Archive for money

Do we benefit off the foolishness of other?

I just came upon a sudden realization:

The only reason we can buy low and sell high is that someone else out there is selling low and buying high.

Unless a company is actively putting more shares out there, there is a static number of shares to buy and sell from.  This means that in order to buy, there must be someone selling at the same price and in order to sell, there must be someone willing to buy it at the same price.

So, if we’re doing well in our investments, perhaps it’s because someone else isn’t doing quite as well and when we’re buying and selling at the wrong times based on emotions or bad information, then someone else is relishing their good luck.

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How to save money: Stop driving like an idiot

As I drove to work in the morning, I saw a car shaking a little erratically as it suffered behind a car a bit too slow.  It switched into the other lane of a two lane road but again it was stymied by another slow car so impatient, it switched back almost clipping another car in the process.  Over and over again, the car switched  lanes back and forth and in the end, had ended up back where it had originally started.  Now, I’m all for switching lanes once or twice if I’m really stuck behind an incredibly slow vehicle but this was just getting ridiculous.  I wanted to pull that guy over myself and sit him down and tell him to just “Stop!”.  Besides, he could save a lot of money if he just had a little patience.  How?

Save on Gas

All this rapid acceleration and decceleration was just wasting a lot of gas which with it being $4.50 or more per gallon around here was a LOT of money.

Save on Auto Service

I’m not an automobile expert here but I’m sure that all this swerving back and forth has got to be tough on the tires.  Not to mention this guy may have been lucky not to get hit by another car this time but things are unpredictable and I’m sure he’s gotten or will get into a few accidents that could have been wholly preventable.  This means getting his car fixed over and over again when he didn’t have to.

Save on Auto Insurance

Speaking of accidents, even minor accidents when happening multiple times will make an insurance company take pause.  The insurance companies still want to make sure they have a profit in the end and if they’re always paying claims since most of the time, it’s this guy at fault, then they’re definitely going to raise his premiums.

Save on Medical Bills

Ok, if this guy gets in a car accident, he has a likely chance of getting hurt or at the minimum: whiplash.  Also, this guy’s rather impatient and even his car seemed a bit stressed.  Stress, whether it be from daily life or simply the fact that he has to pay more on gas or auto service or auto insurance, is definitely not good for one’s health in the long run (heart disease or high blood pressure to name a few).

This guy could potentially be paying hundreds of dollars more and all he gets in the end is that he arrived at work 5 minutes earlier than he could have.  Is it worth it?  That’s for him to decide.

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A Company’s Efforts and Dave Ramsey

During the monthly staff meeting this week, one of my coworkers had offered to show a Dave Ramsey video because he had taken one of Dave Ramsey’s programs.  In the video, Dave Ramsey goes through all the major components of a benefits package from both the perspective of the employer and employee such as various insurance plans especially health insurance and retirement plans.  He also quickly went over his baby steps and  what a debt snowball was.  I’ve never read or heard anything of Dave Ramsey’s even though his name evokes instant recognition in anyone who follows financial blogs on a daily basis.  He was funny and most importantly, he talks in such a way as to engage the attention of his listeners who were mostly apathetic or unknowledgable about their finances.  His video engaged my coworkers, made them laugh, and made them think about their own situation.

Afterwards, as I walked back to my office, I overheard a small cluster of employees asking each other “how much do you have in your retirement account?” “how much do you put in?”  My coworkers were discussing  how saving just $100 or even $10 a month by cutting back on different things could make a huge difference.

Sure Dave Ramsey had some hyperbole and he automatically assumed 13% return which in light of the recession may not be as realistic.  However, his ability to start conversations among people who usually don’t care about finances is quite an amazing thing.

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Invisible Money

It seems to me that money is so invisible now. When I get paid, I see it as a number online. When I pay someone else, it’s a swipe of the credit card and numbers get deducted. Very rarely do I pay with cash. When I fund my online accounts, I click my mouse and tap the keys on my keyboard and the number in one bank account goes down while the number in another bank account goes up. In my investments, my portfolio worth is just numbers fluctuating depending on what price people are buying and selling at.

