Going once..

I posted before that I am looking to see if someone else would like to take over running the Under 30 Honor Roll and Festival of Under 30 Finances as I don't have the time to develop it into something better - if anyone's interested, please let me know!

Shameless plug - Get a free Fandango movie ticket

Join the Johnnie Walker email club and get a free movie ticket from Fandango! I believe this will only be open until Feb. 15th. If you prefer, you can also join CashDuck and earn a dollar for completing this offer - but a free ticket is pretty good too. =)

What the CEO envisions… vs. the reality of what may actually be happening

Back in December when I reviewed??Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time, I did not live in a community dotted with a Starbucks at every block, so I have never been to a Starbucks. ?I was able to read the book and see the vision Howard Schultz, the CEO, had of the company. ?I saw how he wanted the Starbucks image to exist. I wrote my review of his business techniques in the book?here.

Now my commute to work passes three Starbucks Cafes, so I decided to check the place out. ?My brain carried the image Schultz painted in his book. ?The experiences have been totally different. ?Yes the employees were great and the coffee was delicious–but it was the other things that were off. ?He said they give real cups unless customers ask for to-go cups. ?The baristas told me it's actually the opposite. ?They don't even have enough?porcelain?cups to?accommodate?the seats in their shop. ?Schultz said his business was green; the places I visited had no recycling for the disposable cups. ?The differences between what Shultz said was standard and what I saw were shocking. ?But it just goes to show:

A CEO can't always be in touch with what is really happening in his company. ?It's like a king–does he really know everything his subjects are up to? ?There are so many people and so many cups of coffee.

I feel lucky that I read the book before I walked in the coffee shop. ?Of course, it means I was disappointed when I walked in while the average person is won over by the experience. ?Oh well. ?No wonder this book is on clearance at Amazon now.

?

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- Top 10 Retirement Financial Planning Mistakes That Will Make Sure You Don't Retire Wealthy

It's a sad financial retirement planning fact that most people won't retire rich. Most people are pretty sure of that fact too. The 2008 Retirement Confidence Survey� performed by the Employee Benefit Research Institute showed that only 18% of you out there are confident that you'll have enough money for a financially secure retirement. The real tragedy is that for many people the dream was well within their grasp and they screwed it all up.

It only takes a few mistakes throughout your working life to kill any chances you may have of retiring wealthy. Heck, you can ensure that you'll be asking “Would you like fries with that?” if you're not careful. With that in mind I'm going to reveal 10 of the most common retirement financial planning mistakes that can keep you from retiring wealthy, and may even make sure you see a whole lot more of your grandkids; every Friday from 3-11 at the deep fryer.

Retirement Financial Planning Mistake #10 is relying on Social Security to fund your retirement. If you're under 35, it may not even be around when you retire, and for the rest of you it won't provide a very high standard of living, even if it does stick around. Your maximum Social Security monthly benefit if you retire this month is only $2,030 for a single person and $3,027 if you're a married couple.

While this does rise over time, it's not too much unless you have virtually zero expenses. Consider that if you own your home, property taxes will rise, especially if your area experiences dramatic real estate appreciation. You could easily find yourself in a position where your property taxes chew up nearly all your monthly Social Security income.

If you're covered under the railroad retirement act you'll fare much better. For those of you that think social security is such a fantastic retirement vehicle (Mom, you know who I'm talking about) you should take a gander at the plan that railroad industry employees got out of Congress. It was first enacted in 1934, then redone in 1935 when the Supreme Court found the first version unconstitutional. The version of the act we have now has been with us since 1974.

In case you're unaware what good lobbying can accomplish, the railroad union talked Congress into exempting railroad employees from the Social Security system. They knew a bad deal when they saw one, I suppose. They basically got a plan to replace social security, except that it delivers greater returns to participants. In addition there is a second tier that delivers benefits according to years of railroad industry service. The upshot of the whole thing is that, while a Social Security beneficiary retiring this month stands to receive only $2,030, a railroad employee retiring this month will get almost double; $3,959. Put that in your retirement planning pipe and smoke it!

Retirement Financial Planning Mistake #9 is never financially educating yourself. It will be hard to understand everything there is to know about finances and your money. Indeed, that's why there are professionals. You should know the basics of personal finance, however. That way you'll know what questions to ask, what terms mean and when things just don't pass the smell test. You'll also be in a better position when it comes to voting and understanding the candidates position's on financially related issues, as the politicians who make their way into office can have a huge impact on your financial future.

Retirement Financial Planning Mistake #8 is not considering retirement benefits when choosing your employer. This can happen when you're young and free, because hey, retirement's a long way off. Thinking like that will make sure that it's a long way off, you knucklehead!

Retirement Financial Planning Mistake #7 is putting all your eggs in the company stock retirement plan basket. I've said this one before, but you're relying on your company for both your primary source of income and retirement funding, and that could easily lead to trouble. Several well publicized corporate debacles, such as Enron, have illustrated the fallacy of this approach. While stories are rampant of Home Depot and Wal-Mart cashiers retiring wealthy due to their company retirement stock plans, for every one of those there are many others who paid the price when their company's stock tanked just about the time they were due to head to the golf course for the next 25 years. Unless you have no other way, put some of your money in your company stock, but put 70% somewhere else.

