Too Good to be True?

I understand that mutual funds are fickle, but I’m still rather excited by the fact that my $3000 has made $31.28 in just two days. It’ll probably drop down again sometime soon, so I’m not sure how much weight to put on that $31.28 cent gain. Still, that’s pretty cool… to think, it’s possible to make an extra $15 a day. That’s enough for lunch!

Meanwhile, my Roth IRA has gone up $18.40. So I’m up $49.68 in two days. That’s not bad, is it? I wonder how long until my accounts are at less than what I started with.

I’m still confused about the CD I tried to open online. It was that $5000 one at 5.01%. BoA called me but I still haven’t gotten back to them. And, as I noted before, I tried to take of the matter with a real person at an actual banking center, but because I bought the CD online I can only ask my questions to online banking reps via the phone. I’m kind of hoping something went wrong with it and it didn’t go through. That way I can take that $5000 and put it into another mutual fund, perhaps a large cap one. Or maybe I’ll be risky (stupid?) and put more in my VMGIX fund.

One thing I don’t get is if mutual funds work like the stock market. For instance, is it best to “buy” when the price is low for each fund share? Or does it matter less because you’re buying pieces of a bunch of stocks as opposed to just one stock?

I wish my bank would process transfers faster. It gets confusing when it looks like my checking account has $14k in it but really I know $6k of that was moved to the IRA & mutual fund and $5k of that is supposedly tied up in a CD that may or may not exist.

Off on a tangent, it’s quite exciting that I’ve gotten so many comments on my blog in the past day. One person who reads my other blogs actually figured out who I am! I don’t really care much if people who know me read this, but I guess I’m partially ashamed of being such a spoiled brat with my cushion of savings in the bank, and I feel awful that I don’t have student loans to pay while plenty of my friends do.

Then again, I also have friends whose parents will gladly put them through grad school and I know that, while my dad would help out here and there, I’m on my own when it comes to any higher education. Or am I? Well, my father says he can access his 401k funds in about 3 and a half years. It seems like he’s hinting at the fact that at that point he’ll be able to help out with money a bit more.

A part of me wants nothing to do with his money right now. I’ve already received more than I desire, and I feel guilty about that. But there’s also reality, and how I’m likely going to be making a “normal” salary for the foreseeable future. My $24k in savings doesn’t seem like much when I figure plenty of my peers are making $50k or $60k per year. Give them two years or less and already we’re on an equal playing field. So how guilty can I let myself feel, really?

CD Crazy.

Since I’m risk-adverse and I get all wide-eyed and bushy tailed at the thought of a high-rate CD, I pulled out $5000 from my “Maximizer” checking account and put it into a 4.26% 11-month risk-free CD at the bank. Of course I went to the bank to deposit my paycheck, but how could I say no to an 11-month “risk-free” CD? Well, supposedly I can take out money once a week with no penalties, and all I have to do is go to the bank. I figure the harder it is to get to my money, the less likely I’ll spend it.

I considered pulling my $7,400 from my crappy CD and putting it into the new one, but it turns out that the penalty to take it out (about $100) would be just about as much as the extra cash I’d make if I moved it to the slightly higher-rate CD.

So, gee, now I have three CDs. Is that crazy? The one I signed up for online hasn’t gone through yet. I still need to call the bank. It’s really frustrating that the online version of my bank and the in-person version don’t really talk to each other, with the exception of sharing my account information. I just wanted to sign any documents needed for the CD to be set up, but I can’t do that at the bank. I have to call them and deal with the automated system. Oh what fun.

PF Jitters

My $6000 was officially transferred from the safety of my Maximizer checking account into my IRA and Mutual Fund investment accounts. I’m excited about taking the investment leap myself, but nervous as all hell that the leap might be futile, or worse. I’m pretty comfortable with the $3000 I put to my Roth IRA. It’s in a nice Retirement 2050 plan that’s already diversified with my retirement date in mind. And since Vanguard seems to be a pretty reputable company, I’m not too worried. However, the $3000 I put towards that Mid-Cap Growth Index Fund is probably a bad idea.

