Fees & the tiny investor

Over the past few months I've invested in 12 different individual stocks. (And I have my eye on at least 6 more, but it will take more time before I'm able to purchase those.) All of the stocks that I chose were trading at $150 or less at the time that I bought, since that was one of my requirements. (Most of them were actually closer to the $50-$60 range.)

I knew I wanted a large variety of individual stocks, which meant that they needed to be reasonably priced to begin with for a variety of reasons.

One of those reasons is fees.

I currently have accounts at Sharebuilder* and USAA. Sharebuilder's Basic plan includes real-time trades at $9.95 per trade and automatic investments at $4 per trade. They have other plans as well. USAA's plan gives you 25 free trades and then pricing moves to $6.95 per trade. Their trades all appear to be real-time.

My trading costs so far have gone like this:

8 trades at $4 each - Sharebuilder

2 trades at $9.95 each - Sharebuilder

2 trades at $0 each - USAA

That's $51.90 total. With the $55 I received for signing up at Sharebuilder, I've actually come out $3.10 ahead.

But of course that'll change.

For example, when it comes time to sell, I'll have to pay $99.50 to Sharebuilder and $13.90 to USAA, bringing my costs to $113.40. So the value of all of my stocks must increase by at least that much just to cover the cost of trading.

Since I have invested $1812 to date, a few hundred dollars at a time, this means that my stocks must increase in value by at least 6.258% before I break even.

To someone that's happy to get 4 point something percent on bonds and 3 point something on money market accounts, this sounds pretty risky. Every time I buy some stock, I start out in the hole. So my instinct is to buy greater quantities of fewer different individual stocks. But a louder voice in my head tells me that is wrong, wrong, wrong! The more baskets I have, the better. Spread out the risk across a variety of industries. Spread out the risk in the various industries across a variety of companies. Take a deep breath. I'm in it for the long haul. Research, be sure it's money I'm willing to lose, and then buy.

But ow, the fees. I can't help but think how much easier it would be to hit profits if I had $18,000 to invest over a few months instead of $1800. My fees would still amount to $113.40, but my stocks would only have to increase in value by just over half a percent instead of by more than six percent before I would reach the break-even point.

Of course, there is Zecco, which offers 10 free trades monthly. But you have to have at least $2500 in stock equity there to qualify, so the free trade portion will have to wait. Meanwhile though, I think I'll sign up for their regular account, which offers trades at $4.50 each. The lower the fees, the lower my break-even point. And I can gradually build up my account.

*Email me if you'd like a referral for Sharebuilder that gets you $55.

A Ridiculous Yielder for the Everyday Finance Self-Directed IRA Portfolio

I had some extra liquid cash from dividends paid in the self-directed IRA account and came across some info on Alesco Financial Inc. (AFN). It's an REIT that has been hammered pretty hard from around 10 a year ago to close to 3 today. Upon the announcement of its quarterly dividend, the stock has started to rebound and I jumped on board. Essentially, given the decline in the share price, the market had priced in a massive cut in the dividend, but that has not been the case.


The dividend had been steady at $0.31 per share for some time and the assumption given the share price decline was that the dividend would be cut substantially or altogether. Fortunately, the dividend has been announced as $0.25 payable April 10 to shareholders of record March 20.
The stock is close to $3, so this represents around a 30% yield. Obviously, this isn't sustainable, so either the share price will rise substantially or the dividend will be cut further to bring the long term yield to something around 10-15%, which is commensurate with the highest yielding sustained price stocks.

I've posted in the past that one has to be skeptical of such high yields, so you need to do your own research on this one. The big driver for me was this recent announcement of the dividend, solidifying management's view of the near term ability to continue to deliver cash back to shareholders.

I took a look at their financials. In the recent quarters, the revenue's been increasing steadily, but cash is declining. Accounts payable has blipped up a bit, but long term debt has declined. There are some offsets you may want to investigate further. In my case, I just threw a few hundred bucks at it, knowing I'm assured at least a dividend payment in the next couple weeks, which of course will buck the stock following ex-dividend, but if this housing/CDO situation turns around and the stock holds on, I could be holding a massive capital gainer with a 30% return on initial investment from dividends along the way.

www.everydayfinance.blogspot.com

House Flipping In The Real World-Part 7-Doing The Numbers

As they say at NPR, when we do the numbers we find that, well, it depends on how you do the numbers. Analysis is in the eye of the beholder. Just ask any finance guy told to justify the corporate jet. I prefer, with a few twists, to do the cash in, cash out method so here goes.

The HUD asking price was $39,900. I got it for $27,000 after some long negotiations. Dealing with HUD is tricky so a realtor that specializes in this is important. HUD picks the realtor and the realtor cannot opine on a bid but they will do so in code. "They may have an issue with this" means too low. "Perhaps in the ballpark" means you got it. Anyway, as I said before, you make money when you buy the house, not when you sell it.

Here are the cash flows (Sorry about the numbers going all over the place, programming ignorance):

Money out

Purchase Price $27,000

Maintenance/Repair 3,400

Property Taxes 3 Years 3,600

Insurance 600

Freddy and Celia Closing Costs 3,500

Foreclosure Legal Fees 750

Back Taxes and Penalties 3,000

Patricia Sale Closing Costs 500

Total Out 42,350

Money In

Rent $16,275

Freddy/Celia Mortgage Payments 7,920

Patricia Sale Proceeds 49,000

Total In 73,195

ROI = Cash In minus Cash Out divided by Cash Out=$73,195-$42,350=$30,845 divided by $42,350=72.8%. Not too shabby, at first glance. I held the property for 4.5 years so the annual return is 72.8% divided by 4.5 years equals 16.2%.

At this point, any analyst out there worth anything should be shouting "Wrong, wrong." And they would be right. You can't divide 72.8% by 4.5 years because it ignores the time value of money and a few other things but that's my story and I'm sticking to it.

There is a more glaring error. There is no expense in there for me but let's not quibble.

Let's do look at what is in there--The cost to renovate the house was only $3,400 because I did most of the work myself. It was a controllable variable. Uncontrollable variables are property taxes and penalties ($7,600), insurance ($600), closing costs ($4,000) and legal fees ($750). Actually, closing costs can be reduced significantly by avoiding real estate agents as I did with Patricia but it ain't a done deal yet so an agent still may be necessary.

