Archive for August, 2008
Tuesday, August 19th, 2008
It’s simply amazing how people sacrifice so little to sacrifice a lot. Millions of people around the country are living the American dream and the mountain of debt that goes along with it just because they don’t want to start a (GOD forbid) budget. Check out this story I simply had to shake my head at:
Mary earns an after-tax weekly salary of $675 and gets weekly child support of $142; her income averages $3,462 a month.
Her monthly expenses: $1,485 for rent, $175 for utilities, $275 for a car payment, $361 for car insurance, gasoline and maintenance, $415 for her son’s college tuition, $124 for cable television and Internet service, $350 for grocery bills and $100 for dining out. That’s a total of $3,285 — and it doesn’t include incidental costs for clothing, hair care, gifts or entertainment.
She’s also overdue on several bills, including $282 for medical costs, $233 for a student loan and $80 for 2-year-old phone charges.
In a nutshell, Mary spends close to or more than she earns each month, and she runs out of money before she can make payments on her existing bills. That means there’s nothing left over to pay down her growing debts.
Mary is the first to admit a lot of her financial problems are in her head. She’s always had trouble with money, so her financial woes have become part of her identity — so much so that she carries her folder of bills with her wherever she goes, like a security blanket.
She says she wants to have the means to take vacations and buy presents for her grandchildren, even have a little in the bank for emergencies. But her self-sabotage has stopped her from attacking the real problem: her attitude about money.
Mary, like most people, dreads the “B” word: budget. But budget is not a dirty word. It’s the secret to financial freedom.
Without reading the article any further I immediately so ways to improve her situation in a matter of months. Instead Mary, would rather sacrifice budgeting instead of her attitude about wasting money.
Off the top of my head, I see she could lose some cable television programming and possibly opt for cheaper internet services. She could sell the car and buy something older while at the same time being reliable. Doing so would also lower her car insurance rates.
So lets say she creates a budget and is able to milk $200/month (on the low end) out of the deal. The $80 phone charges would be pai off the first month. That leaves $120 left over for the month. Next month add that up with the $200 and pay off the $282 medical costs. Take the rest and pay off the $233 bill the next month.
After 3 months those debt collectors are paid off and now she has $200 to spend on more debt in order to get the debt reducing snowball rolling.
Life shouldn’t be that hard people. Sacrifice your laughing now so that you won’t be crying later. Reverse the trend!
Posted in Generate income, Informational, Personal debt, education, relapses | 1 Comment »
Sunday, August 17th, 2008
As a follow-up to my previous entry here’s where it gets interesting. I’ve done the research for you. so here’s a list of investment options from (my opinion) best to worst.
Bust first here’s a quick dumbed down vocabulary to decipher some terms:
- Stock: A single unit of ownership of a single company.
- Mutual Fund: A collection of stocks fro different companies.
- Bond:You loan a corporation or government money and they repay you with interest at the end of the predetermined term.
- CD:You loan the bank money so that they can make money and give you some of the profit at the end of the predetermined term.
Now that you have that highly detailed explanation, lets get to it:
ROTH IRA (Individual Retirement Account): Paid into with your post tax dollars. As of 2008 you can contribute up to $5000/year. It’s an individual account that has nothing to do with an employer. You can withdraw your contributions at any time tax and penalty free. At the age of 59.5 you can withdraw contributions & earnings tax & penalty free. Before hand and you have to pay the taxes and 10% penalty on the earnings only. At the age of 70, you have to start receiving monthly distributions from the account or roll it over into something else altogether.
ROTH 401K: Paid into with you post tax dollars. As of 2008 you can contribute up to $15,500/year. It has to be offered by your company as they’ll match a percentage of your contirbution (sometmes 100%). You cannot withdraw your money without penalty (sort of). you have to take a proportionate amount of earnings with the amount of contributions you are withdrawing. So if you take 50% of your contribution out, you have to also take 50% of your earnings. The earnings are then included in your income for federal tax purposes. At the age of 59.5 you can withdraw contributions & earnings tax & penalty free. Before hand and you have to pay the taxes and 10% penalty on the earnings only. At the age of 70, you have to start receiving monthly distributions from the account or roll it over into something else altogether.
