The Cost of Late Fees (Part 2)

In part one, I discussed my bad and expensive habit of incurring late fees. I have been disciplined enough to have never had to pay a late fee for credit cards, etc. How did I get so disciplined? I got my first credit card at 17, I signed up for the card at a pro basketball game. Since I wasn’t 18, I pushed my age back a year. My friend who was a few years older than me signed up at the same time. We had no credit; we both had part time jobs and what little income we had flocculated. Nevertheless, we got our credit cards with $1000 limits in the mail a few weeks later. In the beginning, I was good. I paid my credit card in full when it was due. A few months later, my friend and I were discussing the credit cards, she said, “do you know if you don’t pay the minimum they charge you if you’re late? And then they charge you if you’re over the limit?” At the time the fees were only $15 for each offense, now they average about $30. That was enough to scare me straight! Since then, I always made sure to pay at least the minimum, which has enabled me to have good credit when some of my friends didn’t.

If you don’t pay at least the minimum you’re teetering on the edge of whirlwind of trouble. If you’re late for 30 days or more, you can be reported to the credit bureaus, making a dent on your credit score. If you don’t pay your credit cards on time, you might jeopardize your “good standing” and if you do that, then other lenders (even lenders who you’ve always paid on time) can jack up your interest rate! Yipes. When I was out of work for several months in 2001 and 2002, I called my credit card company and explained my situation to them. Because I had a history of paying my credit card on time, they waived my minimum payment for two months. I think the fact that I was forthcoming and contacted them before the payment was due; they were willing to work with me. In the end, my credit card company just wants to get paid, and they are often more flexible as long as you make attempts to pay. For more tips on dealing with credit card companies click here. Here's an intresting article on credit card companies, it's geared toward college students, but anyone can benefit from the information. If you want to know how long it's going to take to pay off your credit card, click here.

I've Just Joined the PF Blogger's Network

In my very first post, I stated that my this blog was heavily inspired by MM's personal finance blog. He's been covered heavily in publications such as the Wall Street Journal, CBS's Marketwatch.com and was just voted the best personal finance blog by 2005 Business Blogging Awards.

At any rate, when he announced early this month that he was looking for contributing bloggers to join his newly-formed network, I jumped at the chance. Just yesterday, the PF blog made its debut. Now, you can read more about my personal finance journey both here and at the PFBlog site. If you want to continue checking this website, please do so. This will continue to be my main blog. By joining the network, I hope to attract new readers who might not have otherwise seen my blog. I will post most of my content on my new "gold channel". Learn more about the personal finance network by clicking here or click directly to my channel here. Happy reading.

Maxing My Roth IRA for 2004, Will I Make It?

I am attempting to max my Roth IRA for the 2004 tax year. So far I’ve contributed $1000, but I need to come up with another $2000 by April 15th . . . err! I will put another $500 in during my mid-month paycheck in April. It looks like I will have to “borrow” $1500 from my emergency fund in order to meet the deadline. It’s not my ideal plan, but c’est la vie.

My Roth IRA currently is in an S&P 500-based fund. As I accumulate more money, I’ll diversify it. When I first opened my Roth a little over a year ago, I was searching for an index fund that had no load, low expense and administrative fees and also accepted low balances. I wanted to open an account with Vanguard, but they wanted $1000 to start. I had $400. I found the Motley Fool’s No Load Index Center. It’s pretty old and some of the information is outdated but I made a few calls and eventually opted to go with a company that had a low minimum, and met all of my other requirements. I’m glad I started my Roth IRA when I did, because every little bit helps. I think I can do it.

Reigning in My Latte Factor or The Cost of Returning Things Late (Part 1)

Reigning in My Latte Factor or The Cost of Returning Things Late (Part 1)

As a result of posting my total net worth and my monthly expenditures last month, I made some serious revelations. I needed to identify my latte factor. My latte factor wasn’t lattes; I get my coffee from the office machine. I don’t smoke cigarettes. I don’t have extravagant dinners at expensive restaurants or spend three nights out drinking a week. So what is it? It’s something 100% preventable—it’s late fees. My late fee habit has interestingly never been on credit card fees or any past-due bills. My latte factor is a little sneakier than that.

