Scared of Money

This is about getting the most out of life for the least amount of money. And doing it with a bit of style.

Wednesday, April 12, 2006

How I Choose My Vanguard IRA

I finally choose my Vanguard IRA. I gave Vanguard my timeline for retirement (40 some years from now or earlier if possible : ) and they gave me three choices - Growth Index Fund, U.S. Growth Fund Investor and Mid-Cap Index Fund. I narrowed it down to the two index funds because my financial planner from work recommend an index fund. Then I looked at both of the fund's descriptions, past performance (yes, I know, I know, past performance doesn't guarantee future results), looked up the definition of mid-cap on wikipedia, recalled the cover of BusinessWeek that said mid-caps were outperforming blue chips and decided on the Mid-Cap Index Fund. Was it scientific or strategic? No. BUT I made a decision, didn't miss the tax deadline for the 2005 IRA and now have one less thing to worry about. I can always change my mind later.

Baby steps, baby steps...

Crazy, Free Stuff from Restaurants

I love food and I love free stuff, so imagine my pleasant suprise when I found this post fromFree Money Finance on joining birthday clubs. I joined the birthday clubs from Coldstone Creamery and Baskin Robbins, so I can get coupons for a free birthday cone. Then imagine my complete delight when I found out from the Festival of Frugality posted by Money and Values that Noodles & Company will send you a coupon for a free meal when you sign up AND on your birthday. While checking out Noodles & Company, I noticed that they directed me to a Web site called Fishbowl.com, so I decided to check that Web site out, and apparently they put together loyalty programs for restaurants. So by checking out their clients, I was able to find programs for Dairy Queen's blizzard club, Maggianos and Red Robin. Hopefully, I don't have to use the coupon ON my birthday but get a little leeway. : )

Other restaurants that I wasn't as excited about include Famous Daves, Houlihans, Qdobas, Red Lobster and Joe's Crab Shack.

Enjoy! And let me know if you know of any more. You can never have enough free food.

Sunday, April 09, 2006

How Much is A Private Education Worth?

I went to a top 25 University and have about $14,000-$15,000 in debt with about 12 years to go. It equates to about $115 a month, which is very affordable all things considering. Do I think my private education helped me get a better job? Nope. Most of the other students I work with went to a state school. Did the brand name of my school get me a larger salary? Nope.

So was it worth it? Would I do it all over again if I had the chance? With out a doubt. I think I was pushed much harder than I ever would have been at a state school because of my professors and because of my peers. My school's values have translated to my own values, and I think that after 4 years there, I left a better person. With that said, I think you can get a phenomenal education no matter where you go if you take advantage of the resources offered to you. I also read that those who attend Ivy Leagues aren't successful because they attended an Ivy League school. They are successful because the traits that got them into Ivy Leagues are the traits that make you succeed in life.

The reason behind this post? I was reading an article from The New York Times on how parents are letting kids pay for college and several quotes really struck me.

Alexandra Baldari and her parents have talked a good deal over the past year about how to pay for her college education, and the upshot is this: If she enrolls at the University of Miami in the fall, she will bear much of the cost, which could total $40,000 or more a year, on her own.

Ms. Baldari's parents earn about $100,000 a year, but her mother, Anne Angelopoulos, said little is left after paying for housing, three cars, gas, food and utilities, as well as saving to contribute to Ms. Baldari's 11-year-old brother's education. Ms. Baldari's parents prepaid for her to attend a public university in Florida, but she does not want to go to a public institution.


So is the University of Miami worth being almost $160,000 in debt rather than going to the University of Florida? Will Alexandra really receive an ROI on her education worth going that far into debt? I doubt it.

Still, some students say they are unwilling to let financial constraints dictate where they go to college. Thomas W. Dillon, 20, of Warwick, R.I., decided to go to the University of Connecticut over the University of Rhode Island, where his parents would have covered tuition, and faces tens of thousands of dollars in debt.

"The way I see it is, I only get to go to college once," Mr. Dillon said. "If I have to pay an extra $20,000 a year, that's what I have to do."

Whoa. But not once does the article spell out what that will cost Thomas in payments, or how much more can he expect to earn from attending the University of Connecticut. I'm sorry but 18-year-olds can not fathom how much debt this really is. I know I didn't. It should be illegal to allow students to incur more than $40,000 in student loans with out providing direction on how this will affect their financial well being for the rest of their life.

Would my undergraduate degree be worth it if I was now $100,000 in debt? Not so much.

Others? Did you go to a private or public university? Any regrets?

Which Vanguard Fund Do I Use For My IRA?

Target Retirement 2045 Fund?
Small-Cap Index Fund?
500 Index Fund?

This is when I shut down because of all the choices. I took the preference choice and choose high-risk and aggressive choices (although this isn't my personality) because I know at my age (25) that I should make aggressive choices. They gave me the choices below. This isn't all of my money or even close but so I should be ok choosing aggressive funds. I'm leaning towards the Growth Index Fund since that the financial advisor at work suggested an Index fund.
  • Growth Index Fund
  • U.S. Growth Fund Investor
  • Mid-Cap Index Fund

Does anyone have any experience choosing an IRA fund especially from Vanguard?

