Mar 26, 2008

The Cost of Having Pretty Hair

I just read a post over at Saving for a Home of My Own that details the $$$ Saving Diva has spent over the years to perfect her coif en route to her currently frugal lifestyle. Her post is so great! She breaks down, by hair style, how much it has cost her to maintain over the years. $2225 a year for the bleach blond hair, $1374 for dyed brunette locks, and now $104 per year for the low-cost, low-maintenance version.

It's amazing how much money us girls spend on our hair. Even without going to fancy salons, the costs quickly add up if you follow the recommended "get your hair cut every 6 week" myth of the salon saleswomen.

When I was younger and my parents were paying for my hair maintenance, I would get my hair cut every six weeks. From middle school on, I got my hair highlighted and dyed. It must have cost my parents a small fortune! Sometimes I'd dye my hair myself with drug-store bought brands, but it would usually come out shitty and I'd have to get it redone at the salon.

After graduating college - now that I'm paying for my own hair care - I fall somewhere between "spending way too much money on my hair" and "frugal." I admit I like to splurge on my hair, when I get it done. But I just get it done about two to three times a year. $200 three times a year or so is not going to break the bank, but every three weeks would be awful!

I think it's important to have a good hair cut and style. Makeup you can buy cheap and you can go w/ just some concealer and maybe basic lipstick to look professional. But hair is so key in your look. It doesn't need to be dyed at all - I think the cut is what's worth spending the money on.

I used to go to supercuts for a while and spend $20 on each cut, but half the time I'd end up with crooked, messed up hair. I like my hair stylist now and she knows what would look good with my face shape. Sure, it costs $60 (plus tip) to get my hair cut. Then the dye is another $100. I don't do highlights anymore, they are way too expensive. And right now my hair is dyed my natural color, almost, so I may just let it grow out and stick to cuts until I go gray and need to start coloring again.

Speaking of tips (not roots) I wonder how many people actually tip their hairdressers. I always tip 20% if someone does a good job and usually tip about 10% if I don't like what they did and don't plan on coming back. If they really mess something up I won't leave a tip at all, but that's very, very rare.

My friend - who comes from a lower-income family (not poor or anything, just not upper middle class like my family) apparently never tips her hairdresser. She goes back over and over again and her hairdresser, who has been cutting her hair since she was a kid, doesn't seem to mind much at this point.

I just wonder... how many people tip their hairdressers and how much? It seems like the tipping cost alone adds up fast. But I am very cautious of tipping poorly to people who do things like cut my hair, etc, because I want to go back to them and I don't want them to make it awful the next time around.

How much do you tip your hair dresser?


Saving Confusion

I've been going on and on about how I don't know where to put my savings. I've been trying to save and invest, but right now I have a feeling my portfolio breakdown is not advisable. I still need to open an HSA and money needs to start going into that ASAP, but other than that I'm not sure where to invest.

Right now, my savings breakdown is:

$2167 -- liquid checking to pay off debts, rent, bills, etc (checking, liquid savings & paypal)
$19,599.34 -- pre tax non-retirement, non liquid savings (CD #1 & #2, Sharebuilder, Vanguard, Prosper)
$7067.75 -- Roth IRA (down from $7300 of initial investment. Have $1700 more to invest in 2008)

-$1037.88 -- debt (to be paid from checking as soon as the deposit fully clears in my checking account)
-$450 -- to go to taxes

TOTAL NET WORTH: $27,346.21


So that means right now 71.6% of my total portfolio is taxed once, then is put into a pre-tax account to be taxed again when it take it out one day down the road.

Savings wise, here are my priorities to save for...

1. My Health (As I have a high deductible health insurance, I need to make sure my HSA savings at least covers that deductible. Hopefully I'll never have to use it. Right now I don't have an HSA account set up. I need to do that pronto.) This also covers general dental care, yearly cleanings, etc, and vision expenses (I'm not sure if an HSA can go to vision costs or not, I'll have to find out. But I need new contacts!)

2. A House (I'm 24 now, I'd like to purchase a home by the time I'm 30)

3. Grad School (I'm pretty sure I want to go back to grad school one day, either for directing -- a huge expense --, an MBA, or a degree in computer interaction design. I want to do this by the time I'm 27.)

4. Cosmetic Dentistry (my teeth make me so sad. I'd love to be able to get them fixed at some point!)

5. Travel / Gifts / Fun / Gadgets (I'd like to save for enjoyment expenditures and gadgets, so I can buy things like a DSLR camera without feeling guilty.)

6. Laser Hair Removal (due to having polycystic ovary syndrome, I have excess hair that grows on my face and it drives me nuts. I also spend a small fortune buying tweezers and razors every other day. If laser hair removal really is permanent then this expense might be worth it. I'll probably have to save about $5000 to get it done, or maybe just $2000 or something for my face alone.

7. Marriage & Kids (I want to get married when I'm 33 or so and have three kids. Well, one to start with and I'll go from there. The cost of getting pregnant, thanks to having PCOS, will be huge. I'll have to get drugged up and do in vitro, probably, over and over again. This is going to be majorly expensive. If I don't start saving now, I might never be able to have children. Even adopting is expensive, so either way I'll need the money before I can have a family.)