As of 10:25am, my $3000 in my mutual fund is down 5 cents, and my $3000 in my IRA is up 3 cents. Why is a 2-cent loss making me so god-damn nervous? And furthermore, why is my Mutual Fund down 5 cents when looking at the day’s activity in the fund, it should be up a bit? I’m rather confused right now. Maybe it dropped down the second I put my money in. I know I’m going to be anal about checking how the fund is doing, despite that I’m going to try to force myself to keep my money in there for a few years (until grad school) unless someone more knowledgeable than me advises me otherwise.

I’m kind of glad I’m prohibited from getting involved in the nitty gritty of stock trading (due to covering technology companies that I’d like want to invest in), so I’ll likely avoid making any major investment mistakes. Still, putting $3000 in an account that could drop down to $2000 in a few days makes me rather nervous. I mean, the largest investment I’ve ever made with my money thus far was that godawful CD with a 3.1 % interest rate. I put $7000 into that a few months after I got out of college. It seemed like the wise thing to do at the time. It was an 18-month CD, and I figured since I had upwards of $30k in savings somehow, I could spare $7000 for such a “risky” investment. Well, it felt risky at the time.

Sadly enough, I didn’t bother to call my bank when the CD matured, thinking that it would just automatically transfer to my checking or savings account and I could deal with it then. Of course, now I know that CD’s automatically reinvest themselves at the same rate, for the same amount of time. So now I have my $7000 (which is at about $7400 after gaining the 18 months of Interest, which I guess is better than nothing) tied up in this low-interest CD. Meanwhile I recently saw an ad on Bank of America for an 8-month 5.01 % CD and I threw $5000 at that. For some reason they haven’t processed my CD investment yet, though. I guess I have to call them and confirm some things before they can pull my money from my checking account and put it in the CD.

In more exciting news, since last weekend I’ve made $1.57 since enrolling in BankofAmerica’s “Keep the Change” program. It’s kind of neat – every time you use your debit card, they roll your spending cost up to the nearest dollar and deposit the difference in your bank account. So, for instance, if you spend $1.01, they’ll toss in 99 cents. Of course, most purchases end up being, like, $2.92, so in that case you only get 8 cents. But over the course of one week and eight transactions, I’ve afforded myself a small coffee. I also apparently racked up $2.46 in my AdSense account somehow. I guess that means people are actually reading my page. That’s exciting! Extra income, even $4 a week, is certainly helpful. I’m nervous about this AdSense account thing, though. I’ve read some horror stories about how Google has shut down accounts if you click on your own links. And it’s not like I’m going to do it on purpose, but sometimes I’m not thinking and I’m actually interested in an advertisement shown on my page. I’ve never had to restrict myself from clicking something. So hopefully I can restrain myself.

On another note, I’m saving some money this month because I’ve offered a friend who’s recently moved to the area a place to crash until she finds a place. I wasn’t going to make her pay anything, but since she offered I figured I’d split my rent and pro-rate it. So that comes out to $15 a day. And I’m also possibly designing some websites for my friends for a rather small fee (compared to my normal rate.) But I never count my freelance money as income. It’s always “extra,” although in actually due to my poor spending habits and inability to keep a budget, I’m lucky if my freelance wages cover all the cash I’ve spent in a month.

So salary-wise, make about $2200 a month after taxes. (Though this year I ended up owing a lot in taxes and I haven’t done anything with the W4, so I’m figuring I make about $2100 a month, really. $905 of that goes to rent & utilities (PG&E, water, trash, etc are “included” in my rent). Oh, what the hell, here’s a list of my basic fixed monthly costs:

$905 — Rent (includes utilities) – Going up to $1050 per month in July, plus requiring renter’s insurance.
$60 – Verizon Cell Phone Bill, if I remember to pay it on time and don’t use 411, etc.
$64 – RCN TV & Internet
$8 – the converter box from RCN that I’ve yet to find time to return, that I’m apparently “renting” on a monthly basis
$5 – RCN “Home networking” – on my RCN bill, but I have no idea what this is. WTF?
——————————
$1038 total for now
$1188 + whatever rent’s insurance costs in July.

