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, 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.

Yeehaw, I Bought Gold — How to Get In on the Hot Commodity

…And not in the form of a pretty necklace, either.

With my limited knowledge of the stock market and this recession that’s going on, it seems that gold is one investment that works well during this sort of time. It sounds like if the rest of the economy decides to miraculously recover, gold’s value might go down, but then my other mutual fund-held stocks would go up… hopefully making my fantastical logic actually work in the long run.

I’m a bit worried about this, but in I bought a whopping 4 shares of a gold ETF for something like $320. If the price goes up because a major recession hits, awesome. If it goes down, I’ve learned my lesson.

“Ultimately, the only logical reason to invest in gold stocks is if you believe, after you have done your own due diligence and research, that the gold price is going higher. If you arrive at the conclusion that gold is heading lower, you are better off not owning any gold stocks. Gold stock investing ultimately boils down to a bet for higher gold prices.” —

It’s all ING Direct’s fault. I decided to start saving my money through them. Of course they bought Sharebuilder recently, so they advertise the budget trading site on their “savings” site. I’ve been wanting to sign up to do some individual and ETF trading… without making that my entire portfolio. I don’t know if now is a good time to get into the stock market or not. I feel like most of the stock prices out there are down due to news of the recession… so either this recession will kill off some companies, or the companies I invest in will survive and prosper in the long run. Needless to say, I’m not going to be… THAT stupid. I acknowledge that I’m playing with fire here, as I really don’t know what I’m doing. Except I know that following the advice for beginning investors — “invest in Vanguard mutual funds” hasn’t been going that well. I’m not going to sell off those funds, but I’d like to diversify my portfolio a bit. Thus, I went out and bought myself some gold, baby.

Apparently there are a few different ways you can invest in gold:

The lowest risk is through buying coins of solid gold. Then you own the precious metal, but you have to figure out where to store it, and then pay insurance, and… that just seemed way too complicated and frustrating to deal with for a relatively small purchase of less than $500 that I planned to make.

These are fairly new in the world of gold. From what I can tell, there are two different options. You’ve got streetTRACKS Gold Shares (GLD) and the iShares Comex Gold Trust (IAU). They’re a good way to get your feet wet in the gold market without going super high risk, while also not having to deal with all the trouble that comes with insuring coins. Basically, they’re both ETFs or “Exchange Traded Funds.” According to Wikipedia... Exchange-traded funds (or ETFs) are securities certificates that state legal right of ownership over part of a basket of individual stock certificates that can be traded at any time throughout the course of the day. Typically, ETFs try to duplicate a portfolio such as SPY or the Hang Seng Index, a market sector such as energy or technology, or a commodity such as gold or petroleum. Sounds like a more focused mutual fund to me… which is nice because you can invest in a commodity without the risk of investing in just one company. Or…

Individual Stocks
You can buy individual stocks in gold mining companies. This is the highest risk option because even if the gold market as a whole is soaring, one company can falter and go out of business. Or maybe they just don’t have technology that lets them keep up with the other companies. Owning an ETF mitigates this risk because you own stock in many different companies. But, of course, with the risk you also can reap great rewards.

… I ended up buying the GLD ETF, mostly because on Sharebuilder the other ETF option wasn’t available for trade and it was 6am when I decided to start trading (yea, I know, I shouldn’t try to understand investing after I’ve been up all night).

Do any of you have a better explanation of gold stocks and enlighten me if I’m being a complete idiot?

Found My Dream Job… But Why Must it Require 60 Hours Per Week?

My contract gig is going very well. In fact, it’s going better than expected. In the past two months, my 30-hour-a-week gig has already expanded from that of “writer” to that of marketing assistant and community manager. In a meeting with my boss yesterday, we briefly discussed the possibility of my staying on past the end of my contract in mid-Feb, and he seemed to want me to stick around. Great. Here’s the catch — to be considered “full time” I’d have to work about 60 hours per week.

Yes, that’s how life is out here in Silicon Valley. 60 hours a week is the norm for a full-time salaried position. Maybe I don’t need to be “full time.” I can be “part time” at 40 hours per week. Basically that just means that I’d be sans benefits and I’d get paid a bit less. And I might end up working 60 hours per week, but I won’t be required to do so.

I’m not sure that’s the end of the world. I’d rather have flexibility compared to having to be a slave (albeit a paid one) to a job (albeit a job I really like.) I want to have a life outside of work… even if that life is working other freelance gigs… I like the diversity of freelancing, so I think I’ll stick with that. Or maybe I should actually find myself a job that’s salaried at 40 hours per week.

But I tried that and I was miserable. I’ve been so happy lately, and it’s all because of my flexible schedule. I’m making a bit less money, but in time I can fix that. I’m marketing myself and getting new freelance writing gigs. An article here, a marketing newsletter there, and pretty soon I’m making $50k a year, all with time to keep enjoying my “hobby” of directing theater in the evenings and on weekends. I just don’t sleep.

I just wonder if I need to suck it up and take on a 60 hour per week job in order to advance in my career. I know that’s the norm here, and it seems like I’ve got one of those generation Y sense’s of self entitlement if I don’t just agree to that kind of life. But I’m worried if I do that I’ll quickly slip back into depression. And that I don’t want at all.

Holding My Breath — Investment Pains

I know the economy is suffering lately, and had I not been paying attention to the news I would have figured it out by looking at my bank account. My Roth IRA, which had $4000 in it, is now worth $3762, and my regular Vanguard mutual fund, which had $5100 invested in it, is now worth $4662. Ok, so I’ve lost about $700 thus far on my investments. Ouch.