401K:Paid into with pre-taxed dollars (meaning you’ll have to pay taxes later when you withdraw). This setup through your employer and they have the option to match a percentage of your contributions (some dollar for dollar). At the age of 59.5 you can withdraw contributions & earnings tax & penalty free. Before hand and you have to pay the taxes and 10% penalty on the earnings only.
403b: Strikingly similar to a 401k plan in every way. The biggest differences are investment options which are limited to:
Mutual Funds:Paid pre or post tax depending on the account. You can purchase mutual funds by selecting them within you ROTH, 401, 403 or individual accounts. They’re the 2nd choice of investing for individuals. They’re not as volatile as individual stocks. When researching which MF’s are best for you, choose the 4 best percentage gainers over a 10-15 year period and allocate 25% in each.
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nnuity and variable annuity contracts with insurance companies.
- Retirement income accounts for churches.
- A custodial account made up of mutual funds. This is known as a 403(b)(7).
CD’s (Certificate of Deposits):Safest of all investment options as there’s a contract that you’ll get a preset return at the end of a contract. The drawback is that the interest rates are usually low and is almost the same as the increase of the yearly cost of living increase. Usually, the longer the CD is held, the higher the interest rate. If you cash in the CD before the specified time, you will have to pay a penalty. CDs are also insured (up to $100,000) if the institution is federally insured.
Savings Bonds: Usually yields lower interest rates than a CD and also come without a garuantee (unless it’s government issued). Not really an option in the investment cycle (for me at this point) so I really didn’t feel like doing my full research on it. If you want to know more, read here.
Stocks: Can be good or bad depending on your research. RESEARCH RESEARCH RESEARCH. There’s a reason you hear about day traders going postal. I’d suggest going the mutual funds option instead of the stocks route.
Note: All of these options (except for most CD’s) have risks involved. I’m a 31 year old male that can afford to take the risks at this time. Even though this is an informative blog entry that may persuade your opinion to invest one way or another, I’d advise you to seek the help of a professional. Of course, I’m always willing to give advice so if there’s something you need explained in further detail, don’t hesitate to ask.
Posted in Generate income, Informational, Personal debt, education | No Comments »
Monday, August 11th, 2008
Some of you know I have ideas about what I’m going to put on my blog by some of the conversations I have during my daily strolls on earth. Today, I happened to walk upon a conversation about finances and investing today with one of my cousins who was seeking advice from my grandfather.
During our conversation my cousin discussed his investment avenues and he has a portfolio that consists of a 403b & some account he contributes to out of pocket. Basically, he had no idea what he was throwing money into.
His investments were giving him good returns but as with every conversation I bring to you, I realize that a lot of US (yes I’m guilty) are ignorant about things that’re really important to our future. OUR RETIREMENT!
During our conversation, he was only involved in the dollar amount he was getting for the quarter. Instead, he should be concerned with the percentage of his returns. LET ME REPEAT… NEVER LOOK AT THE DOLLAR AMOUNT OF RETURN ON YOUR INVESTMENTS. ONLY LOOK AT THE PERCENT OF RETURN!
Reason being, he got a pretty good dollar amount from his quarterly statement but he was only getting a 5% gain (because 65% of his portfolio is in a fixed fund). He’s 35 and that’s a BIG no-no. The younger you are, take the biggest chances. You have time to recover from something catastrophic.
Use the well adopted rule of “120″ when figuring out what should be allocated where. 120 - your age is the percent of your portfolio that should be in stocks. So by that rule he should have 85% of his portfolio in stocks (or mutual funds). I’d suggest Mutual fund because they aren’t as volatile as individual stocks.
Back to my point of focusing on the percent. Not bragging, but following Dave Ramsey’s advice of picking the 4 best performing mutual funds over a 10-15 year period, I was able to gain 24% last year within my 401k. Within my Roth (I started last year), I managed 15% (ticker:FNARX). This year is down in my 401k as I’m currently posting a -15.7% return (but that’s OK considering the market is down more than that). I look at it as a buying opportunity (as every investor should).
Anyhow, just imagine what his numbers would’ve looked like if he got even a 12% return last year instead of 5%?
