All posts by Joy

Dreams of a 401(k)

Oh 401(k), when I think about you, I touch myself.

Employers matching contributions? That’s a truly beautiful concept, and one I’ve never been able to take advantage of.

At the moment, my freelance career prohibits me from obtaining full benefits at one company. That’s how I chose to live my life, so I have to deal with the fact that my Roth IRA has lost significant amounts of money this year, while if I had been able to contribute to an employee-match 401(k) I might have at least broke even amidst this recession mess. However, I just have to go it alone. That’s my choice.

But that wasn’t always the case. My first full time job at a magazine showed me how even full-time gigs at companies don’t always equate to earning the luxury of a 401(k). That company was a bit, how-do-you-say, confused in terms of organization. We had a meeting about getting 401(k)’s where the financial companies came in and presented our options, then they came in another day and we met with the reps and signed the paperwork. Of course, since the company was not making any money, our 401(k) was not going to include a match at all. So ultimately the only benefit was that it would encourage employees to start saving (but tax-wise, most of us would probably be better off with a Roth anyway).

Next up on my job history resume, I obtained another full-time gig at a startup where I was to get stock options instead of a 401(k). I never actually earned any of those stock options because I left the company after three months. I was fired. I was bored with the topics I was writing about. And I couldn’t keep up with the pace. It was for the best.

I worry a bit about my retirement. I know it’s many years off, but I won’t have the security that my dad has. He retired early so my family is living on a tight budget now, but in a few years he’ll have access to his pension and he and my mother can live off that. What will I have to live off of in 2058? Or whenever it is I end up retiring?

Thus far I put $4000 into my Roth IRA (started in 2007). It’s down to $3600. I know… I know that investing is a long term thing. Still, I can’t help but be concerned about what my future holds. Maybe the smartest thing to do would be to get a stable full-time job at a public company or government agency. But I’m trying to balance my happiness and my future. It’s hard to find that balance. I’m worried I’m leaning too far towards happiness right now.

Question of the Day: Can Wealth Be Fair? – from Brip Blap’s Blog

Blogger Brip Blap poses the question “can wealth be fair?” The blogger goes on to list three different scenarios where in order for people and a country to build wealth, others might have to suffer. The blogger does not say that (s/)he agrees with these scenarios. In fact, Brip Blap goes on to explain how (s/)he is upset but each of the scenarios discussed.

#1 — A college graduate basically decides to save nothing and spend all his money throughout his life. Is society responsible to pay for his medical expenses and basic necessities later in life when he can no longer work?

Brip Blap Says:I detest this attitude. His attitude will take money out of my pocket when he is older…. (still) I doubt anyone is prepared to see senior citizens sleeping on the streets.”

I say: I think financial education should be a required, ongoing class in public school. Each year you should have a different amount of money (income) to budget with, and the idea of the class should teach you about saving money, investing, and why credit card interest rates are the devil. After that, if someone choses to go out and spend all their money right away, especially if they’ve made enough to save, then I don’t see why the government should have to pay anything to them when they’re older. I don’t think the government should be able to “force” you to save your money through taxes, but should provide a clear and easy-to-understand tax incentive for people to save money. It should be income based, maybe in match form, so those who are in a lower income bracket but manage to save 5 percent of their income get a 10 percent match, where those in the upper income bracket get a 5 percent match… or something like that. (Those in the higher income brackets would likely be investing anyway.) For rich people who don’t save, I don’t mind them ended up on the streets. It’s their own fault.

#2: A child is born with 50+ different health problems. Keeping her alive is more expensive than treating dozens of other children. The family is in debt, the health insurance system is hurting because it can’t afford to treat this kid.

Brip Blap Says: “I knew a child like this. She was a lovely, happy and intelligent child who suffered from an incurable genetic condition that meant her chances of living to be a teenager – much less an adult – were minimal. Even if the chances of her living to be an adult are slim, she deserves her chance at whatever life she can have. My higher insurance premiums that may have resulted from that? Please.”