Mar 24, 2008

Medical and Dental Vacations

When I walked into my personal trainer's fitness studio the other day, I noticed a red bump on her stomach but figured she must have hurt herself accidentally. A few minutes into our conversation, though, I found out that she had recently returned from a medical "vacation" in Mexico. Uninsured, when her belly button ring got infected, she put off seeing a doctor for too long. The small infection grew and by the time she decided to get it checked out, she needed surgery. Prices in the states would have been too high, so she called up an old friend who worked at this clinic in Mexico that hooked her up with super low rates for the procedure.

I don't need any medical attention right now, but in my efforts to find out more about affordable dental work (I have a gap in my teeth that I absolutely hate and my teeth aren't as white as they probably should be) I started to look into dental vacations. Apparently these medical and dental vacations are all the rage these days.

As my income starts to increase, one of the things I want to save for is dental work. But in the states, it almost seems to be not worth the high cost to fix my teeth. I'd be nervous about getting a bad dentist but with the proper research I'm sure I could find top-notch dentists who could fix my teeth that cause me great insecurities.

It's so interesting and sad that lots of people in the States have to to go to Mexico and other countries to be able to afford healthcare and related services.


Mar 23, 2008

March 1-20 Spending ($3176.93)

March Spending Breakdown Check In (March 1 - 20)

Fixed Costs = $1422.28
$71.33 -- Cable Bill
$129 -- Health Insurance
$87.33 -- Car Insurance
$57.62 -- Phone Bill
$1050 -- Rent
$27 -- Gym Bill

Gas Totals = $121.30


Color Code

$1543.58 -- Fixed Costs & Gas
$387.98 -- To Be Reimbursed
$371.16 -- Food / Drug Store
$0 -- Clothing / Beauty
$105.54 -- Furniture / Household
$512 -- Investment
$256.78 -- Other


$2277.06 Spending
$512 Investment
$387.87 To Be Reimbursed
$3176.93 Total March 1-20

breakdown by type:

Cable / Internet Bill

Health Insurance:

Sharebuilder Investment:

Car Insurance:

Play TBR - Tables:

Cash Withdrawl


Cell Phone Bill


Gym Bill


Sharebuilder Fees

Sheet Music for Play (TBR)

Drug store

Dinner for Two

Target – bookshelf and ottoman

Quik Stop

Drug Store

Antiques for Play (TBR)

Quik Stop


JoAnn Fabrics (TBR)

Home Depot (TBR)

Burger King (TBR)





Dinner for Two


ITunes – sound for play (TBR?)

Taco Bell (food)

Bagels for two


Drug Store

iTunes (TBR?)

Ace Hardware ($30 TBR)



Joann Fabric (TBR)

Gift for Boyfriend’s Birthday

Home Depot (TBR)

Ace Hardware (TBR)





Mar 21, 2008

Investing in a 529 Plan for My Non Existent Children

So I'm looking for creative investment ideas once I max out my Roth IRA for the year. One option is a SEP IRA or a Keogh Plan, but I don't really want to save that much for retirement right now. I'm in my 20s and yes, it's important to put away a lot of money for retirement but I feel like on my salary $5000 a year is enough. (Maybe I'm wrong, but regardless, that's my current thought.)

The stock market, as we all know, is a giant toilet bowl right now, and it feels like putting money in it is just as bad as walking into a Vegas casino and flushing your money away. The hope is that it will go up over the long term. And it probably will, though no one can say what the rate of return will be, of course.

Besides starting an HSA Plan (which I should do, like, yesterday -- but figuring that out is a whole other blog post-o-fun), I'm thinking that it might be a good time to start saving for my kid's college education.

What kids, you say?

OK, so I don't actually have any kids yet. I don't plan on having kids until I'm 30, and that's 6 years away.

But college prices are so expensive... and if I have kids at 30, they'll be going to college when I'm 48 (wow, I can't even imagine being 48). Anyway, that's 28 years from now. Putting money away now to compound for that long will probably eek out a nice return, especially if I invest in some basic Vanguard index funds.

I'm also considering going to grad school at some point. So I'd start a 529 Plan in my name and if it turns out I never go to grad school, I'll put the money towards my kid's plans when I have kids. If I don't have kids, well, then I'll just give the money to my sister's kids. If she doesn't have kids, I'll give it to my cousin's kids. I'm sure someone in my family can use it!

Does this seem like a silly idea? I'm trying to find out more about 529 Plans.

The government site explains them a bit...

There are fees and expenses associated with 529 plans, and I won't jump into the investment without fully understanding them. Right now it all seems like a bunch of jumbled numbers to me.

Some interesting points from the gov site...

"Under current tax law, an account holder is only permitted to change his or her investment option one time per year."

"While each educational institution may treat assets held in a 529 plan differently, investing in a 529 plan will generally reduce a student’s eligibility to participate in need-based financial aid."

"Before you start saving specifically for college, you should consider your overall financial situation. Instead of saving for college, you may want to focus on other financial goals like buying a home, saving for retirement, or paying off high interest credit card bills. Remember that you may face penalties or lose benefits if you do not use the money in a 529 account for higher education expenses. If you decide that saving specifically for college is right for you, then the next step is to determine whether investing in a 529 plan is your best college saving option. Investing in a 529 plan is only one of several ways to save for college. Other tax-advantaged ways to save for college include Coverdell education savings accounts, Uniform Gifts to Minors Act (“UGMA”) accounts, Uniform Transfers to Minors Act (“UTMA”) accounts, tax-exempt municipal securities, and savings bonds. Saving for college in a taxable account is another option."

