The Importance of Keeping Notices (Part 1)

Update: this week I am in Ireland, working on a school project, so I've been largely away from a computer. I return at the end of the month, in which I will give you my updated net worth.

Right before I left, I discussed opening an account with Vanguard. I choose Vanguard because it has low expenses and an excellent fund that mirrors the S&P 500. To fund the account, though, I had a mini-disaster. I used 1000 from my main checking accoung and 1000 from my "emergency" savings at ING. It took a few days for Vanguard to withdraw the money, but when they did--they made a huge mistake, and withdrew $2000 from my main checking account. I didn't have anought money in the account and it caused my account to be overdrawn by $462! I tried not to panic anc called Vanguard to sort out the problem. The initial customer service representative transferred me to someone else, who was able to help me. Thankfully, I printed all of the confirmations I received regarding the initial funding, which I don't always do. The rest of the details are pretty long, but in the end I transferred the money from ING to my main checking account to keep my account from being overdrawn, and Vanguard offered, without any prodding, to pay any fees associated with their error. Vanguard was incredibly responsible by admitting they made a mistake an immediately attempting to remedy it. But because they were so forthcoming, it was an indication to me that this probably wasn't the first time a situation like this came up. Even though I often end up with a sea of papers, I learned the important lesson of keeping confirmations and notices. Next time, I'll write about my issue with MBNA and how keeping the notices came in handy.

I've Been Rich, I've Been Poor, Rich is Better

I've Been Rich, I've Been Poor, Rich is Better by Judy Resnick targets women who are financially dependent. Resnick is a money manager and principal of The Resnick Group, a financial services firm. She writes from a generation (and mindset) of women that grew up believing that men in their lives would take care of them. I am obviously not its target demographic, but I read the book because I was attracted to the title.

Resnick intertwines her personal story with that of her clients, including a lot of solid advice. Her life story is a very interesting one. She was dependent on her husband, then after her divorce, on her father to provide for the needs of herself and her two children. After her father's death, she was left to fend for herself. It never occurred to her to get a full time job until she was 40 years old.

As far as good points to this book, there are many: this book was published in 1998 and like many personal finance books of its time it is stock market-centric. Of course, the recent tax law changes are not included. I liked the fact that Resnick doesn't talk down to her readers, even though they are women who, presumably don't know much about finances. Also by telling her story, she connects with her
readers in a way that is more personal way than someone who has not had the same challenges.

I did feel a few key discussions were missing from the book. As a money manager, she should have seriously discussed asset diversification, not just in terms of stocks and bonds but tax-exempt investments (like bonds) and real estate. In the few paragraphs in which she mentions real estate, she refers to it as "speculating" but neglects to mention the tax advantages of owning real estate, especially one's own home. But then again, I have the benefit of hindsight.

She neglects to mention that women insist they be included in a spousal IRA, provision of the Taxpayer Relief Act of 1997. The exact women she discusses could benefit from women the act by insisting that they have their own retirement money set aside. If you want to read more about Spousal IRAs, feel free to start here.

For her section on estate planning, she tells her readers following her father's death (and source income) "I was desperate. If only my father planned for his death more wisely." Her feelings while incredibly honest are completely void of any personal responsibility. In that regard, Resnick never discusses volunteer work or continuing education for financially dependent women. By not addressing women's
own potential for self-sufficiency she overlooks the fact that we can, in fact, be our very own best asset.

This book was very hard for me to rate. As a stand-alone book, and for financially dependent women, it would be a 3.5. With a supplemental book, I believe that it could be a must have for any financially dependent woman.