Closely related to mistake of keeping all your eggs in the company basket, is failure to adequately diversify your investments. All but complete financial newbies will be aware that the purpose of diversification is to reduce risk, yet many of those same people will have large percentages of their retirement funds concentrated in sector funds, company retirement accounts, real estate, or a few company's stocks. If you're young you can have time to recover from a problem, but if you're nearing retirement, this can have devastating results. Anyone living through the tech bubble burst in 2000, or real estate investors in the last year or two (depending upon where you live) can attest to the perils of this approach. Yes, you can achieve spectacular results with investments that are concentrated in narrow sectors or industries, but that's a strategy best left to younger investors that have time to weather a storm, should one occur.

Retirement Financial Planning Mistake #6 is spending more than you make. This will not only make it much more difficult to save for retirement, but can leave you deep in debt. You want to have income and be debt free when you retire, not have a string of credit card bills and other debts to contend with. Remember that if you're truly retired, you're on a fixed income, so as inflation rises, your real income will fall. That doesn't leave room for too much debt.

Retirement Financial Planning Mistake #5 is failing to make a retirement plan. Yeah, we've all heard the “failure to plan is planning to fail” adage that's drummed into your head in business school and elsewhere, but you know, there's actually quite a bit of truth to it. You need to find the two things that every plan should incorporate; a goal, and a path to achieve it. A bit of oversimplification, yes, but that's what you need. You want to find out when you want to retire, what else (kid's college, vacation property, etc.) you'll have to fund along the way, and how much income you'll need to support you and yours in the lifestyle to which you've become accustomed (or any other lifestyle you may want to retire in). Once you've done that, you can sit down either with a retirement planning professional, or on your own, and make a step by step plan to achieve your goals.

Retirement Financial Planning Mistake #4 is funding other things ahead of your retirement. This is a common mistake, borne of parent's desire to see their children do better than they, or misplaced recreationally-oriented priorities (you bought a boat instead of maxing out your 401k). If you fund your kid's college fund at the expense of your retirement fund, all you're really doing is helping to ensure that your children will have the job necessary to help support you in your retirement years, because you won't have enough money. Better to not need their help and have them work their way through college like the rest of us. It will be far better for both of you, trust me.

Retirement Financial Planning Mistake #3 is using the “set and forget” approach to retirement planning. While there's nothing wrong with a buy and hold strategy when it comes to investing (Warren Buffett's done pretty well, after all), you want to revisit your asset allocation once in a while to ensure that your strategy is the most advantageous for the times. For example, technological, economic, political, and demographic shifts will make some industries have greater potential as times change. You want to be sure that you're taking advantage of this, or at least not getting caught heavily invested in dying or declining industries. You may also want to shift more of your assets from stocks to bonds to more closely match your investment requirements as you near retirement, for example.

Retirement Financial Planning Mistake #2 is common and very serious. It's starting too late. Learn from my mistakes here, please. The power of compounding is well known, but often ignored by young investors that have their priorities more closely aligned with this weekend, rather than what they'll be doing in 30 or 40 years. You're shooting yourself in the retirement foot with this strategy, however. As an example, if you're 25 years old and earn $40k/yr now, you can contribute 8% of your salary into a fund that earns 10% for the next 40 years. Assuming you et a 5% annual raise, you'll retire with a hair over $2.2 million. Making the same assumptions, but starting only 5 years later, at 30, and you'll have almost a million dollars less, just a bit under $1.3 million! If you stop and consider that people are likely going to live much longer, that money may have to last longer than you actually worked.

Retirement Financial Planning Mistake #1 is never starting or participating in a retirement savings plan at all. That's a sure way to find yourself on the opposite end of the wealth scale in your golden years. According to the U.S. Department of Labor, 25% of Americans who had an available 401K plan didn't participate in it. That's a financial tragedy that can keep wealth a distant dream you'll never have the pleasure of living. If you consider that many 401k plans include employer matching funds, you're turning your back on free money that can multiply your investment returns. Not too smart.

If you're just starting out, avoiding these top 10 financial planning mistakes. You can retire wealthy, the real tragedy is far too many people don't think they can do it, and so they're right. Remember (Debt Free Saying of the Day)

“Good luck is a created through the sacrifice of the persistent and the prepared.”

Are You Adequately Covered?

One of my more popular posts is about a former co-worker who lost everything in a rental fire on St. Patrick’s Day.

Well, insurance is back on deck as today’s topic because last evening there was a fire and boyfriend had to call 911 and knock on doors to make sure some neighbors got out of their houses. Four houses in a row were lost, possibly some pets as well.

Last night a boarding up crew was out. I could hear their saws ripping through plywood as I went to sleep. All I could think about when I saw the fire engines was if the Red Cross was out to help the residents and hoping the residents had some insurance coverage.