The late fees bit at me the worst in 2003. When I graduated from college, I had eight library books that I used in assorted term papers. After I walked across that stage, I ever wanted to see the inside of the library again, so I neglected to return them. The next thing I knew several weeks had passed, and at $0.20 a day, it ended up costing me a whopping $40 smackeroos. I was so embarrassed when the librarian told me my fine. I hoped the people around me didn’t hear my sentence. But even worse is the fact that that my second highest fine was $30! Not to mention, other people were not able to use those books during my extended borrowing session. But my problem isn’t just library books. I have to admit, even before recently policy changes at Blockbuster, I didn’t make it that much of a priority to return things as promptly as I should have. Even with the “end of the late fees” Blockbuster still sneaks in a $1.25 “restocking fee”, plus local taxes if you return it past a certain point. I clearly need to work on that. I just added the fines that I could easily recall, and plugged the total of $71 into my favorite calculator and I realized it would have grown to $1449, if I diverted it into my Roth IRA account and earned 9% interest per year from now until the time I turn 59. If I can get it together to make simple moves like going to video rental store or using the automated renewal system at my library, I’ll be on the right start. Now that’s motivation!

The True Cost of Being Overweight

Last May as I was preparing to leave my old job, I started eating a lot. At least every day, and most times twice a day, I ate out. And as can be predicted, I gained a lot of weight, a whole 30 pounds. I really felt it when I tried to fit in my size 12 pants. Now what does any of this have to do with my personal finance trek? A lot. First, I needed some new clothes to accommodate those extra pounds. New clothes cost money. I scoured stores like Syms, Marshalls and Ann Taylor, but my best bets often ended up being often trendy, but still chock full of work-ready pieces at H&M and Old Navy. I ended up buying a few quality staples from discount stores and mixed and matched with selections from my wallet-friendly stores. The end result was pretty decent.

Now that my life is a little more even-paced, I can return to cooking at home a few times a week and bringing food to work on occasion—saving more money on food. Besides the food and buying new clothes, the cost of being overweight is very real. For me, it also meant wasted money on a gym membership that I didn’t use. For other people it may mean paying for extra doctor’s visits, diabetes medication, buying an additional seat on airplanes, and others. Even if we take care of our body’s wellness and are at a healthy weight, we all bear the cost of increased insurance. And apparently, it costs airlines additional gas/money to fly heavier passengers. As if I don’t already have enough incentives, maybe it’s time to get my act together.

Put Your Own Mask on Before Helping Others?

Does that sound familiar? Flight attendants have been saying that for years and I believe it rings true when it comes to your finances (at least to a certain extent). I am a big believer in philanthropy and giving money to organizations and causes I care about. More than just believing in it, I donate regularly. However, I would not give money to the extent that it disrupts my own financial goals.

I've read on some message boards about young people sending money home to support parents. Luckily, I am not expected to send money home, but then again, my mother is still working. If my mother needed help on a regular basis, I would send as much as I could without derailing my own financial plans. By still ensuring I have money to go for my own goals, I hope to make certain the cycle doesn't repeat itself. I'd love to hear from others who either send money home or don't but are expected to do so. Do you voluntarily send money home, or do you do it because you are asked? Do you feel like you do this because of your upbringing? Or, do you out-earn your parent(s) and just want to help because you can? Trusty MSN Money has a whole section of articles on caring for parents.

Sometimes I Recycle, Sometimes I Freecycle

When I have something that I can no longer use, and I can’t or don’t want to try to sell it, I freecycle it. What’s freecycle? Glad you asked, it’s a virtual meeting place where people can post their unwanted items in the hopes that some stranger will be able to use it. Recently, I was able to send my Aiwa stereo with the broken CD player to a good home. The new owner wants to use it to record tapes. My toner for my old HP printer recently found a good home, too. It was really easy; I just met them at a mutually-agreed upon place, and viola! We were both happy. There are now 2,524 Freecycle groups around the country. Click here if you want to learn more.