I Finally Maxed My Roth IRA

This week I have been very busy with school, work and the end of tax season. Last Monday, I received a letter from Transamerica Funds, the custodians of my Roth IRA. I originally opened an account with Transamerica because they had an S&P 500 based fund and was able to contribute a low $408 to open my account. In the letter, they indicated that, upon shareholder approval, they would liquidate their S&P 500 based fund by the end of the month. I still needed to make a $2000 contribution to my Roth for 2004, anyway, so I took that opportunity to open a Roth IRA with Vanguard. I also am in the process of transferring the remainder of my Roth IRA to Vanguard. I’ve always wanted to open an account with Vanguard, but they have a $1000 minimum, and I couldn’t afford to make that kind of contribution last year. After confirming a few account details like custodial fees, I opened an account online. It was incredibly easy and took about 10 minutes or so. I finally was able to max my Roth IRA, according to my plan. I took $1000 from my mid-April paycheck. I am abstaining from a lot of extras this month to be able to do that. I “borrowed” the remaining $1000 from my ING Emergency Fund. It wasn’t ideal, but I’m glad I was able to max my Roth IRA this year. On another note, my Quicken arrived, so I will probably be up late tonight setting everything up.

Deal Alert: Cheap Quicken Software

In earlier posts, I discussed my need to keep better track of my finances. I currently keep track of everything in Excel and assorted size Post-Its. (If you've ever seen the movie Bruce Almighty it's sort of reminiscent of the scene in which Jim Carrey's entire room gets covered in Post-its. I know, scary.)

I was undecided between Microsoft Money and Intuit's Quicken, but they both seem to have equally unfavorable ratings at Amazon.com. I decided anything either one would be better than my current system. After doing some research, I eventually for Quicken 2005 Premier Home and Business. I needed something to track my small business which should net in the neighborhood of $3200 this year. I visited the Quicken website, where I learned that it was going to cost me $79.95 if I bought it from them. Of course, I decided to do some comparison shopping, assisted by Froogle.com (Google's "smart shopping site"). I found someone selling it for $23.95, and they swear it's new in the box. My total cost was $32.20 with insurance and other S&H charges. The seller has a feedback rating of 100%, so I hope everything goes well. They have several copies so if anyone is considering it. . . now is a good a time as any. Want the link? Click here.

The Numbers: My April FICO Scores

I just received my FICO scores on Tuesday directly from the source, the folks at Fair Isaac & Co. FICO scores range from a low of 300 to a high of 850, and you have a different FICO score from each of the three credit reporting agencies. My scores were 775, 753 and 746. The median score in the apparently is 723 (according to Fair, Isaac's website), so I'm doing slightly better than the average Jane.

After a score of 720, you can pretty much qualify for the best rates. There are great informational booklets, if you want to learn how to increase your credit rating. Don't feel like reading it? It's okay. . . the short version is here.

I can't wait until September first though, when I can FINALLY get a free credit report every year. Up until now, I've been shelling out the dough periodically. Unfortunately the free credit reports don't include your FICO score, so when the time comes, I'll have to buy that separately. The Western and Midwestern states are the only ones currently eligible (unless your state has different laws), click here. If you're already eligible, what are you waiting for? Click here to get started.

Administrative Notes: You Can Now Make Comments, Email Posts

Since my very first blogs in February, I've been making ongoing updates and upgrades to this site. I've upgraded counters, so I can see how many people are checking me out. One of the options is I get to see where you (all of the wonderful people reading) are from. The overwhelming majority of people are right here in the United States, but I've also gotten readers from Canada, Singapore, and one each in Philippines, Japan, Mexico, Portugal, Spain and Austrailia. To each and every one of you out there in computer land, thanks for checking me out. Even though my discussions on Roth IRAs and 401(k) accounts may not be directly relevant to you, I hope some of the tips on saving money at the grocery store or late fees, are helpful.

To that end, please feel free to leave comments on any article you read. I've updated so now anyone can comment. Also, feel free to send me an email--it helps me stay on top of my goals. It may take me a while, but I will always respond. You can also now email posts to yourself or others. Click the envelope icon below. You can also check the stats yourself my clicking the circular icon on the left. Thank you.

