We have moved!
Thursday, January 31, 2008
I was delighted with how my federal tax return played out. Moving across the country for a new job meant a huge deduction, and I am getting a nice chunk of cash back from the federal government.
Then I did my two state returns.
And I owe both states a not so nice chunk of cash. More than the federal return, in fact.
I can't say that this is entirely unexpected. I have investment income from mutual funds, as well as interest income. Even though I may reinvest the interest and dividends on the mutual funds and never actually see the money, it is still income, so I shouldn't be surprised that I have to pay all these additional taxes.
Seeing those numbers made me cringe. I've been working so hard to really tighten my budget and be able to put more money into my savings. (I tend to "ignore" my investment income - it's there to grow, not to be spent, at least not at this point.) Paying these taxes was going to put a huge dent into my day to day savings account.
And then I realized I was just being silly with all these rules I've set up for myself of what I can and can't spend. I have a money market account tied to my investment accounts where CD interest is dumped. I've mentally earmarked that as my emergency fund, but really, it's got almost 10 months of expenses in it right now. Since it's thanks to investment income that I owe these taxes, why don't I pay the taxes out of the investment income? It's the obvious solution.
I think the lesson here is that sometimes we set up all these financial rules for ourselves in order to keep us on track, and we end up focusing so much on the rules that we miss the big picture.
Saturday, January 26, 2008
But ING's interest rates have dropped severely over the past few months. Most banks have dropped their rates as the Fed has dropped rates, but ING's last drop seemed fairly extreme. From 4.1% all the way down to 3.65%. As a comparison, HSBC Direct is currently at 4.25%. Thanks to Flexo over at Consumerism Commentary, you can check out the interest rates at a number of banks.
As part of my Dollar a Day savings plan, I decided to open up an HSBC Direct account, and planned to only use it for the money I'm depositing for the dollar a day plan. Now that I see the discrepancy in the accounts, I'm tempted to move my long-term savings account there instead. I love the fact that I can have sub-accounts with ING, and I wish that HSBC had the same features.
I'm still waiting on my username and password from HSBC Direct, so no final decision has been made yet. I may just use HSBC Direct for the Dollar a Day plan to begin with and then make my decision after spending some time with them first.
Except now, I have started getting spam texts. Porn spam texts, of course. I knew that spam texts were common for people with unlimited text plans, but until recently, I had been spared the spam.
I'm not sure how the spammers got my number, but every so often, I check my phone and find that two or three new spam messages have come in. I have to pay for those!
Okay, so it's only 2 cents per message. So the three messages I just discovered only cost me 6 cents. But this goes back to my hidden fees post - how many of these do I get over a period of time? How much money does it end up costing me? A dollar a year? More? And I've discovered that these spam messages were coming more frequently than they used to.
I'm not sure if I'm going to contact the phone company or not. After all, it was only 3 messages. Only 6 cents. Maybe I am overreacting. And it's probably not worth my time to sit on hold for 5-10 minutes only to get 6 cents credited to my account.
But I still find it a little frustrating.
Thursday, January 24, 2008
And then I remembered why. Until September of this year, I was a barely employed law student. I spent the entire summer holed up in my apartment, reading bar review books over and over. It all paid off - I am a licensed attorney. But as soon as I moved and started receiving paychecks and paid off the move, my spending got a little more... free.
I thought I was doing ok. I was contributing to my 401(k) (or rather, my TSP). I was putting money into a long term savings account. And I was spending less than I was making. All good things, right?
When I sat down and looked at where my money was going, I realized that I could be doing a lot better. I could be saving so much more money if I actually paid attention to where it was going, rather than just looking at the overall amount. And if I budgeted, I could plan for those larger yearly expenses, like insurance payments.
I have used Microsoft Money for years to track my income and expenses as well as my investments, and I tried using their budget program, but it just wasn't for me. It was too complex and too time-consuming to edit. I needed something much simpler. I tried an Excel Spreadsheet, and even that didn't go over too well. After a bit of research, I decided to try out YNAB. I purchased the Excel version rather than the standalone, because, well, I like spreadsheets.
I've just about finished setting it up, and am very hopeful that this will be what I need to get me on track. I'd like to be able to make larger deposits into my long term savings account. I'd like to be able to plan some large purchases and not feel like I'm delving into my monthly expense account. Mostly, though, I just need to stay accountable to myself. If I'm going to spend it, I need to track it, and I have to have any overages from this month affect what I can spend next month (and the same with savings).
I'll review YNAB in a few months and let everyone know what I think. So far, I'm excited about it!
Tuesday, January 22, 2008
Tuesday, January 15, 2008
This morning, I came across an article by Mr. Sullivan entitled Why hidden fees are a big deal. Like me, Mr. Sullivan hates hidden fees that companies pile onto us. I have to agree. I hate signing up for a service that advertises it will cost $39.99 and find that my end bill is over $50. Why? Taxes and fees. Usually I just shrug and figure it's part of the deal, but that doesn't mean I don't find it frustrating.