Plenty to think about. I really should be saving for a house. But it just seems like it couldn't hurt to start saving for grad school and/or my kid's college education. Right?


I Love Spending Money

Besides spending a gadzillion reimbursable dollars on my credit cards, I've been pretty good about spending money this past month. And that's been a good thing too, since all of my retirement and stock accounts have lost hundreds upon hundreds of dollars. My plan to spend frugally while the stock market takes a hit is not working as well as I'd like in terms of balancing my net worth. I'd like to not lose money, even if I have to deal with not making any. But my net worth keeps going up and down, and now it's on a downward trend. I don't feel like I'm spending a lot, but with half of my savings tied up in stocks and such, the recession is hitting hard.

I do trust that over time most of my stocks will go up. Or at least I hope they will. I'm not going to pull out now just because I've lost lots of money. But I'm less excited about putting more money into stocks.

I kind of wish I put more money into that liquid 4% rate CD that I got a bit less than a year ago. Now the CD rates are at like 2%. Ick. After paying off my credit cards and bills, I'm not sure where to put my money right now. I still want to max out my Roth IRA for the year, but I only have $1700 left to do that.

I'm also planning on going to Israel this summer for the birthright program. It's a free trip, but i still have to pay to get to the airport in New York (a $300 flight) and then I'll have to pay for anything I want to buy while I'm there. Also, I might want to add on some time and travel a round a bit after the official trip, which will cost more. And I promised myself that next time I travel abroad I will buy a good DSLR camera to take with me. So... I think that time might be coming up.

So I do want to have some liquid assets. But I don't want to just keep it all in my ING account, that seems kind of wasteful. As I've written before, I'm slowly adding more funds to Prosper (I'm up to $250 and 5 loans so far)... that seems to be the best way for me to make a decent rate of return on my money in these sour economic times. But the risk makes me nervous as well.

All I want to do this year is get my networh at least up to $30k. It's at $27k now but it goes up and down all the time. I'd love to get my networth to $35k this year, but it really depends how the job situation pans out, and if I can manage figuring out where to save money without losing it.


Mar 19, 2008

You Can't Scoff at Deal or No Deal if you Play the Stock Market

Have you ever watched Deal or No Deal? If so, how frustrated do you get when the contestant is offered a really good amount from the banker and then the contestant goes on to play against the odds and ends up with a measly ten bucks?

Watching the show it's easy to think, gee, this person is an idiot. But how different is that from playing the stock market?

Of course, stocks have a lot more math to them. The odds aren't so clear cut. Each company has its own risks and it's own potential for success.

But when it comes down to it, you either believe in a company or you don't. You believe that in box #1 there is a goldmine and you stick to your gut or you change your mind and hope you're right.

Obviously you can't control the stock market, but I never realized just how vulnerable it (and the American dollar) was until recently with this huge recession going on.

I can't figure out if my stock investments are bad choices or if the recession will just have to work through my piggy bank before my stocks can start growing, and hopefully returning to their investment value and exceeding it. Still, I have my doubts I'll see that money again.

As I've said earlier, my Sharebuilder account is where I can play the stock market for the long term. I'm not day trading... which maybe is a bad thing, given the recent performance of my GLD holding. It was up to over $100 a share just a day ago and now it's down to $93 a share. My $49 profit has widdled away to $6, and I wouldn't be surprised if it goes negative soon either.

Meanwhile, all of my other funds are performing miserably. One of the other reasons I started my Sharebuilder account is to diversify my portfolio internationally. I've got random bits of stock in Brazil, India and the rest of Asia (coal and cleantech stocks) -- all ETFs. I'm hoping that if the US crashes and burns maybe these other economies will survive and even grow. I believe that the future for the US economy may not be so bright. China and Asia are gaining power by the millisecond. I can't imagine that the US will be able to keep up. I think over the next century the US is going to lose some of its superpowers, for better or worse. I believe there's going to be a big war at some point down the road that's going to hit all of the world's economies much worse than the Iraq war. There will probably be more attacks on America, and there will be a third world war. I just don't see how it's possible to avoid it. Scary, but I think it's probably true.

Of course war times, historically, are usually good for the economy, right? Well, except this Iraq war doesn't seem to be living up to that. So I don't know. I can't really guess the future, but the way the world is right now, and the way people are so stupid and stubborn and violent, I can't see us avoiding some huge conflict for much longer.

I'm not sure how that will effect my stocks. If I survive through such a war... maybe a diversified portfolio will be a good thing to have?


Mar 17, 2008

Concerning My Expenses... and the Stock Market

I've charged about $500 in expenses for the show I'm currently working on, and while I'll get all that money back, I'm now a little worried how I'm going to pay for all of it. I've moved so much of my money into stocks and such (which, of course, are performing awfully) that I have little in my checking account. I get paid sometime at the end of the month and I'm actually owed a lot of money right now for invoices I haven't filed yet, so I'm not really concerned about the end result of my expenses balancing out, but for time being I have a credit card statement due that needs to be paid off, like, next week.

What to do, what to do.