Trimming the Fat and Stuffing My Wallet

In an earlier post, I discussed the fact that I gained a lot of weight recently. Now, I am working to shed the extra pounds. I'm a city girl, and by that I mean I don't really cook, I eat out regularly and I buy convenience foods. I am willing to sacrifice some of that, but I don't like to feel like I'm being tortured. Here are my goals by meal, and a few tips I learned along the way:

• Breakfast: Milking the free Dairy. I get free soy milk at work, so I eat cereal at work instead of using the office cafeteria. I buy cereal from the RiteAid and CVS drugstores (which actually costs less than my local grocery store). My total monthly savings is about $15-20.

• Lunch: Even as a kid, I hated bringing my lunch, so this is very hard. I usually buy my food from the company cafeteria which is subsidized by my employer. It usually costs me about $5 for very filling meal. (Yes, that's a cheap lunch in Manhattan.) I try to bring lunch about once or twice a week (that's a stretch). Otherwise, I eat some snacks that I've brought from home, so I eat less food for lunch.

• Snacks: I have stock up on apples, grapes and peanuts, all of which I like and are pretty good healthy snacks. Other times, I buy the $.25 bag of chips at my local deli. I try not to buy the larger bags because I never "save" them for later, as is always my intention. It doesn't work for me. I've tried.

• Dinner: I check out recipes online and try to experiment from time to time. I make it a point to try recipes for dishes that I already like, such as Pad Thai or Salmon Teryaki because I'm more inclined to actually cook them. Some of the more successful meals turn into lunch the next day.

Here are some general grocery shopping tips that have been helpful to me:

• Shop the Sales. I usually check the sales online before going to the store, so I know which grocery store to shop at that week. I don't think its a good idea running all over town trying to save a dollar here and a dollar there, and if I had a car and had to pay for gas or maintenance, I don't think it'd be worth it! If it works for you, go for it.

• Buy in bulk. I buy large quantities of products like ketchup or cereal that I use regularly on sale, especially those that have expiration dates far off in the future. I also save money by not waiting until I need it at whatever the going price is at that moment in time. This may not be the best idea for perishable foods, see the post below.

• Work that freezer. In my experience, I've learned some interesting things about freezing foods. Most importantly, sour cream doesn't freeze well. Well . . . it freezes just fine, but when it's thawed out, it's a disaster. (Don't laugh, but I just figured this out a few months ago.) Click here for tips on freezing food, so you don't have to learn the hard way, like I did.

• Use Coupons. I don't usually buy a print edition of the newspaper, but when I do, I look for coupons on products I already buy or am willing to try. Even if its a good deal, If I end up letting the product expire, it's a waste all around. There are also tons of online resources for printable coupons.

• Club Cards. I always use the club cards from each store. If you're reluctant to give your personal information, then don't. I personally don't want the stores tracking my buying habits, so I make up a name and a fake address, so it doesn't go to someone's real house.

Here are some grocery shopping (and weight reducing) tactics that usually backfire for me:

• Skipping meals, because then I get hungrier and buy more food later.

• Buying large quantities of junk food in an effort to save money. This usually fails because I just eat more junk sooner.

• Buying large quantities of things that I don't usually use just because they're on sale. Hey, if I don't like the taste of Boca Burger's chicken-like patties (which I don't), I'm not going to like them any more just because they're 15% off.

BankRate suggests other ways to save money on groceries. Please feel free to post your own ideas for saving money on your food bill.

March Net Worth

At long last, here is a summary of my net worth as of March 31, 2005:

	2/25/05	3/31/05	% change
ING Emergency	3870.30	4000.53	103.36%
ING Other	32.22	302.22	937.99%
Checking	403.42	1449.62	359.33
Roth IRA	924.00	14232.40	154.05
Stocks	931.95	801.55	86.01
401(k)	8546.00	8716.81	102.00
Student Loans	(21298.79)	(21285.62)	99.94%
Credit Card	(488.00)	(542.50)	111.17%
Payable	1	(935.00)	-95535.00%
TOTAL	(7077.90)	(6089.34)

Overall, my net worth increased $988.56 since February 25th. A few things are out of the ordinary, which I explain below. In the future, I intend on updating my accounts from the last day of the month, and posting them a few days into the new month.

