Ides of April Spending Check-In

I'm trying to be frugal this month. I owe so much money for 2007 taxes and estimated taxes. My boyfriend is helping out a bit in that he's paying for a higher percentage of our "dining out" expenses. Without further ado... here's my expense breakdown from April 1 - April 15.

Total Spending: $1907.16

Fixed Expenses: $1218.33

$1050 Rent

$87.34 Car Insurance

$27 Gym

$53.99 Phone

To Be Reimbursed: $120

$120 Parking Permit

Taxes (not including federal): $311.90

$260 Estimated State Taxes

$2 State Taxes 2007

$49.90 tax cut online

Investing: $12

$12 last Sharebuilder fee for a while

Gas: $126.48

$64.29 Gas Filler up.

$62.19 Gas Filler up.

Food / Drugstore: $118.45

$5.33  Safeway

$9.28  Longs Drugs

$8.65 Walgreens

$26.84 Dining out for two

$21.54 Longs drugs

$12.07 Supermarket

$23.49 Eating Out for Two

$11.28 supermarket

Sharebuilder Experiment -- An Expected Failure?

My Sharebuilder account is down about $134 right now, and I doubt it'll enter an uptrend anytime soon.

The biggest burner is one stock pick - COMV - that I bought a measly 4 shares at for $29 a piece. Those shares are now worth about $10 a piece.

Meanwhile, GLD, the "gold ETF," which was actually doing very well a few weeks ago, is now "correcting" itself, and I'm down $30 on that investment. $30 isn't bad, but I have a feeling that it will be a while before GLD hits $100 a share again. I think it will, one day, given that every so many years the economy looks bleak and people start to pour money into gold. I don't know if it will ever go beyond that. I don't know how long it will take to get there again. I don't know how much money I'll "lose" in the meantime. I see people saying GLD could be worth $70 a share or less. That'd be a "big" loss. I own about $500 worth - 5 shares. So a $30 drop per share would be a $150 loss.

I guess that's not that bad. If I want to hang on to GLD as a backup. It's supposed to be "insurance" in a portfolio. Of course, most people say it should be in metal form, not paper. But GLD is kind of like owning the metal, right? It's investing in the bullion anyway.

I wonder if I should have sold GLD when it was up to $100 a share. I would have made a nice little profit of $47 at its highest... which would have been better than losing $300. Much better.

I'm happy to hold on to all of my investments for many years. I'm trying to invest and then "forget" about my investments, even though I follow how they're doing, but as soon as I put my money into that account I pretend it's play money so I don't have to worry about it. Maybe that's an awful investing strategy?

Regardless, I stopped investing in GLD. The $500 is enough of my portfolio at the moment to devote to that.

Meanwhile, I've started diversifying a bit more. Away from GLD and away from individual stocks. Right now my Sharebuilder portfolio is:














GLD: $507.10 (5.8 shares)
BMXX: $251.83 (money market)
EWZ: $244.33 (3.08 shares)
MCD: $194.83 (3.41 shares)
PDB: $163.46 (6.2695 shares)
KOL: $109.10 (2.88 shares)
WFMI: $106.01 (3.069 shares)
EPI: $105.73 (4.48 shares)
XLF: $69.65 (2.65 shares)
COMV: $43.48 (4 shares)

Investing in a 529 Plan for My Non Existent Children

So I'm looking for creative investment ideas once I max out my Roth IRA for the year. One option is a SEP IRA or a Keogh Plan, but I don't really want to save that much for retirement right now. I'm in my 20s and yes, it's important to put away a lot of money for retirement but I feel like on my salary $5000 a year is enough. (Maybe I'm wrong, but regardless, that's my current thought.)

The stock market, as we all know, is a giant toilet bowl right now, and it feels like putting money in it is just as bad as walking into a Vegas casino and flushing your money away. The hope is that it will go up over the long term. And it probably will, though no one can say what the rate of return will be, of course.

Besides starting an HSA Plan (which I should do, like, yesterday -- but figuring that out is a whole other blog post-o-fun), I'm thinking that it might be a good time to start saving for my kid's college education.

What kids, you say?

OK, so I don't actually have any kids yet. I don't plan on having kids until I'm 30, and that's 6 years away.

But college prices are so expensive... and if I have kids at 30, they'll be going to college when I'm 48 (wow, I can't even imagine being 48). Anyway, that's 28 years from now. Putting money away now to compound for that long will probably eek out a nice return, especially if I invest in some basic Vanguard index funds.

I'm also considering going to grad school at some point. So I'd start a 529 Plan in my name and if it turns out I never go to grad school, I'll put the money towards my kid's plans when I have kids. If I don't have kids, well, then I'll just give the money to my sister's kids. If she doesn't have kids, I'll give it to my cousin's kids. I'm sure someone in my family can use it!

Does this seem like a silly idea? I'm trying to find out more about 529 Plans.

The government site explains them a bit...

http://www.sec.gov/investor/pubs/intro529.htm

There are fees and expenses associated with 529 plans, and I won't jump into the investment without fully understanding them. Right now it all seems like a bunch of jumbled numbers to me.

Some interesting points from the gov site...

"Under current tax law, an account holder is only permitted to change his or her investment option one time per year."

"While each educational institution may treat assets held in a 529 plan differently, investing in a 529 plan will generally reduce a student’s eligibility to participate in need-based financial aid."