If the Housing Bubble is About to Burst, When is the Ideal Time to Buy?

I read a post in the Housing Bubble blog about a Nonstop Flood of Foreclosures in Denver. This summer, there is supposed to be a record surplus of homes in Denver. Will this drive prices down? Theoretically it should, right? Ideally, I would like to buy in February 2007 but am afraid that I could buy when prices are at its peak.

Any thoughts on timing?

Saturday, April 08, 2006

So Why Am I Scared of Money?

I'm an avoider according to a recent post by Sitting Pretty: Money Personalities.

Definition: Avoiders put off dealing with money management because the task overwhelms them. Since they don't like budgets or keeping records, they frequently forget to pay their bills.

Some blogs have titles such as I Will Teach You To Be Rich or Savvy Saver. I belong in the Financial Train Wreck category.

I get statements from my parent's estates saying that I have so much money in an REIT. What the f*#k is an REIT? (Real Estate Investment Trust but I had to Google it.) So I let the statements stack up without really deciding anything.

I wasn't kidding with my initial post, I am a financial mess. I would just rather not deal and pay the late fees or deal with whatever the consequences might mean. I have kept money I inherited from my parents into a low-earning interest money market account for a year because I have NO idea where to begin. This blog is my way of taking baby steps to getting my financial life in gear.

How do others fight the overwhelming feeling they get when have NO idea where to begin?

Friday, April 07, 2006

Rock Star Lifestyle on a Dime – Art and Accessories for the House

I have this unexplainable desire for plates and glasses and other crap I
don’t really need. Even though I have more than I have room for in my
studio, I want more. Along the way, I’ve found some great deals and wanted
to share some tips. I got my everyday plates, bowls and coffee cups (fine
bone china by Rhumba) from Overstock for less than $50. To be honest, I
haven’t had anything but bad luck with Overstock. One of the cups was
broken. I once ordered a coffee table, they sent me an umbrella. I ordered a
shelf and the glass was broken, so buyer-beware with Overstock. However, my
former roommates, sister and cousin have had great luck with them. My cousin
saved a $100 per stool on the exact same stool they were planning on buying
from Great Indoors.

I’ve also had great luck with Crate & Barrel’s online outlet and found some
super cheap deals there. We don’t have a real Crate & Barrel outlet but if you’re an outlet fan like me, here’s a great tip – call and ask them when they stock their
merchandise. Great deals can go quickly, so ask them what days they get their
shipments in and stalk the store on those days.

If you like framed art like I do, be sure to check out local student artists
and their sales. The student art league has a giant sale each year and you
can find cool stuff there. The art center where I take ballet,
semi-regularly has a pottery sale from its artists. My Dad also used to use
eBay to buy art from unknown artists. I truthfully can’t tell the difference
between their artwork and the professionals, so why pay the difference? The
best method to buying art I’ve ever heard is something along the lines of that it doesn’t matter whether you get it from an art gallery or a garage sale, it just has to be moving to you.

I also inherited my parent’s taste for all things Asian. You can buy
expensive plates at your local gourmet shop OR you can check out your local
Asian market or food store. I’ve found super-cheap plates at a place called
Troung an Video, which in addition to renting Asian videos, has a large
selection of Asian Plates.

Any other tips?

Tuesday, April 04, 2006

Checking off an item on your life's to-do list? Priceless.

$100 for a twelve-week ballet class
$117 - Two pairs of pink tights, one black leotard, one black skirt and one pair of pink ballet shoes

$217 - Checking off one of the items on your life's to-do list. Priceless.

I just finished taking a ballet class, which is one of four items on my life's to-do list (the other three are to write a book, learn Italian and to visit Africa). I always wanted to take ballet when I was little, but I was so uncoordinated that my parents signed me up for pottery instead. I would walk by the ballet studio on the way to sling clay around in my pottery class and would be so envious of all those graceful dancers. So I finally got around to signing myself up for ballet. I wanted to quit the first night because it was a little painful (as all dance classes typically are for people with no balance, coordination or rhythm. : ) But I stuck it out and the $217 was well worth the feeling of accomplishment. I liked it so much I signed up again for another twelve-week course.

This is exactly how I want to spend my money. On life experiences. Trying different things. Pushing myself out of my comfort zone. This summer I'm really going to push myself to get out of my apartment and to LIVE. So I also signed up for a 0ne day class on Japanese flower arranging. : )

$50 gift card to Amazon for opening a Compass Bank Checking Account

Compass Bank is offering a $50 Amazon.com gift card if you open a checking account with them. Must be a resident of Alabama, Arizona, Colorado, Florida, New Mexico or Texas to qualify.

This is my first foray into one of these deals. I'm hoping they don't do a hard credit check as I finally got my credit score up to a decent number (772). But if they do, I should be fine. I'm not looking to buy a house for at least a year.

