Monday, December 11, 2006

Have YOU Seen My Identity?

After trying out several clever titles, I decided on THAT one.

It's true, though. MY IDENTITY WAS STOLEN. If it's never happened to you, well, step into my shoes for a minute. It's scary and it sucks. In my case, only one account has been compromised. All the other accounts are being closely monitored. While this is considered identity theft according to the people I've had to deal with recently, it's more like Account Number theft for me.

Here's some resources I've found helpful:

The FTC's ID Theft Website
The Identity Theft Victim's Kit

Overwhelmingly, the most frustrating thing is that the same incompetent customer service representatives who can't ever help and have to transfer you to to endless departments are the EXACT SAME PEOPLE working in the "Fraud Alert" departments. I've spoken to three different people at the bank in question, and every one told me something slightly different. Whatever. I've got so many people working on this now I'll just clog the system until it's resolved.

BTW, they said my card was most likely skimmed at a restaurant or something. Everything has been consistant with that sort of fraud. So, my advice is to pay cash at restaurants and watch retailers like a hawk.

Saturday, December 9, 2006

Health Savings Account

Last week, allergies kicked in for me. Snarf. You may have noticed there were no posts for a couple of days . . . or since I'm only aware of 3 people that read this blog, maybe not. Anyway, I had to go to the doctor and update my allergy-prevention strategy, so I'm mussing about medical expenses.

I don't have much to complain about, I'm a pretty healthy individual. I do take some maintenance medications that I buy in bulk via mail order. I also take advantage of my Health Savings Account. My company offers one to all the employees. During the enrollment period, I decide what my contributions will be for the next year. This year, I decided on $2,400. Every month $200 is deducted from my check for this purpose. However, I have the $2,400 there to spend the first day enrollment choices kick in. (I could theoretically spend all $2,400 the day I get it.) I get a debit card for a small fee of $4 that I can use anywhere you can use a credit card. And . . . drumroll . . . all my contributions are pre-tax!!

On the day of my doctor's visit, I used it to pay the co-pay at the doctor's office, and again to fill the prescriptions she wrote for me & to get some over-the-counter allergy medicine.

According my HSA website, I've saved $400 in taxes this year by putting money I would have used for health purposes anyway into this account. It's really easy to use - about the only thing I have to do is sometimes send in a receipt for health purchases I make at grocery stores. They send me a letter asking for verification of the charge, and I tape the receipt to a piece of paper and fax it to them. They update my online account, usually that day.

Besides doing this, I always ask the pharmacist for the generic version of a drug, or an over-the-counter equivalent. Last year, when my eyes swelled up and refused to open when exposed to some new plant that blew into town, I was prescribed a $200 eye drop. The pharmacist pointed out that they were selling almost the exact same thing over-the-counter for $10.99. (It pays to drop by the independent pharmacy that's been in your town forever and ask their opinion on your prescription.) You can sometimes bypass the doctor completely by going to your pharmacist.

Wednesday, December 6, 2006

The Under-Thirty Honor Roll

Defying generational stereotypes since 1976! The Under-Thirty Honor Roll is a list of young financial bloggers.

Weblo: New-Age Financial Opportunity or Complete Bullsh*t?

I got a comment from an executive at for this post. If you read my post, please make sure you read theirs so you get an accurate picture of the whole deal. As the disclaimer says, I just tell you what I think, and you make your own judgements from there. Thanks, Worst Financial Blogger Ever.

As I'm drifting off to sleep last night, the local news show I had on actually said something that made me sit up and crank the volume. There is a new website called that allows to you to "buy" cities and famous landmarks, then either sell them for (hopefully) a profit or keep them for the ad revenue.

Confused? So was I. It's like a monopoly game, except with real money, and you're playing with everyone in the world. You pony up real cash to buy, say, your hometown for $2. If there is someone out there who wants to pseudo-own your hometown more than you do, you can sell it to them for, say, $4. Or whatever you decide on. Or you can keep your hometown, and if that page gets enough hits, someone may want to advertise on it - and lucky you gets to keep a share of the profits.

In the interest of good investigative journalism I went undercover on the site to determine whether it was a good financial deal or not. I think we all know which way this is heading, but regardless, journalistic integrity prevailed.

The first thing is discovered is that while it is free to join an purchase property, what they really want you to do is upgrade your membership to one with a monthly fee. They range from $4.59 - $29.95. At least we know the owners of the site are making money. You get a slight discount on purchases the higher up you go. Among my free goodies, though, was some pretty random stuff, like a free celebrity fan site. Huh? Why do I want that again? Besides, Benjamin Graham is probably already taken.