"Before you start saving specifically for college, you should consider your overall financial situation. Instead of saving for college, you may want to focus on other financial goals like buying a home, saving for retirement, or paying off high interest credit card bills. Remember that you may face penalties or lose benefits if you do not use the money in a 529 account for higher education expenses. If you decide that saving specifically for college is right for you, then the next step is to determine whether investing in a 529 plan is your best college saving option. Investing in a 529 plan is only one of several ways to save for college. Other tax-advantaged ways to save for college include Coverdell education savings accounts, Uniform Gifts to Minors Act (“UGMA”) accounts, Uniform Transfers to Minors Act (“UTMA”) accounts, tax-exempt municipal securities, and savings bonds. Saving for college in a taxable account is another option."

Plenty to think about. I really should be saving for a house. But it just seems like it couldn't hurt to start saving for grad school and/or my kid's college education. Right?

I Love Spending Money

Besides spending a gadzillion reimbursable dollars on my credit cards, I've been pretty good about spending money this past month. And that's been a good thing too, since all of my retirement and stock accounts have lost hundreds upon hundreds of dollars. My plan to spend frugally while the stock market takes a hit is not working as well as I'd like in terms of balancing my net worth. I'd like to not lose money, even if I have to deal with not making any. But my net worth keeps going up and down, and now it's on a downward trend. I don't feel like I'm spending a lot, but with half of my savings tied up in stocks and such, the recession is hitting hard.

I do trust that over time most of my stocks will go up. Or at least I hope they will. I'm not going to pull out now just because I've lost lots of money. But I'm less excited about putting more money into stocks.

I kind of wish I put more money into that liquid 4% rate CD that I got a bit less than a year ago. Now the CD rates are at like 2%. Ick. After paying off my credit cards and bills, I'm not sure where to put my money right now. I still want to max out my Roth IRA for the year, but I only have $1700 left to do that.

I'm also planning on going to Israel this summer for the birthright program. It's a free trip, but i still have to pay to get to the airport in New York (a $300 flight) and then I'll have to pay for anything I want to buy while I'm there. Also, I might want to add on some time and travel a round a bit after the official trip, which will cost more. And I promised myself that next time I travel abroad I will buy a good DSLR camera to take with me. So... I think that time might be coming up.

So I do want to have some liquid assets. But I don't want to just keep it all in my ING account, that seems kind of wasteful. As I've written before, I'm slowly adding more funds to Prosper (I'm up to $250 and 5 loans so far)... that seems to be the best way for me to make a decent rate of return on my money in these sour economic times. But the risk makes me nervous as well.

All I want to do this year is get my networh at least up to $30k. It's at $27k now but it goes up and down all the time. I'd love to get my networth to $35k this year, but it really depends how the job situation pans out, and if I can manage figuring out where to save money without losing it.

You Can't Scoff at Deal or No Deal if you Play the Stock Market

Have you ever watched Deal or No Deal? If so, how frustrated do you get when the contestant is offered a really good amount from the banker and then the contestant goes on to play against the odds and ends up with a measly ten bucks?

Watching the show it's easy to think, gee, this person is an idiot. But how different is that from playing the stock market?

Of course, stocks have a lot more math to them. The odds aren't so clear cut. Each company has its own risks and it's own potential for success.

But when it comes down to it, you either believe in a company or you don't. You believe that in box #1 there is a goldmine and you stick to your gut or you change your mind and hope you're right.

Obviously you can't control the stock market, but I never realized just how vulnerable it (and the American dollar) was until recently with this huge recession going on.

I can't figure out if my stock investments are bad choices or if the recession will just have to work through my piggy bank before my stocks can start growing, and hopefully returning to their investment value and exceeding it. Still, I have my doubts I'll see that money again.

As I've said earlier, my Sharebuilder account is where I can play the stock market for the long term. I'm not day trading... which maybe is a bad thing, given the recent performance of my GLD holding. It was up to over $100 a share just a day ago and now it's down to $93 a share. My $49 profit has widdled away to $6, and I wouldn't be surprised if it goes negative soon either.

Meanwhile, all of my other funds are performing miserably. One of the other reasons I started my Sharebuilder account is to diversify my portfolio internationally. I've got random bits of stock in Brazil, India and the rest of Asia (coal and cleantech stocks) -- all ETFs. I'm hoping that if the US crashes and burns maybe these other economies will survive and even grow. I believe that the future for the US economy may not be so bright. China and Asia are gaining power by the millisecond. I can't imagine that the US will be able to keep up. I think over the next century the US is going to lose some of its superpowers, for better or worse. I believe there's going to be a big war at some point down the road that's going to hit all of the world's economies much worse than the Iraq war. There will probably be more attacks on America, and there will be a third world war. I just don't see how it's possible to avoid it. Scary, but I think it's probably true.

Of course war times, historically, are usually good for the economy, right? Well, except this Iraq war doesn't seem to be living up to that. So I don't know. I can't really guess the future, but the way the world is right now, and the way people are so stupid and stubborn and violent, I can't see us avoiding some huge conflict for much longer.

I'm not sure how that will effect my stocks. If I survive through such a war... maybe a diversified portfolio will be a good thing to have?

Concerning My Expenses... and the Stock Market

I've charged about $500 in expenses for the show I'm currently working on, and while I'll get all that money back, I'm now a little worried how I'm going to pay for all of it. I've moved so much of my money into stocks and such (which, of course, are performing awfully) that I have little in my checking account. I get paid sometime at the end of the month and I'm actually owed a lot of money right now for invoices I haven't filed yet, so I'm not really concerned about the end result of my expenses balancing out, but for time being I have a credit card statement due that needs to be paid off, like, next week.

What to do, what to do.

