Possible business idea
Posted by moonimus on Jan 28, 2008
On my way to San Jose over the weekend, I thought of a food service business at an airport. Ususally, I won’t need to get anything but I normally don’t take plane rides exceeding three hours. It’d be great if there was a restaurant that would take my order online or over the phone and have the food waiting for me after I checked in. I like to get to an airport early so as not to feel any stress about getting in on time. I really think a model like that could do really well.
I also had an interesting stay at the Doubletree in San Jose. I did not know anything about “furries” until this weekend. Actually that’s not true, they made a reference about it in Entourage. Not really my thing but they all seemed like they were having a great time which in the end is all that matters.
Weekly Weigh in January 28, 2008
Posted by moonimus on Jan 28, 2008
232.2 lbs. Ugh. That’s as bad as it gets. The good news is that I believe my cold is 99% gone now and I have been feeling much better physically in the last week than I have for more than a month. Also, my business trips are winding down. I only have one more place to go and then I won’t be traveling for a while.
I will slowly start working out again. During the hiatus, my xvest
Fed Rate Cut
Posted by moonimus on Jan 22, 2008
The Federal Reserve just cut the federal funds rate on overnight loans from 4.25% to 3.5%! I can’t remember the last time there’s been a 3/4 point rate reduction since I started understanding how the Fed affects the overall economy.
Overall, this was a response by the Fed to the declining domestic and international markets. I haven’t checked yet but I’m sure all my retirement accounts have taken a beating. I’m not that worried as I’ve got at least 35 - 40 years before I start to tap into that money. If my daughter’s 529 plan is any indication, the market has been tanking badly since last June. I wish I had a nice windfall of money right now as I’d most likely buy into this declining market across the board…
This rate cut will probably affect me in two ways. First, the interest for my online savings account is sure to decline. I’m not too happy about that because for the first time in my life, I actually have a $1,000 in a savings account accruing at a decent 5.3% APY. Second, I’m going to make some calls to a few banks and see if I can get a better rate on the mortgage for my apartment. A friend told me that refinancing shares are much easier and cheaper than refinancing a mortgage. If I can reduce my interest rate by even half a point, that would be a big difference. I’ll post in the future the results of my calls.
Time Out on 401ks?
Posted by moonimus on Jan 19, 2008
Recently I went to Gaetana’s for a friend’s birthday. I know the owner from my wild drinking days. He used to be one of my favorite bartenders in New York City. Anyways, this place is a hidden gem in the West Village. I highly recommend the pizza. It’s great!
As I was walking around the neighborhood with my daughter, I saw the cover of Time Out New York with the words “Get Rich!” and in smaller print “Why 401ks are for suckers.” For those of you who don’t know, Time Out New York is a weekly magazine that lists things you could do in New York for the week. It also reviews shows, movies, restaurants etc. If you’re ever in New York for a length of time, it might be worth your while to pick up an issue. For personal finance though, I’d rather stick to blogs.
The author of the article, is 26 and states that she hasn’t saved any money for retirement. She argues that she wants to live now and “not hoard (cash) away so I can score a nice trailer in Clearwater, FL, 40 years from today.” Joking or not, she sounds like your typical ignorant (but sophisticated and tragically hip) New Yorker. Nevermind that she hasn’t saved money, I just can’t stand someone insulting anyone else’s lifestyle. Get off your high horse.
Her employer’s plan contributes 50% match on the first 3% of her contributions. She implies that there is a 4 year vesting period to gain the full match (25% per year). She resents that companies are increasing 401k options instead of increasing wages and bonuses. She mentions the IRS concept of highly compensated employees for 401ks. She argues that “401ks are designed in such a way that everyone-financial advisers, stockbrokers, mutual-fund managers-gets paid before you do.” She also states, “…most folks enrolled in 401k plans don’t have a clue how they work.” She takes no comfort in knowing that “the government and my employer are directing my investments.” She sums up with the following, “So if I’m on the dole at 65, eating cat food out of a rusty hubcap, I’ll be content knowing that while y’all Steady Eddies were fastidiously stashing pennies [italics my emphasis], I was gorging myself on expensive cheese in Paris and snorting hard drugs off the backs of go-go boys in Berlin. In other words, I was living.”