In other financial news, I'm starting to really feel the hit of the stock market. Mostly I just picked a few bad stocks on the first day I signed up for Sharebuilder (bought 4 shares of one for $26 and now it's down to a measly $11). I could sell that stock and buy something else with the money but it seems like a waste to sell $40 worth of stock with a $9 fee. If anything, it's worth $30 to wait it out and see if one day that stock will go up again. Or if the company will go out of business and it will be worth nothing.

While that specific stock has cost me the most in my Sharebuilder account so far, I'm still down $73 dollars. Not so bad, I guess, compared to my Vanguard accounts which are now down hundreds. Thousands even. I can barely bare to look at them.

I've been keeping detailed track of my investments and every single account for the past month. I record it all in a google docs spreadsheet every three days. So this way I can see what my stocks are actually doing. It's a little hard to track them because I invest in them every other week, so it's hard to tell if they went up or if I just put more money into them.

I'm trying to continue investing with the "stocks are on sale now" mentality but it's getting tough. Losing money is not my forte.

I'll hang in there, though. Or at least I'll try, in hopes that one day when the economy booms again, so will my stocks and index funds.

In the meantime, my GLD ETF is performing very well. I'm sad I didn't buy more of it the first day I decided to start purchasing stocks. Still, I fear that I won't get out of GLD at the right time and I'll end up losing all my gains.

A few weeks ago I wrote how my GLD was up $29 and someone said that I should just sell it now, the $24 gain was good enough. But now it's up $47 so I'm glad I didn't sell. The way the economy is looking, it's probably good to hold onto it for a while. It's the only ETF/stock in my Sharebuilder account that's actually making money. It helps balance the blows of everything else. Luckily it's also the largest percentage of my Sharebuilder portfolio. So that's why I'm only down $73. But given the trends in the stock market, I have a feeling I'll be down much more.

The good news is that my Prosper accounts are doing well. I'm getting an average 8% return on them. I only have $200 in Prosper (and one $50 bid out) but it's nice that my borrowers are paying me back on time thus far. It also feels like a nice cushion to the sagging stock market. But I know that one defaulted borrower would put me back $50, and more than one would make the whole P2P lending "benefits" worthless. Less than worthless. You know?

So where does that leave me? Like everyone else who is invested in anything, my finances are suffering right now. I feel like this is a great opportunity to throw money at the stock market (or at least at low-cost index funds and maybe some quality stocks now "on sale") but gosh, it's really hard to put money in knowing that I'm going to lose a lot in the meantime.

I mean my Vanguard total stock fund should have $5200 in it, but instead it has about $4500 or something. I can't even check anymore. It's too painful.


Mar 13, 2008

Oy, my friend is financially hopeless.

Sorry my blog has been hijacked my posts about my friend, but my financial situation is nowhere near as dire (or dramatic) as hers, and I feel like my blog title "Her Every Cent Counts" is more suited to her.

The good news is that today I think maybe I opened the door for the opportunity to help her budget and such in the future. We've agreed that I'll help her come up with a budget if she helps me organize my room. Because my room is just as a mess as her bank account is.

The bad news is that the poor girl (and I don't mean "poor financially," although in some terms of the word that would be appropriate right now too.)

I've been covering her financial saga since last week, when I first found out just how deeply she was in consumer debt. Since then, things have taken a turn for the worst.

As I noted in "It's None of My Business, But... Part 2," my friend had a little collision with a parking meter the other day and chipped her tooth. The chip wasn't that bad, but due to not having dental insurance and no emergency fund, the $300+ the tooth fix cost her today is going to put her checking account into the red once again.

But I also found out some other things that I couldn't understand.

A few weeks ago she took a trip to LA with her friend who was auditioning for some reality TV show down there. This girl (the one in debt) is a really good friend (to a fault.) Both of the girls apparently didn't really have the money to take a trip to LA, but that didn't stop them.

That's fine. The concern I have with the whole situation is that my friend, Lisa, as I'm calling her, paid for the entire price of both plane tickets on her credit card... which, since they waited till the last minute, was about $500 total. Her friend, I'll call her Tammy, has yet to pay her back for the flight. She told Tammy that she could pay her back in installments, since she knows money is tight with Tammy too.

But now Lisa broke her tooth and needed to get it fixed. She has about $250 in her checking account and the tooth fix cost her over $300. She paid by check. Obviously this is not a good situation.

I felt the need to provide some advice on this situation, so I wrote to her and said that she should call the dentist and ask if they can hold off on cashing the check for a week or two. She needs the time to get the money into her account. Her mother might lend her the extra $100, but even if she does it will take a while for the check to clear. She'll likely be stuck with overdraft fees.

After talking about this, I started to bring up how I'm really bad with budgeting and how I'm working on getting better at it. By leading in with talking about my bad spending habits (which exist, I'm not lying about them just to get her to open up) she told me about how she has a tough time budgeting. So then we got into talking about how I am now into all this personal finance stuff and I'd like to help her figure that out if she'll help me figure out how to organize my room.

Hopefully this bartering arrangement will pan out.

That's what friends are for, right?

All of this has inspired me to think about writing a personal finance book. I've always wanted to write a book, but never really had a topic I was so passionate about. I'm not sure I know enough about finance to write a whole book about it, but then again it seems like a lot of idiots rewrite books in the self-help section and with a pretty cover and tantalizing descriptions, people still buy them.


Mar 11, 2008

It's None of My Business, But... Part 2.