In other financial news, I'm starting to really feel the hit of the stock market. Mostly I just picked a few bad stocks on the first day I signed up for Sharebuilder (bought 4 shares of one for $26 and now it's down to a measly $11). I could sell that stock and buy something else with the money but it seems like a waste to sell $40 worth of stock with a $9 fee. If anything, it's worth $30 to wait it out and see if one day that stock will go up again. Or if the company will go out of business and it will be worth nothing.

While that specific stock has cost me the most in my Sharebuilder account so far, I'm still down $73 dollars. Not so bad, I guess, compared to my Vanguard accounts which are now down hundreds. Thousands even. I can barely bare to look at them.

I've been keeping detailed track of my investments and every single account for the past month. I record it all in a google docs spreadsheet every three days. So this way I can see what my stocks are actually doing. It's a little hard to track them because I invest in them every other week, so it's hard to tell if they went up or if I just put more money into them.

I'm trying to continue investing with the "stocks are on sale now" mentality but it's getting tough. Losing money is not my forte.

I'll hang in there, though. Or at least I'll try, in hopes that one day when the economy booms again, so will my stocks and index funds.

In the meantime, my GLD ETF is performing very well. I'm sad I didn't buy more of it the first day I decided to start purchasing stocks. Still, I fear that I won't get out of GLD at the right time and I'll end up losing all my gains.

A few weeks ago I wrote how my GLD was up $29 and someone said that I should just sell it now, the $24 gain was good enough. But now it's up $47 so I'm glad I didn't sell. The way the economy is looking, it's probably good to hold onto it for a while. It's the only ETF/stock in my Sharebuilder account that's actually making money. It helps balance the blows of everything else. Luckily it's also the largest percentage of my Sharebuilder portfolio. So that's why I'm only down $73. But given the trends in the stock market, I have a feeling I'll be down much more.

The good news is that my Prosper accounts are doing well. I'm getting an average 8% return on them. I only have $200 in Prosper (and one $50 bid out) but it's nice that my borrowers are paying me back on time thus far. It also feels like a nice cushion to the sagging stock market. But I know that one defaulted borrower would put me back $50, and more than one would make the whole P2P lending "benefits" worthless. Less than worthless. You know?

So where does that leave me? Like everyone else who is invested in anything, my finances are suffering right now. I feel like this is a great opportunity to throw money at the stock market (or at least at low-cost index funds and maybe some quality stocks now "on sale") but gosh, it's really hard to put money in knowing that I'm going to lose a lot in the meantime.

I mean my Vanguard total stock fund should have $5200 in it, but instead it has about $4500 or something. I can't even check anymore. It's too painful.

Forbes Billionaire's List and How Rich is Rich Enough to Give to Charity?

A few days ago Forbes posted its annual list of the world's richest people. While the billionaires gracing the normal list were mostly obvious -- Warren Buffett, Bill Gates, etc, the list that I found more interesting was the sidebar "World's Youngest Billionaires."

Many of the world's youngest rich inherited their wealth. Some, like Facebook's Mark Zuckerberg, are self-made billionaires. At just 23 (he's only a year younger than me) he's set for life. And a few other lives, as long as he can reincarnate and claim his savings on his return to earth.

As I've been figuring out my budget upon my upcoming raise, I noted that I feel like I'm almost making too much money, and I don't know what to do with it all.

Of course, that's not true. Now that I actually have money to put into savings, I can start seriously saving for things I want, like for the down payment on a house.

The other day as I was driving I was thinking about how nice it would be to make enough money that I could donate a substantial chunk of it to charity. Then greed clouded my head and I thought - why donate money when I can save the money? My Roth IRA isn't maxed out yet, and even then the extra cash put into a SEP Ira, a high interest savings account for the house down payment, a CD or some other saving mechanism would probably be a wiser move.

I always thought that charity should be given in time, not money. If you're going to be charitable, go do some volunteer work, help build a house with Habitat for Humanity, or volunteer to mentor in-need kids in a local town.

Then I got into the "real world" where I realized time is money and I have more money than time. Yet I still don't feel like I have enough money to donate yet.

Obviously, given my pay bump I could donate $100 a month instead of putting that to my investments and just pretend it never happened. It would probably make me feel all warm and fuzzy inside, but I don't know how warm and fuzzy I'll feel when I retire and the government has run out of money for social security.

At what point in one's wealth-building career does charity become a necessity? Does everyone donate to charity? How much is the proper amount to donate, percentage wise, of one's income? What if one's job is unstable and while he or she is making a good amount of money now (in the $55-$70k range, dependent on how many freelance projects are completed), but in a few months she might be unemployed? What if, as a freelancer, my entire life is lived like that? And then what if I have kids and more than just myself to worry about one day, financially speaking? When do I give to charity and when do I just be selfish and keep all my money?

What to do about GLD?

A few months ago when I dove into the market with idealism and ignorance, I wanted in on all this gold excitement in the market. I believe the market is tanking, a recession is inevitable (if not already happening) and gold will do well for a while. I believe, and largely still believe the hype.

However, what I didn't realize at the time (damn me for not reading the prospectus or understanding tax law) is that GLD, being as it actually means I hold a small tiny piece of actual gold, is considered a collectible by the IRS.

Why does that matter?

Well, normal long term capital gains are apparently taxed at 15 percent, which is actually pretty nice given that you can make a lot of money in the stock market, and as long as you hold your stocks for a year you only have to pay the 15 percent tax.

However, GLD, the "collectible," is taxed at a rate of 28 %.

Oy!

So now I'm trying to figure out what to do with the GLD stock in my Sharebuilder account.