I was in awe after I read this. The author has some misconceptions about 401k and saving for retirement in general. First, she should be contributing the 3% to get the match. Even if she stays for one year, she’ll have vested 25% of the match. Assuming she makes $40,000 a year and only stays one year, her contribution would be $1,200 and her vested employer contribution would be $150. We’ll just assume an 8% return at 40 year would be about $32,000. At 10% it would be about $67,000. I’m thinking she’s being a bit shortsighted about this. She’s also forgetting about the upfront tax savings.
Second, I’m not sure what she means about other people getting paid first if she enrolls in her 401k. Last time I checked if I contributed $600 into a 401k, my account received $600. Also though your investment choices may be limited, the employee directs all the investment choices in his respective plan. No government, no employer is telling me to invest in anything. It’s different if she can’t make an investment decision.
Lastly, I think it’s fairly easy to say when you’re 26 that you can live off of cat food but I seriously doubt she’ll feel the same way at 65. Also how can she afford to go to Paris, eat expensive cheese and score expensive drugs?
I’m pretty sure her editors wanted her to be as controversial as possible. But if that’s not the case her ignorance shines above her arrogance. I hope most 20 somethings don’t really think or feel this way about saving for retirement.
Advice from the Wall Street Journal
Posted by moonimus on Jan 16, 2008
A few weeks ago, there was a column (may require registration to view) in the Wall Street Journal about reporters giving advice to WSJ readers. I’ve pulled out the summaries for those related to personal finance followed by my own comments.
The Problem: Your checking or savings account pays little or no interest.
The Fix: Shift excess cash into a high-yield online savings account.
There is no way anyone with an internet connection should not be opening an online savings account. You can try ING or HSBC which receive rave reviews. Personally, I’m a rate chaser so currently my money is at One United Bank which is earning me 5.3% APY.
The Problem: You’ve been a victim of identity theft or are worried about scammers opening financial accounts in your name.
The Fix: Freeze your credit files. Doing so blocks anyone — including yourself — from accessing your credit report and prevents new creditors from opening accounts in your name.
Hopefully you won’t ever need to do this but this is sound advice. Also if you ever lose your wallet, you should have a written inventory of your wallet with account and phone numbers for all your debit and credit cards so that you can cancel all your cards.
The Problem: Finding a parking spot at the airport during the holidays and other busy travel periods.
The Fix: Reserve a spot online. Park ‘N Fly (parknflynetwork.com) has online-reservable lots at several major airports, including Los Angeles International Airport and all three of the major airports serving the New York City area, and it has no online booking fee. ParkRideFlyUSA.com customers who park for three or more days can save 10% during the December holiday period (ending Jan. 1), winter break (ending March 1) and spring break (ending May 1).
Not really personal finance related but pretty cool if you ever need to park at the airport. Frugal folks would probably find other solutions.
The Problem: You’ve just bought a home, and you’re looking for one more tax break.
The Fix: Deduct your private-mortgage-insurance payments. So-called PMI is typically imposed on homebuyers who have equity in their house of less than 20% of the home’s value, and is designed to protect the lender in the event the borrower defaults. Payments are generally wrapped into your mortgage bill every month.
I don’t have PMI so it’s not applicable but you should check if you qualify because there are some limitations to this deduction.
The Problem: Your heating and energy bills keep climbing higher.
The Fix: Make some relatively low-cost changes to your home. Compact fluorescent bulbs use about 75% less energy than incandescents, and now come in a variety of shapes and more-flattering hues. Consider a programmable thermostat so the house isn’t being heated or cooled when you aren’t there; according to the Environmental Protection Agency, this can save you about $150 a year. Sealing holes in attics and basements with caulk, spray foam or weather stripping can reduce a household’s total annual energy bill by 10%, according to the EPA. Be aware that plasma TVs are big energy guzzlers; look for TVs with the Energy Star rating, which certifies they use less energy than standard versions.