Okay, so after some account activation drama I'm in the bowels of the website. It comes across as a really cheesy gaming site, so I'm pretty turned off all around. I've got my eye on my CharmingHometown, USA. Hmmm. Seems like someone beat me to it. I click "yes" when weblo asks me if I want to make an offer, and I'm immediately brought to a page where the input fields are malfunctioning.

Hmmmm. I navigate back and try to buy a Suburb of CharmingHometown, and that's available . . . for $5. I thought it was only supposed to be $2? I'm peaved about this, but I'm also caught up in the fact that my family actually owns alot of property in Suburb of Charming Hometown, and how cute would it be to virtually own it? I can kind of see the appeal of this. However, this is supposed to be a moneymaking venture.

I navigate back out of the "buy properties" page and go looking for CharmingHometown's Weblo site. This is where all those ads are going to be posted that are going to be the income stream for the owner . . . and there are certainly some ads here. I'm also seeing space for a future community forum, a poll, and a place for community members to post their profiles.

Well, I thought I'd have to hunt for this information, but there it is right there: the owner of CharmingHometown has made
$.089 thus far. I'm going to assume that he paid the advertised $2 fee for the property. So far he's gotten a 4% return on his money - better than most banks are paying on a savings account. Since it's ony been up for maybe a month (not sure when this wesite was born), that's really not bad. If his inital $2 investment continutes to make him .08 cents a month for five years, he will have made $4.80. Not really worth writing your virtual home about.

While I can't sneeze at a 4% return, the micro "investments" mean you'll have to buy a ton of stuff on Weblo to make any real money. You're also taking a risk that the venture will continue - as far as I can see on CharmingHometown's Weblo site, there is NO reason for me to go back. I seriously doubt it will take off as a social networking site, a poll site, an online yellow pages of business ads, or any of the multitude of things it's trying to be. The design of the site is very poor, and since you have to be a member of Weblo to see a property's homepage anyway, not alot of people are just going to drop by. (According to the response I got from Weblo, it IS possible to "just drop by." I guess I didn't spend enough time trying to figure it out, so went back. Yes, you can look at properties without logging in - I'm sorry for the error, you're investigative journalist has failed you. However, most of the homepage is dedicated to getting people to sign up, so browsing isn't immediately apparent. I had to LOOK for a way to do it among the multitude of tiny links at the top of the page. In my opinion, that's a bad thing.) All you've got left are the "bragging rights" to pretend-owning a particular place, and since the few people I've explained Weblo to were completely unimpressed, well, you don't even have that.

I'm putting a big bullsh*t stamp on this one.

Tuesday, December 5, 2006

Larger Home Down Payment or Invest the Money?

It's been bugging me for awhile, and I found a good thread on Young Dreamers that helped me settle this question for now.

When we first talked with our mortgage broker about a loan, he mentioned that he also invested in real estate. We started talking about Robert Kiyosaki and Rich Dad, Poor Dad, and he made the recommendation to us to not put any money down in order to save it as capital for future projects, buy a house, live in it for a year (so we wouldn't have to pay taxes on capital gains), then rent it out. Rinse & repeat.*

That wasn't what we were planning at all. We planned on putting down the largest down payment we could. One of our 2007 goals was to have $40,000 saved for this purpose.

Should we a.) put down the whole $40,000 we've planned to have saved for this goal, or b.) should we put down nothing as the mortgage broker/Robert Kiyosaki convert suggested in order to invest that money in better opportunites for higher returns?

I've decided to go with option C. We are going to put down enough to cover 20% of the home price. So on a $140,000 home we'll only be putting down $28,000. That keeps too much liquid capital from being tied up in the house (and if Hurricane Katrina has taught us anything, it's that our home should NOT be our largest asset).

It also means we won't being paying PMI (private mortgage insurance) - a huge money-waster since it's basically just a penalty fee for having less than 20% equity in your home. We would still have enough capital left over for a downpayment on a nicer home a year later, and of course we'd keep adding to it during the year. The rent money could help pay the new mortgage. **

When I tried to tackle this problem by figuring out which option would leave us richest, I found that there were just way too many variables (home appreciation, interest rates, etc.) that had to be guesstimated. The strategy is kind of middle-of-the-road, and just makes me feel comfortable.


*Well, we still haven't bought a house, but for personal reasons. Husband and I aren't sure about staying in Big City, USA. Big City also has some major property taxes that actually make renting cheaper (as long as the difference is invested, of course, and you live in a shoebox with low-ish rent.) I did the math on my own, and double-checked myself with Kiplinger's Am I better off renting? calculator. Turns out we'd have to live in a nice starter $140,000 home for 13 years to make it worth our while to buy. We planned on moving well before then.