I say: If we are going to have a health insurance system at all, I think it should not be based on the concept of wealth. We should all pay equally into a universal healthcare system and receive the same quality health coverage, regardless of our pre-existing conditions. Those who are well off may wish to also purchase individual insurance for additional benefits. Yes, even a government-run healthcare system has to make some money to pay for the people who work there, but until healthcare leaves the hands of private, profit-seeking companies, it will never be fair.

#3: Is it fair that a middle class married couple pays more in taxes than someone living off their investments, even though they both may be taking in the same amount of money? Is it fair to tax the rich more, but keep taxes on lower-income families low?

Brip Blap Says:The unfairness in the system – the loopholes, the weak taxation on rich people – may not benefit me now but it will when I am financially free. I plan to be one of the people living off my investments, earning no wage income and avoiding my fair share of taxes. So if I want to build wealth, why should I rail against this system? I intend for it to benefit me in the end.”

I Say: Taxes are never going to make everyone happy. If you live in a society with no taxes and a very limited government, the rich get richer, the poor get poorer, and the middle class disappears. Then the poor start a revolution and the rich get slaughtered. This has happened in history many times. Yes, it’s sounds extreme, but that’s what happens if you make it impossible for the poor to have at least some opportunity to make it into the middle class. The more opportunity you give, the less likely we’ll have another civil war one day. So as much as I hate knowing how much of my income gets zapped from my paycheck due to taxes, I know that at least some of those taxes benefit me (I’m glad the bridges are maintained, as to avoid falling into the East Bay). However, I’m not sure about taxing those living off interest income less than people earning the same amount. It seems taxes should be based solely off of income, regardless of where it comes from.

Brip Blap closes with a great point: “there is no fairness in a capitalistic society. Does anyone want complete fairness? Inequalities in the system are what allow wealth to be built.”

That’s very true. Otherwise we’d live in a communist society where we’d all (supposedly) be equal. We’d all work, get the same pay, have no reason to better ourselves or society. What kind of society would that be?

That’s why I think the role of the government should be to keep wealth in check. To give opportunity to people who are born in poverty and even middle class families. If I had my way, I’d make it illegal for parents to give their children money, and instead they’d put that money into a giant pot that would be divided up evenly amongst all the children in the country. It seems fair for individuals to build wealth, but unfair for their children to profit from such wealth. Yes, I come from a family where I did profit from my parent’s wealth, but at what cost? I’d probably be better off if I learned about budgeting from a young age, knowing that I would be on my own with a few hundred dollars in the back to start off with. Allowing families to pass money down from generation to generation is where unfairness begins.

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Making Money with Blog Advertising

… I’m not going to give you a list of “how to make money on your blog” here. Apparently, AdSense is not really working for me. It seems the more quality clicks I get on my site, the less likely someone is to click on an AdSense link. Which is perfectly fine, but kind of defeats the purpose of AdSense.

I’ll keep the ads on my page for now, since I take in maybe $1-$2 a month (that’d be 1-3 clicks a month), but what surprises me most is how in the last few weeks my blog traffic has gone up substantially and consistently (yeay!), but my AdSense earnings have not reflected my increase in popularity.

Meanwhile, the one ad I sold on my site made more money than I’ve made on AdSense to date, and I bet that ad gets more clicks too (though I have no way of measuring that). People are just so numb to AdSense these days that anyone who actually reads blogs on a regular basis will very, very rarely click on an ad. Sometimes I’ll click on ads other’s blogs because either I’m interested in the advertisement or I just want to help the blogger out a bit. But most of the time I forget to do this.

I’m running a poll right now on the left side of my page about AdSense, where I’m asking you, the reader, if you ever click on AdSense ads (not just on my site, but on any site.) If you haven’t voted yet, take a second to pop in your opinion. I’ll post the results at the beginning of next month.

Meanwhile, I’m enjoying watching my readership grow. It’s a slow, sloooow process, but you’ve got to start somewhere, right? I look at some of the PF blogs out there that have over ten thousand feed subscribers and I wonder how they did that! I have 28 right now (I gained a few and lost one thanks to that vibrator post, heh) and that’s the highest it’s been yet. It’s exciting to know that people out there in cyberland can relate to my financial experiences. I’m ever-so grateful for all the advice my readers have given me to date.

