Wednesday, October 31, 2007

Pointing your finger: not just for third grade anymore


Kiplinger recently published an article called The Earnings Blame Game. Basically it is scapegoating, with companies using everything from El Nino to the recent housing crash to cover poor business models and falling income. Since I've invested in solar power and cable, I haven't seen much of this (my investments are, luckily, going up) but it might be something to keep an eye on; a company doing badly overall might just be using the latest disaster for justification.

Merrill Lynch's massive $8 billion subprime-related write-down was stunning, and the list of companies blaming housing, subprime mortgages or the credit crunch for their troubles includes not only homebuilders, banks and financial-services companies, but also car dealers, big-box retailers, semiconductor makers and freight companies.

. . .

Even Hershey (HSY) blamed the credit crunch for weakness in its candy business, saying that higher interest rates cut into distributors' profits, forcing them to whittle inventories.

In fact, you hear the same excuses in so many earnings releases that it makes you wonder: Are some companies latching onto a convenient scapegoat to camouflage other weaknesses? It wouldn't be the first time.

Sitting on $25,0000


Or sleeping on, actually...

BERLIN (Reuters) - A Berlin student who bought a second-hand sofa bed at a flea market learned she had been sitting on a small fortune when she found a baroque painting hidden inside the couch.

The artwork fetched 19,200 euros ($27,660) in Hamburg after the student discovered it stashed between the folding sections of the couch she had paid 150 euros for last year, the auctioneers said Tuesday.

Tuesday, October 23, 2007

How to conserve the jungle: Jobs


An article in CS Monitor tells how the New-York Based Wildlife Conservation Society is trying to stop poaching in Zambia: the old-fashioned way, by giving people something else to do.


The program goes beyond teaching former poachers new ways to earn a living; it is creating a sophisticated network of markets that makes money for locals while reducing poaching, improving land use, and supporting conservation.

They are also introducing carrots for those who comply (while keeping the sticks for those who don't)

Mr. Lewis notes, "[poachers] can't do it without the support of the local community."

In that context, promoting conservation means recognizing the reasons poachers hunt – and setting up a business model that gives local residents the opportunity to make a real, legal, living, says Lewis as he sits outside the program's local trading center.

Monday, October 22, 2007

Beating the Collection Companies

A recent article in Kiplinger personal finance talks about lingering debts and how it can destroy your credit:


Q: I recently checked my credit report and found a $104 collection account dating from July 2006 for an unpaid utility bill. Xcel Energy claims I owe $86 from 2001, when I was in college, but I was never notified. This has knocked 100 points off my credit score. What can I do?

A: You may have to bite the bullet and pay the bill. That will at least get the collectors off your case -- but unfortunately it won't help your credit score. "Having a collection account on your credit report is statistically significant for predicting future delinquency," says Craig Watts, of Fair Isaac, the company that compiles the FICO credit score. "What you do later on what that account doesn't change its significance to the scoring formula."


In reality, after three years (the statute of limitations in Arizona) you can no longer be sued for that debt (three years for credit card debt and oral contracts, six years for written contracts and five years for promissory notes). If you're unsure of what the statute of limitations is in your state, here's a great interactive map from Bankrate. Should the company or collection agency continue to report the debt, know that you have rights and must stand up for yourself.

I think it is morally important to pay valid debts, but if you choose not to pay the debt for whatever reason -- unfair billing, for example -- you might just have to live with collection agencies calling you for a very long time. It's called Zombie Debt Collecting. Collection agencies buy that debt for pennies on the dollar, so if you pay the full amount, practically all of it goes straight to their pocket. Should you decide to pay very old debt, consider paying the original company rather than the collection agency. This keeps an unethical company from getting your money -- and possibly selling your debt again without reporting it collected.

Also, once seven years has passed, you may have to write to each of the three reporting agencies to ensure they actually drop the mark against you. I was surprised to find 9 and 12 years debts -- that had been long paid -- still on my credit report when we decided to buy our house. And, a student loan that had been paid had been accidentally marked "delinquent" rather than paid by the loan company! That was a shock.