What ate up a large amount of cash was FEES and you cannot avoid them but most people forget about them. If you invest in real estate, don't forget them.

BUT we still haven't come up with the most GLARING error in the analysis. The Donald and Co. would say "Don't do it this way. Use OTHER PEOPLE'S MONEY." Let's try that. You put 20% down and borrow the rest for repairs and everything else at 10%. So that is $5,400 for the downpayment and $15,350 for everything else and 4.5 years of interest payments=$31,899 plus the interest not paid you for the downpayment but let's not split hairs. Income of $73,195 minus expenses of $31,899 generates a return of $41,296 divided by $31,899 for a return of 129%, or an annual return of 29% doing it my way.

Not bad. In fact, great. The Donald is vindicated except for the fact that OPM is based on the assumption the OP are either idiots or charities because...

Who is going to lend you this money? Not HUD. Oh, there may be a government program out there that will lend you the money but I don't know about it and I wouldn't qualify. Maybe you would but I doubt it. Will a bank lend it? Lend $31,899 for a property worth currently, maybe $27,000? Remember OPM assumes you can borrow just about everything. I don't think so. Maybe Mom and Dad will lend it. Give it a try. Or private individuals may lend it but they will charge a lot more interest and take a lot more of the profits.

Please feel free to take a whack at the analysis or come up with a better one. I'm going to send this to a friend that is much better at finance than me so we will see what he has to say. For now my head is spinning and I probably made some major mistake BUT no matter how you do it you will come up with the same conclusion--yes, you can make money in real estate but it isn't as easy or painless as the guys on TV would have you believe.

Oh you temptress, TIAA-CREF

So I wrote previously about how I am trying to structure my contributions to cram as much money as possible into my retirement accounts this year. Well, TIAA-CREF just sent me a letter about this year's contribution limits for my 403(b).. and my 457(b). What what now?

Apparently I have BOTH a 403(b) and 457(b) set up for me through my work plan. I am not sure what a 457(b) is, but it appears to do the same thing that I am doing with my voluntary contributions to the 403(b). And my maximum limit on it is $14,740. Which means, total between the two, I could put away $30,240.

This has opened up whole new possibilities of cramming money into the account! I am tremendously excited. (Especially since I found out that you can only change your allocations once a quarter, and thus must plan more carefully.) So I think I will wait and see how things shake out in the next couple months as there may be some changes in my life going on, but I might be able to get a whole lot more money in there! (This would also save me a fortune in taxes, given how much self-employment income I have.) Very interesting...

Memories...

I got this e-mail today and it made me all nostalgic for simpler times, when I was desperate to just stop spending money and somehow plug the holes in my budget. Also made me miss my friend who moved away from Chicago far too soon after we met. I'm super impressed and kind of flattered that she remembers my financial goal of saving $3k when I first started the site.

Enjoy my personal e-mail chain...I'm sure many of you can relate! We've all come a long way!
(Ignore my response. I thought it added personality to the overall post, but then I realized that I just didn't know how to cut myself off. I guess that's the benefit of an editor.)

>>>>>>>>>>>>>>
From Natalia, 12:58pm Mar 16th
i just read your blog again and i remember when you set your goal to put 3k into your savings account (thats what i just made my goal, this yEAR!)- now your goal is 30K? you are RICH. congrats on how well you're doing. you are an inspiration and a true role model (and i thought role models were all supposed to be oldeR?!) ... thought i would say hi. hi. holla back when you have a sec.
xox -me

From Nicole, 8:00am Mar 18th
Ahhh... those were the days. I am seriously the farthest thing from a role model, though. Half the time I feel like I can't even get myself together, let alone help other people do their thing, LOL! (That's true!) What are you doing now? Who do you work for? Have you been doing any drawings or art lately? ...And most importantly, when are you coming back to Chi-town? Maybe this time we can actually get our schedules together for drinks!

>>>>>>>>>>>>>>>>>>

Jewels and Gems

Let's talk jewelry for a minute. A unique shining, shimmering piece can transform a girl. A great necklace can take a look from boring to bravo in seconds. Chandelier earrings, bangle bracelets, diamond studs, fake, real, you name it, I love it... and I probably own it in several styles.

I have a particular weakness for jewelry which started when I was young. As a grade schooler I was enamored by those neon yellow charm necklaces - I even bought a space shuttle charm to wear in honor of the Challenger after it exploded. As a teenager, I spent hours digging in my mom's private jewelry drawer and in her small silver heart-shaped box filled with earrings when she wasn't looking. I started buying my own jewelry in high school, and I amassed a ton of cheap plastic things that looked, well, cheap and plastic. But as an adult my taste has become more sophisticated; I'm always in search of the perfect piece to wear to complement my outfits, and now I have my own jewelry drawer filled with little boxes that I can rifle through when no one's looking.

The problem, of course, is that real jewelry is expensive. A cocktail ring can easily run $50 at Macy's. A heavy steel cuff? Forget about it. Out of my price league.

So how have I created such a great jewelry collection on a budget? Buying jewelry, I've found, is all about creativity and care. I don't buy those expensive trendy pieces that everyone from J. Crew to Banana is showing at their ever-expanding jewelry counters. True budget aficionados do a little more digging... and end up owning a lot more indispensable pieces that they love.

Here are my tips for creating a budget friendly jewelry collection that your friends will envy:

1) Collect family heirlooms. My most beloved piece of all time came from my great aunt's jewelry box. It's a sterling silver cuff that was created in Pennsylvania in the 1960's and looks like one continuous piece of thick silver twisted around my wrist. I get more compliments on it than anything, and I didn't pay a dime for it. I actually don't know how I ended up with the piece, because most of her pricey stuff (and she had a TON of that) was given away or sold after she died. Only her "costume" jewelry remained in a box for Goodwill, which was where I found the silver cuff.

Aside from the obvious benefit of laying claim to free stuff, family jewelry is important to me because it provides a connection to previous generations. The fact that my aunt and I had the same taste, despite the fact that I never really knew her trendy style, is a thought that stays with me. I'm reminded of her every time I wear the bracelet.