If you haven’t done so already, review your insurance policies for 2008. Did you buy anything new of high value in the past year? Did you have a life changing event? Are you renting? Can you buy more coverage? Is your car old enough to warrant a change in policy? What’s your commute like? Longer or shorter? Are you carpooling?

I feel particularly sad for the young woman who is clearly house-proud. She was out with her parents earlier this spring planting and re-mulching her front garden. She obviously just bought the place because she’s sprucing it up so much. I also feel pretty bad for the lady boyfriend rescued. She answered his knock on the door and he convinced her to get out. She was house- and petsitting. She saw the smoke through the wall and was looking for the cats when he knocked. He had to plead with her to leave the cats behind and make sure she was safe first. Then there’s the lady in another house with lots of little dogs to keep her company.

The Fire Department was still out there this morning to ensure the hotspots were out.

After the shooting in the neighborhood a few weeks ago, I think the neighbors are slightly shell-shocked today.

See Me On The Tee Vee

Check this out! They actually didn't use very much of my footage.. but I'm glad they pronounced my name correctly. :) And they didn't use any of the shots of the guinea pigs which I think were definitely way more interesting than me talking.

2008 NMFA Fellowship Program available

Hey everyone, I'm writing to let you know that the Military Spouse Fellowship for the Accredited Financial Counselor Program for 2008 is now accepting applications. From now through the end of April, the application will be available online through the National Military Family Association website. It's a great program and at the end of it, the selected applicants will have attained the certification of Accredited Financial Counselor under the guidance of AFCPE and FINRA. Please see the linked website if you're interested in learning more or applying to this program. It is definitely worth the effort.

And on a more personal note, tax season will be over in less than two weeks, and I look forward to blogging again!

The Land of Bad Financial Decisions

Yesterday, I ventured into the land of bad decisions. I left my apartment at 8:00 a.m., running late and unprepared for the day ahead. I knew I had a series of events to attend, yet I had not determined how I was getting to them, coordinated meeting points with other attendees or planned how to transition my outfit from day to evening. It was the perfect equation for overspending.


I was aware I approached the day without a plan, but I felt a bit helpless about it. My morning work conference began 9:00 a.m., and I would not be caught dead lugging a weekend bag full of clothes and make-up to an event full of influential health care communications professionals from around the nation. (Leaving it in my car wasn’t an option; I don’t have one.)

So from the conference on, my day was full of tragic spending missteps: I knew I was making bad decisions, yet I didn’t see any better options, so I just kept spending. I bought lunch, I spent $20 on a dress and another $20 on a sweater for the evening (I couldn’t remember if I had anything clean; I would have been fine without them) and then spent another $30 on a cab ride from my apartment (to make up for time), rushing all the way and still arriving a full hour late to my evening affair.

As with most bad decisions, after all was said and done, I felt terribly guilty about my spending afterwards, and in retrospect was able to identify numerous other options that would have enabled me to spend less (arriving to work early and dropping off a bag, or staying home from the evening gathering, for instance). But I was living in the moment, rushing ahead of myself and blindly moving through the day, so I missed those opportunities.

It’s a story not unlike most people’s approach to personal finance.

I’ve been reading Jean Chatzky’s book, “Make Money, Not Excuses: Wake Up, Take Charge and Overcome Your Financial Fears Forever.” Though I’m only through the first few chapters, what struck me while reading her introduction was that many of the women she interviewed were just floating through their financial lives, unaware of where their money was going, without a plan, a savings structure or an understanding of their financial needs and goals. And while most of the women she interviews are in their 40’s and 50’s, the sentiment also rings true for most 20-somethings I know.

For those right out of school, a first paycheck and a first raise are a cause to celebrate. And while happy to focus on securing a job and developing new skills to attain raises, financial planning is not front and center (at least in my experience). So into their mid- to late-20’s, many intelligent, hardworking people are scratching their heads, still moving blindly though their financial lives, spending here and there, monitoring checking accounts and paying off credit card bills and student loans, but feeling terribly guilty about not having any savings and silently panicking because they know where to start. Some have amassed major debt, others have just been hemorrhaging money. In short, living in the land of bad decisions.

The good news is, every single day offers the opportunity to start anew. Every day offers the opportunity to make a good decision – to look into your 401k, to open a savings account, to spend a day at the library learning about financial goals, to reassess your income and your outgoing cash flow. There are numerous resources available – books, Web sites and blogs – that can start you on the right path. But to get there, you have to recognize that the decisions you’re making are the wrong ones. You have to slow down and assess your progress. You have to ask yourself: Am I making decisions today that will help me achieve my future goals? If the answer is no, it’s time to start changing your behaviors.

So today, I’m determined to get back into the wonderful world of good decisions. I’m starting by taking it slow: I went to cheap and delicious buffet breakfast this morning with a good friend, then came home to take stock of all my accounts, finish my laundry and do a bit of writing. We’re going to watch the final four at home tonight and maybe head to a local watering hole to celebrate a big law school achievement for B. It’s all planned out, there’s no rush, and my spending limits for the day are set.