Now, time for some depressing figures…

My spending on rent currently is 45 percent of my income (you’re only supposed to spend 20-30 percent of your income on rent, I hear.) In July, sans a raise (and I doubt I’m getting a raise anytime soon) I’ll be spending 50 percent (or more) of my income on rent.

It doesn’t take a personal finance blogger to tell me that’s a terrible idea.

I’ve been thinking about writing a post about why on earth I live alone in the SF Bay Area on $35k a year, so I think I’ll write that up over my lunch break later this afternoon.

In any case, with $1050 left for all the other things in life outside of basic housing, TV, Internet and phone, I just keep overspending. It doesn’t help matters that I’m spending upwards of $350 a month in gas to get to my various rehearsals that are 40 or so miles from my home (my “hobby” is doing community theater – which is free, outside of gas mileage and makeup for shows and the like.)

But hey, at least I made $1.57 in “keep the cents” change. Then again, Bank of America, for some reason, has that $1.57 noted as a “spend” in my checking account. So I’m down $1.57 for the time being. What’s up with that? Grr.

Agism & Career

Business magazines love to gush over CEOs who barely left the crib. In December, BusinessWeek ran a story on “CEOs 40 and Under.” Meanwhile Forbes highlighted “America’s Youngest CEOs,” who were all around 33 years of age. But most of their success as an entrepreneur began in college or soon thereafter. Then you’ve got Red Herring’s “Tech Tots” who are all under 30 years of age… some are even as young as 17.

Each age has its benefits and hindrences, even though at some point age stops mattering, or so I’ve been told. Additionally, being female, age has further significance when it comes to how others view you in a work enviornment.

Since I can’t speak for 40 year olds or 30 year olds or 27 year olds, I’ll focus on what I know best.

I’m 23 years old. What does that mean? Well, I’m certainly no longer 18. That seems to be the last age with a real clear definition in my mind. Once upon a time 21 seemed like a big milestone, but two years past that birthday, I see little has changed upon passing that overrated celebration of aging flesh and mind. 18 meant something. It wasn’t at all about getting the right to vote, or to gyrate naked on some dirty, wealthy man in a strip club had I any desire to do so. It was just the year that I legally grew out of being my parent’s kid and became my own person. Of course that took a few years to accept, but when I turned 18 I stopped being a kid and became, well, sort of an adult.

Then the years flew by. Heck, that was nearly six years ago. I was a freshman in college then. Somehow I managed to wrap up undergrad in four years. Two years later, I’m an entry-level worker in the wonderful world of reality.

The first year I got out of college was really tough for me. I didn’t quite understand how old I was, I just felt like this 14 year old playing dress up when I went on job interviews. I’d put on some suit, fix my makeup, ensure my lip gloss was no more than a nanometer out of place, and headed off in my “new” used car, and attempted to promote my greatness to some stranger who responded with little more than a nod.

How I got through that year, I’ll never know. There were certainly days when I could have called it quits. I’m glad I stuck it out, though.

After all of that, I landed a full-time job. As I noted before, I work in the editorial department of a magazine. Being as I work in business journalism, the people I work with are extremely smart. They’re also all at least four years older than me. That is, others who have the same title I do (and started after me) are at least four years older. Most of them have advanced degrees. So it’s just an awkward spot for me to be in… given that in order to prove myself I not only have to prove that I’m a hard worker and talented enough for my age and experience, I have to prove somehow that I’m really just as smart and talented and motivated as my colleagues who’ve been around the professional block.

It feels weird for admitting my age to co-workers to feel like such a dirty thing. If someone asks me how old I am at work, it feels like they might as well ask me which site I prefer to surf for my weekly dosage of porn viewing. It’s not something I like to discuss publically. I’m embarressed by it. I’m only 23. Then again, people can be successful at any age. Folks are getting into Stanford at 18 (there goes my Ivy Envy again) and they’ve surely accomplished great feats well before filling out their college applications. When it comes to success, age is irrelevant.