I’ll stick it out because I know investments have to be a long term sort of deal, and hopefully at some point our economy will recover and so will my piggy bank. It’s just tough to watch $700 disappear so quickly, and I’m sure this isn’t the end of the downturn. I’m prepared to lose all the money I invested, although it will surely SUCK to lose $9100. But if I lose all of that money, you can bet that I’m done with the stock market and mutual funds for good.

Who Needs $90 Wine?

Apparently the price of wine heavily influences how much people enjoy it. A team of researchers at Stanford and CalTech set out to prove this, and gave testers two glasses of wine to try. One was a “$90” glass of wine, and the other a “$10” glass of wine. What the subjects didn’t know was that these two glasses of wine were actually identical.

“Specifically, the researchers found that with the higher priced wines, more blood and oxygen is sent to a part of the brain called the medial orbitofrontal cortex, whose activity reflects pleasure,” reports CNET.

Britney Spears, Lindsey Lohan, Paris Hilton, and the Destruction of America

When I was little, and when I was not so little, all I dreamed about was being a celebrity. It was the end all of success. As a celebrity, you’d be praised for being unique (albeit slightly unique), and everyone would love you.

Fast forward to a reality check… those celebs that find themselves on the covers of the gossip rags often once were the same ones that I’d envy, except their lives and careers had spilled sour.

Poor Britney Spears. She certainly has some kind of mental condition, and it’s obvious that it’s not helped by being smothered by Paparazzi everywhere she goes. Her family (that is, parents and sibling) are apparently not the most stable bunch, but Britney made it big with some spunk and rock hard abs. Could she sing? Well, not really. She could hit the right notes and had a voice that you couldn’t forget, for better or worse. But Britney had what we all wanted… innocence with a serving of sex appeal. Even if we hated her music, we wanted to be Britney… or like Britney. Same goes for Lindsey Lohan. We saw both of these girls when they actually were young and innocent (well, so they’d like us to believe). And then… well, they’ve grown up in the spotlight, and it seems that spotlight was just a bit too bright.

It’s unfortunate, but I think we need celebrities like that to use for public floggings, as otherwise the rest of us minions would think that their lives were perfect because they were rich. Apparently, money doesn’t heal all wounds. Sometimes it’s pouring fuel on an already painful flame.

I feel for Britney and Lindsey. They feel like it’s part of their job and their image to go out and party. To be a young celebrity in Hollywood. Only when drugs enter into the picture, you lose control. I’ve seen friends get eaten up by drugs, and it certainly is just as much a problem in Hollywood… where celebrities have enough money to overdose daily on the most gourmet offerings of the latest designer drug batch.

But who could blame them for needing that rush? If as Americans we hold celebrities on the top of the totem pole of what we wish we could be (which I assume is the case for other people too, since celebrities are still featured on the covers of magazines, and talking about celebrities has made stars of once-Internet-nobodies like Perez Hilton, those GoFugYourself girls, etc) then once you’ve made it to stardom… what’s left? Better party it up when the going’s good.

Not all celebrities turn into psychotic drug addicts, of course, but those that do surely get the most press. Is it good for their careers? If they can make a sober comeback, possibly. Everyone wants to root for the fallen celebrity, despite how much he or she may make fun of this person. If a celebrity truly falls from their divine status and cannot return, then that pops the fantasy of flawed perfection.

Truth is… Britney, Lindsey… they’re just human. Sure they happened to have been born with extra lovely looks, and with some luck and being in the right place at the right time, they guaranteed themselves a future in show business.

It’s funny how easy it is to forget that what they do is their JOB. Sure it’s a pretty awesome job that pays well, but so is being the CEO of your own corporation, or a successful venture capitalist. The job comes with a lot of negatives as well. Privacy? Forget it. You’re working around the clock as a celebrity. From the moment you leave your house to the second you shut the door and close the curtains.

Accepting this changes my extreme, almost obsessive desire to become famous. Or, now I’d like to become famous for writing something brilliant… doing something interesting… but I don’t know if I’d want to be so (un)fortunate to be one of Hollywood’s young actresses. If you’ve got one life to live, there’s not perfect way to live it. If you’re rich, you have nothing to work for. You’ve been raised on attention, so you need to work for the attention. Look at Paris Hilton. She doesn’t need to work, but she does because without work she’d be just like any other NY socialite.

A few months ago I spent some time with my grandmother who lives in Las Vegas. At breakfast one morning, she spent some time complaining about Hollywood today, saying that everyone these days is ugly. I went through a list of celebrities and she said they’re all ugly (except she liked Halle Berry for some reason). Anyway, I know the idea of “beauty” has changed over time, because a lot of these actor and actresses she found ugly happened to be my personal idea of aesthetic perfection. Still, I get her point — beauty is no longer about health and youth exactly. Sometimes people admire the beauty of those who do lots of coke because Kate Moss chic is unbearably still in.

And all of that makes us, the American public, especially the female half of that, spend oodles of money trying to make ourselves look like these people who have lots of money. It’s a vicious cycle of consumerism that is at the heart of America. Capitalism would still exist without celebrity, but what would it look like?

I’m not sure of the answer. In college, I took a class called the “sociology of celebrity” and it was by far the best class in my four years at school. Dissecting celebrity culture, both from the side of the everyman and the celebrity, is understanding America.

I actually read the entire textbook from cover to cover…

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