2) Search for vintage. I frequent consignment shops and local antique stores for estate jewelry. Sometimes you can get really interesting pieces there, or you can find pieces that are easy to transform. For instance, I bought a really pretty antique silver ring that looks like leaves from a resale shop in a nearby suburb. It was probably $5 because it was missing the main stone. I wore it anyway, and later realized I had the perfect pearl to place in its center. Voila! New vintage jewelry.

3) Make your own, or find someone to do it for you. A friend of mine's mom used to create jewelry from pictures. So if you saw a beaded necklace you liked, she made a replica for you that only cost the price of the stones. There are bead shops that specialize in this sort of thing, like Bead in Hand in Oak Park, Ill. I have a bunch of beads and stones at home that will someday be made into masterpieces when I have time... I just haven't had the chance to do it yet. It's a project for a rainy day.

4) Buy wholesale, and buy local. When I was in Albuquerque, I bought a bunch of turquoise jewelry (earrings, necklace and bracelet) wholesale from a turquoise store. It was ridiculously cheap. I don't know what other kind of gem wholesale stores there are, but that was like finding an oasis in the desert for me. I highly recommend. The other key point her is to buy local. I get lots of cool pieces from open air markets and arts festivals when I travel - the pieces are cheap and they serve as souvenirs. Plus, they always allow me to share a great travel story whenever I wear them.

5) Buy trends cheap. Let's say a few years ago you wanted some big colorful plastic or wooden beads. Where would you go? If you said H&M, you'd be right. If you said any place that would charge you more than $10, you'd be wrong. It makes no sense to spend money on items you'll only wear for one season. I don't do it often, but when I'm buying trends I shop mostly at Target, H&M and Old Navy. Anything more isn't worth it!

6) Ask for moderately priced gifts. My final point is sort of a cheat. I'm usually all about purchasing my own stuff and not depending on anyone to support my lifestyle, but I have found that asking for moderately-priced jewelry from my parents and boyfriend for my birthday or Christmas typically results in some cool stuff (they ALWAYS ask me to do a list anyway). I love having those items as a special bond between the giver and receiver - made even sweeter when the giver purchases something that perfectly shows he/she gets your style. And I'm not talking gold and diamonds here, any little sparkly thing usually does the trick.

Plus, saving your impulses throughout the year by window shopping to select your next gift suggestion might actually prevent you from making any crazy unaffordable decisions.

I could go on about jewelry but I'd risk sounding super obsessive and TOTALLY boring the males (done and done, I bet). Nah, they're off making their brackets today anyway... this one was for the girls.

Developing my legitimacy bit by bit

It pleases me to report that I have passed the first of two exams necessary for me to attain the certification of Accredited Financial Counselor, a designation awarded by the Association for Financial Counseling and Planning Education. Once I have completed a second exam (probably sometime in the spring), finished several hundred hours of practicum experience, subscribed to the Code of Ethics and paid the membership fee, I will be a blogger with a legitimate, real-life accreditation, and not merely an "internet professional"! How many other personal finance bloggers can say the same?

It was quite a test. Nothing at all compared to the CPA exams or the CFP nightmare, but it definitely required a lot of preparation to fully understand all concepts covered.

If you are eligible and interested, this program is a great opportunity for military spouses and survivors to get free education and certification in an important field. The certification would cost about $900 out of pocket otherwise. Applications are accepted in the spring sometime, usually in March. For more information on the program, click here.

It's Almost Time for the Stimulus Package...What to do with your refund

Although I don't think the timing was right nor can the state of the U.S. budget deficit and ever-weakening dollar justify the stimulus package recently passed, the checks will be cut shortly nonetheless. Aside from the tax refunds most people receive around this time of year, there will be additional checks coming that you probably weren't counting on.

At a high level, if you haven't already calculated how much additional cash you have coming to you, here are some high points:

For Single File Taxpayers, under $75K, this applies in full; over $87K income, no refund.

• If you earned more than $3,000 and paid taxes, you get $600.
• For each child you have, you get an additional $300.

For Dual Filing Taxpayers: Under $150K, this applies in full; over $174K, no refund.

• If you earned more than $3,000 and paid taxes, you get $1,200.
• For each child you have, you get an additional $300.

Therefore, for a typical family of four making say, $100K per year, that's an $1,800 check. So, what to do with this new found cash?

Invest it:

Well, this site is primarily dedicated to investing, so you can probably guess what I plan on doing. However, I don't think I'll be adding anything to my traditional trading account, but rather investing in my childrens' college savings funds as outlined next.

Start a new college savings account for your child - 529 or ESA:

I initially started the children off with an ESA given the lower fees, but by now, the 529 plans have really come around. You can also invest much more in the 529 plans. So, I'll likely add half to each kid's ESA right away and later in the year when I exceed the annual $2,000 limit, I'll be starting up a 529 for each. I've done some research and the Utah plan appears to be the best; will update more later on why (notice it doesn't have a huge participation because it is not advisor-affiliated so there's no financial incentive for financial advisers to recommend it).

Leave it in an emergency fund:

Given the jobs outlook and the current recessionary environment, anything can happen. Perhaps it's prudent for some to just leave this unexpected funding in a liquid account.

Pay Down High Interest Debt:

If you are paying 20% + interest on credit cards, payday loans, whatever it may be, immediately, pay down that debt. There's no investor in their right mind that would turn down a risk-free 20% return on investment.

Make an additional pre-payment on your mortgage, shortening the life of your mortgage:

There's a been a lot of hype lately on paying down your mortgage early. I will be doing a post shortly on a newfangled "system" that's being sold that I've found to be unnecessarily and frankly, a waste of time and money. For some, the peace of mind that comes with paying down a mortgage early is worth it. Most economic opinions do not favor pre-paying a mortgage. If you're in a 6% interest rate and deducting your mortgage interest at a 25% tax rate, you're paying down close to a 4.5% rate of interest and forgoing the opportunity to invest at a long term rate of 8%. Perhaps this is taxable, but then you're at 6% post tax, which exceeds 4.5 OR you can invest in an IRA and the equation changes altogether depending on various factors.