So that friend I wrote about the other day... the one who is maxed out on her credit cards, works a part-time job and earns less than she spends more often than not... ended up accidentally chipping her tooth today. Besides it sucking that she now has a small chip in her tooth, the biggest problem is figuring how to pay to get it fixed. With no dental insurance, no room left on her credit card, and no emergency fund... well, I'm not sure how she'll figure this one out.

As a friend, I really want to lend her the money to get it fixed. But I realize friendships can end badly the second money gets involved. So I'll stay out of it. I figure her well-to-do boyfriend can help her out if worst came to worst.

Still, it's times like these when I wish I could say "you know, if you put the money you spend on your 2-day trip to Los Angeles, and the shoes and sunglasses you got there, into an emergency fund, these awful accidents wouldn't have to be that bad."

Of course, I just hold my tongue. It's not polite to say such things to friends.

It's one thing if you are trying hard to be frugal and you're in debt, its another if you're just over spending when you're making enough to live a comfortable life on your income. I don't understand how people can do the latter. 


Mar 10, 2008

The Carnival of 20 Something Finances: The Anti Daylight Savings Time Edition

How did it get to be Monday, March 10th already?

Since I'm a half-asleep victim of yesterday's daylight savings time hour loss, I think I'll dedicate this Carnival of 20-Something Finances to sleep. It's one of those truly wonderful, amazing and luxurious things in life that is actually free.

This is my first official "Carnival" posting, so bear with me. :)

I got over 50 submissions. I read each and every one. This is an incomplete carnival, I need to finish it up tonight (sorry, I must work so I can make money and it's been an unexpectedly busy weekend). I don't want to keep you guys waiting, so here's the 1st half of the carnival. Check back late tonight to read the rest!

Here are a few of the highlights:

Sleep, Not Spend! (Personal Finance Stories and Trends)

Ryan Taylor at Millionaire Money Habits tells of his financial upbringing and how his family taught him about finance with poor financial habits.

Curious what the Top 10 Reasons You'll Spend Too Much This Weekend are? Money Under Thirty seems to think it has an awful lot to do with Tequila.

Antishay writes about her "financial epiphany" in 2005 and asks readers when they realized that they ought to get a hold of their finances and save.

Free Offers and Easy Money Making (for those who prefer to sleep instead of work)

The Freebie Diva has a list of freebie offers for you, including a sports bra and a gallon of ice cream on your birthday!

Campus Grotto seems to have a thorough list of where to sell your used and no-longer needed textbooks online.

Credit and Loan Debt (Growing While You Sleep)

Do you need to consolidate your credit cards? Then Money Blue Book has an extremely helpful list for you -- that is, a list of 0% Balance Transfer Credit Card Offers.

Pinching Copper is In No Hurry To Pay Off His Student Loans. Find out why he and his with, with $40,000 in student debt, are taking their time paying off these loans.

A Home You Can Sleep In

Schaefer's Blog ponders how to figure out How Much House You Can Afford in 2008.

Sleep Your Way to Millions (AKA Work Hard and Earn Interest While You Sleep)

Want to become a millionaire? Debt Free posts on why it's not as hard as you think. The concepts provided are not new (spend less than you earn, start investing early, etc) but the post itself is an inspiring reminder that you don't need to be worth a fortune in your 20s to be rich later in life, as long as you remember to save and invest wisely.

The Bulter Project interviews a millionaire furniture store owner in Salt Lake City (named "MR") who got started with his business while he was in his twenties.

Living Off Dividends passed $2000 in passive income last month. That makes my $50 in AdSense revenue that I was bragging about the other day seem so much less impressive. Congrats Living Off Dividends! I think we all have something we can learn from you.

The Sleepy Stock Market

Living Off Dividends also offers up a post on why you should consider investing in gold and it's risks.

There's a great overview for beginning investors on how to invest for dividend yield (something I've been wondering myself) over at Stock Marketing Investing for Beginners. The post highlights how to calculate dividend yield, how to calculate dividend yield in your stock market analysis, and a bunch of other nifty information on dividend investing.

Think all mutual funds are managed by people who know what they're doing? My Simple Trading system highlights the poor performing American Century Ultra Fund, and why it has gone down the tubes.

Sleepy Geeky, And The Rest

Need something odd to inspire you to save? How about this post over at Monevator on "Who's Your Star Wars money hero?"

$ucessful Footsteps has a list of 10 Tips to Stay in Contact With Friends. Since networking is paramount in one's future success, a friend today could be a business partner or job lead tomorrow. Building a network of "friends" is more important than ever. $ucessful Footsteps also posts on why it's better to be optimistic than pessimistic, and how your positive or negative view on life effects success.


Mar 7, 2008

"It's None of My Business, But..."

My good friend has a problem with money. I want so desperately to help her get on the right path, but anything I say would come off as judgmental.

My friend, let's call her Lisa, is an intelligent 20-something gal. She has a high school degree but dropped out of college because it wasn't for her.

Her parents own two smallish houses in an area where real estate costs an arm, a leg, and a gold mine. She lives in one of them. She doesn't pay anything for rent, etc.

Her parents also own a small business. She works for them part time. Since I've known her, the business has been struggling a bit. They've kept it going, but her paycheck of something like $1000 a month doesn't always come in on time.

Lisa is knee deep in credit card debt.