I understand the long term capital gain tax, but I'm still unclear what the gains would be taxed at if I cashed out in less than a year. I'll probably want to do that anyway given that gold's price will hit the roof at some point, the dollar will recover with the new president coming in (hopefully) and I can sell off the gold.

But what rate will GLD be taxed at if I sell it within a year?

Also, I'm buying it about once a month in smallish increments. Right now I own about $470, or a little less than 5 shares of GLD. As of today, the account has a net profit of $34. To sell it, though, would cost $10. So if I sell today, I made $24. But that $24 will be taxed. What rate would it be taxed at?

When it comes to long term capital gains, is the "one year" policy based on when you bought each share? What if I bought a part of a share per month? When can I sell to get the long term capital gains tax instead of the short term tax? And would I want to wait or sell sooner for my GLD holdings?

Can someone explain this to me...?

Almost maxed out my Roth IRA, now where do I put my savings?

By now, I've read plenty to scare me into investing as much as possible for retirement as soon as possible. Last year I maxed out my Roth at $4000 (put some of my savings into that, since my income didn't allow pulling from that) and this year I'm already up to $3300 of my $5000 limit. I'm trying to put in $300 a month, which will get me to my limit in a few months.

Ok, so the question is, after I max out my Roth IRA, where do I put my money?

*I am a freelancer so I don't have access to a 401(k).

I'm diversifying my investments away from my Roth right now as the case may be, but I'm not sure if that's the ideal situation. I've got about $1300 in my Sharebuilder (non roth) account which kind of seems foolish. What seems more foolish is my heavy investment in the GLD (gold) ETF, since, despite it making nice gains, is a terrible play for long term. Ok, so I should have researched this before investing in it, but I recently found out that GLD, because it's investing in gold bullion and not the gold mining companies, actually counts as a collectible after a year, which means it gets taxed at 28 percent instead of 15 percent if you hold it long term.

Well, at this point Sharebuilder is starting to seem like a huge rip off. I do like the idea of dollar cost averaging, and I am using up all of my six "free" investments each month, putting $300 a month into my sharebuilder account as well.

My question is... while I could max out my Roth IRA sooner by skipping over my Sharebuilder account altogether, I'm definitely on track to max out my roth one way or another (yeay) and then... what should I do with the rest of my savings? What's the smartest place to put it for growth and tax purposes?

Here are some options I've recently discovered and am considering. Let me know if any sound like a brilliant idea because at this point I'm completely confused.


1) 529 Plan
Part of me wants to go to grad school one day down the line, although I'm not sure of this, and putting savings into a tax advantaged 529 plan would make sense if this were the case. Worst scenerio, one day I probably have kids and they get to take advantage of my 529 plan that never got used, since it can be transferred within the family. Not a bad idea, I guess. Worst, worst case scenerio, I never have kids and someone else in my family gets the money. But this won't help me save for a house/condo, which is really want I want to be saving for right now, as grad school is a maybe and house is a definite sometime in the next 10 years.

2) HSA
I still need to open my HSA account, as my health insurance IS HSA eligible. While I can't withdraw that money until retirement (so it's less flexible than a Roth) I can use it to invest. And there are some tax advantages (that I don't entirely understand) available for the HSA as well.

3) Prosper
I've had great success with Propser in the few months I've been using it thus far. I've only put in $200 and lent to 4 people ($50 each), but the first three at least are paying on time and I'm getting my 8% return, for now anyway. Of course I'll have to pay tax on all that, but it's still a nice return. I just worry about my borrowers defaulting, since one default will take out a huge chunk of the money I'm lending. With $200 in loans, it's not that scary. If I start lending out lots of money, it could get scary.

4) CDs
I already have $12k tied up in CDs that are ending over the next six months. I'm considering putting $5000 of that into my Roth IRA for 2009 when the time comes, but that still leaves $7000 plus whatever savings I manage to make over the year. Where do I put that? Back in a CD? CD and savings rates are so crappy right now (thanks economy!) so it seems like a bad idea for the short term.

5) Put extra savings into my ING Direct high interest savings account and put it into a Roth IRA next year, and the year after, and the year after that. Don't touch it for anything else.

That leaves me with...

6) Keep the money in Sharebuilder and grow my non roth ETF investments. Figure out what the deal is with my GLD investment taxwise and sell before it moves into the higher tax rate. Probably break even on that if it performs as well as it might. Oh boy. What a bad investment! I wanted to hold it long term, but now it seems silly given what a high rate it will be taxed when it take it out. So I plan on focusing my Sharebuilder account on emerging market ETFs. Either they're do awful and I'll lose all that money or over the years they'll do well and with a low fee percentage, I might make some money. It will be taxed when I take it out, sure, but at least it will be a way to grow my savings after my Roth is maxed out. I might sell off my three individual stocks too. I'm a bit confused on dividends, but it seems that if they're going to get taxed each year and then be reinvested and my stocks keep losing money, that's a bad situation for me, no? I don't have that much money invested in individual stocks at the moment (about $300 in three stocks, the largest holding being MCD, and all three of these stocks have gone down since I started investing in them, yet I still owe tax on the dividends).

I like investing in Sharebuilder because it gives me a chance to learn all this. Still, if I want to buy a house one day, I need to be somewhat careful. I know I'm young now and I can take changes, but there's no reason to be stupid about things.

So, faithful readers, help! What should I do with my savings after I max out my Roth IRA?

Scientists figure out we're too horny for immediate gratification to save.

"It turns out that your brain is much more aroused by $1 today than by $1 tomorrow. And $1 six months from now barely registers," according to "new discoveries in neuroscience labs." Oh, come on, I could have told you that, and I'm no scientist.