When I do pay in cash, it disappears from my wallet into a cash register into a bank account where the paper is converted to 1s and 0s in some computer somewhere. It’s almost as if my cash disappears and sometimes I wonder where it goes and if it’s ever going to appear again, holding my breath like an audience of one watching a magic trick that hasn’t quite finished yet.

Wouldn’t it be strange if we just woke up one day and found that all the money had disappeared and instead all we had were numbers. I pay you a certain number and you sell me something for a certain number and my value is a certain number but there was absolutely no physical object to back it up with. Then, if all the data got erased (a la Fight Club), what would we really be worth? Would we all start back to zero? Would everything be a blank slate again?

Yes, I know that’s a bit dramatic but it’s the what-ifs rather than reality itself that can really show what the underpinnings of reality is really made of.

[edit: this article was included in the Carnival of Personal Finance 3rd Anniversary edition!  To check out more good reading, go here.]

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Everytime I receive my paycheck, the first thing that comes out of it is 10% for tithe. Then the rest is meant for various accounts and purchases.

Why do I do this?

Because it enables me to keep perspective on my money. Each time I write a check out for tithe, I realize yet again that my money isn’t in my own hands. Yes, I worked hard for it but it’s not just about me. God gave me this money too. My job pays me to do what I like to. I am in good health so that I can do my job. My family supports me in my sometimes crazy schedule. I have to be thankful.

So, in order to show my thanks, I give my money away. This way, my money can go toward helping others (oh, and a nice tax deduction of course but that’s not the main reason). It makes me feel good that my work can go toward others in more need than me.

So, I think tithe is a good thing. You don’t have to give it to a church. Give it to a charity, a foundation, or even just another person down on their luck. I believe that helping others will bless us a hundredfold in the long run.

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A High-schooler’s Mentality toward Money and Retirement

In some ways, my sister has been abnormal for her age in her quest for money. When she was 5 years old, she discovered how to extort money out of her own family by setting up a lemonade stand in the middle of the living room and not letting anyone pass until they by her lemonade. When she was 8, she refused to let us wrap our own gifts, insisting that she would do it for us for a fee and they would be much better looking. They were not. When she was 12, she decided that she wanted to go to business school and she’s never wavered from that path. When she was 16, she discovered the joys of working part-time. Now, that she’s in her senior year of high school, she’s looking towards college.

I admit, my sister tries to save her money each time she gets a paycheck. She tries to buy clothes on sale. She even knows what the stock market is (sort of).

However, when it comes down to it, she’s like a typical girl her age.

-Even when she doesn’t need that jacket that everyone had, when she spys it on sale, she suddenly desires it like no other (even when she didn’t care for it a week ago).
-She doesn’t look at her bank statements and only saves it because Mom makes her.
-She has absolutely no concept of retirement because she simply cannot imagine herself older than 25. So, she gives me blank looks when I suggest a retirement account for a portion of her paycheck.
-She doesn’t understand that frozen yogurt everyday (admittedly delicious frozen yogurt) is the exact same as paying for a larger pricier item in the long run.
-When I talk about anything financial that don’t involve dollar signs, her eyes glaze over.
-Everything she buys has to be a brand name, even if the generic is the exact same product.
-She’s picking a college based on whether it has a business major and its proximity to the beach without any thought towards financial aid or grants.

But, when you get down to the nitty gritty, she has a good foundation to build on and a decent financial education from various members of the family. So, I won’t worry about her for now and I hope her business major will give her the push to taking on her finances in a smart, responsible way. Also helps that I’m there to nag at her right now.

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Deducting from my already paltry paycheck

I’ve gotten my first full-time paycheck for a complete 80 hours worked in 2 weeks (actually, it’s closer to 110 hours…if you’re counting the completely useless hours I sit in traffic trying to get to work).

I was so excited, already budgeting and figuring out how to siphon my money into my different accounts and savings. Until I got the paycheck. Now, I understand taxes and deductions were going to be taken out of it but SO MUCH! I mentally started reshuffling all my finances and lengthened my savings goals.

Then I looked closer. What the heck was FICA, FIT, and SIT? It sounded so innocuous but they were drinking my hard earned money away. So, I looked it up:

FICA stands for Federal Insurance Contribution Act. These are usually a flat percentage for your Social Security and Medicare.