Lisa owns a few pets. She recently bought a dog. She loves her dog. But the dog costs a lot of money. She's already paying to take care of a cat and a bunny rabbit.

Recently, Lisa went on a trip with a friend who was auditioning for a show down in Los Angeles. While they didn't stay in a luxury hotel, Lisa did pay for airfare and half of the rental car. According to her blog, her friend didn't plan in advance, so she had to put the rental car on her credit card, which just happens to already be maxed out. Lisa took the trip just for her friend, and she's only staying for two days, basically to wait for her friend to audition, and then return home.

It's none of my business, but I just want to understand why someone so deep in credit card debt would buy a dog and take an unneeded trip. These purchases add up fast.

I guess some people live their lives just accepting credit card debt as the norm. But I don't understand how they do this.

I want to help Lisa get out of credit card debt. The friend side of me wants to lend her money to pay of her credit card bills so she can not be taking on such high interest rates. But I couldn't do that because the likelihood of that scenerio ending pretty is rather low.

Do any of you have friends who just spend, spend, spend without thinking about their credit card debt? Have you ever tried to step in and help?


I hit $50 in AdSense Revenue!!!

Finally, after 17,979 page impressions, I've hit $50 in AdSense revenue!

Of course, I won't have access to the funds until I make $100 or something in order for Google to send me a check. Still, this is a day I ought to celebrate.

I've been blogging for years and only recently decided to add AdSense to this personal finance blog. My traffic has been slowly increasing, and so have my click-through rates. $50 is not much, especially not for all the work I've put into this blog, but I'd be blogging anyway so the extra cash is a nice plus!

I know some people make a lot more money with AdSense. Most of these people have more traffic than me so that's do be expected. Do any of you have any suggestions for placement on a blog that gets the most clicks without violating Google's strict terms of service?


Forbes Billionaire's List and How Rich is Rich Enough to Give to Charity?

A few days ago Forbes posted its annual list of the world's richest people. While the billionaires gracing the normal list were mostly obvious -- Warren Buffett, Bill Gates, etc, the list that I found more interesting was the sidebar "World's Youngest Billionaires."

Many of the world's youngest rich inherited their wealth. Some, like Facebook's Mark Zuckerberg, are self-made billionaires. At just 23 (he's only a year younger than me) he's set for life. And a few other lives, as long as he can reincarnate and claim his savings on his return to earth.

As I've been figuring out my budget upon my upcoming raise, I noted that I feel like I'm almost making too much money, and I don't know what to do with it all.

Of course, that's not true. Now that I actually have money to put into savings, I can start seriously saving for things I want, like for the down payment on a house.

The other day as I was driving I was thinking about how nice it would be to make enough money that I could donate a substantial chunk of it to charity. Then greed clouded my head and I thought - why donate money when I can save the money? My Roth IRA isn't maxed out yet, and even then the extra cash put into a SEP Ira, a high interest savings account for the house down payment, a CD or some other saving mechanism would probably be a wiser move.

I always thought that charity should be given in time, not money. If you're going to be charitable, go do some volunteer work, help build a house with Habitat for Humanity, or volunteer to mentor in-need kids in a local town.

Then I got into the "real world" where I realized time is money and I have more money than time. Yet I still don't feel like I have enough money to donate yet.

Obviously, given my pay bump I could donate $100 a month instead of putting that to my investments and just pretend it never happened. It would probably make me feel all warm and fuzzy inside, but I don't know how warm and fuzzy I'll feel when I retire and the government has run out of money for social security.

At what point in one's wealth-building career does charity become a necessity? Does everyone donate to charity? How much is the proper amount to donate, percentage wise, of one's income? What if one's job is unstable and while he or she is making a good amount of money now (in the $55-$70k range, dependent on how many freelance projects are completed), but in a few months she might be unemployed? What if, as a freelancer, my entire life is lived like that? And then what if I have kids and more than just myself to worry about one day, financially speaking? When do I give to charity and when do I just be selfish and keep all my money?


Mar 5, 2008

What to do about GLD?

A few months ago when I dove into the market with idealism and ignorance, I wanted in on all this gold excitement in the market. I believe the market is tanking, a recession is inevitable (if not already happening) and gold will do well for a while. I believe, and largely still believe the hype.

However, what I didn't realize at the time (damn me for not reading the prospectus or understanding tax law) is that GLD, being as it actually means I hold a small tiny piece of actual gold, is considered a collectible by the IRS.

Why does that matter?

Well, normal long term capital gains are apparently taxed at 15 percent, which is actually pretty nice given that you can make a lot of money in the stock market, and as long as you hold your stocks for a year you only have to pay the 15 percent tax.

However, GLD, the "collectible," is taxed at a rate of 28 %.


So now I'm trying to figure out what to do with the GLD stock in my Sharebuilder account.

I understand the long term capital gain tax, but I'm still unclear what the gains would be taxed at if I cashed out in less than a year. I'll probably want to do that anyway given that gold's price will hit the roof at some point, the dollar will recover with the new president coming in (hopefully) and I can sell off the gold.

But what rate will GLD be taxed at if I sell it within a year?

Also, I'm buying it about once a month in smallish increments. Right now I own about $470, or a little less than 5 shares of GLD. As of today, the account has a net profit of $34. To sell it, though, would cost $10. So if I sell today, I made $24. But that $24 will be taxed. What rate would it be taxed at?