Basically, for your brain to accept waiting for interest to accrue, it has to accrue at some impossible rates.

"For your brain to be willing to wait a mere three weeks for a higher payout, that $20 would have to grow at an annualized rate of roughly 4,800%."

Eeks.

I'm glad that I'm accepting saving, and potential interest on my savings, is a long-term investment. I don't even let myself accept that I've made the money I will be investing. If I for a moment acknowledge that I could be spending that money now, it would be much harder to lock it up in savings until I'm old and gray.

One interesting tidbit I found in the article is that "the average holding period for a stock, among individual and professional investors alike, is just over 11 months."

Whoa. I'm doing pretty good, then. I don't mind holding, even when I'm losing money. It's easy to do this because, again, I haven't accepted that I've earned that money. I'd like to save for a house or grad school, or some other large-ticket item, but at the moment all of those purchases seem so impossible to me, it doesn't matter much if I lose money. As long as I can keep making money, I know I'll be fine. I just need my rent payment for my studio and food money and I can deal. All the extras is just that - extra.

I can see why later in life, investing might get more complicated. Instead of extra income from investments being a luxury, when (/if) I have kids, it might become a necessity. But then I'd think my investing would become even more risk-averse.

Anyway, the brilliant scientists "found out" that we're bad at waiting for reward. We all have a little Veruca Salt "Daddy I want it now" in us. Is that so bad?

"...the temptation to buy dotcom stocks in 1999, energy stocks in 2005, real estate in 2006, emerging markets in 2007 or gold right now - what's hot when it's hot - is overpowering for many people, no matter how often they've been burned before."

I wonder if Gold will be like dotcom/energy/real estate. Hopefully not, as I'm investing somewhat heavily in the GLD ETF (although not that heavily just because I haven't really invested much money in my sharebuilder account yet versus my Vanguard Roth.

The first Investing cut is the deepest

I'm an impulsive person, for better or worse. Sometimes I think about something for a long time trying to come with a rational conclusion, and then I make an un-wise spur-of-the-moment decision anyway. I need to stop doing that.

Well, about two months ago now I decided I wanted to start investing on Sharebuilder. It was a way for me to get to know more about the stock market, the overall economy and perhaps make some money.

My first purchase was four shares of COMV at $26 a share. This was a company I had been wanting to invest in ever since I covered it as a business journalist covering cleantech. I noted in a previous entry that I knew my experience covering them as a private company that was doing fairly well (yet not turning a profit) would not really translate to how they would perform as a public company. Regardless, I wanted in. I finally could, without any conflict-of-interest, try to nab a piece of a company that may eventually skyrocket to success.

A cleantech energy management company, they basically get contracts with utility companies to start demand response programs in place. These programs help the grid remain stable during times of high demand (like in the summer when everyone has their air conditioning on full blast). Instead of overloading the grid, the software and hardware installed by the company would reduce the amount of energy used in a building, therefore limiting the amount of demand on the grid. If this is done in a bunch of buildings, it can extremely reduce the likelihood of a blackout.

Anyway, I liked the idea, but didn't do enough research about the financial matters of the company.

The thing is, they could still do good in the long run. They just scored a multi-million dollar contract with a utility, and maybe they can make a profit this year and the stock price will go up.

I feel bad for the folks who bought the stock at $40 and who were holding. I got in on the downward trend.

I bought four shares of COMV for $26 each.

The stock is now worth $14.

The other day it was back up to $19.50 and I figured if it got to $22 I might just sell it and put the money into one of my ETFs that are performing much, much better.

The next day it had dropped $3.20 a share. I'm not sure why it did this, after all the company seemed to put out good news the day before. Or maybe it was bad news in disguise and I just missed what the other investors saw. Or maybe the stock market just had a bad day.

Regardless, my little experiment is paying off in knowledge and not-so-much in profits. I invested in three individual stocks and three ETFs. All my ETFs are up, all my individual stocks are down. One individual stock (the one I'm talking about in this entry) is very, very down.

Lesson learned. I will not be investing in individual stocks anymore. I may or may not keep my four shares of COMV out of curiosity. And, right now I have little to gain by selling. My shares are worth a measly $50 and it will cost me $10 to sell them. I'd rather watch the money deplete itself entirely than sell at this point. I'm just glad I was lucky enough to splurge on the stock when it was at $26 and not $40!

With Sharebuilder I get six "free" investments a month (for a $12 monthly fee). I'm investing about $300 a month if my funds allow. So in the future, I'm going to move more into ETFs and on occasion put some money into the two individual stocks I own that will at the very least pay some sort of dividends (McDonalds and Whole Foods). I knew COMV was a risk from the get-go and I was right. Good to know my instincts are accurate sometimes, even when I fail to listen to them.

Woman in Charge: family finance for one day down the road

My mom never calls me to see how I'm doing. The only time I'll hear from her is to tell me that some show is on PBS that I should watch or that there's something else of interest to her that isn't really of interest to me at all, yet she thinks I should know about it anyway.

The last one of these conversations had to do with Suze Orman's book "Women and Money " that Oprah gave away for free (via PDF download) a few weeks ago. My mom e-mailed me about the book download and then followed up immediately when I called her later on that day "did you download the book yet?"

Ok, so Suze Orman's books and blab have provided me with some useful finance advice in the past. But at this point I know all the basics about finance and that I should save money and invest it as opposed to spend all I make.

