more empowering than knowing that you are in control of your money...so I'm working on it!