So even if I won’t make more than a buck or two a month by writing in this blog, I make a lot from getting to meet great people (albeit anonymously) and learning more and more about how on earth I should manage my out-of-control budget and investing experiments.

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Monthly Income Goals

While sorting out my expenses is necessary in order to start saving money, I am going to try over the coming months to focus on my income. Here are my goals:

1. Startup / Part-Time Writing Gig: $3300
2. Marketing Company Writing Retainer: $400
3. Freelance for Magazine: $100
4. Freelance for Market Research Firm: $150
5. 5 hours per week for online news mag: $500
6. One Pro Bono (or Paid) Web Design Project: $0
—————————————————————
$4450

Then there’s taxes. So I really won’t make that much. But ideally, that’s what I’d be bringing in, at minimum, each month.

What to do About This Cyst on My Head

A few months ago I went to see a dermatologist to find out about getting two dime-sized cysts on my head removed. From what I could tell, they were not cancerous or anything, they were just annoying me and potentially causing pressure on a nerve which would explain the headaches I had been getting.

When I went into the dermatologist, I had good health insurance – a PPO with a $250 deductible. She recommended a simple outpatient surgery to get the bumps off of my head and I agreed. I asked her if this would be covered by insurance and she said “I think it will be covered, don’t worry about it.” So I had the surgery done and all went well. She cut holes in my head, took out some gook, then stitched me up.

One month later I receive a $136 bill for the surgery (my insurance paid for some of it.) While I was hoping they’d pay for all of it since it was causing me headaches, I wasn’t too pissed about the extra charge. What I was (and still am) pissed about is that one bump was not completely removed. At first I thought it was just scar tissue, but within the two months since the operation, that bump has re-grown and actually gotten bigger.

I’d like to go back to the dermatologist to have her check it out (she can at least tell me if it’s normal for it to grow back, or maybe take it out again) but now I have a high deductible catastrophic insurance and I don’t want to pay $200 for a visit to have her check my head when the original surgery… that I still have to pay for… was supposed to get rid of the bumps entirely!

What should I do?


Edited to add: I called the doctor and was informed that it’s normal for these cysts to grow back and basically I just have to deal, or come in for another appointment. I wish the doctor told me about the odds of the cyst growing back before the surgery. I had read online that the cyst could grow back eventually, but I didn’t think it would happen right away.

The Lawsuit and Rich Parents (aka, why I have $26k in my bank account at 24)

Many of you might wonder how on earth I have managed to save over $25k at 24… and to be honest, I’m a bit embarrassed to admit the truth. While I’d love to tell you all stories of how I worked my ass off through college, got an extremely well paying job the second I graduated and continued to watch my salary climb as the years passed, the reality is none of that is true.

Here’s what really happened:

I was born into an upper middle class family. My mother stayed at home. My dad was an actuary who made a strong six-figure salary. While my mother and I kept spending his hard-earned money, he still managed to save quite a bit. Additionally, his company had a pension plan and all of those old fangled tricks to keep people working at one company for their entire lives. And it worked… my dad, after dropping out of his graduate program in Physics at Cornell, ended up spending his entire life working for this one company and climbing the corporate ladder. He never seemed happy, as he certainly did not like my mother, and having to commute one hour each way into the city everyday couldn’t have helped.

But as he worked hard, I continued to reap the benefits. He saved up more than enough money to send me to a relatively expensive private institution for four years. Somehow he also managed to pay for my frequent shopping sprees to discount clothing stores. I was spoiled in an upper middle class sort of way. It’s not like I went out and bought Prada or even Coach. Designers always meant little to me, but nonetheless I had a major talent for spending heaps of cash.

If all of that were the entirety of my story, I would have graduated without debt, and with about $9k in savings thanks to dad’s “apartment for daughter after she graduates” fund. That would have been plenty more than I deserved.

But here’s the secret to my minor fortune:

In 6th grade, I broke my arm at my birthday party. I’m not quite sure whose fault that was, although my parents, our lawyer, and the judge all seemed to agree that the company running the party was at fault for negligence. As an 11-year-old, all I really wanted was an apology from the folks running my birthday party… after all, I had to leave three minutes into the festivities while the rest of my friends stayed and got to enjoy games and cake. Well, my “apology” came in the form of $15,000. Although $5000 was taken out in lawyer fees, by the time I could access the funds at 18, my bank account had grown to about that original sum.