My mom is so clueless when it comes to money. Part of it is a generational thing and part of it is a chosen "ignorance is bliss" ideology. She's always spent as if the bank account had no end. Now that I know how finances work, I don't really understand just how she did it. Even though my father made a good salary, it was only in the low six figures... which is a lot, but not nearly enough to spend the way she did, or so it seems. My mom would order things from QVC without worrying about the cost. Jewelry, mostly, although sometimes she'd buy appliances and things. She wouldn't go to the mall and spend like that, but because it was on TV she could. Well, that was her excuse.

Granted, she did work hard as a stay-at-home housewife for many years, and she deserved some of the finer things in life. She put up with my father who, despite being a good breadwinner, wasn't the best husband.

Now, though, my mom is in her late 40s and my dad is out of money for a few years. He retired early and his pension plan doesn't kick in quite yet. My mom doesn't get what having "no money" means. Well, that's mostly because my dad has kept her in the dark about our financial situation over the years. She doesn't know how much money he has in savings, or what that means for their retirement.

Knowing my dad, he has a good amount of money available for retirement. After all, he made a career out of designing pension plans for other workers. I'm sure his pension is solid, when he will get it. Still, it's completely astonishing to me that my mom has no idea how much money they'll have in retirement, or how much money they have now, other than "no money," which could mean just about anything coming from my father.

My situation is so much different. Sure, right now I'm at the very start of my financial journey and I'm just learning how to save and invest. Without being able to control the markets, even if I make all the "right" choices I might still end up back where I started or worse. But at least I feel that now I'm in control of my finances. I know that if I can save a certain amount per year and invest it, if the market goes along as expected over the long haul, I'll be able to save a certain amount of money for my retirement.

This makes me feel powerful. It also makes me focus just a little too much on money. Making money has become a bit of an obsession. As a freelancer, it's easy to sign up for one too many projects. Who needs sleep, right?

But the way I look at it, the more I can make today, the more I have to spend later on. That's true, regardless of what I have to do to get there.

Now, my boyfriend, he finally got himself a job and he's making money. He spends less than me because he doesn't have to pay rent (he lives at home) and he doesn't really buy many clothes. When he does, he doesn't splurge on designer anything. He still dresses nicely, but he has a very limited wardrobe. Two pairs of jeans, and a bunch of button down dress shirts. That's pretty much all he wears. Oh, and two sweatshirts from his college and some really old shirts and shorts that he'll wear to the gym and such.

His spending right now pretty much revolves around me. If we go out to dinner, he often pays. I used to feel bad about this, but now that all this saving money thing is a game, and as I'm paying so much in rent and clothes and products to look pretty (for him, mostly) I feel less bad about having him pay for food more often than not. Even though I'm "making" more money at my job.

My boyfriend is not at all interested in investing or finance. The other day I excitedly told him all about mutual funds and index funds and such, and he was bored to death. His mother has saved up enough money to send him to grad school one day which is, as far as I know, sitting in a fairly low-interest savings account right now. He makes money and although he spends a lot on us eating out and gadgets for himself, I'm sure he's still making more than he's spending right now. But he puts it all into his savings account.

I tried to get him excited about opening a ROTH IRA and told him about how hard it is to afford retirement these days, but he wasn't interested.

Now, if this is the guy I'm going to marry, which right now I think might be the case, I feel like I have a right to not only inform him of these options, but push him down the path of opening an IRA and starting to save for retirement.

I guess, in the long run, if only one person in my couple hood is going to understand finances and save for retirement, I want it to be me. I don't want to be like my mother, clueless and hopeless as it is. If I'm going to spend a lot of money, at least I want to have a solid grasp on what that means for my monthly contribution to my ROTH.

I keep telling my mom she should get a job. If she wants to keep living her lifestyle, it isn't so hard, even if dad says they're out of money. Get a part-time job and viola, some extra income which she can spend as she pleases. But she refuses, saying she's too busy. She's dealing with this whole fight with the school system about my sister's education (my sister has a learning disability and the school isn't giving her the appropriate accommodations) and otherwise she's too busy doing other things... like, oh I don't know, cleaning the house... no one in our house helps out with laundry or dishes, so that's all her. Still, I think she ought to get a job. My dad is retired now, he can start helping out with some of the chores around the house. If my mom was working, maybe he'd be inspired to do so.

In the meanwhile, I'm going to make sure that I know the nitty gritty of personal finance. Even if my significant other choses to remain somewhat oblivious to how he can save for retirement, I refuse to let life take me for an unfortunate ride.

For the past few years, my net worth has gone up and down between $25k and $30k. Right now I'm at about $27k. My goal is to stop going down, and to break that $30k by summer.

Immortality, Death, and Retirement Planning

The other day, my boyfriend and I were discussing death and immortality. I don't know if I've mentioned it in this blog before, but I have a huge fear of death. I'm not a religious person and the concept of just not existing anymore scares the shit out of me. While I know it's not possible to live forever, I get past my morality-anxiety by pretending like perhaps there will be some cure to every illness known to man (including old age) by the time I'm wrinkled like a prune and somehow I can live forever.

Why do I bring all that up? Even though we (and I) can't live forever, our society is all geared around helping us live longer. In the early 20th century, the worldwide life expectancy for a human was 30-40 years old. Now it's 67. In another 100 years, most people will probably be livin to at least their 90s.

That's great in terms of... well, getting to stick around, aware, on this planet for a few extra years and for medical science as a whole, but how does lengthening one's life mess with the concept of retirement?

Ok, so in one of my days of freaking out about my mortality I ended up doing some research into Cryogenics and started reading up on a place where for a shit load of money I could get frozen after I die and maybe, just maybe somehow in the future I could be brought back, alive.