Monday, April 03, 2006

Credit Card Companies Charge Extra for Using Cards Abroad

Be wary of using your credit card abroad, because almost all credit cards
tack at least an extra 1 percent transaction fee to your total purchase,
according to a recent report by IndexCreditCards.com. Visa and
MasterCard charge a 1percent processing fee on international transactions,
and most banks add their own fees (for up to a total of 3 percent) on top of
Visa and MasterCard's fees. The only exception to this rule seems to be
Capital One, which doesn't even pass on Visa and MasterCard's fees. I'm not sure how Discover and American Express stack up since they aren't mentioned in the report but the list of fees that credit cards charge are listed below. I'd certainly avoid taking a Wells Fargo credit card abroad with me.

Capital One: 0% transaction fee. (Capital One does not charge its own fee or pass along the 1% fee that Visa or MasterCard impose.)
Providian: 1% transaction fee
American Express: 2%
Juniper Bank: 2%
Bank of America: 3%
Chase: 3%
Citibank: 3%
HSBC: 3%
MBNA: 3%
U.S. Bancorp (U.S. Bank): 3%
Wells Fargo: 3%

The New York Times (http://travel2.nytimes.com/2006/02/19/travel/19prac.html)also had a great article on the cost of using credit and debit cards abroad. Apparently merchants can charge you extra for converting to dollars as well. They recommend using credit cards for the big purchases and using your ATM card to withdraw money for everything else.

Anyone else had experience with this or tips on how to control costs? I wonder if you could purchase a prepaid debit card abroad at the beginning of your trip, which shouldn't have additional costs associated with it. Hmmm....

PS - Sorry for the lack of formatting. Blogger is making me INSANE.

To Buy or Not to Buy?

I can’t decide whether to keep renting or whether to buy my first
home or townhouse. I keep going back and forth.

Renting
I currently rent a studio for $881, which is ridiculous I know.
What’s funny is that I qualified for subsidized rent because I make
less than $45,000 a year. Otherwise I would have to pay a $1,100.
That’s insane! But I LOVE my location. I’m right downtown and can
walk to work and to the bars, which is sweet b/c we get a parking
allowance of $115. I apply that to rent. I fill up my car once or
maybe twice a month. I get cheaper insurance because I don’t drive
much. I have a state-of-the-art workout room and each piece of
cardio equipment has a flat screen TV. So I don’t have to pay for a
gym. Plus, we get a health and wellness benefit for $350 each year
so I apply that for my cell phone bill instead of gym membership. My
heating, electricity and water bill is $50 a month because I only
have to heat a 610 sq. feet apartment. And they didn’t charge me for
the first 9 months. I love my apartment building. It’s super trendy
and full of super trendy people. (Which isn’t so good with my “sheep
syndrome.”) I covet the BMWs in my parking garage. And there are a
lot of them.

Buying
I want to stay close to downtown. I want a two-bedroom place. I want
granite countertops and stainless steel appliances. I want to pay
around $200,000. These wants aren’t very compatible. The only thing
I’m firm on is that I want to be close to downtown (cab ride close).
I’m thinking of looking around February 07 because I will have two
more reviews by that time (and hopefully two more raises), which
will make it easier to qualify for a mortgage. At my projected
salary in February 07, the finance calculators are telling me that
I’ll qualify for a $125,000 mortgage but I was only planning on
putting down $50,000. I’ll probably have to my pay off my car
($6,000 by Feb. 07) and possibly my student loans ($13,000ish by Feb
07) to qualify, which I would rather not do. I’ve thought about it
and could get a one-bedroom place but they don’t appreciate as fast
and have a harder time selling. I can go without the granite
countertops and upgrade later. I’m also torn between a house and
condo. I absolutely do not want to pay HOA dues (homeowner
association) because they can rise rapidly. But a house is a lot
more work and I’d have to get someone to mow my lawn (I know from
experience that I won’t do it.)

Any advice from others who have been is the same spot?

Sunday, April 02, 2006

Retiring in a Tuscan Villa

Ever since reading Under the Tuscan Sun I’ve dreamed of buying my own villa in Tuscany. (I should probably visit first before I commit to living there : ) However, my wants for retirement aren’t exactly keeping up with my current financial planning. I contribute 7 percent to my 401 K (3 percent is matched at 100 percent and 2 percent is matched at 80 percent). To that end, I’ve also decided to do a Roth IRA for $4,000 for 2005 and 2006. (Thanks to Our Balance Sheet for the heads up that you could still contribute for 2005). I met with our work’s financial planner from Wachovia who does our retirement planning who told me NOT to invest with him because of the commissions that would be involved. He advised me to invest in an index-fund with Vanguard or a managed fund with another company that I’m totally forgetting. I’m really impressed with his honesty and may invest him in the future. He even told me to check out which fund I want, and he would advise me over the phone to make sure it would provide diversity to my current retirement portfolio. That is phenomenal service. I would definitely consider investing with them in the future. Now I just have to pick out a fund.