It’s not all bad however, I managed to get him to look into a Roth IRA account and I encourage you all to do the same. It should be the first individual investment you guys should make. It’s already taxed since it’s coming out of your pocket. Did I mention that it’s already taxed? Did I? That means that when you turn 65, you can take it all out without taxes or penalty. What about before 65 you ask? What you contribute to it is YOUR MONEY ANYTIME YOU WANT IT without taxes or penalty. The catch is, it’s so good of a retirement plan that it’s capped at $4k/year you can contribute. For you ballers, I’d suggest paying monthly or quarterly instead of contributing all at once in order to average in your buy-in points of the mutual funds you select.
This article took a different turn than what I intended it to so I guess I’ll follow up later on what I wanted to originally write about: Differences in investment options.
Posted in Generate income, Inspirational, Personal debt, education | No Comments »
Friday, August 8th, 2008
Had an interview the other day and it got me to thinking. All interview are usually the same. There’s, “how well you play with others”, “How much of a geek are you” and “how do you mesh with our company” type interviews.
Just so happens that I had all 3 rolled into one.
I’m in IT so the interviewer would be foolish to not test my technical knowledge while considering hiring me for a technical position.
Enough of me… To the point:
Tip: Give specific examples. If you don’t have any, make up one they’re just testing to see how you handle yourself under pressure.
HR type ?
—————–
Question 1: Tell me about a time you had to settle a disagreement or compromise with your coworkers.
Meaning: Here the interviewer is looking at how well you’ll play with others and to see if you’re stern, don’t budge, or if you’re a peace maker.
Answer: Talk about how someone wanted to rush a deadline & that you were able to persuade the individual in a diplomatic manor that the project can’t be rushed because it’s a dire situation. Explain that you told the individual that there’s processes that have to be followed and that you’re determined to comply with the processes and that you’ve looked for alternatives to possibly make the project go faster.
—————–
Customer Service ?
—————–
Question 2:Tell me about a time you’ve had to deal with an angry customer and how’d you handle the situation?
Meaning:They want to know how you react to irate individuals and how well you handle stressful situations.
Answer: Too easy: Tell about the (fake or real) customer that called and was cursing because the expected a product to be working as expected. Explain how you understood that the customer wasn’t upset with you personally so you let him get what all he had to say out. Then tell the interviewer that you assured the customer that you’d take care of their problem and that you’re sorry that they weren’t happy with the product. Then explain that you realized the customer calmed down after you started using the customer’s first name in order to calm the customer down even more. To summarize, (make up) some sob story about how the customer actually, emailed you boss with a letter of recommendation or whatever and that you’re actually in good with the customer.
——————-
Multitasking type ?
——————-
Question #3:Give an example of a time you’ve had multiple projects due and how you managed them to get them done.
Meaning: (I hate this question) It’s too obvious. None-the-less, it’s aimed at seeing how you manage your time and multitask and how you perform under pressure.
Answer: Make up some detailed story about how you had 2-3 projects due at the same time and that you worked overtime while putting more attention to the highest priority project first.
——————-
That’s all I got. If you have questions, ask them. I’ve been on dozens of interviews and have been to interview trainings, etc I don’t mind sharing.
Each one teach one.
Posted in Informational, education, success | No Comments »
Tuesday, August 5th, 2008
Next time you see that ‘player of the year’ flawsin’ in that 2005
Chrysler 300 sittin’ on 23’s while he’s pulling it into a parking stall
of a rented apartment hand him this article.
USA Today article on Black Spending Habits:
These are tough economic times, especially for African-Americans, for
whom the unemployment rate is more than 10%. Alarmingly, rather than
belt-tightening, the response has been to spend more. In many poor
neighborhoods, one is likely to notice satellite dishes and expensive
new cars.
According to Target Market, a company that tracks black consumer
spending, blacks spends a significant amount of their income on
depreciable products.
In 2002, the year the economy nose-dived; we spent $22.9 billion
($22,900,000,000.00) on clothes, $3.2 billion ($3,000,000,000.00) on
electronics and $11.6 billion ($11,000,000,000.00) on furniture to put
into homes that, in many cases, were rented.