Now for another good decision: time to go transfer some money from my checking to my downpayment savings account. After all, there’s no better way to make an evening of overspending up to yourself than by stashing some cash away for future use.

How often do you replace pillows?

Our bedpillows hadn't been washed in some time, so I cleaned them on Friday. After taking them out of the dryer, I was amazed to see what awful shape they were in. The shells were clean and pretty, but the filling was all wadded up and sideways (and I'd even dried them with tennis balls, like everyone recommends). A lot of punching and jumping on them has made them look a lot prettier but they're far from new, and when I fold them in half they don't spring back to their original shape. So should they be tossed or not? I'm sure a pillow salesman would tell me to replace them every two years or something, but what is the lifespan of a pillow?
I'm probably going to replace them in the summer, after they've gotten four years of use. Seems like a reasonable timeframe.

Simply College Answers Our Student Loan Q's

While I typically spend my weekends dining, drinking and catching up with friends at social functions, I spent much of this weekend at the Kellogg School of Management's
Women's Leadership Workshop in Evanston, Ill. Kellogg is one of the world's top business schools, and I was honored to be a participant. The session featured valuable classroom workshops on negotiations, interviewing techniques, values-based leadership and relationship dynamics for leaders.

I'm going to reflect on those themes and share learnings from the workshop in coming days, so look for more on that. In the meantime, I noticed that many of the women attending the session were grappling with the issue of funding and student loans. Serendipitously, I had already been working on a story about college loans with the good folks at Simply College, a company that specializes in simplifying financial aid for those applying to college and graduate school.

Since the job market's looking pretty glum these days, and the news about student loans has been drab as well, I posed some questions about loans to Rene Bolti, Vice President of Simply College, and an educator with 17 years’ experience creating and administering programs and services for elementary, secondary and higher education. I hope you find her answers helpful.

Here's the Q&A...

1. In layman’s terms, what’s changed in student loans over the past six to twelve months?
Probably the most significant change is a new trend toward eliminating loans from financial aid packages of students below certain income levels. As a result, students at many top-name colleges may find themselves being awarded grants (which don’t need to be repaid) instead of loans.

But, the vast majority of students attend colleges that still include loans in the financial aid equation, so unless you are accepted at one of the top-tier, no-loan colleges, you’re likely to have to grapple with the question of student loan debt.

Although some lenders are exiting the student loan market, there are still many education loans available through a variety of lenders, including federal loans. In fact, the maximum annual limit on federal loans and grants for undergraduate and graduate students has recently increased, making the loans go further toward paying for a year of school.

2. What are three things I should know about college loans today?
1) There are many different types of college loans.

- Federal Stafford loans are available to students who complete a Free Application for Federal Student Aid (FAFSA).

- A family’s financial situation determines whether a student qualifies for subsidized or unsubsidized Stafford loans. (In subsidized loans, the government pays the interest while you’re in school; in unsubsidized loans, you’re responsible for the interest that accrues while you’re in school.)

- Federal PLUS loans are a low-cost option available for parents of students.

- Private loans, made directly by banks or specialized lenders, which tend to be the most expensive option, are available to students and parents to fill any gaps that remain once financial aid has been awarded.

2) Not all education loans are taken in the name of the student; some are student loans, some are parent loans, some need to be co-signed by the student and a credit-worthy adult.

3) Private education loans need to be researched for terms of repayment, length of repayment, total cost over the life of the loan, special qualifying characteristics (like minimum grade point average), and whether all terms and special offers (like interest reduction based on a certain number of on-time payments) are guaranteed for the life of the loan.

3. Can’t parents help their kids navigate the process?
The financial aid process is complex and overwhelming, even for parents who are college-educated and highly motivated. It is a multi-step process requiring attention to timing and detail, with many significant decisions compressed into a very short period of time. To minimize the anxiety and stress inherent in the process, it is beneficial for parents and students to work together, using trusted resources, to be sure they pay attention to each critical component.

Our program, Simply CollegeTM offers a step-by-step workbook/organizer, “Financial Aid Simplified”, to guide students and parents through the entire financial aid process beginning as early as January of junior year in high school, including researching scholarships and loans, completing required forms, comparing financial aid award offers, building a “college life” budget, and more. Go to www.simply-college.com to view video segments that accompany each tab of the workbook.

4. Is the financial aid process different for grad students?
The financial aid process for graduate students typically includes the FAFSA (to make federal loans accessible), but also may include looking for fellowships, assistantships and private loans. FinAid.org has a page dedicated to information for graduate students, including information on specialized loans.

5. Are working professionals at a disadvantage when it comes to loans?
While it is true that income will determine eligibility for certain loans and grants,
working professionals might consider financing their graduate degree through a combination of: employer tuition reimbursement, fellowships, grants, loans.

If you research the possibilities, you’re likely to be able to put together a package that meets your needs. In addition to discussing all possible funding sources with your selected university’s financial aid office, be sure to discuss assistantship and fellowship opportunities with your selected department.

If you are currently employed, talk to your human resources department about tuition reimbursement options (even if you’re unsure whether your employer has a tuition reimbursement program). As mentioned above, finaid.org is a good source of information and fastweb.com has loads of scholarship opportunities, including some for graduate students.