Before I read Mr. Sullivan's article, I thought I was pretty good about watching for hidden fees. I check my credit card statement a few times a week, and when the bill comes, I go through the statement and reconcile it with my records in Microsoft Money. I do the same with my bank accounts to be sure that I'm not getting any additional fees. I also check the bills for various services (cable, cell phone, etc) to be sure that the charges are all valid.
But I tend to ignore those various fees that are always tacked on. The ones that claim to be various taxes. I figure that's all part of the deal. But this sentence from Mr. Sullivan's article made me pause:
"The most successful firms are now the ones that hide their prices best: Under asterisks, deep inside terms and conditions, in fees they call taxes, bills that come months after the fact, or around a dark corners in auto dealerships where the manager’s office is."
You mean that perhaps these fees aren't taxes after all? Then what are they? And while they may only be a few dollars every billing cycle, those few dollars add up! On this website, I'm tracking how much I really can save by just putting a dollar a day into a savings account. Think how much more I could save if I could put a dollar a day plus all of those little fees that pop up every month! The article states that the average amount that a consumer spends on these types of fees per year is $946. As Mr. Sullivan points out, that means that while some people manage to minmize their fee expenses to under $300, others are paying nearly $2000 per year in hidden fees!
I don't know what we can do about these fees. I have a feeling that if I called my cell phone company to inquire about a fee, they would tell me that it's a tax that they are required to charge me and that would be the end of it. But I do think I'm going to start paying more attention to my bills. I distinctly remember a few months back where I stayed in a hotel and when it was time to pay the bill, there was a random $3 charge on it. I asked about it, and the desk clerk shrugged and said it was just a standard fee. I was on my way to the airport, so I didn't bother to argue. At that point, it was worth losing the $3 to be sure that I got to the airport on time and didn't miss my flight home. After all, it was only $3. But now that I think about it, how many times have I done something like that? How many little $3 charges have I just written off because "Oh, it's not worth it to fight that, it's only a few dollars."
I'm not going to become a crusader against hidden fees. But I think I am going to start asking questions. If nothing else, I should at least know why I'm being charged that additional money. Then, if I shouldn't be charged, I can work to get it taken off my bill. It's not a huge step, but it's a step in the right direction.
Monday, January 14, 2008
First, what is Mint? Mint is a free, online tool designed to help you manage your money. Best of all, it does a lot of the work for you. You input the information for your banks and credit cards, and Mint access and compiles all the information. Mint tracks and categorizes your income and expenses (and you can change those categories if you don't like Mint's recommendations). You can set budget amounts for the various spending categories and Mint will tell you when you are getting close to your budget and when you have blown your budget. Additionally, one of Mint's more unique features is that they search for and recommend "offers" for you. They look for credit cards with lower interest rates, bank accounts with higher interest rates, and other services as well.
Sounds great, doesn't it? Let's break it down into the good and the bad.
- Automatic - Mint downloads everything for you.
- Charts and graphs - who doesn't like pictures?
- Alerts when your balances are low or when you have spent a certain amount
- Automatic categorization, but you aren't locked into these categories
- Mint recently added the option to split categories as well. For example, yesterday I went to the grocery store. I bought food but I also bought cat litter. I would like to categorize the food as "groceries" and the cat litter as "pet supplies," even though it was all in one big purchase. (Until this feature was added, the inability to split transactions was one of the big reasons I wasn't sold on Mint.)
- Historical view of your income and spending. While you may not always notice that you're spending a lot on X every month, when you look at what you spend on X over time, you might be more inclined to rethink those expenditures
- On occasion, Mint makes some ridiculous categorizations and renames the item they downloaded so that it makes no sense to me and I think there is a fraudulent charge on my account. But Mint does allow you to click and see the original name for the downloaded item, so you can make any changes necessary.
- You do have to enter your log-in information into Mint's servers. Personally, I am not concerned, but any time you are dealing with financial information over the internet, there is a risk. That said, Mint appears to be doing everything they can to protect your information. You can read more about that here.
- It's not magic. You still have to log in and actually read the information. As of yet, no company has figured out how to port this information directly to your brain. And then, after reading it, you have to do something with it.
- Mint's "Ways to Save" offers. Because I already have a high yield savings account, Mint has yet to recommend anything along those lines to me. But the recommendations that Mint has provided have been... less than spectacular. They are recommending I switch from Comcast to Verizon Fios - which I would consider, if it were offered in my area. They are also recommending I ditch one credit card for another purely because it has a slightly lower interest rate. Because I pay off my credit cards every month, I am less concerned about the interest rate and more concerned with the benefits and rewards provided by the card.