But so much of my profession is about being respected and getting to know sources. So much of it is about being able to, well, talk the talk and walk the walk. And to be honest I still feel like that little girl playing dress up. I don’t know if the feeling is enhanced because I’m female or what… one of my co-workers, a female, told me once that she feels like we’re working in a boys club… and it’s true. One out of maybe 400 venture capitalists is female (this is a guess, but it’s likely true), and the stats are probably similiar for CEOs.

Of course the topic of gender requires it’s own entry and… I’m not about to write three entries in one night. 🙂 But age in itself is an issue worth discussing. There’s a feeling towards people who “just graduated.” It just so happens these days “just graduated” doesn’t really give away a person’s age. Plenty of people went to community college, took a few years off, and maybe wrapped up their schooling in their mid-20s. Well, I started undergrad at 17 and I was out by 21.

I’m really tired of hearing that I’m “young” and “inexperienced.” Yes, that’s true, but it’s not like I’m oblivious to the fact. And while I’d like to think I do a good job given… my age, my “experience,” and my abilities… I’m not sure what is “enough.” I believe that if I were male I’d be treated a lot differently. Sure I’d still be “young” and “inexperienced,” but I think my age would matter less.

Am I still “entry-level” just because I’m young? Sometimes I feel like I need to be at least 25, or have a higher degree to be considered anything but entry level. But that’s just my mind playing tricks on me and my billions of insecurities, right?

Who is Superior? Response to a Comment…

“John M said… I can relate to Ivy envy. I live near Boston on the East Coast (Harvard, MIT, etc.). It shuts you out of some really special positions. Most of suffer from not living up to our expectations. We percieve others as being superior to us, and that we are failures for not being perfect. I look at decisions that I have to make in the future and I realize that compromises have to made. There are many people with ADD who are successful. There are many people who aren’t book smart who are successful. Our perception of success may seem difficult because of the challenges we face. I am not perfect, but that will not stop me, nor should it stop you from being successful.”

John,

Thanks for leaving me a comment. I’m not sure if you’ll return to my blog or not, but I figured I’d respond to our comment in a new post.

I figured that the Boston area is similiar to the Bay Area in the way that either you’re “one of them” or you aren’t. I can’t complain about the whole situation much, though, because I just love being around smart people. It inspires me. I’d rather live here than in middle-of-nowhere hicksville, where 50 percent of the population doesn’t know how to multiply past single digits. But I’m also glad I’m not the only one who feels such Ivy Envy.

It’s interesting that we all view other people as being superior to us. I guess everyone does that, even people who are extremely smart with… proper pedigree. I realize that success is not defined by what school you attended, and that there are plenty of people who are successful sans any degree at all. Yet I feel trapped by my understanding of myself and my abilities. I’m terrified of risk, even though compared to some I’m quite a risk taker (I moved away from home for college and never looked back, I live on my own now, support myself, etc, etc). I figure one thing required for success is the ability to see failure as a byproduct, albeit hopefully a temporary one, of any opportunity worth chasing.

I’m sure ADD isn’t what will hold me back in the long run. So I have a hard time focusing and It’s in my nature to be terribly disorganized. But I’m a big idea person, and when I put my mind to something I’m always the person that puts in 200 percent.

I’m now tempted to write an entry on age in the workplace, so I’m going to sign off here for this entry and move on to the next.

Again thanks for your comment John. I hope you return to my blog. I love comments. 🙂

Ivy Envy

Two years ago, when I was just a wee soon-to-be college grad, I hadn’t a clue what “job stability” meant. I was all wide-eyed and bushy tailed, expecting my B.F.A. to ensure everything in life would work itself out, given a short bit of things smoothing themselves out.

I really had no idea what I was in for. I’m lucky, I have a savings, I know my parents are there for me if I’m desperate (although with the amount of savings I have and my history with the ‘rents, I’d rather run myself into serious debt than beg them for help.)

