Stocks and Cents

Always know where your money is

22
May

I was talking to my friend the other day and it turns out that she doesn’t entirely know where all her savings and investments are.  Now, while this is usually a bad thing, it’s not the worst thing in the world for her.  She’s still young and is an expat, so it’s not terrible for her to have someone else managing her US based investments and taxes while she is abroad.  But even then, she should probably have some idea where her money is, as should us all.

For many of us, our parents managed our money when we were kids.  They co-signed the accounts, set up any investments, etc.  While this wasn’t necessarily the best option, as it didn’t teach any of us financial responsibility on our own, it did manage to keep money safe from crazy teenage spending sprees.  The problem is now, as is the case for my friend, we may not know where the money is anymore.

Another situation is that as we grow older, we simply forget where things are.  I know plenty of people that have a 401k somewhere.  That’s the extent of their knowledge.  They have a 401k somewhere.  Maybe it’s with Fidelity or John Hancock, who really knows?

Well, HR knows.  But that’s besides the point.  The point is that we need a series of action steps in order to find all our damn money!  So let’s put some stuff on paper.

1.  If you’re younger and have just left the house, ask your parents.  Have them put together a list of all your accounts, bonds, cds, precious metals, whatever!

2.  Contact the HR department of any old employees.  You may have an old 401k account that you could rollover into an IRA and don’t even know it!  I know way too many people that don’t pay attention to this.

3.  Check with National Association of Unclaimed Property.  Eventually, if you don’t touch your accounts, the bank or investment firm is going to report this to the state.  Eventually the state will just take the money and hold onto it, making sure that your bank doesn’t claim the money as its own.  Each state does this and each state has its own way of searching, so please look for whichever state you think works best.

4.  Now that you’ve found all of your money, consolidate it!  If you can, put it all under one roof (USAA is great for this).  If you can’t do that, at least try to keep it in no more than two different institutions.

It’s not all that hard to find your money.  What it really comes down to is a conversation with your parents about money (always awkward) and calling the HR department of the place that may have fired you (definitely awkward).  At least when you’re searching the unclaimed property registry you’re just dealing with an internet search.  Although, if they actually have something of yours, you’ll probably have to talk with someone from your local government (also awkward).  So yes, this will be an awkward and rewarding process.  But mostly awkward.  Good luck everyone! If anyone finds something ridiculous (insane secret inheritance held by the state?  Hell yeah!) let me know!  I’d love to hear some good stories related to this.

Posted on by Brian

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Cover Letters and Resumes

20
May

Well, I’ve decided to begin searching for a new job.  This is a thought I’ve had for a few months now and it’s been dragging on me heavily as I go to work.  I feel a sense of loyalty to my current job.  They took a chance on me out of college and gave me the opportunity to develop into the role I currently hold.  However, I’m on my fourth year, already a manager and my growth has kind of gone stagnant.

For the past few weeks, I’ve been spending my time networking and building contacts in other cities (Boston! New York, Chicago, Dallas, etc) and trying to find jobs that I’m actually interested in.  What I’ve learned is that it’s damn hard to get back into the market after several years off.  Although a huge part of my job is actually networking and building interest in my company and what we do, the jobs I’ve been looking at and the people I talk to tend to be outside of the leasing industry.

Granted, I knew this would come eventually.  Leasing is not really my cup of tea and although I’ve learned a great deal about corporate financing, structuring and other items that will help me as I continue my career in finance, I’m ultimately not as happy as I could be doing what I’m doing (partially leading to me starting this site).  In the end, I’d rather be working in an M&A department or at a private equity firm, sourcing and structuring deals.

At this point, I’m working on cover letters most days, trying my best to be confident in myself and my abilities and express that on paper.  While that might come easily to some people, I’ve never been terribly good at it.  So this is something a little bit new to me.  I’m hopeful that over the next few months, I’ll have some good experiences to write about here.  Experiences that I learned from and hopefully lead to me pursuing a new career path.