6. If I’d like to quit working and go to school full-time, using student loans, what special considerations might I have to take?
Giving up a salary and returning to the classroom full time will mean making some adjustments to your current lifestyle as student loans are unlikely to equal your salary. Each person needs to weigh personal responsibilities, career aspirations and financial goals when considering full time graduate study and how best to finance it. Here are some specific questions you should ask.

- Is there an alternate source of support available while you’re in school, like a spouse or parent? Even if it’s a loan from a family member, the terms of repayment and amount of the loan would likely be more favorable than any formal education loan.

- Is it possible to work part-time to cover basic living expenses while in school?

- Will a post graduate-degree job in your field draw a salary sufficient to afford and justify educational loan payments?

- Do you already have employment prospects that will be enhanced by a graduate degree?

- If you need to take an educational loan, how soon will you be expected to begin repayment?

# # #

To read some of my personal thoughts and other research on college loans and education, click here and here and here.

Good luck with your applications!

The Stock Market--What To Watch Out For

Uncle Bill is always looking out for your well being and as the credit crunch heads west and out of sight, I think, there are some real things to worry about and they are---

1) politicians

2) the Supreme Court

3) the Fed

As the guys over at MarketMinder.com (full disclosure--I am a client) are often more articulate than moi, I'll let them do the talking--I've got a house to get built.

The Real Risks

10/9/2007

Story Outline

• “Credit crisis” headlines are being replaced by economically insignificant headlines, signaling a lack of legitimate negatives to report.



• Legitimate market risks are few, and unlikely to impact the market much at this point. The risks for aggressive legislation and a major monetary policy error remain low.



• Positive fundamentals currently far outweigh potential market negatives.

Anyone else notice the “credit crunch” headlines are starting to go away? They’re still out there, but no longer occupy top billing, chased off by Britney’s child custody saga, Pamela’s quickie Vegas nuptials, and harrumphing over stores gearing up for Christmas in October. This is front page stuff from allegedly “legitimate” news sources! Very bullish. (For more, read MarketMinder commentary “What a Week,” 10/05/2007.)

We spill barrels of virtual ink at MarketMinder underscoring why now’s a great time to be bullish and pointing out glaring flaws in popular bearish views. As we’ve covered here, popular concerns such as the credit crisis, a weak dollar, allegedly slowing US growth, trade deficits, debt, and even terrorism don’t have the market impact folks think. (For more, you can refer to our commentary archive.) But that doesn’t mean we’re blindly bullish. Rather, we see that legitimate risks are unlikely to develop into major market negatives right now and are far outweighed by positive fundamentals.

For example, we’d view an aggressive legislative reaction to perceived subprime problems as a legitimate risk. Our senators vow to “solve” subprime by forcing banks to tighten lending standards in order to protect the “little guy.” (Pardon us, but who is going to protect the “little guy” from the Senate?)

In our view, any attempt to limit credit access could have negative economic and market consequences—perhaps serious. Is it time to pack it in, go to cash, and safely watch the political melee from the sidelines? Not at all. As we’ve discussed here in the past (“Veto Power”—10/04/2007, “A Political Punch”—05/31/2007) third and fourth years of presidents’ terms are famously feckless. We nearly always see the president’s party lose relative power in the mid-terms—donkeys and elephants alike—setting up the perfect recipe for political gridlock. The political furor over subprime is likely to devolve into nothing more than inane investigations and name-calling—a very good thing if you’re a fan of rising stock prices.

The same goes for rising protectionism—another legitimate market risk. Though congressional cries to “save American jobs” may increase political contributions in the near term, efforts to hinder globalization will likely have an ugly economic outcome. But for now, third- and fourth-year politics should keep ill-considered protectionist legislation to a minimum.

What about a case the Supreme Court is hearing today—being called the Roe v. Wade of securities law (i.e., unique in its far-reaching significance)? In StoneRidge Investment Partners v. Scientific-Atlanta, the plaintiffs argue investors have the right to sue third parties—accounting firms, investment banks, consultants, vendors—if a public company commits fraud. If the plaintiffs succeed, it could mean open season on big business and an exponential increase in frivolous lawsuits. (Great news for plaintiff’s attorneys! Bad news for pretty much everyone else.) Imagine what companies would have to do to protect themselves from litigation. CEOs would become prohibitively risk averse—which would likely reflect in lackluster earnings growth and stock prices.

StoneRidge: Don't Look For a Landmark Ruling
By Brian Wingfield, Forbes
http://www.forbes.com/home/businessinthebeltway/2007/10/08/stoneridge-lawsuits-supreme-court-biz-wash-cx_bw_1009scotus.html

However, we agree with this article’s assessment that the Supreme Court is highly unlikely to rule in favor of the plaintiffs. A 1994 precedent and two recent lower court decisions make it easy for the Supreme Court to rule against the plaintiffs and in favor of capitalism. Another risk moderated. (Though we’ll watch the Court carefully on this.)

