One of my big goals is to grow my retirement as much and as quickly as possible. I don't have a magic number that I think I must reach by a certain date in order to retire. I do however have an amounts that I will be happy to reach as milestones on my path towards retirement. The first amount I want to reach is the $5,000 mark and then the $10,000 mark.
Currently I have just over $2,000 in my IRA. I am now eligible to participate in my 401k and have decided to put in 5% of my salary in order to get my full company match which will amount to 4% of my salary. Currently that means that starting this month (October) my accounts will increase by about $420 a month not including any capital gains/losses. A quick calculation and this gives me about $3,260 at the end of this year. At the end of 2008 I hope to have over $8,300. Using a quick savings calculator with a return of 8%, in 30 years at the age of 55 I can hope to have $611,717. This number should be higher as my salary grows. If I save another 10 years until the age of 65, I can hope to have $1,396,302. With an ultimate goal of over $1,000,000, I am getting a good start. Once I can afford it I would like to increase my contributions to my retirement accounts but for now, I am feeling pretty good that I am on my way to reaching a good retirement.
Saturday, September 29, 2007
Friday, September 28, 2007
Updates and Updates!
I've updated my Networth IQ and it shows an increase in my net worth even though it feels like it was a bad month. My retirement account number isn't accurate because it is not including my 401k which I just started. I will update that hopefully later today or monday when I can get the correct numbers after the market closes today.
My last post I laid out some goals I want to accomplish. The goals I most want to focus on currently involve paying down my debt, increasing my emergency fund, and increasing my retirement accounts. In order to work towards these goals I am planning on working out a budget this weekend. I will continue tinkering with my budget over the next few months but hope to have it firmly established by the new year 2008. This will be just in time for a raise that I hope will be coming. I will post more later on my 3 big goals and the budget that will help me accomplish these goals.
My last post I laid out some goals I want to accomplish. The goals I most want to focus on currently involve paying down my debt, increasing my emergency fund, and increasing my retirement accounts. In order to work towards these goals I am planning on working out a budget this weekend. I will continue tinkering with my budget over the next few months but hope to have it firmly established by the new year 2008. This will be just in time for a raise that I hope will be coming. I will post more later on my 3 big goals and the budget that will help me accomplish these goals.
Monday, September 24, 2007
101 Goals
Earlier I posted that I wanted to try the 101 goals in 1001 days. Now I have come up with a list. Unfortunately I have only come up with 60 goals. I think this is fine and I will be doing great if I accomplish these goals. I don't know when 1001 days from today is, so I am using August 6, 2010 as my goal end date. I would like to accomplish this list by then. I will post a little about each goal and keep the list updated as I go along over time. The list is as follows:
1.) Emergency Fund exceeds $5,000.
2.) Retirement Funds exceed $10,000.
3.) Pay off new bike.
4.) Pay off engagement ring.
5.) Pay off credit cards.
6.) Ask Bridget to marry me.
7.) Plan and have wedding.
8.) Go on honeymoon to Europe.
9.) Purchase a house.
10.) Run a marathon under 3 hours 20 minutes.
11.) Establish a solid training plan utilizing running and biking.
12.) Compete in corporate Challenge bike race, 5k run, triathlon and duathlon.
13.) Run more road races. (Westport St. Patty’s Day, Groundhog run, Trolley Run, Hospital Hill, KC Marathon).
14.) Join a bike club.
15.) Start 8 minute abs and stick to it.
16.) Do 50 push ups a day consistently.
17.) Get house completely organized.
18.) Get files completely organized in file cabinet.
19.) Establish and stick to a new budget.
20.) Earn over $40,000 taxable income in one year.
21.) Post consistently on my blog. (At least once a week).
22.) Increase net worth over $15,000.
23.) Stay on top of car maintenance. (check tire pressure, change oil, carwash).
24.) Stay in touch with old friends.
25.) Take lots more pictures of family and friends.
26.) Visit my family more often.
27.) Save money in my Emigrant account for whatever “fun” thing I want at the time.