Hopefully this week is lighter and I will be able to write more here.  Unfortunately, I can’t say for sure that I will but, just in case, keep checking into this space.  I should have something else up soon that has more to do with personal finance!

Posted on by Brian

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Money doesn’t equal happiness

13
May

I feel like this should be obvious but let’s just get it out there: Money does not equal happiness.  Happiness is attained.  It’s a state of mind. Money is simply a tool that we use to help us attain happiness but even then, it’s not necessary.

You don’t need Financial Independence to be happy.  Yes, becoming financially independent will be amazing and it will be fantastic to not have to go in to a 9-5 everyday but if you’re not happy before you get there, then you probably won’t happen once you arrive at your destination.  You’ll probably be excited for a little bit but then that will wear off and you’ll be left just wondering what the hell to do.

Take a lottery winner for example.  We all know that they have a higher tendency to go bankrupt than a normal person but are they really happier?  I doubt it.  Before they had money, often, they were slogging through their day to day lives, waiting to hit that retirement boat at the end of the journey, the one they most likely hadn’t saved up for.  When they won the lottery, they attempted to use the money to buy themselves happiness.  They buy fancy cars, big houses, and go on spending sprees.  After about 5 to 8 years, all the money is gone because they didn’t know how to take care of it in the first place.  And they still aren’t happy.

My point is that, like I said above, money is simply a tool to help us in our journey for Financial Independence and, ultimately, some sense of happiness and contentment.  It’s not going to simply provide it for us.  Just as we have to work on our budgets and investments, we have to work on being happy.  We have to put ourselves in positions where we know we can be happy.  Are you happier if you’re working out?  Join a running group or a crossfit and be a part of a team.

I think the biggest thing any of us can do is to make sure that every day we do something to make us happy.  Otherwise, we’re wasting our own time!  If you’re scrimping and saving and investing wisely, all to reach financial independence, then you better be happy.  If you haven’t reached some measure of general happiness with yourself, money will not suffice as a substitute.  It will only treat the symptom and not the disease.  Take some time and think about what has been dragging you down lately.  Think long and hard and try to see if this is something you can change.  Chances are, you’ll find that it’s within your power to fix.

 

Image courtesy of 401(k) 2013

Posted on by Brian

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Refinancing my car

8
May

I’ve been tinkering with the idea of refinancing my car.  This ties into what I was talking about on Monday and really comes down to my desire to maximize cashflow.  Despite my hatred of debt, cashflow is king to me right now.  And looking at this as if I were a business, the best thing I could do would be to refinance the debt to a longer term at a lower debt rate, reducing my interest expense and my principal repayments each month.

So I’ve been working with a firm, Blue Harbor Auto (Not an affiliate link, I swear), to get this done.  So far, they’ve offered me very competitive rates on 48, 60, 72 and 84 month terms.  Considering I only have 51 months left, all of this seems a little ridiculous.  However, if we’re talking about investment return vs debt payment, there is something to be said.  The 84 month term would only carry a debt rate of 2.85% for me, a pretty big drop from what my current loan has (6%) and would free up $200 of monthly cash flow.  Even more ridiculous, I’d actually still pay less interest (only about $200, but still) than I would pay in the remainder of my current loan.  Even adding three and a half years to the loan term doesn’t reduce the financial benefits of refinancing.

The additional $200 a month would be a huge step forward for me.  It would increase my current savings dramatically each month and would hopefully grow at a much larger rate than 2.85%.  If my investments only grow at an annualized rate of 7% for the next 51 months, that extra $200 a month will add up to just under $12K.  Even if I keep my current loan and then invest the full value for the three years after, I still will not save that much money.  From a pure numbers stand point, this is a no brainer!

The good thing about this is that there are no prepayment penalties if I pay extra or pay the loan off early, so I can still tackle the debt while investing if I choose, just utilizing a much smaller debt rate.  After doing some number crunching here, this means that if I choose to pay the exact SAME amount that I pay now, I’ll actually have my loan paid off in 45 months, as opposed to 51.  So if I were to refinance at the 84 month rate and still pay my current amount, I’d actually save myself half a year of payments.