Another risk we see is a massive monetary error—like the Fed aggressively tightening or even dropping rates dramatically. We view this risk as slightly higher now, though still unlikely. Mr. Bernanke will be the first Fed head up for reappointment in the first year of a president’s term, as opposed to the fourth year (thanks to term limits imposed on Mr. Greenspan). Ben’s recent cut might have been a signal to presidential candidates, “Hey! I can be accommodative! You want to get reelected to a second term? You need a pleasant economy in the first—and I’m your guy!” If he is indeed auditioning, he may very well cut rates again. But, we still don’t see a few rate cuts as a major deal. First, they take a long time to be felt. Second, inflation has actually been dropping over the last two years. We can’t see how another cut or two will ignite inflation radically from here. File “major monetary policy error” under “still highly unlikely.”

None of these seem likely to flare into major market conflagrations at this point. And they pale in comparison with healthy fundamentals like a growing global economy, strong corporate earnings, and attractive equity valuations. Add to the mix a historically unique positive gap between earnings yields and bond yields globally—which contributes to shrinking stock supply—and a lack of economically significant headlines, and the bears don’t stand a chance. Neither does Britney’s custody case, by the way, but as long as she hogs headlines and fundamentals remain positive, we’ve got a nice ride ahead of us.

Military personnel probably not eligible for RALs this tax season

The Military Lending Act came into law on October 1, 2007, with the intent to stop predatory lending to military personnel, their spouses, and their dependents. The primary target of this law was to protect military families from payday lenders and to protect the nation from the risks of servicemembers with high levels of debt and out-of-control financial situations. The law caps interest rates on all short-term loans (defined as loans of less than 91 days in duration) at 36% APR. One provision of this law deals specifically with Refund Anticipation Loans, or RALs, which are short-term income tax refund advances. With RALs, customers of tax preparation companies forfeit a portion of their refund in order to get it in one or two days instead of the 8-15 days normally required with an IRS direct deposit. The interest terms on these loans are usually right at 36% APR, since the major tax preparation companies have known about this impending legislation for awhile. That should make the fit within the parameters of the law, right?

Not necessarily, and if you live in California, the answer is definitely no.

Aside from the APR, these loans have an origination fee which cannot be waived for anyone.* The origination fee (or account creation fee, or check fee, depending on where you go) added to the interest charges on the loan bump the loan's interest charges well above the federal limit of 36% APR. This means the loans are considered too predatory to military families under the Military Lending Act and are therefore unavailable. Therefore, as a servicemember, you need to plan ahead and realize it will be a couple weeks before your refund is available.

Are there any loopholes? Not as far as I know, short of committing perjury. A wife filing separately from her servicemember husband is not eligible for a RAL. A child who has received more than half of his support from a servicemember for the 180 days preceding the loan request is likewise ineligible for a RAL. Major tax preparation chains will have their software programmed to recognize certain EINs as belonging to military divisions and will invalidate the RAL option on that basis alone.

This will probably prove to be one of the more frustrating aspects of the new legislation, as many people who don't bother with payday lenders still request income tax refund anticipation loans. Many may not be pleased with the longer wait time, even if it does save them some money.

*Specifics here might vary by state. If you're interested in one of these loans, contact your tax preparation company of choice to inquire. They will know, and more likely than not, they will not be able to offer this product to any member of the military, their spouse, or their dependents.

Frugality is a habit

Frugality is a habit just like any other. Habits are powerful things. If you make sure to get into good habits, they can change your life for the better, a little bit at a time.

Some examples of frugal habits that I use without thinking about them are:

• Using half the recommended amount of laundry detergent


• Washing a few large loads on the weekends (to use less water and a cheaper time of use) instead of several smaller loads


• Using half a dryer sheet instead of a whole one


• Making sure the dishwasher is full before running it


• Using only a small amount of dish detergent instead of the recommended amount


• Using a mop, vinegar & water instead of the hateful-smelling Swiffer


• Turning worn-out clothes into rags, which can then be used instead of paper towels


• Combining errands into one circular trip

What habits do you have that are frugal?

Tax Time

Phew! My taxes are filed. I'm glad to be done with them for the year. If you haven't filed yours yet, get moving. You only have about a week left!

I filed my taxes using H&R Block online. As many of you know, my lovely Aunt Mary usually files mine for free, but I ran out of time to send them her way this year so I filed online. For those of you accustomed to having financially savvy relatives or friends do your taxes, the experience was little daunting; I wasn't 100 percent certain I did everything right. Still, it was very convenient to file, took less time than making a trip to the nearest tax place and included a computer-generated error checking system, which comforted me a bit. It was difficult, but I only filed a 1040-A. I'm sure if I had more complicated finances, I'd use a professional.

So... now that you're all filed, what are you doing with your double whammy tax return and tax refund this spring? I'm predictably putting into the savings account, which will be a nice bump towards helping me achieve my savings goals this year, but I'm sure others have bigger, more exciting plans (exotic vacations? new refrigerators?). Share them!

