Sunday, December 31, 2006

The Invisible Rich

I have long wanted to be a part of "The Invisible Rich" like the ones in this article. A friend of mine was surprised to find her parents were extremely rich because they always lived in a modest house, drove older cars and didn't seem like there was much money. That was because her mom and stepdad were socking away a ton of money every month, and when they hit retirement, they suddenly bought a million dollar home on a lake. My friend was shocked. She'd had no idea.

When I was in college, I hated looking different from my friends -- not having cool clothes or a nice car. My roommate, on the other hand, was a saver. She bought her clothes on sale at Fred Meyer or Walmart, and saved every month, even if it was only $5. She always had money, and was constantly bailing me out. Now, nearly ten years later, I have hardly made a dent in my student loans while she has had hers paid off for 3 years (and she graduated a year after me). She has $10,000 in the bank, no debt, and is planning on traveling. My net worth is currently higher -- I bought a house, for example, during a buyer's market and now its worth has more than doubled. I also didn't date boyfriends that mooched off me like my friend. But I still call her before I make any major financial decision (and she calls me before she makes any boyfriend decisions). I know that she had the right idea all along and I often think, what would my roomie do? when I am faced with a financial dilemma and she can't be reached (she lives overseas). She taught me that it was okay not to throw your money around, because when you do...it slips out of your hands all too easily.

I still struggle with certain things. I love really, really expensive shoes. I hate driving crappy cars, and I want a new one that runs consistently. But whenever I crunch the numbers, its always worth it to wait a little while longer, to save a little more, to pay a little more on those credit cards/student loans/mortgage payments. I am trying to join the ranks of the invisible rich, though - at least for now. Someday I can afford those luxuries, and not on credit -- on cash. Oh how I look forward to the day!

American Cars

Here's a great article from the Boston Globe: What's Bad About GM? The cars.
I remember when foreign cars took over the U.S. market in the late 80s. Everyone was up in arms and my parents vowed to never buy a foreign car. They never have. They have also spent tens of thousands of dollars on cars that are complete pieces of shit.
Here's the lineup:
Ford Taurus -- 2 so far. Both models ran fine but had faulty paint that peeled off the car within five years, leaving the car looking like it had the heebie-jeebies.
Pontiac Grand Prix -- also had all its paint peeled off. My parents spent $2500 on a new paint job only to have the car lose a brand new timing belt and blow its engine less than a year later.
Dodge -- my dad has bought 2 new Dodge trucks, one gas and one diesel. The gas truck had a variety of issues and the diesel, while better put together (and one of their most trouble-free cars) has not aged particularly well.
Oldsmobile diesel sedan -- while I sped the demise of this car by side-swiping someone, the car eventually died. Before it did, we had to manually heat the glow-plugs via a button my dad put in the dash by carving it out.

Before the "no foreign cars" vow we had a toyota pickup. What did it do? It ran and ran and ran until the body was a heap of twisted, oxidizing metal, and then it still ran just fine. How about my Subaru GL? Fabulous car that I rolled and it still ran. I used it for 3 years before selling it to an ex-boyfriend who ran it until he totaled it in a rollover. It probably still ran.

I have had one US car that ran well -- the Ford Festiva. It is a great little car. Of course, I found out it was actually designed and put together by Kia. Big surprise.

We bought a 2002 Ford Focus brand new. To date, we have had $9,450 worth of repairs on a car we paid $10,500 for. The car has gone through two transmissions and the third one is starting to make grinding noises while we drive down the road. The car spontaneously loses power while we are driving, which means we lose power steering and brakes. The side mirrors are flimsy and one has been broken over and over again, so we have to glue it on. The rearview mirror spontaneously pops off all the time. We got a flat tire and found out there was no tire iron in the repair kit. We have manual door locks and windows, few safety features and the car has a ton of road noise. We don't even have cruise control on the car.

We had originally wanted a Honda Civic and I wish, oh, how I wish we had bought one! I bought the Ford because I had loved my Festiva (this was before I knew it was built by Kia). It was a terrible, terrible purchase, I now know.