Chances are I will probably go through with refinancing my car through these guys.  They did, however, try to sell me on an extended warranty which I declined, so I think I figured out where they actually make their money.  I’ll keep you updated as I go through the general negotiations involved with this.  I’ve never done it before but I’m hopeful this is significantly easier than trying to close a bank account with Bank of America (for the record, it’s near impossible).

 

Image courtesy of Stradablog

Posted on by Brian

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Invest or Pay down my debt

6
May

I’m not sure if you’ve noticed this about me through my writing but I tend to think a lot, sometimes too much.  This blog is limited to personal finance mostly but still, you’ve probably noticed that I go back and forth on concepts and ideas, wavering on the execution and which strategy is best for which time.  Which brings me to my current dilemma: should I be investing my money or putting every extra penny into paying down my debt?

I go back and forth on this all the time.  I’m already paying extra into my debt to knock it back but still, I feel like I could do more.  I look at the $750 a month I spend there and literally drool at the investments and returns I could be making.  I already put away $400 a month outside of my 401k, so if I was able to put aside $1150 a month?  Now we’re talking.  At the same time though, I enjoy putting money into my investments.  Watching my $400 a month grow into something is exciting and gives me hope that I just might be doing something right with my money!

When I look at how my net worth has changed over the past year, what I see is that my debt has just slowly, moderately decreased, while my investments in my 401K and Vanguard account have led a massive charge forward.  Since I started tracking my net worth like a crazy person, in January of 2012, my debt has decreased by only a total of $7,900 while my investments have risen by $12,500.  There is a huge disparity here and while I’m not going to say I dislike it (I do like having more money as opposed to less), I tend to think about the road not traveled.

The thing is, my investments massively outperformed the interest I paid on my stocks.  Since January 2012, my investments have paid a return of over 22%, outpacing the weighted average of 5.25% of my debts (not taking into account the tax deduction for student interest).  I can look at those two numbers alone and know that my money is being put to better use by investing it.  The bigger question now is, now that I have enough savings to feel safe in case something truly awful happens, should I just do it?  Should I just go for it, cut my 401k and my investing and just knock away my debt?

I’m honestly not sure about this.  On the one hand, I hate debt.  I truly loathe it!  It’s one of the only things that can keep me up at night and I don’t even have that much of it!!  I hope I never have a mortgage, otherwise I’ll never sleep.

On the other hand, I love watching my investment account grow.  I love having money as opposed to giving it away.  In the end, I’m almost positive that I will take stashing money into a Vanguard account over paying off my debts any day.  The more quickly that account grows, the quicker my net worth heads towards positive and the less I will worry about my debt just hiding off to the side, slightly out of view.

Opinions here are appreciated.  What do people think?  I know a great deal of people choose murdering debt while others would rather build up their cash stash.  Let’s hear it, what road should I take?

 

Photo courtesy of somewheregladlybeyond

Posted on by Brian

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Net Worth Update – April 2013

2
May

Well, the rent debacle continues.  It turns out there was some sort of computer error that added an extra month onto everyone in my buildings rent.  Lucky for my, I hadn’t set up auto-debit yet, otherwise I’d really be pissed off.  The problem now is that, while they attempted to fix the charges in their system yesterday, they forgot to clear the old charges when they put in new ones!  So now my total due is over $5,000.  I live in a decent place, don’t get me wrong, but I definitely do not owe that much.  Hopefully this gets fixed correctly today.  If not, I’m going to just assume that nothing changed on my rent, walk downstairs and give them a check and hope it all works out.

But on to better things!  I owe you guys a Net Worth update.  April was a crappy month.  My car got impounded, I bought some plane tickets to go back to Boston and in general, spending just wasn’t where I wanted it to be.  As always,  Template courtesy of J Money at Budgets Are Sexy.