So if you were wondering how on earth I have so much money – that’s how.

I do feel guilty about it, as I have many friends who had to take out loans to get through college and who will be paying for their education for years to come.

I’ve had the luxury to move across the country, to rent a $1050 a month apartment, and to mess up at a few jobs and figure out my career through trial and error. I’m lucky. I’m very, very lucky.

It’s hard to compare myself to others my age. I don’t know a great deal about people’s personal finances, but I have friends across the spectrum of class (ranging from “upper lower” class to “upper middle” class.)

My boyfriend’s situation is somewhat different, yet he also has money in savings and graduated with no loans. His mother has never moved out of her parents house. She’s worked consistently throughout her life, and has saved most of her income. While I was a spoiled little brat as a kid, my boyfriend never experienced the finer things in life… even though his family had the money to show him such things if they wanted to spend it. But instead, his mother believed in buying clothing from the thrift store. Last Christmas I was shocked that she got me a gift (it is the thought that counts) but I just found it interesting to see that the “gift” was a red wool coat that she had bought from a thrift store a while back, knowing that at some point she’d give it away as a gift.

I don’t judge her for this at all, I’m just fascinated by the different financial mindsets of people in America. I wonder how much of it is based on culture and religion, and how much is unique to each family and person. Even I believe that the best part of making more money is being able to share that money… at least with the person you love and your close friends.

There’s plenty more I can write about all of this, but I need to get some more work done this evening before heading off to bed. Please leave comments about this topic, as I’m interested in hearing about your families and how that influenced the way you spend and save today.

Edited to add: My parents no longer send me money. I’m on my own. If I was in debt or something awful happens, I know they’d be there to help as much as possible. But now I’m earning money and paying all of my bills, including rent.

Sharebuilder – Will it Destroy Me?

I’m determined to “understand” the stock market as much as possible. Instead of “investing” in an economics class, I’m putting my hard-earned money into stocks via Sharebuilder.

It all started this week when I realized Sharebuilder and ING were now one in the same. I trust ING, so I figured it was time to make the next leap in my financial journey — ETFs and stocks. I wasn’t going to do anything crazy and spend $1000 on one stock right away, but it’s time to do some experimenting… especially since we’re in a recession and the markets are fairly weak right now. It can’t be that bad a time to buy, looking at a long-term investment.

I did a little research and with in my typical spontaneous and likely under thought fashion, I decided to quickly move on from my original $500 investment in Gold and one small cap company that I’ve liked since my reporting days (even though now that I think more about it, they’re probably not the greatest investment). Sharebuilder had a neat feature showing losses and gains that I couldn’t see unless I signed up for their monthly plan ($12 a month) which also features 6 free trades, so I gave in and spent the money. Probably a dumb idea. Potentially a very dumb idea.

But I’m young and it pays to be aggressive in my investments, supposedly. If my “safe” mutual funds are failing, then I know to expect that anything more aggressive will likely lose money too. I’m just hopeful 10-20 years down the line these purchases might pay off… maybe in time to move to a bigger place (or buy my first house) and have kids?

Regardless of how much you know or don’t know about the stock market, it really all is one big guessing game that can be sorted through with the help of statistics and a fine understanding of the economy. Still, another bomb could go off anywhere in the world and send everyone’s predictions completely out of whack. A part of me loves the excitement of the stock market. It’s a grown-up game where you can win some money (or lose all your money, eek.)

Again, I’m not being totally stupid about it. I still have a good $12k in two crappy-interest CDs (I’ll be moving those funds to one higher-interest CD as soon as they’re liquid again) and at least my gains on my CDs and occasional take-home pay equaling more than I spend in a given month have helped balance my loss of $700+ on my Vanguard accounts.

Besides, if we are in or going into a major recession, I believe (after reading a bit on the topic) that certain cheap retail establishments will do well, especially if they have foreign sales power. I’m all about the foreign investments too. Not all in one country, but I’m going to buy a small amount of an index fund in Brazil, one hot company in Spain, and another index tracker in China.