So after a year of interning for a slave’s wage, I found myself a full time job in the editorial department of fairly small magazine startup. I’ve been there for about a year. It’s been a great ride, that’s for sure, and I’m learning tons. What I’m not getting, however, is a promotion in title or salary, despite that I’m a fairly dedicated worker and I’ve put a lot of hard work into the job.

Besides all that, it looks as though the company is slowly but surely falling to pieces. It could always surprise me and make a fortune, but there’s been an increased dosage of pessimism that leaves me thinking I’m likely going to be out of job in a month or two, or maybe three at most.

Meanwhile, my apartment complex raised my rent to $1050 from $905 (utilities included) for my comfy studio apartment. Gosh, I can’t believe I’m paying $1050 for a studio, but that’s the cost of living in the Bay Area. I know, I know, I should live with other people because at $35k a year, I can’t really afford to live alone.

But the thing is, I’ve been depressed my whole life until I finally got my own place, and suddenly my brain and emotions have stabilized. Living on my own, I figure, includes the cost of therapy I no longer need (or at least no longer desperately need).

Still, expenses are tight, as I’m spending about $200 more than what I earn per month. It’s do-able with my savings, but obviously I can’t live that way forever. I kind of figure that eventually I’ll be making more money (hopefully sooner than later) and if I can manage to make at least $45k a year I’ll be set.

I mean, I’m a spender. I buy things. But I also rarely buy big ticket items. I’m the type that goes into the drug store for shampoo and leaves having spent $78. I did that today. I love little things. Sometimes I need them, sometimes I don’t. I’d never spend more than $70 on a shirt, and I usually try to find clothes at sale retailers like Marshalls or Nordstrom Rack. I’m rather stingy, for the most part. Or so I think. It’s just all the little costs add up. And then I’m left looking at bright red numbers with a minus sign in front of them on my budget reports in Quicken.

Sometimes I feel like I’m hopeless. When I lose this job, I’m not sure what I’m going to do. I’ve considered graduate school but the thought of taking the savings I have and spending it all on more schooling, plus going into debt over it, makes me want to puke. I mean, I’d be going to grad school for journalism, and the reality is that the salary I’d make at a job post graduate studies is equal or lower to what I’m making now. That’s just how the field works.

Meanwhile, my job prospects at the moment are pretty dim. They’re definitely not as bad as they were last year, when I was a college grad with a degree in the arts and basically no experience minus a few internships. I’m way ahead of that in terms of experience now, but still, I feel like the only jobs outside of journalism I can get are in PR. And not that there is anything wrong with PR, it’s a perfectly practical and admirable profession, it’s just not something I can see myself getting passionate about.

There are SO many things I want to do with my life, and I’m trying hard to do each and every one of them, but some things I just, well, I need more training to do, and I’m not sure how feasible that is. For instance, I’d love to learn how to code web applications, to work for a local startup as a project manager, to somehow magically obtain some serious computer science skills and build out a career from there. Of course it’s a bit late for that. I know HTML and some CSS and that’s about it.

Well, long story short, when I’m out of a job in a few months, I really don’t know what’s next. I’m looking for another position now, mostly because I don’t want to be left out cold. But I also want to take the next step in my career, as it doesn’t seem possible at my current company. I just have no idea where I ought to step, and meanwhile I’m just frustrated with myself for failing to be good enough for my company. It’s tough, I’m not an Ivy League grad, and for good reason. I’m smart, but I’m not book smart. I’m not as smart as 99 percent of the people who work at my company. And I try, believe me I try, but it’s hard to know that my brain perhaps doesn’t have the ability to keep up with my co-workers.

But that’s just what it’s like in Silicon Valley. Everyone here is smart. Everyone here seems to have graduated from Berkeley or Stanford. Well, I didn’t. I’ve got Ivy Envy, and for good reason. Tons of the interesting entry- or junior-level job ads on craigslist note that they’d prefer (or require) the applicant to have a degree from a “top university.” Thus, I’m out of the running.