Taking a Loan from My 401(k)? I Don’t Think So!

Lewis Schiff, author of The Armchair Millionaire, addresses 401(k)
loans in a recent CNN Money article. I understand the temptation to do it, but I don't think it's a good idea at all.

My main problem is that 401(k) loans are taxed twice. True
enough, you contribute to your 401(k) with pre-tax dollars. If you take a loan on it, you have to repay it with after-tax dollars, this is the first time that it is taxed. You get taxed the second time on your 401(k) plan when it's time to withdraw the money during retirement. Sure, you pay yourself the interest, but you're probably better off letting your money stay put and continue growing in the first place. As Suze Orman said on her New York stop on her book tour, "why do you think the government lets you do it?"

My 401(k) account is where the bulk of my net worth is located. I've taken a few precautionary measures to make sure I don't have to withdraw it prematurely.

1) I have an emergency savings of three months worth of basic living expenses. My favorite financial planner recommends 8 months. I am young, have no dependents, and feel like I can take that sort of a risk.

2) I have a Roth IRA, and I can always withdraw the principal at any time in the event I needed to do so.


3) I have both short term and long term disability insurance, paid fully courtesy of my generous employer.

4) In an extreme emergency, I could live on my credit cards until I found an income replacement. Because I've kept my FICO score high, I have very low interest rates on my credit cards.

In general, there seems to be a lot of confusion on what types of retirement plans have which features. Here are the best and most reputable summaries I could find.

For Bankrate's summary, click here.

The Fool also has a good reference guide/overview.

I'm not ditching ING just yet

As you’ve probably already heard, ING Direct has raised its rates to 2.8%--I am thrilled because I was considering a switch to Emigrant Direct, whose rates are now at 3.25%. I've been a customer of ING since 2003, and I have no complaints. I have to admit I was considering switching to Emigrant Direct because of their high savings rates. After a little bit of research, I found that it is quite a process to sign up, up to a few weeks in some cases. It could be that Emigrant was just overwhelmed with the response, but I don’t feel like waiting that long. Also, if I am not sure if they do a “hard” credit request or a “soft” credit request, but too many inquiries aren’t good for your credit rating. (Lenders apparently assume that you are desperate or are heading for financial trouble. If all of your inquires are in one area, say car loans or a mortgage, all inquiries in a 14 day period apparently count as a single inquiry.) Since I am trying to purchase property by the end of the year, I want to keep my requests to a minimum. Want to read more about credit inquiries? Click here. If you want a $25 bonus for opening an ING Direct Account, send me an email. There are no fees and there's only a $1 minimum to join. And as long as the account is open for 30 days, it's all yours.

My Trip to Chicago

I've been on hiatus for the last week. After reading articles on other bloggers who have lost their jobs because of their blog, I figured I'd do some due diligence and not blog from the company computers. Since my new Dell arrived, it's made it that much easier. As I said in an earlier post, I am in Chicago this weekend, and right now I am connecting from my hotel. So far I am going to be under my original budget of $800 for the entire weekend. After my plane ($227) and my hotel ($202), the most amount of money I've spent so far has been on food and beverages. The food in Chicago has been amazing. I've also visited the Lincoln Park Zoo--one of the more beautiful and well-laid out zoos I've visited. The best part about the zoo was it was free. I bought some presents from the gift shop and I'll probably send a small donation when I come back to New York. Throughout my personal finance journey, I've always made it a point to give to organizations that I care about. Anyway, it's my last night in Chicago, and I am not going to spend all of it online. So long for now.

Book Review: The Automatic Millionaire

I recently checked out David Bach's The Automatic Millionaire courtesy of my local public library. Now, from my Suze Orman discussions, you probably think I don't ever buy books--but that's not the case. I buy books only if I know I am going to read or refer to them again and again. The library helps me "preview" books that I am considering purchasing. TAM was a really easy read, I was able to finish it in a day. At first glance, The Automatic Millionaire seems to present its readers with original, fresh ways to create and stick to a financial plan, but upon further investigation, it’s a repeat of the principles of the classic The Richest Man in Babylon sprinkled with a few modern tips.