Donate it to charity:

Some people say, "I would do more of this if I had the extra money to spare". I'm one of them. We have a couple charities we participate in each year, but I haven't reached a point yet where I feel that I'm making a sustainable investment in something tangible. I was really burned on what happened with all the money I donated to Red Cross following 9/11 and now just stick to the American Cancer Society and local interests (fire dept, etc). However, maybe this is an opportunity for you to start giving if it isn't something you've done before.

Spend it on a vacation you didn't have planned:

Hey, it wasn't in the budget and you don't need it. Why not be a patriotic American and plough this money back into the economy like the politicians are requesting? When you're on your death bed, it's doubtful you'll look back and say, "I'm glad I skipped that vacation and saved some extra money back in 2008". These are tough decisions, but it's a good decision to have to make - to consume money you didn't intend on.

Buy a new widescreen television:

Well, all your neighbors have it and you don't. What will they think? These days, the prices of electronics are dropping and you can have a pretty impressive set for under the $1,800 for a family of four that will last for years. Why now?

What will you be doing with your additional refund? Vote at the poll on the left or leave your comments here!

www.everydayfinance.blogspot.com

Some don't like lack of RAL option

Greetings, faithful readers! I didn't realize I haven't updated in over a month. I've been very busy with a new but seasonal job. And I have discovered something interesting. Military personnel are not fond of the Military Lending Act as it pertains to Refund Anticipation Loans. While not as expensive as recurrent payday loans, Refund Anticipation Loans are short-term, high interest loans given in advance of an income tax refund. The loan is normally paid off with the proceeds of the tax refund and the lender pockets the difference. The loans are considered by many to be predatory and are illegal to give to members of the Armed Forces or their dependents.

However, a lot of military personnel don't know that the law has been changed to prevent them from getting these loans, and I have seen many disgruntled service members who don't want to wait for their refunds. Unfortunately, it doesn't seem like they have much choice in the matter, thanks to the new legislation.

Budgeting Babe on CBS News: Frugal Fashion

Here is the CBS Evening News story featuring The Budgeting Babe... Saving Green is the New Black.



And here is the extended interview that aired online only:



I'm really happy with the way everything turned out.


As I said, it was a wonderful experience. Roughly one week after I received the initial e-mail from CBS expressing interest in my blog, the amazing Kelly Wallace and her fantastic CBS producer, Tony, flew out to Chicago to film my friends and I talking about fashion and finance. We spoke for about an hour and I was surprised by how in-depth the conversation turned; we talked about the importance of living within your means, saving for goals and retirement, the housing market, the impact of the economy on fashion and a multitude of other things. We then went back to my office, where both Kelly and Tony experienced the luxury of sitting on the purple yoga ball that is my chair (you can see it in the interview), and we talked about my blog.

Truth be told, I was a nervous wreck the morning of the interview. But we had a lot of fun, the conversation was good and I had two of my closest friends at my side to boost my confidence. And I must say, as you can tell from the second interview, they did beautifully on camera! They were smart, funny and well-spoken. I was so impressed!

During the week since taping ended, I've been frantically calling, e-mailing, Facebooking and texting my friends and family to let them know about air time. Although they were a little nervous when I got bumped by a bunch of newts on Tuesday (LOL!), in the end they were so happy and proud to see the story. I'm so lucky to have their support.

Now that it's all over, I'm actually kind of excited to get back to my regular life. I have piles of laundry to do, several big projects at work that need attention, my heat just broke (fabulous), my lease needs to be signed, my taxes aren't done yet and I have to pick out an outfit for a fancy party this weekend. Ahhh.... normalcy. My 15 seconds was fun but now this Budgeting Babe has to get back to reality.

NMCRS to release $300 Quick Assist Loan society-wide

To mark their 104th birthday, the Navy-Marine Corps Relief Society is going to begin a $300 emergency loan program effective January 23. The program, which had been piloted in three geographical areas during 2007, will now be available at full-service offices society-wide. The idea behind the program is to provide rapid assistance for sailors who need a small amount of money for an emergency need without subjecting them to the Society's normal interview and budget process, which can take several hours. 70% of sailors and marines who use the Society only need to visit once during a career, and this product is designed to help them.

In order to be eligible for the Quick Assist Loan, an applicant must fit the following criteria:

• Must be an Active Duty sailor or marine. Retirees, reservists, widows and spouses are not eligible, even with a signed POA.
  
• Not have any outstanding loans with the Society and not have been a recipient of any grant aid from the Society within the past year.
• If the applicant has prepared a budget with the Society in the past year, it needs to have been a surplus budget indicating repayability.
  
• Must not have received more than one other Quick Assist Loan within the past 12 months.
• Applicant cannot be subject to disciplinary action from the command, either currently or within the past six months.
• Applicants under Chapter 7 or 13 bankruptcy protection are not eligible.
• Applicants must bring their most recent LES, military ID, and a QAL application in order to apply.

The loans are designed for emergency needs of specific types (basic living expenses, medical, dental, transportation, and family emergency). Repay on the loan begins the month after it has been disbursed, and the repayment period will range from 3-10 months. Each servicemember is allowed no more than two QALs in a one-year period. The QALs are not eligible for conversion to grant and must be repaid before the EAS date. If a servicemember is not eligible for a QAL, they are certainly eligible for regular Society assistance. The Quick Assist Loan is just designed to expedite the process for minor emergencies. Like other Society loans, the interest rate on the QAL is 0%.

Free camera when you sign up for Key Checking

I got a Nano with their last promotion - now you can get what is actually a very nice camera. Click to check it out. You have to open a checking account and:

* Set up Direct Deposit and/or Automated Payments and complete two transactions each of $150 or more by June 1, 2007
* Or, use your new checking account to make 20 transactions - from ATM withdrawals to online banking to writing checks - and be approved for a new Key credit card by June 1, 2007

I'd personally go for the first one as it doesn't involve opening a credit card. I've always had great service from Key and they'd be my primary bank if there were a branch close by. Right now I use them as my bill paying account and things have always gone smoothly.

Why do people do this?