Cold Weather, You're Out

Dear Chicago:

I don't know what I did to piss you off, but I'm writing to let you know that I've absolutely had it with your attitude. I WILL NOT, no matter how cold, snowy or downright nasty you get, WILL NOT wear my down parka another minute until at least October. I refuse! You may have gotten the best of me this winter by jacking up my heating bills to over $200 each month, leaving permanent salt stains on all my clothes and shoes and halting my driving lessons with your "ice storms," but mark my words, frienemy, your frosty days are numbered.

Watch out Chicago. Because as soon as your cold snap ends, I will be out on your town with a vengance.

Regards,
Nicole

Tuesday News Round Up

I really have no good personal finance news to share on this drab, rainy spring day. It's kind of a cranky, "crap, I didn't know it was that bad," sort of a day. Did you see any positive stories today? If so, let me know. 'Cause all I saw today was this:

A British paper is claiming the U.S. is in "the Great Depression of 2008" and cites some alarming statistics about the use of food stamps as support. Read it here. OK, it's just one article, but these types of stories are becoming very prevalent.

The Wall Street Journal points out that the credit crunch is now affecting our savings accounts! What! That's a blow to this savvy saver! It makes me feel like there are no good decisions to be made. I think my Emigrant Direct account is no longer keeping up with inflation. Grrr...

The New York Times says the average consumer is carrying $9,000 in credit card debt from month to month. (That can't be right, can it?)

And Fortune is freaking out about the proposed new finance regulations and the mess on Wall Street. (Don't worry if it's over your head, nothing's likely to happen very soon.)

We're so grumpy-pants we're even hating on SATC today.

Will Summer please get here soon so we can return to sunshine and happiness?

Blogroll Clean Up

I’m not too happy with the latest and greatest version of WordPress. The GUI is a little too different for me to enjoy the transition. When it was installed, I was under a lot of stress at work so I didn’t like the aggravation of having to figure out where stuff was. Therefore, I did nothing but write.

Last night I finally had some time to flip through my blogroll and cull it mercilessly for old stuff that’s not updated or sites that are just plain old gone. If you moved your site, let me know the new link and I’ll try to get to it.

Instead I bring you three new gems in the form of Mrs. Micah, The Hustle of Sistah Ant and Weight Down, Money Up.

Mrs. Micah is a freelancer and part-time employee. She’s a young married with a great mix of personal values and frugal tips in her writing. Yesterday’s post on lingerie begs for a follow up post by me. I’ve been feeling harrassed by my undergarments in the summer heat. (Link has a picture that is SFW.)

Sistah Ant is living in my hometown, Philadelphia, works as a contract employee and yet has managed to save up $9K for her first home downpayment fund. She inspires me with her drive to reach her goals.

Weight Down, Money Up is written by BK, your sassy Brooklyn-bred Jazzercise instructor. She is beautiful and smart. She has a lot of spirit and energy, as you can imagine a fitness instructor would. If you are interested in weight loss and personal finance, (as many of us are) check out her blog. All I want to know now is if she teaches Jazzercise in my neck of the woods…

N.B. Please don’t ask me for a link exchange. I blogroll what I actually read regularly. If I couldn’t remember to add your link the other night, I probably don’t read you enough. But do feel free to send me a link if you want me to check you out. I just don’t make promises that my sieve of a memory will remember the next time I update.

PS - How about them Red Wings?

Steve & Barry's Rocks It Out

I have never been to a Steve & Barry's. And yet, this article in the New York Times makes me want to visit one.

Tightening the Belt
Is This the World’s Cheapest Dress?
New York Times, May 1, 2008
By Eric Wilson

... Steve & Barry’s, for the uninitiated, is to fashion what Tower once was to music. Steve & Barry’s is manna, a store that sells stylish celebrity-branded clothes at prices that are absurdly inexpensive, lower than those at Old Navy, H & M or Forever 21, undercutting even Wal-Mart by as much as half....

Read the full article here. (You'll need to register free of charge, I think.)

It's interesting to see that the themes presented in the CBS interview in which I participated (Is cheap the new chic?) are living on.

To take it a step further, I just hope all you fashionistas are putting all the dinero you're saving on clothes to a good cause - like your retirement, education or investments. After all, it's not just about looking good for less, but making sure your bank accounts are just as stylish.

Procrastinate your way to spending less

One tool that's often overlooked in the quest to spend less is the tendency to procrastinate & rationalize. Many of us are procrastinators, so why not turn that trait into something positive for our wallets?

What do I mean? Occasionally you can procrastinate your way into spending less.

Take my car, for example. I don't have AC in it. Or heat. Most people might find not having one or both of those things intolerable, but it doesn't bother me. I had my heater bypassed a few years ago, and I don't even remember when my car's AC quit working. It's been a long time. I always sort of vaguely mean to get the AC fixed, but keep putting it off. Like I'm doing now.