If you're curious about your score and what's on your report, you can now check your score for free once a year at AnnualCreditReport.com.

Monday, October 15, 2007

Green Investing

It's as if old hippies died and went to heaven; terms like "off-the-grid power" and "wind technology" are now as popular as Internet startup was a few years ago. I personally have put my money into Evergreen Solar and Composite Technology Corporation, but there is a wealth of companies vetted by finance publications, and many are saying that buying green could put you ahead of the game financially as green companies come into their own.

From Kiplinger: 25 Stocks to Invest in a Cleaner World

We've sifted through the implications and put together the Kiplinger Green 25, a list of companies we believe will get a big boost from the growing focus on climate change and the move toward alternative fuels. Our picks vary widely in size, and four are based overseas. Some of the stocks may be expensive, and shares of some of the smaller companies may be volatile. But we think all will do well over the long term. In addition, check out our separate profiles of five up-and-comers -- small (with market values of less than $1 billion), more-speculative companies that someday could grow into green giants.

CleanTech Blog talks about Solar Power 2007, a conference about green solar technologies, and what companies are hot right now:
In 2006, PV grew over 40% to $20 billion in revenue and over 2,500 MW of new solar power. The European Photovoltaic Industry Association (EPIA), forecasts a €300 billion industry by 2030 which will meet 9.4 per cent of the world's electricity demand. By 2030, solar is forecasted to be the least expensive source of energy in many sunny regions of the world.

Get Rich Slowly says, "Want to Save the Environment? Buy Less Stuff!"
Every time I buy something, it has an impact on the world around me. When I buy a new kitchen appliance, for example, there’s an environmental cost for the manufacturing process, for the packaging, for the transportation, and for the marketing. By reducing my role as a consumer, couldn’t I help myself and help the environment? Here are five strategies that I’ve developed to help me accomplish both goals at once...

Millionaire Mommy tells us to ignore advertisers and their siren song:
Advertising media leads us to believe that in order to be beautiful, hip and happy, we need to buy their product. What they don't tell us is that when we do, we often pollute our earth, poison our body and empty our bank account.


Last but not least, here's a few energy saving ideas of our own:

As mentioned before, we switched our commuter vehicle from a small, compact car to a 163 cc scooter. This will save us almost $200 a month in gas, insurance and parking fees as well as 1,347 pounds of carbon dioxide a year. I also plan to take my son to school on a bicycle twice a week; that saves us another 425 pounds of carbon dioxide. That's a total of 1,772 pounds saved a year. (Want to calculate how much you pollute? Go to the EPA website here).

We started shopping at a local farmer's market and I found someone who sells eggs in Tucson. Her chickens get the run of her yard, and I get cage-free eggs for $1.50/dozen. That's a savings of $1.25 per dozen versus buying the ones in the store. Next spring we'll look into buying a share of our local CSA, otherwise known as community supported agriculture, to further reduce our impact and save money on groceries. Check out Animal, Vegetable, Miracle to find more resources for buying locally.

Because we're in Tucson, we planted low-water use, native plants in our yard five years ago when we first moved. This year I turned off the watering system and everyone lived, so we look forward to saving about 1200-1500 gallons of water a month (and between $10-15/month) by having a desert landscape.

Our goals for next year include purchasing window quilts or similar to help insulate our house, purchasing an energy efficient range and dishwasher, and looking into solar panels via the Tucson Electric Power GreenWatts Program.

Got any ideas about how to reduce your footprint AND save money? Leave a comment!

Monday, October 8, 2007

Food Troubles

I just got back from Wild Oats with groceries that will last for the week, at least I hope so. I have some other staples here to supplement that, but our goal is to stop eating out as much, and to eat more meals at home.

My problem is that I tend to like really good food. I have a hard time cooking unless the food is good; I use fresh spices, organic produce, and try to use hormone-free beef, lamb and chicken as much as possible. I love really fresh, good food, the kind that was mooing or growing in the sun recently. The problem is the cost. I spent $100 on groceries today, and I hope that will get me through Wednesday or Thursday. I rarely make it through the week on less than $200. I don't know how bad that is for a family of four.