The first chapter introduces you to an average couple with an average salary and a not-so-average bank account. Even though they’ve never made over $54k combined per year they are millionaires. Here’s How were they able to do it: 1) they saved a percentage of each paycheck, 2) prepaying their mortgage and 3) not having expensive habits like smoking or trying to keep up with the Joneses. In the following next chapters, we learn how to apply The Automatic Millionaire principles. In chapter two, Bach asks you to identify your Latte Factor (Bach coined and registered the phrase)--for some people it’s obvious, daily coffee from Starbucks, cigarettes or dinners out, or even that smoothie from Jamba Juice. The trick is identifying and limiting your unnecessary expenditures. You can check this calculator to see how much your habit will cost you.

Later we learn to pay ourselves first beginning with whatever percentage feels comfortable and adjusting it over time. Now assuming you’ve chosen to pay yourself automatically, your best bet is saving for retirement in a work-sponsored retirement plan or a IRA. He provides numbers and websites for people who don’t feel like doing the research themselves. Finally, he suggests creating a rainy day fund and has a few suggestions on where to keep it liquid and relatively safe. The final chapters discuss paying mortgages bi-weekly and automating your giving plan. In the end, it's just like all personal finance books, the ideas work, if you put them in to practice. My rating is a 3.

5- must buy
4-worth it, good reference guide
3-get it from the library or buy it used
2-okay, but nothing original
1-pass

I Bought My New Dell

So, I finally purchased my Dell computer. As I explained during a recent post, Dell updates its "Dell Deals" every week. Various components are often "free", sometimes it's shipping, sometimes it's a DVD-RW, other times it's increased memory--but it usually works out to be about the same price. I realized that by purchasing certain components separately, my overall price will go down. So, I decided to buy my Microsoft Software and USB ThumbDrive separately, saving about $50 with little overall work. I also put it on a credit card that just ended its billing cycle. Since I don't have a balance, that means that I won't have to pay anything until my next cycle closes in early April. And I won't have to pay for the full balance until the very end of April/early May, earning a small amount of interest in the meantime. Hurray for "float".

My Real Estate Search. . . The Story Up 'Til Now

I’ve been interested in buying my own home since 1992. The problem then was I was 12 and had no income. Fast forward to July 2003, I was 22 and ready to begin the first steps. I met with a realtor and I was interested in purchasing a 2 family house in Jersey City, NJ right across the Hudson River from New York City. I was looking for something simple. I just needed a place with two units where the tenant could pay me rent, to help out with my mortgage. My only criteria were that at least one of the units had to be habitable that way, I could live in the not-so-good unit and rent out the better one. I also needed something where I could feel comfortable coming home at a late hour. After speaking to a mortgage broker, I qualified for a $150k, 3% down FHA mortgage, which was great but I suddenly found myself being priced out of the market. Which is not surprising considering, New York/New Jersey area is among the fastest appreciating housing rates in the country. Frustrated, I put my search on an indefinite hold until I had more income to qualify for more house.

The next year, in April 2004, I was ready to give it another go. I was making more and decided 2004 was going to be my year. This time, I qualified for a $200k FHA loan with 3% down. I started looking further away in Newark, NJ. My simple criteria was the same, at least a 2 unit home, where I could feel comfortable coming home at a late hour. For quite some time I was reluctant to consider Newark because of it’s seedy past. But a lot has changed in 30 years. Apparently, I wasn’t the only person reconsidering Newark. I bid on four homes in three weeks and walked through almost 10 times more. None of my bids were accepted. Frustrated and heartbroken, I temporarily abandoned my search again.