That got me thinking... if ultimately many of us would want to live forever... if that's what all our medical science is working towards with stem cell research and such, well, at what point in our future will the concept of retirement simply vanish?

Retirement exists, as I see it, for two reasons. One - you get old, you just can't work as much as you once did because you're sick a lot and need to take it easy en route to death. Two, you worked a long(ish), hard life and it's time to sit back and enjoy the last few years you have on this earth. Either way, what's that worth if you can remain healthy forever.

It's kind of interesting, thinking about how much our culture would change if immortality were possible, and then how much it has changed simply due to medical advances and the increase in average life expectancy. If we could live forever, even the celebrity making billions upon billions of dollars would still have to be careful with how much money they spent because if life forever were possible, at some point money would run out.

So death, not too far along from birth, is really a requirement for the concept of retirement to work (sorry I'm being so morbid today folks, but it's just been on my mind a lot lately).

Also, there have been a bunch of articles and blog posts out in the past week or so about how retirement is impossible for many people these days, what with the cost of inflation and lack of appropriate savings.

The Motley Fool recently published an article called "The End of Retirement"inspired by the also-recent PBS Frontline series "Can You Afford to Retire?"

Well, the Fool was pitching its investment advice for sale (as it does in every article on that site) but it also pointed out some of the sad yet very real facts raised in the Frontline documentary. "[Thanks to how people of different wealth classes invest throughout their lives...] The richest people are getting richer, and the middle-class workers are falling further behind."

I feel like I fall somewhere in the middle, though lean towards the rich end of the spectrum. While I feel like I've just struck gold with my newly minted annual salary of over $60k (if I can hold this contract job for the whole year, mind you), after you take away taxes... including the lovely 15% self-employment tax I learned about the other day, my healthcare expenses, the fact that as a contractor I don't get time off, paid holidays or any other benefits, and suddenly my $60k seems not as much as it did when I first gladly accepted my offer (well, I asked for $200 a month more, then accepted the offer).

It's weird how two years ago I was thrilled to be making $35k, finally a year out of undergrad with a full-time job. Now, as I worry more about saving for retirement in my 20s and somehow saving up for a house (even a fairly decent downpayment on a house... in The Bay Area) and possibly an expensive MFA a few years down the line, I am not sure how much money I'd need to make in order to really feel, well, rich.

Yet I know I'm lucky and that I'm more rich than a lot of people will ever be.

I want to invest heavily towards my retirement and I already have $7000 put into my Roth IRA of a total $9000 I could invest since I opened my account. Not bad, but that was taking my savings and putting most of it into that Roth IRA. Well, it's nice to know that if I make it to 65 I'll at least have some money to take out, tax free. But what about now? What about that house... or 2br condo... that I'm dreaming of? How about grad school?

Other than knowing I ought to live more frugally overall, I haven't a clue about how to allocate my money. They say "max out your IRA first" (if you don't have a 401(k) and that sounds fine and dandy, but now that I'm a slightly higher tax bracket I'm not even sure if I should be investing in my Roth IRA or if now I ought to open up a traditional IRA that gets taxed later on. Ugh, I'm so confused.

Llama Money jokes about how the $1 million saved up for retirement isn't really enough anymore, and explains how to save up $1 billion by retirement instead in this post.

"If you start investing at the ripe young age of 26 ( that’s how old I’ll be in a few months ), then you have 34 long years to enjoy the magic of compound interest. Assuming you earn an average return of 10% per year ( shouldn’t be difficult if you stick with low-cost index funds ), then you must save $308,700 per month until age 60. At that point you will have just over $1 billion in your brokerage account."

Yikes! Um, I don't think I'll be able to save $309k per month anytime soon, or ever.

Llama poses that putting away $280 a month is enough to at least help you out financially at retirement.

The only thing that helps me worry less is knowing that I'm the type of person who won't want to retire. I can't imagine wanting to stop working just because I'm old. I'll want to work a more flexible job, maybe take a bunch of time off, travel the world. But I don't see why I should stop earning an income as long as my health allows.

And being that I'm 24, I can't imagine myself incapacitated to the point where I'd be forced to live off my IRA income and nothing else. If that's what's going to happen, well, I better figure out how to start, uh, making $339k a month so I can save the $309k. Yea right.

Risk vs Reward

I always thought that when it came to risk, I'd avoid it at all costs. Skydiving of the body or the spirit was not for me. Sure, I moved a lot and took tiny little risks like living on my own with no job, but nothing beyond riding a roller coaster known for its safety record.

Now that I'm getting into the stock market, albeit very slowly, I'm ever-so tempted by risk. Yesterday I found the blog of Timothy Skyes who is famous for turning his $12k of Bar Mitzvah money into more than $1 million. He loves the thrill of day trading and obviously it has paid off for him.

I don't think I'll ever be able to take my entire savings and make some educated guesses about where to place my bets on Wall Street, but I am getting more and more interested... and risky... when it comes to my relatively small stock and ETF purchases.

It surely is an addiction. A year ago, I finally took the "leap" of putting a huge chunk of my savings into a Vanguard index fund to open a ROTH IRA. But index funds, especially ones that cover multiple industries with no specific focus, have already started to bore me. Additionally, with the way the overall stock market is performing, watching my "less risky" investments tank makes me want to take more risks so I feel like the failure is, uh, much more deserved.

I started out a month ago buying a few shares of GLD, the Gold ETF. Everyone is screaming "gold" these days, as with the recession such commodities seem to thrive. GLD is the main gold ETF available for purchase. I started out buying about 4 shares of GLD and adding some more funds to that ETF. I'm not sure if I should buy more.