**Actually, we'll probably be building the second home on property we purchase. Most new $150,000 homes could be built for $100,000; the extra $50,000 is the builder's profit when he sells it!! Or so says my contact in the industry.

Monday, December 4, 2006

Why Save Money?

Another post?? I should have started this blog a long time ago. It's very theraputic.

So, why bother with all this money saving? Why not just live for today? It's a good question. If you don't answer it honestly you might just exxxxxtreme save as a sadistic form of self-punishment, then act all snobby to your friends about how much you're saving compared to them. And nobody likes THAT girl/guy.

As I figure it, there are two ways to be "free." One is to live without money at all, like Jesus, Buddha, or the guy I saw walking around downtown in a pink bikini. The other way is to have enough money that you can live off the interest of that money. In either scenario, you're not beholden to any corporation, boss, client, government, or other provider. You are free to do what you want.

I like shoes, and living in a house. So I'll go with option #2. But I really wouldn't want to knock anyone going with option #1, it might be the more noble route, especially if you use the insight you gain to help others. Option #3, just winging it and thinking everything will turn out all right in the end, is crazy.

Now that's why *I* save. I never thought there could be any other reason, but Single Ma has different reasons entirely! Binary Dollar is also looking for freedom.

Max Out Roth IRA or 401K?

The contribution limits for a 401K in 2006 were $15,000 Note: the 2007 limits were announced, and it is now $15,500. The Roth IRA contribution limit in 2006was $4,000, so the most one person with these resources available to them could put away in retirement-specific accounts was $19,000. So the most Husband and I could have saved last year in retirement accounts was $38,000.

That would be great, but it's really not something we can do right now. Last year's total contributions to retirement accounts was more like $24,000. So if you can't contribute the max to both, who do you put the most money toward?

First off, you have to put enough in a 401K to take advantage of any matching your employer does. So max that out first. What happens next depends on when you want to pay taxes - now or later. It gets personal at this point, because that depends on whether you think you think you may be in a higher tax bracket when you retire. Right now, it looks like we will. So I'm better off shoveling money into our Roth IRAs.

Even if you're not sure, or think your tax bracket may be slightly lower, I think it's still ok to max out a Roth IRA first just because you don't want to take the chance of a crazy democrat raising taxes to obscene levels the year you retire (I don't claim a political party, so I like to make fun of both equally). Peace of mind, you know.

EmigrantDirect vs. Vanguard

Financial bloggers mention EmigrantDirect alot and it's 5.05% rate.

My Vanguard Prime Money Market account is getting 5.09% these days. There is no fee, but there is a $2500 minimum.

Write it Down, Make it Happen

I was reminded today of a phenomena that might make sense for a blog about trying to become financially independent. The book is called Write it Down, Make it Happen by Henriette Anne Klauser. Back in my hippie/art degree days I was really into this sort of thing. Even though I've put away the Tibetan wall hangings from Urban Outfitters and Be Here Now, I still use this idea all the time.

You really don't even have to read the book. It's all right there in the title. Anytime you want something, write it down. Keep the piece of paper or throw it away, it doesn't really matter. (Our method is to put them under the mattress.) Every time we've really wanted something, and realized it was almost completely out of our hands to make it happen, we've written it down & stuffed it under the mattress.

We used it to find Husband a job he loved; find me a job in Big City, USA; to find a house (ongoing); and to find a dresser to match our bed and a multitude of other small things.

The dresser/bed story goes as follows: we bought a bed on Craigslist. I LOVE this bed. It's from the now out-of-business furniture store Storehouse. We paid $750 for this $1400 bed, year old, GREAT condition. Since the dresser we had inherited & refinished in a light birch color didn't match anymore, I set out to find a dresser. Well, the matching dresser at Storehouse was in the $1300 range, so that was definitely not happening. I combed Craigslist for anything with dark wood color and contemporary feel, nada. Eventually I got tired of actively looking for something and wrote down what I wanted: a dresser in a wood that matched our bed, $400. I guess this was last summer. Randomly 2 weekends ago Husband saw that Storehouse was going out of business, and it was the last weekend of the sale. We immediately went over there and bought the last dresser they were selling for $411. Yes, it matches the bed perfectly.

That's a more superficial example, but you get the picture. This method takes a lot of patience. You don't get what you want right when you want it. I couldn't tell you why it works; it just does. And it seems to work best for the kind of opportunities you just stumble upon, like dream jobs or incredible furniture deals. Fortune, of course, favors the prepared. You still have to go out an actively look for a job, mention to everyone you meet you're looking for a job, and send out resumes. However, you may have noticed that the best opportunities that come your way were brought about be seemingly random circumstances that you never could have engineered yourself. I think writing it down just helps those circumstances come together.