This time, I am ready to make it happen. I am ready to purchase a house this year. I hear you saying how are you going to afford it. . .don’t you live in New York? You’re right. New York is extremely expensive. And where I am from, in California, isn’t any better. I was really frustrated when I my first two attempts were unsuccessful. Recently, I was watching The Apprentice and wondered what Donald Trump would do in my situation. He would do two things I didn't: thinking outside of the box and perservering, even when I really, really want to give up. For me, that means looking into a different geographical area, and since I like the wages and lifestyle I have in New York, that also means renting out the property instead of living in it. Suddenly, I was inspired by MTV's Real World: Philadelphia (it pays to watch TV sometimes). I decided my new search would be in The City of Brotherly Love, which has been going through its own transformation in recent years.

Financial Goals 2005

Here are my Financial Goals for 2005:

1. Have a positive Net Worth by December 31, 2005.

2. Get 401(k) up to $10,000. As of yesterday’s close, my balance is $8757.03. I contribute $100 per bi-weekly pay period, so I should get there by September 1, even with worst-case mediocre returns. According to this calculator from dinkytown.net, even if I never put another cent in my account and assuming a 9% return (the historical stock market average annual return is 10%), I’ll have $299,807 by the time I turn 65.

3. Buy a piece of real estate and increase my emergency savings to cover 3 months of mortgage payments, insurance and estimated repairs. How am I going to afford a piece of real estate living in New York? More on that in a later post.

4. Make a full contribution to my Roth IRA for 2004 and 2005. I need to contribute an additional $2500 by April 15, and an entire 2005 contribution of $4000 by the end of the year (hopefully).

I tried to make my goals as attainable as possible, while still making progress. I also try to have a well-rounded financial portfolio and not put all of my eggs in one basket.

The Never-Ending Student Loans

I am back in school this semester and I just got a notice from the Department of Education:

Our records indicate that your account is currently in a deferment. . . . You are responsible for the interest that accrues during your deferment on the unsubsidized portion of your loan(s) and can either pay the interest prior to your deferment end date or let it capitalize (be added to principal balance).

Hmmm. . . I have a lot of options right now. I could (1) keep paying them down, (2) ignore them completely until I finish my graduate education in 2006 or 2007, or (3) pay the accrued interest until they are no longer deferred. I have a number of factors to consider before a decision. Right now, I owe $21,285.62, at a very sweet and low 3.625% interest rate. Also, I know that because my Adjusted Gross Income is less than $50,000 any student loan interest will be completely tax deductible. My student loan interest is about $700 a year. I expect that by the end of the year, my AGI will still be under $50k, so I am going to opt to pay just the accrued interest, so I can do other things with my money until I no longer qualify for this tax deduction. This seems to be in direct conflict with my goal to pay my student loans off by the time I am 30 (in 2010), but as soon as my AGI is more than $50k in a 2006 or 2007, I will speed up the payments. Even if my AGI stays under $50k until 2007, assuming I begin paying $517.36 every month beginning January 2007, I can pay it off in 44 months, thus achieving my goal, according to a calculator from dinkytown. I think I can do it.

Uh, Oh!

As a result of posting my expenses and net worth last week, I made some serious conclusions. Now, I need to come up with a better plan. Here's what I found:

1) I don't track my expenses closely enough. Everyone suggests it, it's tedious, but it probably works. You know that book, Don't Sweat the Small Stuff? Well, that philosophy probably shouldn't apply to my personal finances.

1A) My Emergency Fund would just provide me with the just the basics for three months. But that's okay with me. First, since I don't have any dependents and I am naturally a little more of a risk taker, I am going to do only about 3 months worth of basic expenditures. Second, if I were to experience financial hardship, I expect to cancel cable and halt buying clothes and saving for vacation, etc. I'm going to assume I can get by on a minimum of $1200/mo. I know I can do this because I've had to do it 2002, when I was looking for a job. I call it my "breathing tax", because it's the minimum I need to in order to eat and have shelter with nominal amenities. I live in the same apartment as I did then with the same amount of basic expenses, so I am confident that would work, if I had to.

2) I need separate accounts for each savings category/ goal. With plenty of free checking accounts or interest-bearing savings accounts around, I have no excuses. This will help ensure that each allocated amount goes towards its goal. To that end, I am going to open different ING sub-accounts this week. ING Direct now offers 2.6% APY. As soon I do, I'll give you an update.