“Going to” is because I have to wait a week and a day before any of these investments post. That’s what Sharebuilder’s automatic investing is all about. I still don’t understand it completely. The “coolest” part about it (that seems to be its selling point compared to other online traders) is that you can purchase “fractional shares.” How they do this beats me, but basically you say “I want to invest $X into company Y the 1st Tuesday of every month” and if you have enough money in your account (which you can set up to automatically transfer from your bank account) it will invest exactly that much into that company on that Tuesday.

The good here is that if a stock costs $600 ala Google and you really want a piece of that action, I guess you could go and invest $30 in it. But what i don’t understand is how on earth Sharebuilder does that. Do they actually buy a full share of the stock assuming you will continue to buy the rest of it? They can’t really do that, because when they place your next order, you buy it at the market price for that Tuesday. As far as I know in my limited knowledge of stocks, you can’t just buy parts of a share. You have to take the whole thing. So how on earth does Sharebuilder do this? They don’t really explain how they do it on their site, they just say they can and basically that it’s an awesome feature for investors with a small amount of savings each month to invest. I like the idea, but please, someone explain this to me.

Anyway, I’ve set my account up to buy parts of six different stocks once a month for a total of $300. I figure I’m better off forgetting about $300 that I’ve made and investing it, and either it will make money (I am investing in a few large cap companies that seem to pay dividends, which looks to be a good thing to balance out my risk a bit) instead of looking in my bank account and spending more on food and clothing and such that I could get more cheaply. It will certainly force me to be more frugal, in a good way.

I just hate waiting for the investment window. What if Bush’s recession tax plan passes the day before my investment and all the sudden the stocks soar? I’m confident that the stock market is sucking right now, and I’ve picked stocks and ETFs that seem to have long term potential that are also sucking at the moment. I’m so nervous that it won’t be the case on Tuesday the 29th, when my bets should be posted.

Then supposedly I keep investing the same amount every month until I’ve built up a decent portfolio. I just can’t wait until I log into my Sharebuilder account and see a few different stocks and really start following them and understanding what they do and why. If anything, this will help me learn… for future reference… what kills a stock and what makes it soar. Hopefully I’ll learn more of the later.

10 Ways to Make the Most of Your Gym Membership

Gym memberships are a costly investment, but the good thing about them is that you can control the amount of pay off by the amount you actually use them. It doesn’t really matter if you’re spending $19 a month or $99 a month, what matters is how often you actually get your lazy butt off the couch and go workout.

Here are 10 ways to make the most out of that costly gym membership:

1. Go, and go often: Ok, this one is obvious, but despite having a “duh” factor, this is the most important step of all. For the past year-and-a-half, I had a $46.99 a month membership to 24 Hour Fitness. I went to the gym a total of 10 times in those 18 months. Quick math shows that I would have been better off splurging on a day pass to a local luxury gym… or buying myself fitness equipment… instead of spending about $70 a visit. Now that I belong to Gold’s Gym with a $27 a month membership I’ve vowed to go to the gym at least twice a week. Not only does this make my gym membership make more sense to my budget, it’s also helping me be more healthy, which will hopefully cut medical bills in the long run.

2. Get a Gym Buddy… Who Isn’t a Close Friend: Having a gym buddy is a good way to encourage yourself to use your gym membership. But if your gym buddy is a close friend, there’s a better chance that one of you will come up with a last-minute excuse on why you can’t go, letting the other back out easily. After all, friends are often more forgiving about these things, especially if the friends aren’t keen on going to the gym in the first place.

3. Take a Class or Ten: Many gyms offer a variety of “free” group fitness classes. As soon as you start taking these classes, your “investment” dollars are being put to work. Assuming group fitness classes, on their own, would cost $50+ a month at the local rec center, taking a class once a week makes the entire gym membership worth a lot more. Go in without any expectations, and be ready to walk if the instructor is awful or the class is really too hard for you.

4. Use Those Machines: One of the main benefits of belonging to a gym is the ability to diversify your workout. Don’t be afraid of the weight training machines (I know I was for a long time). Instead, read the instructions on the side of the machine and start slow. You should pick a weight that allows you to do 15 reps (repetitions) of the same movement until your muscle feels as if it is melting and has turned to jelly.