I installed CFL bulbs in most of my fixtures but the thermostat on our heaters stink. I tried buying a timer but ran into some problems. I can’t remember where but I also read that the flat screen televisions with the energy star rating aren’t really saving you that much in electricity bills.
The Problem: You want to put your portfolio on autopilot but don’t like the one-size-fits-all approach of target-date funds.
The Fix: Build your own target-date fund.
All my retirement accounts are 95 - 100% mutual funds which is extremely aggressive but I’m looking at a 40 year time period. I think target funds are too conservative but retirement planning is all about personal preference.
The Problem: The anemic dollar is eroding the value of your investments and income.
The reporter for the journal says open a foreign currency account but I think this might be overthinking the currency issue. It’s a good diversification plan but I’d rather have liquid funds in US cash.
The Problem: Getting help with your finances without paying a financial planner.
The Fix: Consider recently launched Web sites such as Geezeo.com, Mint.com and Wesabe.com, which are making it easier to manage your money online. The services provide online tools that help users automatically keep track of their spending, set up budgets and goals, and swap tips with other users on how to save money.
I tried using mint for a while and may get back on that bandwagon but for now, I’ll stick to my custom templates in Excel.
The Problem: Fuel-economy estimates were revised for the 2008 model year but are still unreliable and hard to match in the real world.
The Fix: Consumers need to be more weight conscious — about their cars. Passenger vehicles keep getting heavier and some now weigh nearly twice what the average family car weighed 30 years ago. The heavier the car, the less reliable fuel-economy estimates tend to be.
This is an interesting fact and one I will have to keep in the back of my head when I buy my first car.
The Problem: You want to pursue a career in public service, but you are too burdened by student debt to accept the low salaries that typically come with the territory.
The Fix: Keep track of those student-loan payments. Starting with payments made on or after Oct. 1, 2007, a new federal “public service loan forgiveness program” will discharge the balance after 10 years of working public-service jobs. Those jobs include positions in government, law enforcement, public health, child care, social work and public-interest legal services. The Education Department says it will issue guidance in 2008 to clarify exactly which professions will qualify.
I’m kind of on the fence about this one. On the one side, I definitely admire and respect those who go into public service but at the same time, they have chosen this field for a reason and if they need to borrow money to go to those schools, they should be on the hook for the loans.
The Problem: You like exchange-traded funds’ relatively low cost and tax efficiency, but you don’t know how to sift through the hundreds on the market.
The Fix: Check out some new tools that help users pinpoint ETFs that best fit their portfolio.
I don’t deal with ETFs so I can’t really comment on this problem.
All in all not a bad list. I’ll add one of my own:
The Problem: We’re having a baby but have no clue what to do.
The Fix: It seems as if everyone is having a baby these days (us included) so I highly recommend two books that we continually refer to: Baby Bargains and Baby 411
Weigh in
Posted by moonimus on Jan 15, 2008
I weighed in at 231 lbs yesterday. I had a couple of business trips since New Year’s and I still haven’t shaken this cold I got before Christmas. Once I’m well, I’ll be attacking the weight loss goals. I have such high aspirations, I know this is a small setback in the scheme of things but it sucks having any setbacks at all.
Saving Attempts
Posted by moonimus on Jan 12, 2008
So I tried to be clever about a few things and it ended up costing me (sort of). I guess I should back up first though. I’m a big supporter of the New York Public Library. Ever since someone had told me you could borrow books online and deliver them to the library of your choice, I’ve cut down significantly on buying books. I’m going to keep a tally of books that I borrow versus books that I buy and compute how much I’ve saved by borrowing the book. I usually buy my books from half.com so I’ll use those prices for the books that I borrow. Maybe I’ll even review the books that I read. I’m interested to see the results.