Sometimes I wonder what the difference is between someone like me and a graduate of one of those top schools. Obviously they’re able to focus better and be more efficient with their time. Are they really all smarter than me? What is intelligence anyway? And can I be successful despite having a terrible case of ADD and perhaps not having an IQ that would allow me to so much as get an interview for a job at, say, Google?

Diversification?


This isn’t my first blog, nor will it be my last likely, but after randomly falling into the online investment blogging community, I decided it’s a good idea to start tracking my finances and the like via the Internet… anonymously, of course.

So here’s a little bit of info about me to get started: I’m a young professional in her early 20’s. I’ve been out of undergrad for two years now. My income is $35k a year, benefits included, except sans a 401k. Chance of raise/promotion within next year: 15%. Chance of company going out of business: 55%.

I’m fortunate in the sense that I have a decent amount of savings and no college loans. Savings from both my dad putting aside some funds for me for the awkward post-college year, and then extra cash from a lawsuit over a broken arm when I was little. My networth right now is around $27k. So I realize I’m better off than many other people my age, despite the fact that they might be making $50k a year and I’m only at $35k. Or at least our actual income after bills and other expenses is usually about the same.

Since this is an anonymous blog, I feel ok talking about the details of my finances. I haven’t talked about it much on my main blog since it feels weird letting people know about how much I’m worth, or not worth. But finances are one of the things that I really need to talk somewhat publicly about, since I’m unsure of how to handle my money, with the exception of spending it. I’m very good at spending it.

So I recently opened a few random mutual fund/IRA/CD accounts, as I’m attempting to “diversify” my portfolio. I know I’m supposed to be living under my means, but I often fail to do that and spend more per month than I take in. Obviously that’s a bad idea. But i’m hoping that at the least, putting some of my funds in high-interest accounts will balance out my poor spending habits.

Ok, so here’s the breakdown of my accounts right now… (I’m going to try to keep tabs of this, as well as my budget, on here)

$2,143.54 – Checking
$7,421.99 – CD – 3.1 % Interest, matures 8/28/08
$5,510.58 – Maximizer Checking
$1000.63 – Savings
$5,000 – 8-month 5.01% Interest CD
$3,000 – Vanguard Mid-Cap Growth Index Mutual Fund
$3,000 – Roth IRA, in 2050 Retirement Plan fund

Well, the last three of these items haven’t officially been started yet. I signed up for them yesterday. I’m waiting for all of the electronic transfers to go through. I realize investing in a Mid-Cap Growth Index Mutual Fund. Afterall, the smart thing to do is to invest in large caps, right? But I figure if I put $3000 into a mid cap fund, I can also invest in a large cap fund if/when I ever get a raise. I’m $1000 to maxing out my Roth IRA fund.

I don’t understand the Roth versus regular IRA option, being as I know the Roth is all after-tax income and the regular IRA is pre-tax income then invested. But what should I be investing in now? I’m only making $35k a year, so it seems like I’ll most likely be in a higher tax bracket when I want to retire. Afterall, I plan on making more than $35k per year when I’m 55 or 65 or whatever age it is I can retire.

And if I sign up for a Roth IRA now, can I move to a regular IRA at any time? Or am I stuck in the Roth?

Finally, how about my mutual funds – how much will it cost to change them from mid-cap to large-cap if suddenly I realize I ought to be a bit less risky in my investing? Gosh, I’m so confused.

About

Her Every Cent Counts is written by a 25-year old woman trying to figure out personal finance before she’s hurdled with costs of home ownership, children and other potential expenses in the years to come.

This blog was originally started as a place to write about money issues in depth, beyond what she was comfortable writing in her blogs that friends and family read. It has grown into a resource for other girls (and guys) in their 20s – a place to discuss saving, spending, career growth, setbacks, and the costs of being a young adult.

I welcome you to look around and read a few of my entries. Send any comments/feedback to hereverycentcounts@yahoo.com

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