I've been listening to the Dave Ramsey podcasts lately, and at least three times now I've heard callers talk about how they haven't been able to sell their house. What makes that different from the other people out there that have difficultly selling is that later in the conversation, they'll reveal that they moved out of their house and into a rental in the same town in order to try to sell it.

Why do people do this?

Unless they have an entire herd of animals living indoors with them, I can't imagine a worthwhile reason for moving out before your house is sold if you don't need to move. (And even then, I think you'd be better off farming the animals out to someone else temporarily instead of moving out yourself.)

Houses actually sell better with furniture in them, as long as the occupants are not complete slobs. Wallets get fatter when you don't have to pay both rent & a house payment at the same time. There's less stress.

Interestingly, when Dave asks the people why they've moved out, their responses have all basically been “I don't know”.

If you're thinking of selling your house, do some reading on the process and get sales tips first. No need to waste your money on unnecessary expenses like a second place to live.

Eee!

OK, so I know I keep seesawing back and forth on this issue of should I buy a house. I had thought about it but eventually decided that I couldn't afford anything that was in the area that I wanted and had the amenities I wanted (like not sharing a damn wall with a neighbor) so I started looking at renting a larger place instead. Today we even went to see a potential new place to rent which was pretty nice.

Well, I got home from that tour and visited the Craigslist ads as I always do, and then for a lark went on the Prudential page that I use to look up local properties. And..

There is a great house for sale. It is a wee bit more than I wanted to pay, but I can afford it on my salary, not counting any CashDuck money or contribution from Boyfriend. It needs work, but I do have money coming in that I can use (plus if I put a nice downpayment down, I can take it back out as home equity in the short term.) It used to be a rental, so all the guts work, it just isn't terribly pretty. Very nice big backyard (which is pretty rare for the area) and a big deck. Plus, it is empty right now, which is important because I only have three months (approximately) to get this done. Boyfriend doesn't have intensive classes during the summer, so he'd be able to oversee the work a little bit, and my mom is retiring in June and really wants to help out too.

So.. I put in a request to see the house tomorrow, and for a quote from a mortgage broker (an Upfront Mortgage Broker, thanks Searchlight Crusade!) and maybe we can get this puppy going. Although it is a bit higher priced than I would like, it's going to be the only thing we can get a mortgage for in this area - and I'm pretty much guaranteed to get back all the money I put into it when we sell as all the other houses in the area are at least $50k more, and most are pretty nice houses.

As my mom said, you were meant for this house! But then, as I said, I just have to make sure no one else is meant for it too. :) Definitely be updates on this soon.

Edit: I just pulled my credit reports and scores, I have a 697 (???) at Experian, but a 749 from Equifax and a 740 from TransUnion. So I feel pretty damn good about that.

Everyday Finance Portfolio Update April 6, 2008

The Everyday Finance Porfolio gained 6.7% for the prior week versus a 4% return for the S&P500. Given the relative high Beta and leveraged Financials/Gold ETFs in the portfolio, it isn't unexpected to see an improved return over the major indices. Attached below are the individual returns for each holding:

To highlight a few standouts:

• BIDU has been on a tear lately. I think the stock has been brutally beaten down for the best in class Chinese equivalent of Google. It's got real earnings and even greater growth potential than Google. With a 19% gain for the week, I think it's just getting started on its return to old highs.
• DGP, the 2X leveraged Gold ETF dropped 4% on the week. I've been long gold for quite some time now. I initially locked in profits on the 1:1 ETF GLD and traded it in for this turbocharged ETF. With another rate cut on track for April, I envision continued weakness in the US dollar and at least another foray into the $1,000 per ounce range again.
• UYG, the 2X leverage Financials ETF holds great promise. At the very lowest point in the Financials' index, I called the bottom (full rationale/analysis here) and went 2X long before virtually anyone had done so. Not to toot my own horn, but this week on CNBC, virtually every pundit and investor is now calling for a return to investing in Financials. This portends additional gains on top of the 12% return this week.
• VIP - Vimplecom, the Russian telecom is not for the faint of heart. I had more than doubled my money in it last year, sold some off and then saw decent declines. Now, it's returning to old highs again. I'm a holder, banking on continued growth in the standard of living and telecom growth in Russia due in great part of oil revenues in the post-$100 per barrel world.

www.everydayfinance.blogspot.com

Don't overlook these tax breaks

With just over a week to finish up our 2007 Form 1040s, all of us late-season filers are starting to get serious.

Many are in good shape, despite the late date. They have all the data and documentation they need; it's just a matter of entering the info and sending it to the IRS.

Others are a little less organized, but still plan to make the April 15 deadline.

Regardless of which group you belong to, make sure you don't get in a hurry and miss out on a tax break or two. Here are 10 tax-saving moves that often are overlooked:

1. Additional charitable gifts



2. Moving expenses



3. Job hunting costs



4. Military personnel travel



5. Child, and more, care credit



6. Mortgage refi points



7. Many medical costs



8. Retirement tax savings



9. Educational expenses



10. Residential energy upgrades

Details on each of these can be found in this story I wrote for Bankrate.

Now, since I'm in the second category -- I know, I know. Do as I say, not as I do. -- I'm off to get my tax filing in better shape.

Budgeting Babe on CBS Evening News

Hey friends, tune in tonight (Tuesday, April 1) to the CBS Evening News with Katie Couric at 5:30 Central Time/6:30 Eastern Time to watch yours truly talking fashion and finance with Kelly Wallace!!!!!! (...along with some of my fiercest best friends, of course.)


OMG, I have SO MUCH to tell you about it, but I'm a nervous wreck right now in anticipation of the piece so I have to bite my tongue until we see how it all turned out. All I can say right now is:

1. It was an absolute dream to participate.
2. If it turns out badly, we're pretending like it never happened, 'kay?
3. If for some reason it DOES NOT air tomorrow night, they might hold it until later this week, so keep checking in. It's a features piece, and those sometimes get bumped for more "hard news" stories that come up.

I will post the piece here one it airs. Please, please, please keep your fingers crossed that it turns out OK!

Capitulation - Is it Time to Buy the Financials? Yes!