Gah, almost all green except for my checking account.  And I’m almost in positive territory.  Way better than I initially thought but still way off where I want to be.  This is the third month in a row my cash accounts (checking and savings) have declined and that is not a situation I like.  Hopefully May will be better all around!

Checking Account: If you take out the plane ticket I bought back to Boston ($500) and the total cost of my impounding extravaganza ($405) then this goes right back into the green category.  Obviously I’m going to be paying much closer attention to street signs from now on in order to avoid that mess again.  With flying home, well, I only do it once or twice a year so I’m fine with the cost.  Really, I look at it as though I’ve been saving up for it (I have). So throwing out the negatives, I would have hit a slight positive in April.  Although it’s not actual money in the bank, I’ll take it.

Savings Accounts: Solid growth from my contribution, not the interest. Once I hit $2,000 I think I will actually stop the contributions in here and direct it towards either my debt or my investments.  I haven’t quite decided yet.

401k: Ah, the 401k.  It’s such a driver of my net worth yet I cannot touch it.  It’s right there but no, no touchy.  I haven’t changed my allocation but I’m keeping an eye on it to see if my stocks or bonds get a bit overheated and start taking over.  I’d love to just set it and forget it but I’m not like that unfortunately.  I’ve got to check it AT LEAST once a month :)

Vanguard: I’m pretty happy about the growth this month.  Most of the month my account was looking pretty crummy.  The only gains were from my contributions and I was actually taking a loss on them.  Then, finally, the market woke up and pushed my money up nicely.  While the gains in this account keep coming, I don’t expect it to stay this way.  I’ve got some plans on diversifying this and protecting my cash a little bit more but won’t be unveiling them until later.

The Acura: This is ridiculous.  The value of the car went up.  Up!  I didn’t even drive 400 miles last month.  I’m liking this trend, it makes me feel like the car may not be underwater too much longer.

Liabilities: Consistent drops, I like it.  I did use my credit card for my flight this month but I paid it off.  It’s an airline card, so I got some extra miles, free checked bag, priority seating.  You know, fun stuff.

Overall, I think April was OK.  I felt pretty crummy about my finances most of the month, so to see such positive changes at the end makes me pretty happy.  I’ll keep pushing myself for more positive growth and change over the next few months and we should see some good stuff come along!  Hope everyone else had a good April!!

Posted on by Brian

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Today’s post is delayed

1
May

So, I woke up this morning with the idea that I would quickly put together my April Net Worth post and put it up.  Unfortunately, I received an email that completely threw this idea out the window.  On the first of every month, I receive an automated email from my Apartment Manager showing what I owe.  It’s usually just my rent, plus a few dollars for water for the month.  Today it was not.  Guess how much extra showed up on the bill.

$1700.

WHAT?!?!?

There’s no breakdown or explanation, just an open hand saying “pay me.”  The leasing office opens soon and you can bet your ass I’ll be making a fuss. I have literally no idea where they could get $1700 in fees but I’ll be finding out, contesting every single one and making sure I don’t pay a cent of this.  In the meantime, I’m going to be going back through my leasing contract to see what the hell they could possibly be charging me for.  We’ll just consider it prep for later in the day.

You’ll probably get my Net Worth update later today or you’ll get a double posting tomorrow.  We’ll see how this works out!

Posted on by Brian

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Taking risks like an Actuary

30
April

Yesterday I wrote a ridiculously abstract post about taking risks.  In it, I provided no numbers, no facts to back up my belief that taking risks can be worthwhile, particularly on things you truly desire.  Today, I’d like to try to bring it back to basics and talk numbers with you, especially with respect to Financial Independence.  So, let’s look at this whole risk process more like an actuary.  Don’t know what an actuary is?  Well, have you ever seen the movie Along Came Polly?  Basically, Ben Stiller’s character is an actuary.

