Aug 30, 2010

Making Sense and Losing Cents of the Economy

Like everyone else who has a dime or more invested in equities, I’m concerned about the future of the stock market. Whenever the market looks so bleak, everyone is concerned. And that’s usually the best time to invest. Yet with my yearly investments becoming more sizable, this feels a lot like Las Vegas. Even with diversification, it doesn’t help when all (or most) stocks are on red.

After receiving my paycheck for the past months and reimbursed expenses, I realized that I’m sitting on $16k liquid in my checking account. Part of me hates writing about this because I know I’m so lucky to have the luxury to ask the question “where should I invest?” But this may also be a temporary income boost and I want to invest wisely.

Yesterday, I pulled out my social security statement and studied my yearly income since 2002. Other than last year, I made somewhere between $0 and $25,000 each year. Last year, I broke $60k for a full year’s worth of work. This year as of Sept 1, even with 2 months of unemployment (unpaid), I have earned around $70k this year. And with the way some contracts are shaping up, I expect to make an additional $10k to $30k by the end of the year. So now I face the unlikely problem in a time of economic crisis – what do I do with all this money?

The easy answer is: spend it. Not on wasteful purchases, but things that I need or will need soon. I could buy a new car, or a “new” used car. Or I could invest in property somewhere (though that requires stable long-term income, which I am not confident I’ll have, especially with my plans to go back to school in the next two years.) So where do I put the excess cash?

I’ve already maxed out my IRA and will, within this month, max out my 401k (no match, bummer.) I will likely put another $2000 in my HSA which is invested in very low-risk funds. My IRA is in Sharebuilder and I bought 5 funds – the gold ETF, the silver ETF, two high-dividend ETFs and a REIT ETF. My 401k is invested in a mix of equities and bonds, and I’m not clear what is in it exactly. With a large chunk of my savings this year going into my 401k, I’m concerned that in the next ten years we’ll have deflation, high taxes, and my 401k will turn to mush.

But I’m willing to take that risk with $16.5k because it could be a very good time to invest as well. I’m just not sure I can stomach taking that risk with more money. Not without understanding the real economic situation in this country and the world. History doesn’t always repeat itself, or even if it does it may take a longer time to turn around. I’m young now, I can handle that, but if the next 5-10 years will be lost decade #2, why should I play?

The whole media fueling the fire is disturbing as well. I can’t tell how much of the stocks slipping these days is all the fear stories about how bad the economy is doing. It’s a domino effect that goes in a circle downward. What if all the news resources lied and said the economy was turning around and there’s a ray of sunshine close ahead? If people would invest and spend money than… well, that seems to be the only way to dig ourselves out of this mess right now. I don’t know if I agree with that, but what else can we do? We need people spending again so companies will start hiring again. That’s how capitalism works, right?

But it will take a long time to trickle down to lower and middle classes. The media couldn’t lie for that long. News would get out that the future is not so sunny. And everything would crash again.

Or you can just – apparently – print money until the cows come home and thus make every dollar worth less and less and less. That can’t be a good thing.

Right now lots of big names in economics are saying that we may have a “double dip recession” or – worse? – a depression… because we never actually recovered from the first recession. I wish I understood economics jargon more so I could make sense of this, this, this and this ... and the thousands of other economic gloom and doom stories I'm reading.

Any feedback from those of you out there who are more economically savvy?


Aug 29, 2010

3 NSF Fees from Bank for Same Transaction: The appropriate acronym is WTF

My bank (which will remain nameless) charges me a $35 fee when I don't have enough funds to cover a transaction. Normally I'd say -- ok, that's a bit steep, but it's my fault for sending out a check that I can't cover with funds in my account. But this summer things got a bit wonky.

For work I need to put all of my expenses on my card and then get them reimbursed. I ended up spending a lot more than I expected and although my American Express payment wasn't due, I wanted to make sure it was paid of asap. For some reason I thought I had enough money in my account to cover the $3500 payment. Well, I didn't. I found this out by seeing a $35 charge on my account activity page. Crap, I thought to myself, I can't believe I just wasted $35. So I was going to let it slide.

Then, two days later, I saw another $35 fee. I called up my bank to find out what's up. Apparently American Express is allowed to automatically try to get the payment through a bunch of times, and each time they try it hits my account with a $35 fee. I called up American Express and they told me that once I approved the payment, it's all done automatically, and I had to wait for it to be denied.

So I called up my bank account and after a few minutes of begging got them to remove one of the $35 fees. I hoped that American Express would be done with the requests for payment, but a few days later another one showed up on my account. I called my bank again and the conversation went something like this:

"Can you waive the $35 fee because I am already paying a $35 fee for that transaction. I now have the money in there to pay for the entire American Express payment and then some. I'm a good customer (yada yada) so can you help me out this one time?"

"No, sorry, it won't let me do that, we already removed one fee."

"But it's for the same transaction. It didn't even pay it, it was returned to American Express. I will probably have a fee from them as well."

"I'm sorry it's all automated there's nothing I can do... ... ... unless ... unless you have some sort of hardship, are unemployed or something...?"

(A pause. I wonder how much I should stretch the truth)

"Well, my job is ending soon" I started, adding "my job is ending next week."

"You should call us back next week," she starts.

"What? This is ridiculous." I brought out my inner actress here. "My job is ending... next week, and you can't put that I'm unemployed now? I will be unemployed next week. On..."

"Today is your last day?" she adds, as if trying to help me through my lie.