There is a lot of talk about GM and how worker costs are breaking the company, but that simply isn't true. Most American carmakers are just turning out crummy products. My parents may have vowed to never buy foreign, but I've made my own vow -- never buy American cars. They may be a few hundred dollars cheaper on the lot, but the cost of the headache is out of this world.

Saturday, December 30, 2006

Motley Fool's "Good Stocks to Buy in 2007"

Motley Fool published an interesting article on Good Stocks to Buy Now. I might look into John Deere stock myself, just in honor of my redneck roots. Nothing wrong with Kroger, either -- that I know of, anyway. I don't totally understand the dividends thing, but essentially the idea was high dividend, low-cost stock. I guess I will have to figure out the dividend thing.

I have made two commitments to understanding investment in the New Year. One, I reserved half a dozen "How to Invest" books for teens, so they will be easy to understand (I always hit the kids' section when I first start learning about something -- it makes it easier). Two, I have decided to teach a course on finance for kids at work, which requires me to learn everything and to make some fun games to go with it. I always learn best when I teach, so I think it will help. I have tried a $100 transfer to my new investment account but I just read that, at $7 a trade, I need to do a minimum of a $350 trade (to keep commission below 2%), so it might be a few months before I can get my portfolio going.

Net Worth Down

Sadly, I ran the numbers after a hectic Christmas season and my net worth is way down. This is primarily due to creeping credit card bills, and the loss of $800 of retirement funds. How did I lose $800 in retirement? Nationwide lost it. They took the money, did not create an account for me, and they are continuing to withdraw funds from my paycheck. Payroll is having ten catfits and trying to get ahold of my money, and they have vowed not to willingly distribute Nationwide's information from now on. It didn't help that my rep is totally unreachable. So, I am hoping that I will get my money soon and either stow it in a Roth or put it on my credit cards. Meanwhile...the numbers look bad. Very bad. We have to keep ratcheting up our discipline but with Sexy Husband working part-time, we've been very short on cash. Budget, budget...and more budget. Looks like we're going to have to wait on that new car after all!

Thursday, December 28, 2006

My first investment account

So, I finally started an investment account with Banc of America Investments, a subsidiary of Bank of America. Why? Because it was there. I also plan to open a Roth with ING (reminder to self; must call for appointment) but I bank at B of A and they constantly advertise on their site. Oh, and it's nice to be able to see all the accounts at once. I highly recommend this.

It took about a day for my new account to show up, and since I get paid tomorrow I will try to fund it then. For my first stocks, I am choosing SunPower, Pacific Fuel Cell (a penny stock...scary!), Wild Oats, and Vivendi. You may notice that some of these sound a little hippie granola-crunchy, and yes, that is my intent. Vivendi is company that created and sustains WOW (World of Warcraft for all you non-geeks out there), and my husband plays it enough I should get something out of the deal (LOL).

But the rest I found using this website listing sustainable stocks. I have always had a distaste for business because I don't like the corporate mindset particularly well, but I have decided that I can still use and direct my money for profitable ventures that will improve the world rather than continue destroying it. I could probably make money speculating in oil or real estate, but developers? They are evil. And although we need fossil fuels to maintain our way of life, it's still a hard pill to swallow and I don't want to encourage them. Give me ethanol and support midwestern farmers anytime.

I want to note that the Bank of America interface looks really nice, but I am having a hard time transferring money. The instructions say I can just hit "transfer" and choose the account, but it doesn't give the account as an option. Since I will actually have a decent amount of money in my checking account tomorrow, I will call and fight with them about it then.

Whoo hoo! My investing has begun.

Wednesday, December 27, 2006

Okay, here goes

So I was writing the post below and suddenly I though, what the hey, this is shyt that I don't know about investment and so I created a Bank of American investment account. I am trying to figure out how to transfer money into it at present but I will keep writing about it and what works and what doesn't.

I don't know crap about investing

But I'm trying to learn. I just went through this article by Kiplinger and in some foggy part of my brain I'm thinking, Janus, Janus, I swear I have money invested in Janus somewhere....