When it comes to long term capital gains, is the "one year" policy based on when you bought each share? What if I bought a part of a share per month? When can I sell to get the long term capital gains tax instead of the short term tax? And would I want to wait or sell sooner for my GLD holdings?

Can someone explain this to me...?


Mar 4, 2008

Almost maxed out my Roth IRA, now where do I put my savings?

By now, I've read plenty to scare me into investing as much as possible for retirement as soon as possible. Last year I maxed out my Roth at $4000 (put some of my savings into that, since my income didn't allow pulling from that) and this year I'm already up to $3300 of my $5000 limit. I'm trying to put in $300 a month, which will get me to my limit in a few months.

Ok, so the question is, after I max out my Roth IRA, where do I put my money?

*I am a freelancer so I don't have access to a 401(k).

I'm diversifying my investments away from my Roth right now as the case may be, but I'm not sure if that's the ideal situation. I've got about $1300 in my Sharebuilder (non roth) account which kind of seems foolish. What seems more foolish is my heavy investment in the GLD (gold) ETF, since, despite it making nice gains, is a terrible play for long term. Ok, so I should have researched this before investing in it, but I recently found out that GLD, because it's investing in gold bullion and not the gold mining companies, actually counts as a collectible after a year, which means it gets taxed at 28 percent instead of 15 percent if you hold it long term.

Well, at this point Sharebuilder is starting to seem like a huge rip off. I do like the idea of dollar cost averaging, and I am using up all of my six "free" investments each month, putting $300 a month into my sharebuilder account as well.

My question is... while I could max out my Roth IRA sooner by skipping over my Sharebuilder account altogether, I'm definitely on track to max out my roth one way or another (yeay) and then... what should I do with the rest of my savings? What's the smartest place to put it for growth and tax purposes?

Here are some options I've recently discovered and am considering. Let me know if any sound like a brilliant idea because at this point I'm completely confused.

1) 529 Plan
Part of me wants to go to grad school one day down the line, although I'm not sure of this, and putting savings into a tax advantaged 529 plan would make sense if this were the case. Worst scenerio, one day I probably have kids and they get to take advantage of my 529 plan that never got used, since it can be transferred within the family. Not a bad idea, I guess. Worst, worst case scenerio, I never have kids and someone else in my family gets the money. But this won't help me save for a house/condo, which is really want I want to be saving for right now, as grad school is a maybe and house is a definite sometime in the next 10 years.

2) HSA
I still need to open my HSA account, as my health insurance IS HSA eligible. While I can't withdraw that money until retirement (so it's less flexible than a Roth) I can use it to invest. And there are some tax advantages (that I don't entirely understand) available for the HSA as well.

3) Prosper
I've had great success with Propser in the few months I've been using it thus far. I've only put in $200 and lent to 4 people ($50 each), but the first three at least are paying on time and I'm getting my 8% return, for now anyway. Of course I'll have to pay tax on all that, but it's still a nice return. I just worry about my borrowers defaulting, since one default will take out a huge chunk of the money I'm lending. With $200 in loans, it's not that scary. If I start lending out lots of money, it could get scary.

4) CDs
I already have $12k tied up in CDs that are ending over the next six months. I'm considering putting $5000 of that into my Roth IRA for 2009 when the time comes, but that still leaves $7000 plus whatever savings I manage to make over the year. Where do I put that? Back in a CD? CD and savings rates are so crappy right now (thanks economy!) so it seems like a bad idea for the short term.

5) Put extra savings into my ING Direct high interest savings account and put it into a Roth IRA next year, and the year after, and the year after that. Don't touch it for anything else.

That leaves me with...

6) Keep the money in Sharebuilder and grow my non roth ETF investments. Figure out what the deal is with my GLD investment taxwise and sell before it moves into the higher tax rate. Probably break even on that if it performs as well as it might. Oh boy. What a bad investment! I wanted to hold it long term, but now it seems silly given what a high rate it will be taxed when it take it out. So I plan on focusing my Sharebuilder account on emerging market ETFs. Either they're do awful and I'll lose all that money or over the years they'll do well and with a low fee percentage, I might make some money. It will be taxed when I take it out, sure, but at least it will be a way to grow my savings after my Roth is maxed out. I might sell off my three individual stocks too. I'm a bit confused on dividends, but it seems that if they're going to get taxed each year and then be reinvested and my stocks keep losing money, that's a bad situation for me, no? I don't have that much money invested in individual stocks at the moment (about $300 in three stocks, the largest holding being MCD, and all three of these stocks have gone down since I started investing in them, yet I still owe tax on the dividends).

I like investing in Sharebuilder because it gives me a chance to learn all this. Still, if I want to buy a house one day, I need to be somewhat careful. I know I'm young now and I can take changes, but there's no reason to be stupid about things.

So, faithful readers, help! What should I do with my savings after I max out my Roth IRA?


Mar 3, 2008

The Best Things in Life Are Free

There's a song from the musical Good News that goes "the moon belongs to everyone, the best things in life are free." That's absolutely true.

I spent today rollerblading on a paved path by a beautiful reservoir. My skates cost me a pretty penny once upon a time (and they're about ready for an upgrade), but other than once pricey cost of my blades, the lovely outdoor excursion was entirely free.