5. Go In the Morning: I’m going to try to take my advice on this one in the coming year, as I’ve yet to experience the 5am gym rush. Going to the gym in the morning is great because it gives you energy for the day, helps your metabolism, and… best yet… ensures you won’t come up with excuses after work about why you can’t make it to the gym. Also, going in the morning makes you more aware of getting to sleep at a reasonable hour, which is ever-so important for weight loss and health (she writes at 2am after getting 2 hours of sleep last night.)

6. Buy a Bunch of Used Fitness Magazines: Fitness magazines often repeat the same information over and over again, so I wouldn’t recommend them for health nuts, but for beginners they can be quite helpful. Not only do they offer advice on workouts, they also will discuss (and show photos) of proper form, which will help you make the most out of your workout and not hurt yourself… both important things if you want to keep using the gym.

7. Don’t Give Up: Easier said than done… but staying on track is more than half the battle. Don’t disillusion yourself into thinking you’ll drop 10lbs a week. If you’re eating a healthy diet around 1200 calories (for women) or 1500 calories (for men) and working out 3 times a week, you will lose weight… like 1lb per every 1-2 weeks. Even if you don’t lose a pant size, any exercise is good for your long term health. It’s what you can’t see that’s the most harmful.

8. Join a Online Health Community: Free health and fitness networks can aid in your journey. Check out SparkPeople.com, a wonderful community where you can track your diet, get fitness advice and surround yourself (digitally) with other people like you.

9. Invest in a Personal Trainer: Personal trainers are very expensive and they’re not all worth their lean muscle mass in gold. Some gyms offer a few cheap personal training sessions when you sign up, so take advantage of that deal. Tell your trainer up front that you’re broke so he or she will be less tempted to try to sell you expensive supplements or additional sessions. Instead, explain that you really want to learn a good basic workout (or, if you’re more advanced, ask for a workout that can help take you to the next level). Get the workout in writing and take notes on any specific proper positioning that isn’t obvious.

10. Eat Healthy: You know that saying “you are what you eat?” Well, it’s true, and it’s most apparent when you’re at the gym. It’s easy to tell yourself that you’ve worked out a ton so a good reward would be an entire pizza or slice of cake. However, you’re just sabotaging your hard-earned results. Eating a diet high in protein, complex carbohydrates and fiber will give you the energy needed to work out. For good, easy sources of protein try egg whites. Egg beaters, which are milk-cartons of liquid egg whites, are my new best friend. Also, splurge on a good vitamin. I’m no nutritionist, but look into what sort of vitamin would be best for you. It’s cheaper to buy one slightly more expensive vitamin with everything in it you need than buying a lower-cost vitamin and having to buy separate supplements for missing nutrients.

Question of the Day — From BankerGirl’s Blog

“If your boss told you that you’d just won two years paid vacation, what would you do with the time?”From the blog of BankerGirl.

Oh gosh! Two years paid vacation would certainly be a luxury. A lot would depend on what I’d be getting paid during those two years. Assuming it would be a full-time salary of $50k, I’d probably work another job (hopefully making the same amount) during that time and invest the first $50k more aggressively, probably focusing on trying to buy a house or a condo.

What would you do?

Is this "Diversification?"

Where my money at, yo:

Bank of America Checking: $2,492.28
Bank of America Maximizer Savings: $674.96
Bank of America Family Checking: $421.19
Bank of America Savings: $1,156.67
Bank of America Investment CD #1: $7,570.29
Bank of America Investment CD #2: $5,136.60
ING Direct Savings: $100.6
Paypal: $604.36
Prosper Lending: $125
Vanguard Individual Account: $4,505.46
Vanguard Roth IRA: $3,649.51
Sharebuilder GLD, 4 Shares: $348.92
Sharebuilder COMV, 4 Shares: $91.84
———————————————————
Total Net Worth (in USD) : $ 26,912.96 as of Jan. 18

Goal: $30,000 by end of 2008. If the stock market keeps sucking, I don’t know if that’s possible.