All in all, I think Mint is definitely a worthwhile product to try out. And it is very important to note that Mint is still in beta. They are continually making updates and upgrades to their system. As I mentioned above, one of my negative points about Mint got moved into the positive category after a recent update.
Do I plan to continue to use Mint? Probably on and off, but not on a regular basis. Why? Because I track all of my finances, including my investments, in Microsoft Money, something I have done for years. But I do think that Mint is great for someone looking to start using some sort of personal finance tool, or for someone who is looking to switch. One of the hardest parts about getting control of your finances is tracking your spending and Mint does that for you. You just have to be sure to use that information wisely.
This week, I got my first tax form. Oh joy. Since then, I've been debating what to do about my taxes this year. No, not whether or not to file a return, that's not really an option. Rather, I'm trying to decide if I want to do my taxes myself or if I want to pay someone to do them for me. This year, I have income from two different states and a move across the country for a new job. I've also got some dividend income from investments, but I didn't sell any investments this year, so that does make things easier.
Last year, my taxes were a giant hassle, so I ended up paying a tax professional, because I filed them myself, then got a very late form from one of my banks that I was not aware I was getting. (Let this be a lesson to everyone - be aware of every form you should receive and also be aware of the deadlines by which they have to be sent to you - while a lot of forms have to be sent by January 31st, some can be sent as late as March). I had to file an amended return, so I opted to pay a tax professional to help me with this process.
While I have no complaints about the end result, I feel as though I'm in the process of really taking control of my finances, and to continue that, I should do my own tax returns. If I do them on my own, however, I think I want to get a computer program to assist. I've been looking at TurboTax, but I can't decide which version I need. I do have investments, which leads me to believe that I need the Premier version, but on the other hand, I only have dividend income from those investments. Since I didn't sell any investments, maybe the Deluxe version would work just fine. And the difference is $30 (priced at Amazon).
Plus, if I'm paying $70 for a program to help me with my taxes, how much more would it cost me to have a professional do it? Additionally, I think the price only includes one state - will I actually need to download for the other state (I earned very little there), or will I be able to do it on my own?
I think I need to ask more questions and do more research before I make a final decision.
Monday, January 7, 2008
I currently have credit cards from two major companies, as well as a few store cards here and there. I really only use one card; the other gets used in emergencies or if a great rewards promotion is going on. I have never carried a credit card balance. Therefore, I have never paid any interest on my credit cards. And that probably informs my opinion about my credit card.
My main card is a rewards card. I try to put all of my expenses on that card. I have found that if I carry cash, I will spend it without a thought. If I have to pull out my credit card, however, and see that expense tracked in Microsoft Money, I am much less likely to make the purchase. I know some people are exactly the opposite. This is what works for me. The other benefit to putting everything on that one card is that I can clearly see what I am spending in a month's time. I can see when my spending is getting a bit higher than I would like. Plus it helps the rewards add up.
I freely admit that I signed up for my store cards for the initial discount and the coupons. Was it worth it? Probably. Again, I pay these cards off every cycle. And in at least one instance, by opening the card, I got a significant discount on a purchase. I also get some pretty good coupons in the mail. This month is my birthday month, and I got a number of coupons from stores at which I have a credit card. Will I use them all? No. Will I check out the stores to see if the discount is worth it? Probably.
For me, it is very important to track my expenses each month. I have been using Microsoft Money for years to track my income and expenses. I have it set to download my credit card statements, and review the charges at least once a week, usually two or three times a week. I know what recurring charges are applied to my credit card every month, and I know when they will be applied. Without looking, I can tell you the date my credit card statement will be issued and the date on which the payment will be due.
One thing I love about my credit card is that it allows my money to work for me. Essentially, the credit card company is giving me an interest free loan for the month, letting me buy whatever I want on their dollar. My money gets to stay in my bank account and earn interest. Of course, if I don't pay the credit card company back for this loan on time, they will start charging me interest.
I know a lot of people who find cards with 0% APR for a number of months and then charge everything to those cards, putting the money to pay off the cards in a high yield savings account, and then paying off the entire balance before the interest rate increases. While they can make a significant amount of interest doing this, the thought just makes me panic a little inside. I have tried convincing myself that I don't need to pay my credit card the day that the statement is issued. I can wait a week. I can wait until the day before the balance is due if I want. But doing so makes me worry that something will happen and the payment won't be applied and I will end up with all sorts of fees. I have found a middle ground. I typically make the payment 7-10 days before it is due. That way, I've gained some interest due to that grace period, but there is no chance the payment won't be applied in time.
A few years ago, I got a phone call from the credit card company indicating that they believed my number had been stolen and fraudulent charges were being made. They were absolutely correct. But the company had caught this fraud so quickly that none of the charges ever applied to my account. Yes, the account was frozen, and then closed. But the credit card company sent me a new card (and offered to overnight it to me if I needed it), and I have had no problems since. I consider that great customer service. I can't imagine the hoops I would have had to jump through if something similar had happened with a debit card.