The Motley Fool makes some recommendations, including joining a CSA. Our CSA, unfortunately, has a waiting list! Our name finally came up on the list in August but were unsure if we were staying in Tucson. Since it is an upfront cost of nearly $300, we decided to wait (and need to get back on the list now).

Get Rich Slowly also had a few articles on saving money at the grocery store: Tips and Tricks to Save on Food and How to Feed Yourself on $15/week. Here's another one from We're in Debt: Eight Ways to Save at the Grocery Store.

I had hoped to get by on $75 this week, but I had to buy chlorine-free diapers (my daughter gets rashes otherwise -- she struggles with eczema) and we started buying organic milk. Mostly I think the cost has to do with Tucson, and the fact that water for agriculture is expensive and most items are shipped in, increasing the cost. I know when I visited my family in Idaho, I was practically drooling at the fruit stand, the costs were so low. And my parents used to buy a side of beef every year, too. Along with the deer or elk my dad killed hunting, it usually provided meat for the entire year.

One of the difficult things for me to adjust to is city living. When we ran out of milk as a kid, we drove to my grandmother's dairy farm and dipped a couple of glass jars into the stainless steel tank. We rented a pasture and raised our own beef one year. I ate so much wild game (pheasant, grouse, deer, elk) that I did not even know these things were unusual (or in some cases, a delicacy). I feel like a foreigner in most cities; what, exactly, is normal here? Butchering my own beef and skinning the carcass was normal growing up. I raised and helped butcher my own chickens. Living in the city where everything is under cellophane is much cleaner, I'll admit, but also a lot more expensive.

For me, one of the difficult things about saving money is that you have to try, over and over, to make a concept work. It's a lot like learning a language; repetition makes for ease of use. For me today, I went into the store with a definite list, I had a budget, and I still went over my budget by $25. I could have stopped when I got my organics and chlorine-free diapers, loaded the kids up, and driven to Safeway to buy my apple juice and cheddar cheese, but I did not. It seems like a waste of gas and resources to do that, too, in addition to taking twice as long.

I suppose I ought to congratulate myself on small triumphs. Today I found myself putting back the bunch of organic kale ($1.99) and the organic leek (yes, that's leek, singular, for $2.49), even though they were both in plastic bags already. I bought nearly no produce there because it was outrageously expensive. That saved me $4.49 (plus tax) on my total. I also bought a jar of apple juice because I needed a big glass jar to make sun tea, so for $5.49 I got apple juice AND a reusable jar, when I planned that much for just a jar.

Just like debt becomes a ball that grows, reducing our costs is also a ball that grows slowly, over time. I need patience, as well as discipline, to get through this period.

*sigh*

We did it!

We finally finished cleaning out our storage unit late last night. Yay! That's $174.50 a month back in our pocket.

Sunday, October 7, 2007

Issues

From The Tao Of Making Money, the author of M's Blog says, "Most PF Bloggers Are Rich, Self-Righteous and Inflexible." While the author did recant her comment to some degree here, it certainly made for some interesting discussion, and I realized that, while I have focused on my finances on this blog and my financial decisions, I haven't talked a lot about a whole host of other, more personal issues that do, in fact, affect how I think about money and, more importantly, how I think about life in general.

I started this blog because I admired people who used their blogs as a way to record their finances, and also because I hoped I could be like them -- that I could get out of debt that way. As this year has shown, it isn't that easy, and it was somewhat naive of me to think that way. But, what might not show is that the naivete comes from growing up poor and not really understanding the way things work. There's a kind of mentality that comes from that that is really hard to break. I tend to emulate more than innovate because I don't have the confidence someone with a large income and assets might have. I have a lot of education and I consider myself something of an academic, but it's still hard to shake the idea that "money is corrupting" (love of it is, or so the quote goes). Poor people tend to despise the rich also (I've found that wealthy people are blissfully unaware of how much the poor really despise them -- not jealousy, but real hatred, I mean). So what happens when I become, well, "rich"? It's not an easy thing to deal with, and already there are murmurings in my family when I say I can't afford so-and-so because my husband and I aren't living hand to mouth.