First, in March I received three paychecks, instead of my usual two because I am paid every other week. I worked overtime, so I had extra income. I contributed $500 to my Roth IRA, and I need to contribute $2000 more for my 2004 tax year contribution. I hope to contribute $500 more in my mid-April paycheck and "borrow" the rest from my emergency savings. To that end, I have reluctantly decided to stop contributing to my 401(k) plan for a while effective my mid-April paycheck. I was reluctant because I wanted a $10,000 balance for the "feel good" effect. But reality set in. I don't receive an employer match, and since I am already having trouble maxing my Roth IRA, I decided the best use of my limited funds would be to focus on the Roth. It was a tough decision, but I think it was the right decision.

Here are some general notes of interest on my net worth:

1) I have a small off-line business. I've had it since 1998. My income generated generated directly directly correlates to the amount of time and effort devoted to the business, but I've generally made money off of it. I have a separate checking account and credit card for my business. For my purposes here, I try not to co-mingle my personal and business accounts very much except for my personal draw. However, from time to time, I do pay my business bills with my personal accounts, especially if my business checking account is running low.

2) My payables are usually utility and rent payments which have not cleared.

3) I usually pay off my credit card every month, but there's usually a balance showing. That is the amount currently posted to my account.

4) My brokerage account is lower than last month, but it's not because my stocks plummeted, it's because I took some money from my money market balance and added it to my ING account.

5) I actually added $300 more to my 401(k) account so it has declined in value in March.

6) I currently keep track of all of my finances in Excel. I will purchase Quicken (most likely) or MSN Money in the next few weeks.

Once Again, ING Raises its Rates

For the third time since early March, ING Direct has raised its interest rates. It now pays 3.0% interest. I’m glad that ING is staying competitive, although it still doesn't match newcomer EmigrantDirect's current 3.25% APY. But it's even better than VirtualBank's current 2.8% APY. If you don't already have an account, ING offers a $25 bonus for new accounts with a referral. You can email me if you’re need one. There is a $1 minimum to open your account, and after 30 days it's all yours. (In the interest of full disclosure, if you decide to open the account, I would get $10.)

Even if you don't choose ING, other internet banks are very competitive compared to local brick and mortar banks. Check BankRate.com for a list of banks paying high interest for money market or savings accounts. The best time to start saving is now.

Book Review: The Richest Man in Babylon

I read a lot of books. My a hour and a half commute on public transportation every day definetly helps. Besides books for school, I tend to read a lot of personal finance and real estate books. I usually check out books from the New York Public Library, which has a very large collection. Even if the book isn't in my local branch, I can reserve it and they'll send it to my local branch. If I come across a book that I like, and I know I am going to refer to it on a regular basis, I will buy it.

After reviewing The Automatic Millionaire last month, I made a few referencecs to George Classon's classic book The Richest Man in Babylon. I realized if I was going to be reviewing personal finance books, I better start from the beginning then work forward.

As you may have guessed, my all-time favorite personal finance book is The Richest Man in Babylon. The first time I read it, I was 17 and I immediately loved the ideas pratical ideas presented. It's written in an old style using "thy purse" and "thou wilt not", but as soon as I got used to that, it was a pretty easy read. The main thing I learned (and later implemented) was "a part of all I earn is mine to keep", when Classon suggests to readers to save 10% of their income. Later in the book, there are "Seven Cures for a Lean Purse", and Michael at It's Your Money has a good description of the "Seven Cures for a Lean Purse" presented in The Richest Man.

The Richest Man in Babylon is definetly not a blueprint. If you're looking for exact places to stash your money or how to buy a house, or which credit cards to pay off first, this is not your type of book. More than than anything, this book is inspiration to break the paycheck-to-paycheck cycle.

I rate it a 5.

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