On to the semi-smart move. I recently used Amex points to get a $100 gift card to Home Depot. I was going to use the card to buy CFL bulbs to replace for most of our conventional bulbs and then buy a timer for our heating/AC unit. The bulbs are an obvious move as we need to cut down on our energy usage. We use a “green” provider and their rates are higher than conventional electricity providers. Most of the lights used 60W bulbs but I decided to switch to 100W equivalent CFLs. Four of the bulbs were used in the kitchen but when I tried to install them in the hallway fixtures, they didn’t fit. So I went back and I exchanged them for the 60W equivalent CFLs which are working great.
Also, on the second trip, I purchased a heavy duty on/off timer for our heating unit. I have gotten sick more frequently this year than any other year and it’s been mostly related to one thing. Our baby. My wife kicks on the heater when our baby goes to bed and it doesn’t shut down until one of us wakes up at around 5 or 6am. Normally this would be fine but I usually wake up at around 2am in a pool of my own sweat. I will go sleep in the living room to cool down and then wake up again at around 5 or 6am to go back into the room. Add any kind of abnormal night behavior from our baby and I think I have the perfect recipe to contract colds.
So the timer would function two fold 1) make sure that I stay in bed without needing a towel and 2) help us cut down on the heating bill. Unfortunately, instead of a normal grounded 3 prong plug, this heater uses a strange 3 prong that I have never seen before. Usually the top two prongs are parallel to each other but these are perpendicular to each other. I have never seen that before and my attempt at saving money is shot. I’ve already opened up the timer and highly doubt that I can return it.
Argh.
Banking
Posted by moonimus on Jan 8, 2008
I’ve been sick the past four or five days plus I’ve been away on business. I’m gearing up for another business trip that will last through Friday. Hopefully, I’ll be able to mend on the road. If anyone has any suggestions for managing a cold while not at home, I’d love to hear from you. This also hasn’t done me any good in the weight loss department. I’m a personal believer in waiting until you get better before putting additional physical stress on your body. I missed this week’s weigh in but I’ll get to it next week.
So my banking situation is a little complex though I’m ok with the setup for now. Here’s the breakdown. I’m a rate chaser when it comes to savings account and I’ve had online savings accounts at igobanking, fnbodirect, but now have settled on One United. I know SingleMa had a bad experience with them but I think they’ve worked out their kinks. The rate at One United is 5.3% APY but they pay interest quarterly. I’m crossing my fingers that the rate will stay the same after the next anticipated Fed rate cut. Eventually, I’ll probably put my savings into a money market fund but that’s not happening any time soon. The savings account is pretty straight forward.
The checking is where it gets complex. Before I switched jobs, I opened an ingdirect account. At the time, I think ING had a 4% APY for its online checking. The only drawback with ING is that you need to keep a brick and mortar bank account for some convenience, especially for deposits. My brick and mortar bank is Chase bank. I can get frustrated with them because of their fee structure. We have 3 accounts with Chase, one is a joint account, one is an individual account for me and one is an individual account for my wife. We set up the individual accounts for our respective allowances. This way we don’t ruin Christmas, birthdays or random surprises. Normally I would close the joint account but we make all the joint deposits into it and its easier to keep things clean instead of commingling joint money in our allowances.
I’ve also recently opened up a rewards checking account at Toledo State Bank. (You can read more about rewards checking accounts at the excellent Bank Deals blog.) I can earn 5% APY on upto the first $70,000 if I meet the following requirements: 1) setup a direct deposit or ACH transfer into the account every month, 2) complete 10 Debit Card transactions (non-ATM) 3) receive electronic statements. There is a local NJ bank that offers 6.01% rewards checking but I want to see if they will lower the rate after the next anticipated Fed Rate cut. I haven’t yet received my checks from WalMart for this account so I haven’t moved my automatic payments and direct deposit yet but that should happen by next week.