The worst thing that happens to the lower-middle-class because of this belief that money and wealth is bad, is corrupting, is that they tend not to make their money work for them. That is the real reason I started this blog; I wanted to really find out about retirement accounts, brokerage accounts and a whole host of other things, and I did. And you know what? Last quarter my 457 account made a 28% profit. Twenty-Eight Percent. Unbelievable!

Regardless, this comment (and the many comments that proceeded from it) reminded me that my position as someone going from a blue-collar life to a white-collar life might be an unusual one, so look for some interesting posts about it, from paying for a private college alone to how I felt about my first real paycheck to dealing with depression and chronic fatigue while looking for a first job. This is some ancient history for me, but I still am dealing with decisions I made right out of school that were directly related to my complete ignorance about personal finances and the reality of office jobs. I hadn't planned to add this element to my PF blog, but perhaps it is fitting, after all.

Breaking It Down


I've wanted to break down our finances for a while now, and I finally sat down and figured out how to use Google Docs to do it. I use several computers and it makes it hard to keep track of a spreadsheet; Google Docs makes that easier, but it is a little different from Excel. Perks -- easy to use, convenient. Drawbacks -- hard to format, exporting a bit tricky. Anyway, here's the result.

As you can see if you click on the picture to the left, we have some serious debts to reduce over the next 12 months. We are in slightly worse shape debt-wise from the changes of the past six months, but in much better shape savings and retirement wise. We hope to pay off the American Express this month; we used it to buy the scooter so we could get 1% back, but we have to be careful not to pay that 17.22% interest by leaving a balance! This month we hope to: reduce our expenses by getting rid of a storage unit ($174/month), sell our car and rely on just one car and the scooter ($4500-5000 to pay off credit cards, insurance reduction of $750/year, gas reduction of $40-60/month) and move some money from a pension account into my IRA invested in stocks.

Comments? Remarks? Questions? Feel free to ask.

Thursday, October 4, 2007

The U.S. Postal Service, or How I Lost $50

Recently I had a little reminder pop up in my e-mail about my brother and nephew's birthday. We are heading into birthday season; 90% of my family were born in the winter, I swear. From November through February I have seven birthdays, one anniversary, Valentine's Day and Christmas. It's a financial nightmare.

Usually I ignore my brother's birthday, but this year we haven't gotten along very well and I thought I should at least send him a card. While I was at the shop, I saw a cute one for my nephew, so I picked that up, too.

I needed a good pen and there was one at the counter for $1.49, so I bought that long with the two cards for $2.25 each. My one-year-old found a cute pen that attaches to a keychain, and I am always losing pens, so I bought that too for $3.99 (yes, I knew it was a foolish purchase).

I thought I might just put stamps on the envelopes and send them, but my nephew is 17 and I knew a card without cash wouldn't be considered "thoughtful." I debated slipping a $20 bill inside, as $10 seemed chintzy, but I had already spent $9.98 plus tax, and, after all, we were trying to save money, and I had splurged on the silly pen. So, I ducked into the cute little toy/novelty shop next door to see if I could find something funny to tuck into the envelope.

I found fun bobbing ninjas for the dash of a car for the low, low price of $10. Then I found a global warming mug for my brother (the coastlines disappear when you add hot liquid) and it was $12.50. Well, I thought, for $22.50 I can get a gift for both of them, sort of like a two-for-one.

You know what's coming.

So then I walked over to the little postal shop nearby. I am terrible at sending things so I knew I had to do it right away or I would forget. Since I didn't have packaging, I had to buy it, and the mug had to be bubble-wrapped so I had to buy that too. I got the addresses from my mother while I stood there, and even though I slipped the ninjas into a plain padded envelope ($2.39) rather than a festive one, my total came to $24.52.

Ouch! I could have sent each one a twenty dollar bill and still saved $7.02. Or, I could have stuck with my original idea, swallowed my pride, and saved myself $50.00.

*sigh* These are the things that making saving money so terribly difficult -- the little decisions I have to make every day. I just hope the gifts get a laugh, but that laugh -- it's an expensive one!