The market took investors on another wild ride today, reeling from the news that Bear Sterns has collapsed and Lehman Brothers may be next. The news has been horrendous in the prior months and I've shunned financials as a result. However, at some point, there will be a bottom.

There are two certainties here:

1) Markets over-react. Investors that enter the market in the trough will stand to do quite well when it's clear that the worst is behind us and all the money on the sidelines rockets stocks (especially the financials) back up again.

2) Neither you or I will perfectly pick the bottom. The best investors in the world cannot consistently pick peaks and valleys and for the long term investor, you're best served in being in the market more than you are out. In my trading account, yes, I did pull money out months ago, exited China in large part and pulled out of trend momentum stocks like Garmin and Crox. Conversely, I played with Platinum and got burnt in Stillwater Mining (SWC).

I have an admission to make: I'm back into Financials.

I took a 10% stake in the leveraged Financials ETF UYG. My move was based on several factors:

• Aside from the points above, investors are simply running out of places to put their money.


• A commodities bubble is forming and while I'm playing now, it will eventually burst and I will soon be taking profits, at least in 50% stakes.


• Treasuries are now yielding negative values when accounting for inflation. TIPS yields are inadequate based on how the government calculates real and nominal inflation.


• Given the supersonic oil prices of late, many oil exporting countries need to diversify their holdings and are doing so in force with sovereign wealth funds. I am sure that these funds will soon be flowing into financials and I want to catch that wave.

This is not to say the Financial sector is not without risk. If you look at a 6 month chart, there appear to be multiple ideal entry points only to be followed by another low. There could be more to come. But I'm looking at a significant rate cut coming tomorrow aimed at an industry that the government simply cannot and will not allow to fail. This is an artificial floor no? This clearly differentiates the industry from say, the internet bust earlier in the decade, which saw no mercy and complete annihilation.

If you're looking for some additional options to ride out the storm, here are several options for commodities plays and double digit yielders you may want to consider; some of which are outlined in my high yield self-directed IRA portfolio.

13% Yielder

Ridiculous Yielder - Another Financial at 30% plus

Wrestling with an 8.4% Dividend

Get your refund in as little as 9 days. E-file with TurboTax today. It's Easy

www.everydayfinance.blogspot.com

Start planning for your final expenses now

I know this post topic is kind of morbid, but this issue is very important. Recently, Mr. Dimes and his family had to bury his grandmother, who died suddenly but not unexpectedly right around Christmas. She had a modest funeral and burial, and her final expenses clocked in around $8,000. My mother-in-law fronted the money and will eventually be reimbursed when the estate has been settled, as the grandmother did have some real estate and other assets which could be sold to cover the expenses. Not everyone is so lucky, though.
I recently had a client whose mother died unexpectedly who was requesting over $16,000 in funeral assistance. Her mother owned no property, had no life insurance, and had done nothing to prepare for her final expenses in advance. While the client has siblings, neither individually nor collectively can they afford the costs of the burial. Their mother desired to be buried in the family plot in an area where real estate is very pricey and the burial costs are over half the cost of the funeral. I had to help a grieving client find an alternative to the burial she wanted in order to have something she could afford. This was not a particularly fun experience. Please, for the love of your survivors, do not do this to them. Plan for your final expenses now and let your family members know where they can find any information about plots, policies, final wishes, etc. Deaths are difficult enough without creating financial stress and trauma for a grieving family.

Here are a few ways to ease the financial burden on your survivors:

• Consider prepayment of funeral expenses: If you know where you want to be placed upon your death, consider buying a plot in advance, and make sure your survivors know where it is. You can also prepay for the funeral, casket, and other mortuary services rather than requiring your relatives to front the expenses at the time of your death.
• Have a life insurance policy specifically for funeral expenses: Both my client's mother and my husband's grandmother had small ($10K-$25K) whole life insurance policies to pay for their funeral expenses, but for one reason or another had let them lapse and when they died, there was no money. If, however, you make sure that you (or someone else) is paying on them and don't let the policies lapse, they can be sufficient to cover burial and funeral costs.
  
• Consider less expensive methods of body disposal: Burials are getting to be insanely expensive, and so are funeral plots. Cremation, on the other hand, is a more frugal alternative to standard burial, and is less harmful to the environment. Some people don't like the idea of cremation for religious or other reasons, but it definitely costs less. It also has the added benefit of allowing for portability of remains; for example, if you want to be buried a great distance away from where you died, ashes are much easier to transport than an intact corpse.
  
• Have a specific set of assets designated for funeral expenses: This would definitely require either a will or a joint account with a person most likely to survive you, but it could solve the problem of a family member having to front expenses and then wait for reimbursement. If you create an account specifically for funeral expenses, then a family member or the executor of your estate should be able to access those funds in order to pay for your funeral. If you're going to do this, you might as well make your wishes known as well as what should be done with any money that remains, in order to keep your relatives from donating your body to science and then flying off to Cancun with your funeral money.
  

While not fun, death is an inevitable (and expensive) part of life, and you can help your family tremendously by making provisions for what to do when it happens.

Sunday, April 6, 2008

Yay!

TIAA-CREF found my thousand dollars. All is well again.

I'm more heavily thinking about sinking most of my salary into the retirement plan.. I am going to pay SO MUCH in taxes this year that I am trying to stick as much of it into tax-sheltered accounts as possible. (Still filling the Roth though, since I can't retroactively fill it five years from now when I am in a lower tax bracket.)

Life is just chugging along. I am really incredibly busy with CashDuck.. and of course I am not making it any easier for myself by advertising so much and getting lots of new users, and working on new site doodads. :)

Saturday, April 5, 2008

Need Job Fulfillment? Read this--

I love Ben Stein. Really like the first part of this, not too crazy about the middle part and back on track for the last part. Go, Ben, go.

Arm Yourself for Job Fulfillment and Retirement Bliss

by Ben Stein

Now for some decidedly non-PC thoughts.

I hear a lot of bragging from my pals about how their daughter got into Brown or their son is being courted by Goldman Sachs or their grandchild just got into a fancy prep school.

Worth Bragging About

What I never hear is bragging from parents who say, "My son just got into the Army Special Forces and is risking his life to keep your son and you alive." I never hear parents saying that their kids got into the 82nd Airborne and are now fighting in Afghanistan to give people there a decent life and keep Al-Qaeda tied down so they don't come here to attack us.