So all in all, I am definitely pro credit cards. But I do see the other side of the coin. They're not for everyone, and they do have their pros and cons.
Where do you stand on the issue?
The story of the second woman, Unique, a 21-year-old woman who was supporting her siblings really had an impact on me. She was determined to have a good home for her family, which included a pregnant 17-year-old sister and her boyfriend. She was really struggling to make ends meet and also to be a good parent to both her son and to her siblings. She did her best to pay her bills every month and had to return to “dancing” (stripping) in order to make ends meet for her family. She wasn’t happy about the fact that she had to dance to make extra money, as she worried her siblings would be picked on for what she did. But not only did she want to make ends meet, she wanted to provide things for her family. She wanted to be able to buy her sister a crib for her baby, for example.
I am sure that Unique’s story is not uncommon in how she struggled with money, though I’m sure there aren’t a lot of 21-year-olds dealing with those types of situations. I was really impressed with her maturity and how she had really stepped into the role of mother to her siblings. She brought them to the thrift store to buy clothing for the school year, and not only had a strict budget, but she also instructed her sisters that there were to be no stomachs showing. She wanted to do things right.
Earlier that afternoon, MTV had shown an episode of My Super Sweet Sixteen, where a girl threw an amazingly lavish party for her birthday. She spent thousands of dollars simply on her outfit for the party. And then MTV presented Unique, who received a check for $100 from a friend so she could buy groceries, and she struggled over whether or not to buy the ground beef she knew would last in her family, but it cost $11. And in the end, the store wouldn’t take her check anyway and she ended up at the food pantry. It really was an interesting dichotomy.
I really hope that being on MTV has helped Unique and her family, and I hope that other people who see this documentary think twice about their spending. It made me take another look at my life and be very grateful for everything I have. It also made me think a bit about my spending habits. What was I buying just because I could, and what do I actually really need?
I don’t know that I would have been able to do what Unique did at nineteen when her mother died. I think she’s a very admirable, impressive young woman, and I think we could all learn a lot from her.
Friday, January 4, 2008
When I shop online, I always look for coupons before I buy. A few weeks ago, someone pointed me to Ebates, a site that features coupons and cash back. Coupons AND cash back, you say? That's right.
This is how it works: You sign up for Ebates. You browse for coupons and merchants based on what you're looking to buy. Some of the coupons are pretty nice, various percentages off. But the unique thing about Ebates is that they also do cash back. For every purchase you make, you get a certain percent of that purchase credited to your Ebates account. Every three months, they cut you a "big fat check," for your cash back credits. You have to have earned more than $5 to be eligible, but depending on what you buy and the value of the cash back, that's not always hard.
I have been looking to replace my running shoes for a few weeks now. Running shoes are not cheap, and the cost is worth it for the reduction in pain in my knees and hips. I normally buy from a local store, but I knew exactly what shoes I wanted (the same make and model I have now), so I've been doing websearches for discounts and coupons. Thanks to Ebates, I saved over $25 on the shoes. How? They had a coupon code for 10% off any shoes at a particular shoe website, and then the website itself had a deal for new customers offering another 10% off. Then Ebates had an 8% cash back offer. And because of the price of the shoes, that meant the 8% back was over the $5 minimum, so I will be getting a big fat check sometime in the next few months.
If you're interested in signing up for ebates and use this link, you will get $5 credited to your account. This sign-up bonus doesn't count towards the $5 minimum for the check, but once you do reach that minimum, this $5 will be added to the value of your check.
Tuesday, January 1, 2008
This month, my net worth increased by 0.91%. Most of this was due to savings, as my investments only bounced back an average of around 0.15%. Honestly, I was hoping for a greater increase, seeing as December is the month in which my mutual funds pay their yearly dividends (which at this point, I continue to reinvest).
My December spending was not as controlled as I had hoped, but part of that is due to the expenses inherent in travel. I had forgotten that I scheduled an eye doctor appointment while I was at my parents' house, so that was another expense, but now it's done for the year. My cats got a chunk of money this month too, what with having to pay for someone to come in and care for them.
Another unplanned, but much needed expense was that this month, I decided to join Weight Watchers. I know that there are many free sites out there dedicated to helping you lose weight (SparkPeople being one of my favorites), but since I moved and started this new job, the scale had been moving in the wrong direction. I decided that I needed to try something new, so I'm giving Weight Watchers a try. I know a lot of people who have succeeded on this plan, and I hope to add my name to that list.
One of my yearly goals for 2008 is to increase my net worth by 20%. Looking at how the numbers have been moving in the past few months, that is a daunting goal, but I think that if I control my spending and make smart choices, I should be able to get there.
Oh, and it's day 1 of my dollar plan. Total so far? $1.