"Yes, I don't have work on Monday," I said, "today is my last day."

"Let me see if that will work," she said. A few seconds later I had my $35 refund.

So... does this make me a bad person? Truth is I AM losing my job next month unless my contract gets renewed. Not on Monday, but fairly soon after. Really, though, I figure I'm paying the one $35 fee for my stupidity and the bank does not deserve a cent more.

Since fairness has nothing to do with bank fees, I also take a little consolation in knowing I'm heavily investing in bank stocks. If they're going to get bailed out by the government and charge ridiculous fees, I'm going to get in on that action.


Aug 28, 2010

Eat. Pay. Money can't buy you Love.

Life has been too busy, for better or worse, to update this blog as frequently as I have in the past. Mostly, though, I'm afraid of being found out -- I know far too many people who are experts in finding things online accidentally or otherwise, thus I'm concerned about writing details of my professional or fiscal life at this point to identify myself. Heck, one gal who read my livejournal for a few years guessed this was me just by my writing style and some other details. What, am I the only insecure yet semi successful gal who writes in run-on sentences in this world?

In any case, it's time for a real update. I'll take my chances and hope that I don't say anything too incriminating here to get me into trouble in the real world.

This summer I spent most of my time traveling for a business trip, and then a short vacation since I was already abroad and needed a breather. The best part about it -- other than seeing some cool new places and having great professional opportunities -- was how much money I made in a month. I ended up working extremely long hours and billed about two months worth of work in one month's time -- which is especially great since my contract will be expiring soon and it's not sure yet whether it will be renewed.

I'm not too concerned on that front, though. I've already made more money this year than I did last year, even with just seven months of work. I also have a few startup projects that I'm working on which are extra income streams -- though they're more to keep me sane (I can't just work on one thing at a time) than for the money. Then again, I've found consulting in my field can be quite lucrative. Sure, self employment tax sucks, but once you can call yourself an expert in something you can get away with charging enough to cover that and then some. What I really love about those jobs, though, is the ability to work from home. I'm so much less anxious at home so I get much more done and do better work. Ultimately, I'd like to find a full-time job or consulting work that I can do mostly at home.

That brings me to my current plan to actually apply to graduate school this year. It's definitely the right time for me to do this, if I'm going to ever go to grad school. I'm 26 and I'm not getting any younger. I want to have my graduate degree by the time I'm 30 and given that a few programs I'm looking at are 3 years long, it's now or never. And now is a great time... I don't have an extended full-time job (even if my contract does get renewed it will end in another six months) and my consulting projects could feasibly continue into grad school if my bosses feel I add enough value to the company, and ideally I could work a few hours a week to cover some of my basic expenses outside of loans.

Still, I wonder if grad school has a place in my life. This year (not counting my two months of unemployment) I would have made over $120k -- most graduate programs, even top-ranking ones, boast that their graduates that are on the high end of the salary scale score jobs that pay that must post graduation. Of course, the reason for me to go to grad school isn't exactly for salary alone... it's about having more flexibility in my career, more respect, and more knowledge. I just wonder how much that's worth... because I seem to be doing ok so far -- which I'm proud of and also somewhat guilty about, given the state of the economy. I certainly don't feel like I deserve the income... yet I know I'm most comfortable in the upper middle class, and I don't expect my boyfriend to ever get me there. It's all on me.

My goal this year was to end 2010 with a net worth of $100k. Even though I've been making a lot and saving a lot, the stock market (as we all know) is not doing well enough to boost my savings to that goal. Right now it looks like I might hit $80k... which means I would have saved $30k this year (not so bad.) I might be able to make it to $100k if some of these side projects work out, but that's all up in the air. It's tough because some weeks I love working the extra hours and other weeks I just wish I had time to have a life! For instance, I've been spending all day working... instead of hanging out with my boyfriend and enjoying the nice weather. Hopefully I'll have a few hours away from the computer tomorrow.

I have a hard time sticking to my goals because everything in life is so transient. Working for a big corporation has been a great learning experience, but I also struggle to find motivation in working for 'the bottom line' when even my direct superiors and their superiors don't have a lot of say in what we're doing. I definitely like working for smaller companies where you have a say. Then again, in a bigger company it's a bit easier to just hang on for the ride... do what you're told... which is nice sometimes. But not what I want to be doing for the rest of my life.

Well, I have to get back to work. I don't know if anyone still reads this blog since I never update, but if you do say hi as knowing folks still read will encourage me to write more. :)


Aug 22, 2010

Overfunding my Retirement Contributions?

This year I've done much better than in previous years, so I decided to get a jump on my retirement savings. I'm maxing out my 401k and my IRA. I still don't know if I'll qualify for the Roth IRA or not (depends on whether I keep my job through Oct, Nov & Dec) so right now I have a regular IRA and I'll reclassify if needed at the end of the year.

What I'm most excited about is being able to max my 401k. My company doesn't match but the good news is that I'm funding the 401k in preparation of a Roth conversion. Being 26, I have plenty of time to let the tax laws work their magic. Sure, $13k is not a huge amount of money, but that's a good thing because I'll still have to pay taxes on it when I convert. I plan to wait to the year I go to grad school to do all the conversions because surely I'll be making very little money then, if any, and be in a low tax bracket.

Now if only my boyfriend would start saving for retirement, I'd worry a bit less about it.

I'm also a little concerned that I'll never be able to afford a house, but oh well, at least at this rate I should be able to retire. Hopefully I'll live that long.