Now, you may say, "All well and good, and it's great that these military families are so modest. But what does this have to do with me?"

It has everything to do with you, my friend.

Why It Matters

First, the military people on the ground -- and those in the ground in Section 60 of Arlington National Cemetery -- are the ones who keep your family alive. They're the ones who comprise the wall around America so that we can play and make money for our retirement and enjoy our children. They, whether in training or in traction, are the ones who keep America humming and keep the noblest dream of freedom alive in our hearts.

Again, you may say, "I agree and honor them, but what does this have to do with a column about money, careers, and finance?" Again, everything.

Day after day I get letters from readers who complain about their jobs and their lives. They have dead-end careers. They have bosses who disrespect them. They have colleagues who are strangers. I know that world. I've been in it.

Real Job Satisfaction

But I also get letters aplenty from men and women in the military. They love their jobs. They do exciting work. Dangerous, of course, but exciting. They have immense responsibilities. They get challenged on a scale they would never have dreamed conceivable. They bring more out of themselves than they knew they had.

Yes, they don't get paid as much as they should. But their pay isn't terrible, and they get extraordinary benefits. More than that, they wake up each morning feeling that they matter. They never have to worry if they're making a difference in the world, because they know there would be no civilized world without them. Their colleagues on the battlefield not only treat them with respect, they would give up their lives for them. They have each other's backs in the real sense of the phrase. (Please, someone at a Wall Street firm, tell me if your colleagues feel the same way about you.)

In short, dear reader, you might want to consider a career in the military. The world needs you, and it just might make you feel like you're doing something very worthwhile with your life.

Light at the End of the Tunnel

Second, I want you to think about retirement in a serious, truthful way. This will tell you that while you're going to be fairly vigorous and sprightly for the first part of your golden years, you possibly won't be for all of them. You'll get a bit weak, often more than a bit confused, and generally not totally "there" for your duties and responsibilities.

This is one of the many reasons I love and recommend variable annuities, which you then convert into a lifetime annuity. Once you've set the annuity on autopilot and start adding to it (always with an eye on fees), it compounds month after month free from tax.

True, when you start withdrawing from it, you have to pay income tax on the amount of gains in the account. But for most Americans, that rate is now extremely low. And you get that check from the insurance company or financial house as regularly as clockwork. It mounts up and up during your contributing years, and then you get the money through the mail.

You don't have to study the market. You don't have to worry about ups and downs. The money just comes in every month or every quarter and you live on it. And it's guaranteed to be there until you die, or for some specified number of years thereafter.

Old age, especially the part of old age that involves loss of powers, is frightening enough for anyone. Old age that involves fear of financial insecurity is truly horrifying. Annuities are a safe, easily accessible, low-cost (if you keep an eye on fees) way out of that desolate valley. Keep them in mind, even if others mock them. They work.

Hardly Working

Finally, I have a correspondent who endlessly asks me if I know ways to get rich that don't involve much work so she won't miss her pedicures. She also wants to work only with nice people who are also smart.

I hate to break this to her and to everyone in her situation, but there's no such job. Making money takes hard work. The people who do it well make it look easy, but it isn't. It's hard work. Get used to it. And the people you work with aren't always nice, either.

There's no royal road to quick wealth. Hard work and disciplined, sensible savings will get you there. Not pedicures.

Friday, April 4, 2008

Someday I hope to be this guy, without the beer

Click if the image is unclear.

This is from PVP Online, a comic that I like to read. This character won a whole lot of money in the lottery and now spends his days drinking beer and playing video games with his friends.

But seriously, I have been thinking (not in a morbid way) about where I would leave my retirement money when I don't need it anymore. One thing I think would make a big impact on people's lives is to dispose of it to a foundation associated with the hospital I work at. This foundation generally pays for things like cab fares and hotel stays and other little things that are important to getting your cancer treated just like the doctors and nurses are - after all, if you can't afford to get there and you have no place to stay, life is going to be a lot more difficult. I know there are a lot of foundations that support research - and seeing as how I am in research, I certainly appreciate it - but the best drugs in the world will not find you a sitter for your kids while you are in the hospital, or drive you here from two hours away when your car is broken down.

Thursday, April 3, 2008

House Flipping In The Real World-Part 5-Guardian Angels

Randy summed it up pretty well-it was a mess. Too much for me to contemplate so told everybody I would be back Monday to start the renovation.

Wasn't there twenty minutes on Monday when Alice and Cynthia came over. I had started hauling stuff in the yard toward the center to make a pile to do something with later. Bumpers, trash bags full of stuff and a bunch of broken up, cheap stereo cabinets along with the bed of the truck. Alice said, "We can put all this junk on a truck and haul it away, cheap." The cheap part caught my attention. I asked for details. "50 bucks. Everything but the truck. We know somebody that will want that--no charge." Things that sound too good to be true, usually are but this was worth a try. I said see you tomorrow and left. Came back the next day and everything was gone, except the truck. Alice was looking a little sheepish, saying her friend said they needed a title to take it. Obviously, I had no title and we all stood around thinking how to get rid of two 400 pound inert pieces of steel. Alice finally said, "I got it...but I'll need 30 bucks for gas." I thought, ok, here's the scam. (After dealing with Freddy, I was a little down on humanity.) But the truck was a problem that had to go so went to the bank, got thirty bucks and left Alice and Cynthia to do their work.

Back the next day and the truck was gone, where I have no idea, but it was gone. Cynthia came over indicating that Alice didn't feel too hot after the two had spent most of the day dragging the truck around--it seems sliding the truck parts around wasn't too hard but getting them up into another truck to be hauled away was a bitch, quoting Cynthia. "Need anymore help?" I have no illusions about my ability to patch drywall holes. I can do it, they just look like patched holes. We reviewed the holes. "How much? "Thirty bucks." Deal. And so on and so on.

Freddy had really screwed up the wiring so Cynthia had to call in a consultant, Randy, who did the job for $25. Then Cynthia offered that the inside really needed painting, the peanut butter brown made the rooms look small. Seems Cynthia has a bit of the interior decorator in her. How much for the paint job? $150. Ok.