3) As soon as I get my own computer, I need to invest in money management software. (I currently post from the SoHo Apple Store, my school's computer lab and from my job.) I've been looking at getting a new Dell, and the one I want is going to be about $1200, give or take. Each Wednesday, Dell posts new computer prices. Dell calls them "Dell Deals", because each week a new feature will be "free". Sometimes it's "free" shipping, other times you get a "free" DVD RW upgrade, and or sometimes they call it a "free" memory upgrade. The funny thing is it all averages out to be the same price if you pick the same configuration. They can't fool me, I'm hip to their game. How do I know this? I've been checking the weekly Dell specials since July, when my Gateway laptop finally died. I couldn't justify purchasing a new laptop when I wasn't in school, because it just seemed like a really expensive appliance. But now since I am back in school and blogging I am ready to make that purchase. As far as money management software, I need to research further, but I am likely going with Quicken or, less likely, Microsoft Money.

So long for now.

I Just Got a New website

I just got registered my very own website, which is currently under construction. If you like what you see and you want to make a contribution, please feel free to click the button on the left. You need to be registered through PayPal. The suggested contribution amount is $2. And yes, IRS, I am going to pay taxes all of it. Anyway, this is the first time I've ever registered a website, so it'll take me a while to get it together. Stay tuned for more!

"If You Have Information, You Can Make More Out of Less" -Suze Orman

Yesterday, I went to Suze Orman's The Money Book for the Young, Fabulous and Broke book tour.It was everything I hoped it would be and more. But I still wasn't going to pay full price $24.95 for her book. Even if I was going to buy it new, I would just get it from Amazon, where I would save about $8. If you can afford it, by all means get it. I flipped through it and it promises to love up to all of the hype. She was dressed sharply as she usually is, and she looks just like she does on TV, only shorter. It was pretty crowded, but the sound system clarity was top quality. My first question when I learned that she was doing her book tour at Apple Stores was "why there?" She answered that one right off the bat! She said because all of her books were written on Mac Computers. Suze said she wrote most of this book while she was naked in her back yard. No, I'm not making that part up.

There was a plethora of information given in the short hour that she spoke to the crowd. First, she wrote the book for YF&Bers by listening to our input. By that, it has short snippets (since we all have short attention spans), it's interactive with her website and it answers the all-too important question. "What do we do first?" She says our first plan of action should be to Find an undervalued asset and invest in it. A while ago it used to be real estate, and at other times it has been the stock market. For YF&Bers, that asset is ourselves. Suze says we're underpaid by corporations, we have minds that are technologically wired and we are fabublosly educated. We can move up in corporations by coming in to work early and staying late. By volunteering for extra projects, in order to get noticed. Then, if your company is not interested in paying appropriately, you will have built up an excellent resume which you can use at another company that will value your assets. Lastly, she told us of her personal story when she was living in a van in Berkeley, California where she waitressed for $400 a month. And she took some of her own advice. And, boy, did it pay off! Anyway, I there is lots more information if you go to hear her speak or if you check out her weekly CNBC show.

Anyway, I am glad I went and I look forward to getting the book.

I Should Always Pay Attention to the Teensie, Weensie Print, Even if Means Bustin’ Out My Glasses

In two weeks, I’m going to Chicago for a long weekend with a college friend. We live on opposite coasts, so I haven’t seen her in a long time. I compared flights, but eventually used AirTran, which wasn't bad ($232) considering my dates and times were pretty inflexible. I also got a 50% bonus frequent flyer points by paying with my MBNA-issued American Express card. I was in charge of booking the hotel on Chicago’s Magnificent Mile, which I did using hotels.com. One major caveat is you have to prepay the entire amount instead of just a credit card to guarantee your stay. Also, there’s a $25 change fee. I did not know about the second problem until I had already booked my stay--and in hindsight I wouldn’t have booked it if I had read the fine print! Two weeks after I booked my hotel stay, the price went down by $28 bucks. But, because of that change fee, it wasn’t worth the hassle. I know, I know! That’s a whole three bucks, which could be breakfast or a really cheap lunch. I’d rather skip lunch and make up the $3 on another route. Or, I could do both and save $6. But I didn’t. I’ve still been checking, but I haven’t found a big enough drop in price to offset the change fee. I would have been better off reading the fine print in the first place.