The view, fresh air, and overall good vibe created by other walkers, bladers and bikers was much more valuable than any "paid" activity I could have chosen to do for the day.

While the cost of living in The Bay Area is ridiculously high, when I actually get outdoors and experience the beauty of my town and the surrounding area, I am quickly reminded why living here is worth every penny.


Scientists figure out we're too horny for immediate gratification to save.

"It turns out that your brain is much more aroused by $1 today than by $1 tomorrow. And $1 six months from now barely registers," according to "new discoveries in neuroscience labs." Oh, come on, I could have told you that, and I'm no scientist.

Basically, for your brain to accept waiting for interest to accrue, it has to accrue at some impossible rates.

"For your brain to be willing to wait a mere three weeks for a higher payout, that $20 would have to grow at an annualized rate of roughly 4,800%."


I'm glad that I'm accepting saving, and potential interest on my savings, is a long-term investment. I don't even let myself accept that I've made the money I will be investing. If I for a moment acknowledge that I could be spending that money now, it would be much harder to lock it up in savings until I'm old and gray.

One interesting tidbit I found in the article is that "the average holding period for a stock, among individual and professional investors alike, is just over 11 months."

Whoa. I'm doing pretty good, then. I don't mind holding, even when I'm losing money. It's easy to do this because, again, I haven't accepted that I've earned that money. I'd like to save for a house or grad school, or some other large-ticket item, but at the moment all of those purchases seem so impossible to me, it doesn't matter much if I lose money. As long as I can keep making money, I know I'll be fine. I just need my rent payment for my studio and food money and I can deal. All the extras is just that - extra.

I can see why later in life, investing might get more complicated. Instead of extra income from investments being a luxury, when (/if) I have kids, it might become a necessity. But then I'd think my investing would become even more risk-averse.

Anyway, the brilliant scientists "found out" that we're bad at waiting for reward. We all have a little Veruca Salt "Daddy I want it now" in us. Is that so bad?

"...the temptation to buy dotcom stocks in 1999, energy stocks in 2005, real estate in 2006, emerging markets in 2007 or gold right now - what's hot when it's hot - is overpowering for many people, no matter how often they've been burned before."

I wonder if Gold will be like dotcom/energy/real estate. Hopefully not, as I'm investing somewhat heavily in the GLD ETF (although not that heavily just because I haven't really invested much money in my sharebuilder account yet versus my Vanguard Roth.


Mar 1, 2008

March Groceries -- $169.90, now on my new Chase Freedom card

My Chase Freedom and American Express Blue Cash cards both arrived in the mail today. While I'm terrified of credit cards, I've decided it's about time to really start building my credit score. I have a bunch of open credit cards and according to a recent credit check I'm in the 730 range, but I still want to up that credit score so one day when I want to buy a house (or condo) I can get a good mortgage rate.

Anyway, I finally gave in and got these two credit cards. I don't know if they'll help or hurt my credit score, but I'm going to start spending on them each month and paying off my balances at the end of the month. I'll only buy what I can afford. Period.

So I went food shopping today. At the "cheaper" (aka non-organic, non fancy) supermarket in town. Safeway. I spent $169.99. I supposedly saved $41.34 on buying things one sale w/ my "club card." I did spend extra time picking out things on sale.

I went a little overboard on buying spices this month, but I don't really have any spices and if I'm going to start cooking more, I need some more spices. I tried to buy ones that were on sale!

Without further ado, here's what I got for that $169.99

$1.39 - Jumbo Taco Shells
$1.11 - Canned Corn
$3.89 - Cooking Spray (non brand Pam)
$3.69 - Paprika (spice)
$3.29 - Bread Cracker Stuff
$3.27 - Spice Island Mustard (spice)
$3.75 - Thyme (spice)
$3.99 - spinach tortellini
$3.99 - three cheese tortellini
$3.73 - garlic powder (spice)
$2.71 - basil (spice)
$3.00 - butternut squash soup
$5.00 - 4 Tuna Salad Lunch
$.99 - plastic spoons
$1.66 - steamed vegetables (frozen)
$5.29 - kashi lime shrimp frozen dinner
$4.99 - liquid egg whites
$2.50 - shredded cheddar cheese
$2.69 - fat free milk
$4.49 - cottage cheese
$2.49 - lowfat yogurt
$5.49 - frozen strawberries
$4.50 - frozen blueberries
$3.49 - frozen quesadillas
$3.00 - frozen veggie bites
$9.00 - three boxes of morningstar frozen meatless buffalo wings
$1.39 - banquet fish stick meal
$6.76 - four cheese and beans burritos (frozen)
$5.00 - two cheese quesadillas (frozen)
$3.99 - a fitness magazine. To inspire me to workout.
$3.39 - bread
$4.00 - frozen fried fish
$2.50 - frozen fish
$2.50 - frozen fish
$5.99 - stuffed salmon frozen
$6.23 - Rockfish Fillet (not frozen)
$3.45 - five kiwis
$2.45 - three sweet potatoes
$2.00 - raisin boxes
$2.00 - two bags of baby carrots
$2.99 - bag of four avocados
$2.99 - veggie turkey slices
$7.98 - two boxes of veggie buffalo wings (non frozen)
$3.00 - blueberries (non frozen)
$3.99 - vegetable mix
$3.50 - cheese whole wheat tortellini