At that point my curiousity was greater than my greed and I blurted out "Why are you guys so cheap?" Cynthia didn't even blink. "We're on parole." Oh, great. Parole and cheap, how do these go together? Cynthia gave me a short tutorial on the American criminal justice system. "See when you go to see your parole officer every week they ask what you have been up to and the more jobs you got, the better. So I have a lawn service, I fix up rentals for Mr. Barlow and now I'm contracting for you. Like I said, the more the better." The cheap part was due to the fact that it is hard to find the jobs because most people don't want ex-cons hanging around the house. Made sense to me. Finally, Cynthia enjoyed the work. At least she said she did.

Went home and said to Sue, "Hey, you won't believe this..." as an intro to asking her if I should not take any risks and dump Cynthia and Alice as having ex-cons as your work force may have some liability attached. Sue came back that I had so much bad luck with tenants and Freddy that maybe it was my time for some good luck. I said, "Or maybe they are more bad luck." She retorted, "Maybe they are your guardian angels." Maybe but I was still a bit nervous.

Pluses and minuses

Plus: I got my $50 National City gift card in the mail today - it was a Sharebuilder bonus for signing up through my National City account that I have for CashDuck. So that's pretty cool. Sharebuilder bonuses are awesome. (I invested my $6 in an S&P 500 index fund. It is now worth $6.14. How savvy am I?)

Minus: I got two W-2's that I had forgotten about - one for Pearson, which was a test-grading job that I had for about a month in April-ish ($988) and one for Kaplan, where I worked for exactly three days during the July-ish period when I decided I needed a second job and then decided that I really wanted to go home after work ($81). So that's about $200 more in taxes to pay since neither had much withheld. And it also makes me wonder where the thousand dollars went??

Plus: I finally am able to see information about Electric Orange, the new ING checking account, and I am ALL over that. They have a payment feature where you can send someone an email, they put in their banking info, and voila they get money! This is so cool I can't even begin to describe. Plus about 3% interest on the money you have sitting around in the account. I am so opening one for CashDuck!!

EDIT: I originally wasn't happy about this feature because you had to know their account info - but the description made it sound like you didn't have to anymore. On further investigation, it's the same. So I guess that makes this a neutral?

Minus: I went to Target on Sunday with a pocketful of coupons, spent $91 and walked out without remembering to actually hand over the coupons to the Target lady (about $10 worth.)

Plus: I got a prescription filled and actually had one of the free-gift-card-with-prescription coupons (which I did use) from Target, so I got a $10 gift card from that.

Plus: I get my first paycheck from my new job on Wednesday - and $500 of it is going into my 403(b). So, from my calculations, about $1340 will actually be deposited between my employer's contributions and my voluntary and involuntary contributions. Which is about as much money as I use to live on and pay bills other than debt. So I think that's pretty cool. If all goes as planned I may have to raise my goals of how much retirement money I want to save by 30! =)

Wednesday, April 2, 2008

House Flipping In The Real World-Part 5-Doing Time In Texas

Note: This has turned into another mini-series, this time on the risks and rewards of real estate investing. To start at the beginning scroll down.

Pretty soon I was out of the picture. Cynthia took over and Alice receded into the background with Hepatitis C problems and liver ailments I really didn't want to know about. I did learn that Alice had a pretty rough life with incest, alcoholism, and some drug abuse that undoubtedly contributed to the Hepatitis C and liver issues.

One doesn't meet ex-cons every day and my curiousity got the better of me, again. "Pretty tough in prison, I bet." "Oh, you kinda get used to it." "Which prison?" "Waco." (My son went to Baylor University in Waco and I didn't know Waco even had a prison. Guess the Chamber of Commerce doesn't go out of its way to spotlight the prison.) How long? Nine years. (Wow) Finally I couldn't stand it any longer, "What did you do?" "Forgery."

Forgery? Nine years for forgery? I think the takeaway here is don't do crimes in Texas unless you want to spend a lot of time indoors.

Plunging ahead. "And Alice?" "Attempted murder...but she got framed." That's what they all say, I thought. "Who did she attempt to murder?" I asked like an idiot, I really don't know when to just shut up. "Her sister's boyfriend. The guy was beating up Alice's sister and well you know..." At that point I did decide to drop it but thought about sending Alice over to see Freddy and then dropped that thought as well.

Cynthia didn't go into a lot more detail except to offer that she was a college graduate and that forgery is one of those kind of 'classy' crimes so she got to be a trustee in prison and did a lot of repair and agricultural stuff where she discovered her love of fixing things other than signatures. And boy, could she fix things. The patched holes fit right in, she put up three light fixtures, found a new(er) backdoor, and filled, sanded and replaced the woodwork where necessary. New paint was next.

In the garage I found the realtor's "For Sale" sign, spray painted it and scrawled my phone number on it with a Sharpie. Sue saw it and wondered if I had had a stroke. Placed it in the front yard and got a call from Marion.

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Blog Archive

• ▼  2008 (88)
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    • Fees & the tiny investor
    • A Ridiculous Yielder for the Everyday Finance Self...
    • House Flipping In The Real World-Part 7-Doing The ...
    • Oh you temptress, TIAA-CREF
    • Memories...
    • Jewels and Gems
    • Developing my legitimacy bit by bit
    • It's Almost Time for the Stimulus Package...What t...
    • Some don't like lack of RAL option
    • Budgeting Babe on CBS News: Frugal Fashion
    • NMCRS to release $300 Quick Assist Loan society-wide
    • Free camera when you sign up for Key Checking
    • Why do people do this?
    • Eee!
    • Everyday Finance Portfolio Update April 6, 2008
    • Don't overlook these tax breaks
    • Budgeting Babe on CBS Evening News
    • Capitulation - Is it Time to Buy the Financials? ...
    • Start planning for your final expenses now
    • Yay!
    • Need Job Fulfillment? Read this--
    • Someday I hope to be this guy, without the beer
    • House Flipping In The Real World-Part 5-Guardian A...
    • Pluses and minuses
    • House Flipping In The Real World-Part 5-Doing Time...

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Cassy

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