How do you learn about the stock market? I took the foreign service exam 2 years ago and failed miserably, primarily because I don't know a lot about how the stock market works. Shouldn't there have been a class in high school? I find it amazing how little is taught. Sure, we did the "pretend you have $1000 and pick some stocks" game in high school, but that didn't tell us important things like:

  1. Who do I go to to buy stocks, how do I know s/he is honest and how do I track my stocks?
  2. What's the difference between a mutual fund, money market fund, general stocks, bonds, and all the other options? I don't mean things like -- you make more money with a mutual fund, money market funds are generally insured, bonds are loans, etc. I mean how do they work? Who buys stocks for them? How are they managed? What works best in a bear/bull market? Those sorts of questions.
  3. What part does the government play in all this? From following real estate, I know that Greenspan and the Federal Reserve affected percentage rates on debt, but how? How do they decide whether it goes up or down? I know they have a lot to do with bonds but what, exactly, I'm not sure.
  4. Can I buy a few stocks at a time, or do I need to buy a minimum?
  5. How much does it cost to consult a financial advisor and how do I find a really good one? What should I look for?

These are my major questions regarding stocks. I want to invest but I feel terrified -- I don't want to lose my hard-earned cash. That being said, I know that I must learn how to invest in order to save enough for retirement. I would have to save $800+ a month to make enough to retire on if I don't get compounding interest and guess what -- it's not gonna happen. So, I have to figure out this system. I have a B.A. and part of a master's degree, but I have never had to take a class that really explains how to manage my money.

I will be looking for that class. Maybe the library will have something? I want a class that is F-R-E-E. So, from now on my goal is this: figure it out before I lose out. Maybe I can tack this on to my goals for New Year.

Monday, December 25, 2006

Oh yeah -- Merry Christmas!

We have set up our tree and I have to say -- it is really beautiful. I arranged all our gifts around it, drank the milk and ate the cookies for Santa, left a "note" from Santa to Sweet Boy, stuffed the stockings, left a trail up the chimney for effect and I plan on loving tomorrow morning. My boy is almost five and these are the good years -- oh, don't I know it! So Merry Christmas and Happy Holidays to all you savers out there and everyone else too.

And the winner is...Honda

We are buying a new car. I know, I know, it's better to buy used, but we have dealt with a lemon of a Ford Focus for 4 years now (bought new) and my husband doesn't want anything without a warranty. If we hadn't had a warranty for our Ford, we would have spent $9,450 in repairs over 4 years. Yes, almost the cost of the car itself, AGAIN, in only four years. That includes 2 transmissions and does not include a dinged bumper we decided not to replace, a broken side-view mirror or a missing hubcap, all of which we are ignoring at the moment. We plan to trade in, primarily because there are so many things wrong with the car I could only sell it for wholesale anyway. It's been a total nightmare.

We want a four-door hatchback and I've spent days reading all the reviews because I simply don't want to be stuck with another problem car like the Focus. I knew that Toyota and Honda were good, but I wasn't sure HOW good. It's been really interesting; according to Edmunds.com, the Honda Fit is the best buy. I loved the real cost estimator; it gives the amount you actually spend per mile over 5 years. The Fit came in at .43 per mile; the Matrix, .45 per mile. The Focus was .47 per mile but that assumes you don't get a lemon like we did.

So, it looks like we are probably getting a Honda, although we will test drive a Toyota. I got some fabulous advice from Single Ma regarding buying a new car and I plan to use it. We also plan to buy a Honda Rebel. They are only $3200 brand new and they get 57 mpg. How great is that? Of course, I will have to bike my kids to daycare (it's only about 2 miles) and then ride the motorcycle to work, but if I get a break on parking then it will be really frugal. We will get rid of both cars and just have one car and a motorcycle (and our bicycles, of course). I wish we could get along with just one car but it's not going to happen. Wish me luck in my quest to buy two new motorized vehicles!

Saturday, December 23, 2006

Failing Christmas?

I don't know how much I spent for Christmas last year, primarily because I didn't want to know, but I would guess around $2,000. Yes, 2K, and we were both students!