As far as other aspects of my trip, I hope to spend less than $800 for my entire 4 night stay. So, since I’ve already spent $232 on my flight and $204 (my share) on the hotel, so that’s $364 left I have to spend while I’m there. I’ll see how that goes. I am hoping the Windy City doesn’t blow all of my money away.

I Love Suze Orman

Suze Orman's new book, The Money Book for the Young, Fabulous and Broke, hit the stores today. I'm excited about it, but I'm waiting to buy it used. I definitely consider myself a YFBer, but hopefully I won't fit in that last category for that much longer. I watch her CNBC show on a regular basis, but since it's on Saturday evening and late nights I am sometimes asleep or out and about enjoying the NYC night life. Two important points I've picked up on her show that are relevant to me are:

• Contribute to your 401(k) plan up to the company match, then max your Roth IRA, then contribute to a 401(k) plan. Of course if you have a 401(k) plan that has a company match and you don't contribute enough to get that match, you're passing up free money. Unfortunately, I have never had a job with a company match. I started my 401(k) plan as soon as I was eligible in 2002. I currently contribute $100 per pay check. As of yesterday's close it was up to $8,612.24. Not so bad. I am aiming for a 5 figure amount, and if I keep it up, I'll be there by the beginning of September. As for my Roth IRA, I finally opened one last year with $400. I should have pulled money out of my savings account and maximized my Roth IRA, but I didn't. I have funded $500 so far for my 2004 contribution. I'll defiantly max it by the April 15th deadline, and if I don't have the money in my general savings account, I'll pull it from my Emergency Savings. Even if I really need the money, I can always pull my principal out without penalties, no really, it's true. Then I'll start contributing for my 2005 contribution, which I hope to max.

• Anyway, back to Suze Orman, her second bit of advice that was relevant to me, is not to invest in bond mutual funds (well, at least not for my age group). Suze stresses that there because they're funds they have no maturity date, so you always get rolled into new bonds with new returns. While they're okay when the interest is low, bond funds don't do as well when the interest rates are high. Another reason not to invest in bond funds at a young age is that they are pretty conservative, and younger folks can generally tolerate more risk in hopes of a higher return.

I am going to see Suze Orman at the New York Apple Store tomorrow night. She just announced this stop on her book tour, so I'm hoping it's not terribly crowded. Also, if you want free excerpts of The Money Book for the Young, Fabulous and Broke, click here.

My Monthly Expenses

Okay, this is a very rough budget. I don't like to budget at all. My expenses for certain things are very exact, like rent or electric/gas bills. But, for my tuition it's a lot more flexible because I pay out of pocket for it each semester. And, I don't always take the same number of classes each semester. Sometimes I use the money in my checking account, other times I take it from my general savings account, which is probably not a good idea. In any case, I don't set aside a certain amount of money. Ditto with vacations. I probably need to work out a plan so that money is in a separate account so I know exactly how much I'm spending.

Other expenses, like $76 of my transportation money and my 401(k) contribution, are pretax.


Rent 700
Cable 42
Cell Phone 120
Gas/Electric 65
Internet 18
Laundry/Dry Cleaning 30
Transportation 104
Tuition and Books 400
Vacations/Ent. 125
401(k) contribution 216.67
Clothing 150
General Savings Acct 216.67
Gym 20
Incidentals 250
Groceries/Lunch 225
TOTAL 2682.34

As far as my monthly income, I get paid every other week which is 26 times a year. After taxes and 401(k) contribution that's about 2504.67 per month. I know these calculations are off b/c I double counted my 401(k) and some of my transportation costs, but the next time I'll count my taxes. I also get another $225 or so from other sources and interest income, for a grand total of $2729.67.