Next time, I'll think twice, or at least I hope I will. Gifts are my biggest downfall, and I just don't know how to stop (and I always, I repeat, ALWAYS, lose money when I make gifts).

I'm not looking forward to Christmas...

Adding $13,500

I just added $13,500 to our retirement accounts. This is the amount currently in my husband's pension fund. We debated whether or not to add it but it seems logical to put everything in. Of course, technically I should go back through the months and adjust according to how much was there, but we didn't know how much, so I decided to just add it this month and leave it. I already know we increased our net worth by $1,102.

Right now I feel like a serious revamping of our accounts is in order. It becomes more and more difficult to track what we actually have because we have so many accounts. This is primarily because of banks; at one bank, we have a free business account, another offered $100 to start a checking account, etc., etc. We have six accounts we use frequently (yes! six!) and another three that we could get rid of. We also have savings accounts at ING (one each) and a PayPal money market account. Most of these don't have fees (I think just one account does and I plan to have it canceled this month) which makes it easy to leave the money there. The hard part is keeping track of it.

Next up: a spreadsheet tracking our loans to date. I've been wanting to do this for some time, and I hope to get it up in a day or so.

Tuesday, October 2, 2007

Not great, but smoothing out

Calculating this month's net worth wasn't as bad as last month, but things are still a bit rocky. We bought a scooter this month and haven't yet sold a car, so we look like we are in the hole more than we are. We had both cars repaired which helped us to decide which one to sell, and I adjusted their worth up accordingly. We will soon have the a/c in the Volvo repaired, which will set us back about $1,000, but we'll gain that in its value, too.

We've made moves to lighten our lifestyle and it will become apparent the next month or so. Getting rid of our Ford will save us in gas and insurance, plus pay for the scooter. We will save almost $60 a month just in insurance, and probably another $40 in gas, and we will soon see the $350/yr savings from switching to a motorcycle parking permit for my husband's work. Altogether that amounts to a $1,550 savings a year, or $130/month that we can put towards debt or savings.

Even though I want things to go faster, we did raise our net worth by $1,100 this month (yay!). Our debt (other than credit cards from the scooter purchase) went down slightly, and our retirement went up quite a bit as I discovered I had money in a pension account I didn't know about. I'm debating whether to add in the money in my husband's pension account too; I suppose that would be the logical thing to do, but since I don't track it monthly (cannot) then I hate to put it in. It would add another $16,000. It makes us look slightly less irresponsible regarding our retirement if I do that. ;)

I changed my ING account to an automatic withdrawal of $15 twice a month. I'm arranging to rent out our guesthouse weekly in the spring but only have it rented for 10 days at the moment, so I hope I can keep it occupied.

I checked my 457 account and noted that I received a 26% return this last quarter! Wow! Annualized that's 14.8%, which is wayyyyy beyond my expectations. Right now I'm faced with a decision regarding the money in my pension; leave it in at 8% or roll it into my stock-based IRA? It's hard to say. Right now my stocks have only just recovered from the recent dip, but we'd like to buy Google stock. I checked and someone who bought just $400 of IBM stock when they opened would have $1.1 million in shares right now. I know Google is overpriced, but we are looking at this long-term; will they be there in 2040 when I retire? Will they keep innovating ahead of the rest? It's hard to say.

My personal IRA account is really for venture capital; I am invested in two "green" firms that create solar panels and a special kind of optic cable. I just read that green investing is the new "Internet start-up" in Silicon Valley. I never wanted to be cutting edge; I just care about the environment and wanted to invest in that sector, so I'm curious to see how this pans out. Anyway, we'll be discussing whether to accept a no-risk 8% return or whether or not it's worth it to take the risk with the few thousand I have in this state pension system. It's a hard call (if I leave it, I can get $63/month pension when I retire, which is pretty underwhelming, but the interest would turn it into $40,000 which I could withdraw at that time).

So that's this month: more downsizing, an unexpected retirement account, and a move to "turtle" savings rather than "rabbit" savings. Hopefully we can hold steady.