This year I have been pretty scrooge-ish compared to my normal, over-spending self, but I just had to crack down. It hurt me every time someone brought me some small, appropriate gift and I had nothing to give back, but we are broke, broke, broke and it had to be done.

I have spent a bit at the last minute, primarily because we chose not to go to my family's home in the snowy north. I bought almost nothing for my son, because he is always so inundated with family gifts, but my parents are total shyt at sending anything in the mail so I realized last week he only had 2 gifts. Two gifts -- for a 4, almost 5-year-old -- not cool. So, I hit the dollar section of Target as well as wrapping up some necessities like clothes, and even sprang for some more toys and such. All in all, I spent about $200 on him, but some of that was in semi-necessary stuff, like clothes. It was still too much, I think, but we'll see how it goes on Christmas day. My best buys were of course the first two gifts -- train paraphernalia for 60% off from the Amazon Friday sale (thanks to BostonGal for the link).

The final breakdown:
Sexy Husband: Total: $177.95. $40.00 for two sweaters, $27.99 for one pair of jeans, $25.96 for 4 pair cotton boxers (including humorous Christmas ones), $25.00 for 5 pair silk boxers (!), $16.39 for one Barenaked Ladies Christmas Album, $9.99 for a Japanese knife set with a bamboo cutting board, and $32.61 for an electric griddle (he likes to cook).

Sweet Boy: Total: $231.99. $60.00 for two virus train set pieces (at 60% off), $60.00 for three DVDs, $16.99 for a treasure chest DVD holder, $35.00 on clothing, $35.00 for stocking stuffers and $25.00 for a really cool pop-up book.

Sweet Girl: Total: $101.99. $20.00 for cool squishy toy, $14.99 for pea-in-the-pod dolly, $10.00 for stocking stuffers, $27.00 for Christmas dress/hat/tights, $40.00 in other toys I can't recall. :)

My husband also spent around $100.00 on gifts for his family, and we spent $75.00 on gifts for our nieces and nephews (their parents are pretty poor and we always try to give them a good Christmas). I spent $50.67 on a friend of mine (an unusual case -- I promised the gift in August) plus $35.00 for shipping. I spent $15.00 on Christmas hats and $20.00 on decorations this year. I also spent $45.00 on gifts for a Bolivian orphan that we sponsor. So let's see what my total is.

$177.95
$231.99
$101.99
$100.00
$75.00
$50.67
$35.00
$15.00
$20.00
$45.00
_______
$852.60

So, I guess I did better than last year, but much worse than my goal of spending less than $500.00 on Christmas this year. However, we did save about $450.00 in traveling expenses by not going to my parents, so if we factor that in I am $100 under. :)

My goal for next year: making a list and checking it twice, making your gifts is cheaper and nice, Saving my money for a night out on the town...

Sorry for the cheese.

Paying for your magazine subscriptions? Stop, it's free!

Most people don't know their local libraries pay for magazine, newspaper and database subscriptions that can be invaluable to small businesses or individuals who want to know more about finances, science, fashion -- anything! Many of the subscriptions are physically in the library, but plenty are online as well. Here in Tucson, there is an A-Z list of magazines available online via the library website. (Want to read older NY Times articles now unavailable on the web? Pima County Public Library has all published articles from 1980-present available online).

A popular business resource at Tucson's public library is Reference USA, which is such a powerful resource I almost hate to post it. You can see a company's ratings, get a general idea of its net worth and other important information. You need to live in Pima County and have a library card to access most of this stuff, but you can get a database only card if you live in Pima County -- or at least claim to -- and access an amazing amount of stuff online. Most urban libraries spend between half a million to a million dollars on their online collection every year -- dollars that you, as the taxpayer, are already spending, essentially. So, if you're trying to be frugal, try the library. After all, you've already paid for it. Why buy twice?

Friday, December 22, 2006

A few financial tools

USA Today has been running a really great series called "Young and in Debt," and they have included a young person's budget in their online version. And, for those looking at income tax, here is a calculator to tell you if you are overpaying. I've always been a fan of income tax return checks, but really it would be smarter to use that money and get the interest myself, rather than handing it over to the government to (mis)use.