Among our favorite purchases are cars and liquor. Blacks make up only
12% of the U.S. population yet account for 30% of the country’s Scotch
consumption. Detroit , which is 80% black, is the world’s No. 1 market
for Cognac (Pass The Co———).
So impressed was Lincoln with the $46.7 billion ($46,000,000,000) that
blacks spent on cars that the automaker commissioned Sean ‘P Diddy’
Combs, the entertainment and fashion mogul, to design a limited-edition
Navigator complete with six plasma screens, three DVD players and a Sony
PlayStation2.
The only area where blacks seem to be cutting back on spending is books;
total purchases have gone from a high of $356 million in 2000 to $303
mill! ion in 2002. This short-sighted behavior, motivated by a desire
for instant gratification and social acceptance, comes at the expense of
our future.
The National Urban League’s ‘State of Black America 2004′ report found
that fewer than 50% of black families owned their homes compared with
more than 70% of whites.
According to published reports, the Ariel Mutual Funds/Charles Schwab
2003 Black Investor Survey found that when comparing households where
blacks and whites had roughly the same household incomes, whites saved
nearly 20% more each month for retirement, and 30% of African-Americans
earning $100,000 a year had less than $5,000 in retirement savings.
While 79% of whites invest in the stock market, only 61% of
African-Americans do. Certainly, higher rates of unemployment, income
disparity and credit discrimination are financial impediments to the
economic vitality of blacks, but so are our consumer tastes.
By finding the courage to change our spending habits, we might be
surprised at how far the $631! billion($631,000,000,000.00) we now earn
might take us.
We all send thousands of jokes through e-mail without a second thought,
but when it comes to sending messages regarding life-affirming choices,
people think twice about sharing. So please pass this on.
Knowledge is POWER! Reverse the trend.
Posted in Informational, Inspirational, purchases, relapses | 1 Comment »
Sunday, August 3rd, 2008
Another one of those days I start thinking again and it struck me… I’m always finding deals and hardly EVER pay retail for anything and I wanted to hook YOU up the same.
For instance, before I purchase anything that can be bought over the Internet, I usually do some searching around first to find the best deal by the most reputable company. My first stop is usually over to fatwallet to see if there’s any brick & mortar type stores I can order and pickup (in order to avoid shipping). If the online deal is a good one on fatwallet, it’s a no-brainer to purchase the item online.
Sometimes, fatwallet doesn’t have what I’m looking for so then I’ll head over to slick deals. Every once in a while, a deal for something I’m looking for (or not) will be on there that makes it very hard to refuse.
Then there’s woot. They usually have one item heavily discounted per day (that’s the down side). On some days, once or twice a month, they’ll have what’s called a “woot off”. Woot off’s mean that they’ll have deals on random things every 5 minutes in a span of 24 hours. Real deals are to be had.
If those three places are lacking in the deal I’m looking for, I then head over to Craigslist. The Mecca of an online market place. It’s a free online garage sale where real deals are to be had by people in your city. There’s no bidding… just emailing and phone conversations to negotiate the price you’re willing to pay. Big deals with very little effort. Early bird catches the worm as things can go really fast.
Once, I’ve used up all of my options I head to eBay. I’m sure you have the history on this online market place. Since I’m a NOW NOW NOW person, I usually only fool with Buy It Nows on there since I hate getting outbid at the last second on something.
For you electronically inclined people, eBay is your friend. I guess I’ll let you in on a little secret I’ve used a time or two. Let’s say you want the biggest and baddest car stereo Best Buy, Circuit City, or Electronics-R-Us you can find. Get the model number and buy it off of eBay for almost half the price if something goes wrong with it within the relative future, you have a local warranty on it by just buying the big boy from the local store and returning the defective unit in it’s place. I know the morale Nazi’s are going to get on me for that one but you’re basically sending it back to the manufacturer to fix their product through a local distributor. The local distributor doesn’t lose anything so I don’t see it as that big of an issue.
Besides, if the markup wasn’t 100% on electronics, you’d be buying straight from the local distributor. Hope this helps you too. Patience is the key.
Posted in Informational, education, purchases | 1 Comment »