Once the direct deposit has been set up. The ING will get a set amount and Toledo will get the rest. The ING account will fund the joint Chase account at the first of the month and then we will transfer that amount into our individual accounts and then mid-month ING will fund the individual accounts. I’d close the ING account except that Toledo doesn’t do online ACH transactions (since Chase will charge me a fee if those accounts don’t receive electronic funding every month). I’d have to call Toledo and I’m not calling twice every month to do that. The One United account is linked to all the accounts. Did you follow all that?
Obviously, I’m not keeping this very simple. I’ve thought about moving the brick and mortar accounts to Commerce Bank since I’ve heard a lot of great things about them but I have a feeling they’ll charge me fees if they are not automatically funded every month just like at Chase. Anyone think I can do this easier? Any solutions would be most welcome!
Motivation
Posted by moonimus on Jan 4, 2008
One of the biggest problems I have in my life is throwing myself at things with reckless abandon and then burning out very quickly. For some reason, I get satisfied with the small amount of progress and then stop everything that made me successful or I get distracted by some other shiny new project/goal. I have never learned to appreciate the process, the struggle, the journey. I’ve often asked myself why I do this and the best answer seems to be that I want to be good at everything. All my life, I think the effort to get from good to great was never worth it. Now that I’m getting older and more mature (maybe?), I srealize that being great at a few things is much more gratifying than being a jack of all trades.
In the book Mastery
The #1 principle in personal finance is spend less than you earn. This is absolutely the most fundamental concept of getting your financial house in order. The #1 principle in losing weight is burn more calories than you consume. Now you can rephrase that anyway you want (like consume less than you burn) but I intentionally phrased it with “burn” first. In his book, Ultimate Diet Secrets
Because of my former, glorious, athletic high school days, I often would kickoff a weight loss plan with extreme dieting, punishing workouts in the gym and thoughts of running 400 miles in 3 days. Then about 2 weeks later, I’m pigging out on ice cream, lying on my couch because I tweaked my back and realized on day 1 of running that I should have scaled back to 400 inches in 3 days. I think you get my point.
So I will be working out in the gym 2 - 3 days a week focusing by using a modified 5×5 plan (provided by Mehdi at stronglifts.com) and then embarking on a walking program and tracking my “active” calories burned by using a Caltrac
This time I’m motivated to be a Master.
Financial Background
Posted by moonimus on Jan 3, 2008
In my about page, I stated I am an inactive CPA in the State of New York. I am pretty good at auditing but have no professional tax experience. You can ask your other CPA friends what I mean. I think it’s funny when many people assume CPAs must be experts in tax planning. It’s just not true. Most CPAs I know are audit experts. Not to say that there aren’t CPAs that are tax preparers and planners. Usually a CPA who makes it his business to know taxes is a tax professional. I am NOT one of those.
As you can see in my debt scales, Mrs. Moonimus and I are about $40,000 in debt not including our mortgage. I thought about adding the mortgage to the debt scale but decided to exclude it. This is partly due to the fact that we are using the Dave Ramsey’s Total Money Makeover
Our baby was born this past May and she is awesome! However, we decided that Mrs. Moonimus would stop working to raise our baby which caused a big shortfall in our income. I quickly changed jobs soon after, got myself a raise and better benefits and we are getting by on my salary alone. Recently, my wife started tutoring some kids in the neighborhood (she is a teacher) and so we get some extra income that way. The last two years, we were phased out of the Roth IRA but 2008 we should be ok to make contributions. If we follow the Money Makeover plan, we’d have to build the emergency fund to cover 3 - 6 months of expenses and then think about contributing for retirement. My company requires a 2% contribution into a defined contribution plan and then has an extremely generous matching program. The match is great since it provides us with more flexibility with our money.
So far our goals for this year is to save $1,000, pay our credit card and personal debts, and maybe pay off half of the student loan though I’m still unsure about this. Also I’d like to see if we could increase our net worth 12% though I haven’t looked at those numbers very closely.