Thursday, December 21, 2006

End of Year Tax Tips

A few good tax tips to remember at the end of the year from the Arizona Daily Star:
Energy efficiency

  • Energy improvements made to your home — better insulation, windows and heating or cooling systems — can earn you up to $500 in credits.
  • The addition of solar power to help heat your home and/or your water can earn you up to $2,000 in credits.
  • The purchase of a hybrid or alternative-fuel vehicle can earn credits ranging from $250 to more than $3,000.
Education
  • Arizona also offers credits of up to $400 for contributing to extracurricular public-school fees such as band and athletic uniforms, science materials, trips for competitive events and "character-education programs."
  • Arizona offers a credit for contributions to private-school scholarships of up to $1,000 for married couples filing jointly.
Income
  • Make your Jan. 1 mortgage payment on or before Dec. 31. This allows you to take an additional deduction for interest paid, provided you remember to add the amount reported by your lender on your 1098 form.
  • Prepay state and local taxes, which allows you to take a deduction for this tax year.
  • Defer income until the beginning of 2007. Many people don't have a choice as to when they get paid, but if you have a bonus coming, ask if it can be delayed.
  • Offset capital gains. Sell investments that have lost value by year-end to offset the taxes you'll owe on capital gains from investments that appreciated.
Little-known deductions
  • The depreciation on your home computer is deductible if you use it to generate income.
  • The depreciation on your computer and cell phone is deductible if you use them for work as required by your employer.
  • Money spent on job searches in your present occupation are deductible, even if you don't get a new job.

Tuesday, December 19, 2006

Net worth and goals for 2007

My goals for 2007:

To push my net worth over six figures. That will take about $22,000, either in debt reduction or in investments, specifically through doing the following:

  1. To pay off one of my lesser student loans -- about $6,000.
  2. To save $5,000 in an emergency fund.
  3. To max out a Roth IRA.
  4. To pay off my credit card debt -- currently at $8,000.
That brings my total to about $25,000. I only make $32,000 a year and my husband makes $48,000 a year, so I would need to utilize all my income to pay off debt and to save. Hopefully if I do that, 2008 will be a little easier.

I have been ignoring my debt for a long time. I have, in addition to my $102,414 mortgage, an additional $67,119 in debt. It breaks down like this:
  1. Credit card debt: $7,250 (as of last month. We'll see how it evens out at the end of this month!)
  2. Home Equity line of credit: $8,820
  3. Student Loans: $51,049
I know it's not as bad as it could be. A lot of people have done worse. And, I have two young children and was out of the work force for three years. But I want to be on the up end of things, not the down end. I want zero debt, and I want some financial stability. My parents lost their entire retirement in the stock market crash in 2000. Thing is, they only lost $2500. Yes, $2500. They were 54 and 49 years old (my mother is older). I find it incredible they even consider this "retirement." What will they live on? Twenty cents of interest a year?

So money is a very emotional issue for me. I don't want to end up like that, or be a burden on my children. So...I am facing my debt head on, and I am tackling it the best I can.

Come on 2007.

Why I am starting this blog

I have been a blogger for 3 years now, with one problem; everyone knows who I am. That is to say, on my main blog, which I will never, ever link to here, there are pictures of me and my family, and people who know me check it out. So, I feel restrained when talking about, say, finances. Or how pissed off I am at my husband. Or how fat I really am. I have longed for the kind of blog where I can bitch anonymously and join in with so many other bloggers who are also bitching anonymously. So here I am. And maybe I will get tired of this blog, or not have time. Who knows? But my husband is griping that my other blog talks too much about finances, so I think I will make this a personal finance blog. If nobody knows who I am, they aren't going to give a whoop about whether or not I've posted my net worth. Do I sound a little angry? I am a little angry. I'm a parent and I'm tired. But I know there are lots of other tired parents out there, trying to make sense of the world, trying to make ends meet. If this is you and you've made it to this site, welcome. Leave a comment and tell me about it. I want to know.

And so we begin.