In real life, an actuary tends to be someone who measures risk.  They have dive into massive amounts of data to figure out when people will die, how much money insurance companies need to have on hand in case of massive natural disasters, and will even determine what sort of asset allocation insurance companies should have in their portfolios.  Really, they are very, very, smart people (David Merkel at the Aleph Blog is one of my favorite guys in this arena.  While he isn’t an actuary, he’s worked with them all his life and understands the field).  And they are extremely good at figuring out if risks are worth it by utilizing math and logic.

So let’s take Financial Independence and think about that. That’s one of my constant themes around here and is something I’d like to achieve in the next ten years.  I’m obviously a ways away but still, I think about it.  But rather than look at the risks normally associated with quitting your job in order to live a stress-reduced life, let’s look at how our everyday choices can affect our goals.

I have a car payment that is $471 a month and I detest.  It takes away from my investments and I seriously want it to just go away.  In addition to this, I spend about $200 a month going out to eat, getting drinks with friends, etc.  This is hugely reduced from what it used to be (greater than $600 a month) but it still kills me to see it.  Beyond this, about $100 slips out of my hands every month somehow.  My guess is that the gnomes take it but more likely, it’s little things that just add up.  So, in total, I personally have wasted spending of $771 a month.  If I continue to waste this each month for ten years (not entirely realistic, since the car loan is paid off in another four or so but bear with me) I will have missed out on a full $142K in principal and investment gains.  That right there could mean the difference between retiring in ten years and retiring in fifteen.  That’s not an insignificant number!!

But that’s just me.  Let’s look at someone else.  Let’s take a coffee habit into account here.  Let’s say that Sally gets a coffee every workday, Starbucks, and it costs her $5 total.  Sally works 50 weeks out of the year so she’ll average just about $105 a month.  Sally isn’t interested in Financial Independence so she works for 40 years and retires.  How much money did Sally end up losing?

$369K.  She lost $369K dollars in 40 years.  And truth be told, it will actually be more.  Forty years ago, a cup of coffee cost a fraction of what it costs today.  In forty years, assuming constant inflation of 3%, it will cost $16!!  So really, Sally will lose WAY more than $369K in real dollars.  But in 2013 dollars, it’s close.

The point is that in the long run, every decision we make, whether small or large, has a consequence.  Every dollar could and should be invested and put to work for you, earning you more money while you are off doing something else, getting you closer to your goals.  Every $100 we spend is worth $220 in ten years.  That adds up each and every month.  We need to scrutinize every dollar we spend and ask ourselves “does this help me?”  If the answer is “no” or “I don’t know” then put the card or the cash away.  If you’re going to take risks, take cheap ones!  Like cliff diving

Posted on by Brian

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Taking risks like a champ

29
April

Most people don’t like to take risks.  They prefer safe.  Safe investments, safe neighborhoods, safe countries. Safe safe safe.  But at some point in our lives we all need to take risks.  It’s bound to happen.  And the thing is, a certain amount of risk can be a good thing.  It allows us to break free from our constraints and hopefully grow towards our goals.

The reason I’m getting into this is because most of the people I know are stuck in a rut.  We’re all in our mid to late twenties, still in the early stages of careers, and we don’t know what we really want from our lives.  You’ve probably read somewhere that this is the point in our lives where we’re supposed to take risks because we have enough time to make our comeback from any failure.  But that’s not the goal here.  I’m talking about calculated risk, good risk, risk that moves things two steps forward.

The first step is just making yourself open to change.  I’ll give you an example.  I graduated college in 2009 and was searching for a job.  Knowing that the Texas economy was still growing while the rest of the country was in shambles, I moved to Dallas from Boston.  From there, I got a job in Los Angeles and have been here ever since.  The only reason I was able to make either of those moves is because I put myself out there and was open to new places and new things.  If you’re not willing to accept the risks inherent in life changes then nothing can change.