This purchase was followed by investing in McDonalds and Comverge (COMV). I figured why not start with one large cap, and one small cap. They ought to balance out in the middle, or something like that, right? Comverge was a company I had covered in the past as a cleantech reporter while they were still private, and I liked what I knew about them. However, I also acknowledged the fact that I had no idea whether they could turn their good idea into a profit for the company. But I always wanted to buy shares in them just because, well, I felt like it was one company I had been following from near-birth, and if anything I wanted to watch them grow (or fail) with a small amount of my money attached.

Meanwhile, McDonalds, I read, was a good buy because it offers yearly dividends to investors AND its price right now has gone down with the current recession.

After a few days it became clear that my Comverge purchase, although not the end of the world, should have been spread out over time so I could have "cost dollar averaged" and saved money. I bought a few shares of the stock for $23 each and since then they've gone down to $18 a piece. Now they're at about $19.50. I'm considering waiting (hoping) they go back up to $20-something again and then I'll sell them so my loss isn't that huge and instead invest them in another stock or ETF that might actually perform well. Or I can keep the $100 in COMV and watch it disappear. Who knows, maybe the stock will soar one day. I'm waiting for the quarterly earnings to see how they've done, and see what that does to my four shares.

Meanwhile, I found that I'm now hooked on investing. I quickly signed up for Sharebuilders "$12 a month" 6 "free" trades plan and started to pour about $300 a month into a variety of stocks and ETFs. This time I did a bit more research and picked the following three stocks/ETFs to invest in:

KOL, EWZ, WFM

What do all those letters mean?

KOL: An ETF of coal. Why coal? It's terrible for the environment. Yet with the prices of oil rising, and other cleaner alternatives far from being able to provide the energy needed in the world, I think coal has (for better or worse) a pretty strong future. I was excited to find the fairly new ETF that would allow me to get into coal with a little less risk. I plan to keep putting about $60 a month into the ETF to see if I can prove myself right. Also, a lot of the ETF is invested in Asia (coal is huge there and growing), so this gives me the Asian diversification I've been seeking.

EWZ: This stock symbol doesn't give one a clue of what the stock is! It's actually an index fund of companies in Brazil. A lot of advisers seem to be recommending it, and I want to diversify my overseas investment so it's not all in coal and Asia. Brazil has a lot going for it and the ETF has performed quite strongly in the past. Will it perform as well in the future? Beats me. I'm investing most heavily in this index fund right now, putting in about $150 a month to EWZ.

WFM: Whole Foods. I spend enough money shopping here! This is another dividend-paying, large cap stock. Not that interesting. I doubt I'll make a fortune on it, but it might at least grow slowly and calmly. Or I'll lose some money but I'll try to get out before it tanks.


One thing I've learned is that in order to make a stock purchase worth it, I eventually need to own a lot of that stock. Even if the stock goes up $10 from $10, a 50% increase, if I only own one share and have to pay $9 to sell it back, that amazing performance will only make me $1. So I've decided to try to focus on these six stocks for now, and if needed to sell one of them and replace it with another. Six seems like a good number to start with, and I'll let my portfolio grow as needed or merited by my income and thirst for risk.

Budget - Fixed Monthly Costs

Since I'm oh-so bad at not racking up random late fees on things, here are my fixed costs
and what they should cost me each month:

$1050: Rent / Utilities
$71.33: Cable/ Internet
$48.33: Verizon Phone
$128: Health Insurance
$138: Car Insurance
$100: Gas
$27: Gym
------------------------------------------
$1562.22

Total Set Monthly Income (actual, not dreamed)

$3700

Have to put 25% of that into taxes savings account...

$925 into savings account.

Leaving $2775 for monthly spending
MINUS
$1562.22 of fixed costs

--------------------------------------------

That hypothetically leaves
$1212.78 for food, fun, investing, medical spending, extra gas, etc

A reasonable budget would be:

$400: Food
$100: Invest (roth IRA)
$100: Invest: ETF/Stocks
$200: HSA Account for Medical (Need to Set Up!)
$200: Clothes / Makeup
$100: Extra Gas
$112.78: Entertainment

What am I missing?

Mutual Funds + Tax = Grr.

As most of you know, I lost $700 on my Vanguard accounts over the last year.

Still, I owe tax on $8.76. That's not a huge deal (maybe I'll owe $1 tax) but, still, it's just frustrating that I lose all this money, and then still owe tax on it. Well, I guess that's how investing works, eh?

What do you think about Credit Unions?

When I was Googling CD rates in hopes of finding high-interest CDs to balance my rapidly-losing-money stock and mutual funds, I came upon a list of various banks and places with their rates. Most of them were around 3 to 4 percent for any reasonable amount to invest in a CD (sorry, if I had $50,000, I would not put it all into one 10 year CD, even if the interest rate was fixed at 5 percent). Then I saw that this one place was offering a 7 percent rate for new members. 7 percent interest on a CD? Where do I sign up?

After doing a little more research, I found out that the "bank" was actually a credit union. While I had planned to take out my $5000 from my liquid BoA CD that's getting 4.1 percent interest at the moment and put it into a 7 percent CD, it turns out the only amount I can put into this CD is $1000. No more, no less. Well, getting 7 percent returns on $1000 won't hurt.

Still, I'm a bit confused about credit unions. I did some further research and they seem like a pretty good deal. The only thing I'm concerned about is that when I signed up, the fine print noted they could charge me $20 in membership fees if they wanted. It wasn't really clear if this was a one time fee, or a per year fee... or monthly...

Credit unions sound good otherwise. When it comes to obtaining loans and such, since these places are, unlike banks, non profits, t