FIT is Federal Income Tax and SIT is State Income Tax. These are based on the W-2 form you filled out when you were hired.

Fortunately, if you qualify as a dependent and someone actually claims you as a dependent (sorry, only one person can do this at a time), then technically, no taxes are supposed to be withheld from your paycheck. If you’ve already signed the W-2 form, just report it on your taxes and you should get a big fat refund check.

And hopefully, all the money they withheld for Social Security and Medicare actually shows up after I’m retired. But, I’m not holding my breath for that.

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“Rich Girl, Poor Girl” from Cosmogirl May 2003

I was doing some cleaning since I’m redecorating my bedroom when I came across a truly humongous stack of old teeny-bopper magazines dating back to 1999.  I decided to recycle them all since I wasn’t ever going to read them anymore and they were just taking up space.  But, being the packrat I am, I just couldn’t recycle them all until I had flipped through all of them and rip out the articles I liked just in case I wanted to read the individual articles again.

Going through my Cosmogirl magazines, I stumbled upon this article.  Here are 5 tips that Robert Kiyosaki, the author of Rich Dad, Poor Dad, gives to teenage girls “to go from normal to super-wealthy” (I’m just writing the tip, not the description.  I add a basic summary in parentheses afterwards):

1. Spend Later – Wealth is about how much you keep, not how much your earn (save more than you spend)

2. Be Desperate – A paycheck is not enough if you want to live the good life (find alternate sources of income)

3. Buy Assets – Money isn’t just for spending, it’s for making more money (invest money in things that will go up in value later)

4. See Green – Opportunities to get rich are all around you (lots of ideas to make extra bucks are all around you, you just need open your eyes)

5. Learn How – If you know how money works, it can work for you (learn from lots of different sources on how to manage and invest money)

What do you think?

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Tracking my Money with my Computer

I do everything on my computer and everything I do usually turns into a series of lists so naturally, I’ve turned to my computer for the important task of tracking my finances. For the last five years, I have tried and tried to come up with a perfect technique of finance tracking for myself. I have tried paper ledgers, Excel spreadsheets, online budgeting/social networking tools, and various computer programs to help me keep track of the way my money flowed in and out. The only things I stayed away from where programs I had to buy because my frugal heart was really pained at the thought of shelling out money when I just knew I could do it in a less expensive way.

Basically, everything was a failure for a number of reasons:

Pure Laziness – I did manage to develop a habit of saving every single receipt that came my way but I would go months before that stack of receipts became sufficently large enough to attract my attention. Then, the task would be so overwhelming that I would procrastinate which made me forget again. Eventually, I would end up with a huge stack of receipts that gave me such a headache that I would just chuck them all out and restart my whole budget.
Forgetfulness – Sometimes, I forced myself to be diligent with my budget and meticulously recorded everything on the receipts and on my bank records. However, cash transactions often were receipt-less and then I would forget to record the amount down so that by the time I got home and sat down, the frustration of not being able to remember even an approximate figure for that transaction would drive me bananas which made me not want to do my budget and therefore I would resort back to procrastination eventually.

Complications – I have a lot of different accounts all over the place which serves me perfectly well. However, it becomes more complicated when I’m trying to keep track of them all in one place. So, either it would be incomplete which was not an optimum solution or way too complicated to manage so I would not want to do it and therefore, (yup! you guessed it) I would procrastinate.

But, I think this time, I’ve figured out a good technique for myself:

GnuCash – this is a computer program that I’ve discovered that I really like. It’s on my computer so I don’t have to be online to use it. It’s easy to use and the format is pretty self-explanatory. It has a lot of categories and a flexibility to adjust the categories to fit your needs. Best of all: it’s free because it’s open-source which also means that it should be free of spyware. Check it out here.

Notecards – part of my notecard PDA that I keep on my purse that goes everywhere with me, it allows me to scribble down random cash transactions so I don’t forget the amounts later.

Persistence – I’m making myself record the previous day’s transactions every morning right after I wake up. By giving it a set time, it should help me to keep it going and stave off the inevitability of procrastination.

I’ll let you know if it works or not. What works for you?

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