Financial Goals for 2007

Next year, the goal will be to put more money toward a home downpayment. The goal is $40,000 as a downpayment, with at least $20,000 still in taxable accounts as an emergency fund. We're going to be putting less into our retirement accounts, because while retirement planning is important, 33% is really kind of overdoing it. We currently have about $33,000 saved for the downpayment/emergency fund goal. 2007 will look more like this:

Retirement Savings 22%
Other Savings 28%
Living Expenses 50%

The goal of saving $28,000 for the downpayment/emergency fund in 2007 is pretty tight.

However, 2006's goal of $20,000 seemed tight too, but we did it somehow and then surpassed it. Overall, our net worth should increase to $100,000 by the end of 2007. We're definitely going to celebrate when that happens.

Sunday, December 3, 2006

2006 - Where the Money Went - Take-Home Pay

I'm full of end-of-the-year statistics right now. This for our disposable income only:

Retirement Savings 33%
Other Savings 17%
Living Expenses 50%

Saturday, December 2, 2006

Holiday Gift Crisis

Every year we set per-person limits on our holiday gifts. The year we were making less than the proverbial church mice I'm always comparing us to, our gift limit per person maxed out at $25 for family members. (Full disclosure: that was 2 years ago.) This year, I'm spending $30 per person, or $60 per couple. I have 10 people to buy for, so that's $300 this year on gifts. At work, we give nominal gifts to just a few people or nothing at all (as is the custom in our offices.)

My husband and I generally only exchange gifts once a year. He gets something for his birthday, and I usually get something for our anniversary or my birthday. This year I spent $250 on him, and he'll spend almost the exact same amount on me. That comes out to $62 for each of us for the 4 major holidays marked by gift-exchanging: Valentine's, birthdays, anniversaries, and christmas.

According to MsMoney, the average American buys gifts for 15 people and spends an average of $75 per person. Budgeting Babe reposted the article. I was disappointed that on all of the personal finance blogs I read, nobody really got into what they were spending per person.

So brings us to the crisis portion of this holiday's gift-giving. I'm worried that we are being too stingy with our christmas gifts this year. I don't want to jip anyone, but I can't help thinking that $75 per person (in my case, that would be $750) seems excessive.

According to the US Census Bureau the real median income for American households these days is about $46,326. That means most people spend .16% of their gross income per christmas gift. Because of our joint incomes, we are making much more than the average American household. However, what we are actually living on (and not saving) is significantly below both our income and the national household income. So if I wanted to give everyone a fair gift based on a percentage, do I use what I actually allow myself to spend or the gross?

And anyway, that formula is based on Most People. And Most People aren't saving nearly as much as they should, so they can't be counted on to give reasonable christmas presents. Which is why I was curious as to what financially responsible people usually spend.

In My Open Wallet, Madame X spent about $45 on a gift for a parent. That seems reasonable to me . . . not nearly as heart-stopping at $75.

I guess the potential backlash here is that people are going to think I don't care about the sentimental value of the gift. Let me premptively strike those thoughts from your mind: every financial article on holiday gift-giving worth it's salt says to make a budget and stick to it, and I DO care about what I'm giving to people. I try to support local business, buy items that are earth-friendly, AND keep the recipient's desires in mind. I just want to make sure my gift budget isn't going to offend anyone, or put me on the wrong side of frugal vs. cheap.

Of course, anyone who would make a snide comment about a well-intentioned but modest gift probably didn't deserve the gift in the first place.

So I guess I'll stick with my $30 rule this year. (Though I might get something a little nicer for our parents.) Maybe I'll bump it up some next year.

(Here's how Divorce to Financial Freedom handled the same christmas dilemma.)

Rebalancing Today! Yippee Skippee!

I started this blog today probably because I'm knee-deep in rebalancing our retirement accounts. I tried to wait until Christmas, but I got so excited I just couldn't stand it.

The goal of rebalancing this year is to move Husband's money from 100% in Freedom Fidelity 2040 to some better performing funds with higher Morningstar ratings.

My Roth IRA:

Vanguard Mid-Cap 100%

My 401K:

Lord Abbett Small Cap 30%
Fidelity International 35%
Vanguard Wellington 35%

Husband Roth IRA:

coming . . .

Husband 401k:

Fidelity Growth (Large Cap) 30%
RS Partners A (Small Cap) 30%
Fidelity US Bond Index 10%

MSN Money 20-Somethings Article

More dire predictions on the financial state of my contemporaries.

Here's the link:

Your 20s: See How Your Wealth Measures Up