The next key to taking risk is that you have to want it.  Most people don’t get that when it comes down to it.  You need to want something so badly that you’ll actually go for it.  Want to move to New York City?  Contact that recruiter!  Want to be a lawyer?  Set up shop and start practicing.  Want Financial Independence?  Go read Mr. Money Mustache and make it happen.  If you want it bad enough, you’ll take a look at the risks and figure out ways to make it work.  Maybe you’ve got to get a second job in order to pay off your student loans early enough to truly retire.  Maybe you need to just get out of the city you’re in and go to Fiji or New Zealand because that’s what you want.  If you want it badly enough, you’ll look at the risks and laugh in their faces.  You’ll make it work.

Next?  Keep trying.  We encounter risk every day of our lives in little, tiny doses.  We also see it all the time in big, potentially crushing doses.  The point is, you have to keep after it.  This goes right with the prior step of wanting something so bad that you’ll do anything for it.  If you keep taking risks and they’re good, calculated risks, you’re going to succeed.  There is a reason that some people are serial entrepreneurs.  Sure, they may just be wired differently than everyone else but there is something encouraging about people who just keep taking shots.  Wayne Gretzky famously said “You miss 100% of the shots you don’t take.”  Well, it’s true.  Plenty of people sit back and watch as friends, family and those around them succeed in love and in life.  They complain that it should be happening to them, that they could do it too.  Well my friends, they’re not taking their shot.  And if you don’t take yours, things will rapidly slip out of grasp.

Most of the risks we see in life are made up of our own fears that we’ll be inadequate or incapable of success.  The more you try and put yourself out there, the more you’ll learn about yourself and see that it is simply not true.  But without trying, without wanting it, you’ll always let the risks overwhelm you.  So get up and start a company or talk to that pretty girl or cute guy.  Take a chance and don’t let the potential risks get in the way.

 

Image courtesy of Wayne Gretzky’s “Special Friend,” Jeffrey Simpson.

Posted on by Brian

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Big Life Changes

24
April

So, life is changing pretty quickly out here in LA.  The girlfriend, a licensed attorney in the state of California, has officially resigned from her current job in order to actually pursue her legal career.  You see, her current job has her doing virtually no legal work.  It’s the job she took while she was studying for the bar so she could make ends meet.  It ended up turning into a full time position after everything was said and done.  While they want to hire her on as a junior counsel, they don’t have the budget for it and just can’t keep her.

So she’s going out and hanging a shingle (yeah, I didn’t get it at first either.  Crazy lawyers).  She’ll freelance for a bit, doing whatever legal work or overflow work she can find from her network and get some more experience.  The hope is that by getting the exposure to more legal work and having some attorneys see the quality of her work, she will be able to get a job offer as an associate somewhere.

What does that mean for me and Jackson?  Well, for Jackson it means that he’ll get a lot more belly rubs and won’t be so lonely while she’s at home.  For me, it means buckling down even further.  Since we won’t know where her next paycheck is coming from, we’re going to focus the first portions of her freelance earnings directly into her student loans.  She went to law school and they’re a pretty decent size, so this makes the most sense.  As she makes more money, incrementally, we’ll be able to increase how much she pays towards rent and other expenses.

I’m going to have to cut back a huge amount as well.  I was already cutting down on going out to eat or get beers.  Now that has to drop to zero.  Additionally, I’m going to finally get a Costco membership and start saving some money over there.  Hopefully I can at least share a friend’s card for a bit before putting the money down for it.  I’ll also keep looking into options on selling my car and eliminating that payment.  I’ve been toying with the idea of become a one car household and purchasing a bicycle but we’ll see.  I’m still underwater on the car loan unfortunately, which makes any decision there a difficult one.

This is going to put a dent in my savings I think.  I’m still going to put away the same amount as now, I just won’t be able to save any extra on top of that.  That means that Financial Independence will get pushed back a few years.  While I’m not happy about this, it’s a step in the right direction for her.

So if anyone has any legal work that needs to be done, send me an email.  I know a young and enthusiastic attorney that would love to help!

 

Image courtesy of loop_oh

Posted on by Brian

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