Here's how my thought process goes. It's already summer, and my car would have to be in the shop for a day or two to get the AC fixed. Which means I'd have to walk home from work then right at the hottest part of the day, so ew. I'd have to spend the money, and I'd rather use that for something else. How often will I be driving anywhere that takes longer than 5 minutes to get to anyway? Not often. A convertible just doesn't get all that cool in 5 minutes or less anyway, even with the AC blasting. Geez I could just take some ice water with me if I have to take an hour drive or something. Plus we're going to be gone for a few weeks this summer anyway. Before I know it summer'll be half over. So why get it fixed now? Then it'll get cooler out, and I'll think well, I wouldn't use the AC at all now even if it did work, so maybe I'll wait and do it in the spring. Then spring comes and it's so beautiful out that I want to enjoy driving around in the nice weather. So I don't do it then either. Rinse & repeat.

The silly thing about this is that the AC unit MIGHT just need freon. (And to be divested of years of dust.) But it's just not worth it to me to get it checked out. If it's in the shop anyway for something else, maybe I'll get it looked at then. (Hm, more rationalization.)

I KNOW this is silly. But I also know it's silly to spend money on something that I just don't care that much about. So why not continue procrastinating and give my wallet a break?

Plus, if I ever do get it fixed, chances are that I'll appreciate it much more than I ever would have otherwise. How do I know this? Well, I drove around for something like 15 years with blown speakers and the original factory stereo. And wow do I ever appreciate the new speakers (thanks to my husband) and the new stereo. I can hear notes that I've literally never heard in songs before. It's like a whole new world of music. So what if my son laughs at me for finally getting a CD player when the rest of the world is into iPods? The stereo does have a jack for that too, but CDs and all those great new notes in the songs are fine by me.

House, Senate panels back a 3.9% pay raise for 2009

The House and Senate budget panels are backing a 3.9% increase in military base pay for 2009, while the President is backing a 3.5% increase for next year. The goal of these increases is to provide for a cost of living adjustment as well as make military pay commensurate with civilian pay for similar jobs. While the increase sounds nice, it hasn't been signed into law yet, because the Congressional Budget is far from being finalized, and if you recall how the process went this past year, don't count on seeing it until February. Hopefully though, a lame-duck Congress and a lame-duck President can get their work accomplished quickly and prevent unnecessary inconvenience to military families.

Of course, we all realize that with the increasing costs of fuel, food, energy, and housing this 3.9% increase will really be a small pay cut, but that's a topic for another day.

A new direction for my net worth this month...

I compiled my net worth statement this month and wasn't too surprised by the results - I'm down about $5,000 - because I finally decided to spend some of my damn money. :) This August, Boyfriend and I will be taking a week-long trip to Rome! I love to travel and Boyfriend took Italian all year, so it works out well. I am so psyched I cannot even begin to tell you.

I am doing pretty well on my "save all my salary, live on business earnings" plan - I am getting a little chicken though, since with paying for the Rome trip I'm down to only (gasp) two or three months worth of living expenses in the emergency fund. You can tell how chicken I am.

I've taken a new philosophy over the past six months or so - I'm finally realizing that I do in fact earn quite a bit of money, and that money isn't any good if you don't use it to get what you want. At first what I wanted was assurance of financial security, now and in the future, so my focus was on building up an emergency fund and retirement savings. Well, I have over $10,000 in cash, albeit earmarked for different purposes, and as of now I have a smidge over $40k in retirement savings. My outlook on savings could best be described as "starvation mode" - you can never have enough. But I am relaxing some, and not saving every dime. Another facet of my realization is that I am spending a good deal more now on restaurants, entertainment, movies, etc, and often paying for my friends (most of whom are students) because I've realized that one thing that I want is to go out and have a good time with my friends, and there is No Good Reason to not use my money to accomplish this end. :)

Next month I will be moving into a more expensive apartment (it's a duplex) and I am also really excited about this. We need more space, and I want a backyard very badly. (My guinea pigs haven't been outside except to go to the vet in a year and a half.) Boyfriend is getting a grill, partially because it is entirely my idea to move as he's perfectly comfortable in our current apartment, and he is putting up graciously with my shenanigans. (Of course, he also has a room to himself as an office, while my desk is in the bedroom.) Now we'll both have an office, and a very nice kitchen and dining room area, which we use extensively. Of course it is more expensive than where we live now, but this is yet another arena in which I need to remind myself that I can well and easily afford this. There is quite a difference between living below your means, and living vastly below them to the point of unhappiness.

I fully expect my net worth to reverse next month, as I am paying off the Rome trip in a lump sum. I also need to contribute more to my SEP IRA, but I have until April 2008 to do that, so I'm not in a hurry.

Now is the time for the twiddling of thumbs

It seems like the days right before the 15th, when I get the bulk of the money and can start making payouts and transferring money and ordering cards, are longer than other days. The 15th is always a busy day for me - all the cards get ordered, and all the checks are written. So I'm looking forward to that.

Unfortunately, the other thing that goes on just before payouts are reversals - usually though if I don't feel that the member did anything wrong, I don't reverse the member's credit. So far this month I have gotten at least 10 Foreclosusre.com reversals and 4 Advertising Web Service reversals, and lots of CallWave signups were put "under review".. hopefully there won't be too many more reversals, but the bulk happen between now and the 14th, when the invoice is finalized.