28.) Brush my teeth twice a day every day.
29.) Read at least one book a month.
30.) Paint bedroom and add second coat of paint to the living room.
31.) Finish H & R Block tax course.
32.) Work 2-3 years seasonally doing taxes for H&R Block.
33.) Work towards starting your own tax preparation business on the side.
34.) Go to Boston.
35.) Eat at least one fruit or vegetable a day.
36.) Don’t drink alcohol.
37.) Manage my checkbook register instead of relying on online statement from bank.
38.) Don’t purchase what I don’t really need.
39.) Don’t eat out so much.
40.) Clean the house with Bridget for at least 1 hour every weekend.
41.) Do something productive every single day.
42.) Start working from lists every week of stuff that needs done.
43.) Take Bridget out on a nice surprise dress up date at least twice a year.
44.) Keep a fitness journal up to date.
45.) Drink at least one glass of water a day at work every day.
46.) Keep my car clean inside and outside.
47.) Roll my PERA account into my IRA.
48.) Switch my IRA out of New Concepts fund at beginning of next year.
49.) Complete a century bike ride (100 miles).
50.) Save all lose change in tennis ball container. Cash in when full and put money towards emergency fund, debt repayment, or wedding planning.
51.) Form a list of birthdays and important dates of family and friends.
52.) Send out cards on birthdays and important dates to family and friends.
53.) Get a magazine subscription to Bicycle magazine and one other magazine that interests me.
54.) Take a vitamin every single day.
55.) Get two dentist checkups/cleaning every year. (March, September).
56.) Go to doctor for physical in two years. (September 2009)
57.) Only buy things on sale.
58.) Take Edgar on at least two walks outside every week.
59.) Begin to sell tickets on eBay for profits.
60.) Think of more goals for this list!
1.) Emergency Fund exceeds $5,000.
2.) Retirement Funds exceed $10,000.
3.) Pay off new bike.
4.) Pay off engagement ring.
5.) Pay off credit cards.
6.) Ask Bridget to marry me.
7.) Plan and have wedding.
8.) Go on honeymoon to Europe.
9.) Purchase a house.
10.) Run a marathon under 3 hours 20 minutes.
11.) Establish a solid training plan utilizing running and biking.
12.) Compete in corporate Challenge bike race, 5k run, triathlon and duathlon.
13.) Run more road races. (Westport St. Patty’s Day, Groundhog run, Trolley Run, Hospital Hill, KC Marathon).
14.) Join a bike club.
15.) Start 8 minute abs and stick to it.
16.) Do 50 push ups a day consistently.
17.) Get house completely organized.
18.) Get files completely organized in file cabinet.
19.) Establish and stick to a new budget.
20.) Earn over $40,000 taxable income in one year.
21.) Post consistently on my blog. (At least once a week).
22.) Increase net worth over $15,000.
23.) Stay on top of car maintenance. (check tire pressure, change oil, carwash).
24.) Stay in touch with old friends.
25.) Take lots more pictures of family and friends.
26.) Visit my family more often.
27.) Save money in my Emigrant account for whatever “fun” thing I want at the time.
28.) Brush my teeth twice a day every day.
29.) Read at least one book a month.
30.) Paint bedroom and add second coat of paint to the living room.
31.) Finish H & R Block tax course.
32.) Work 2-3 years seasonally doing taxes for H&R Block.
33.) Work towards starting your own tax preparation business on the side.
34.) Go to Boston.
35.) Eat at least one fruit or vegetable a day.
36.) Don’t drink alcohol.
37.) Manage my checkbook register instead of relying on online statement from bank.
38.) Don’t purchase what I don’t really need.
39.) Don’t eat out so much.
40.) Clean the house with Bridget for at least 1 hour every weekend.
41.) Do something productive every single day.
42.) Start working from lists every week of stuff that needs done.
43.) Take Bridget out on a nice surprise dress up date at least twice a year.
44.) Keep a fitness journal up to date.
45.) Drink at least one glass of water a day at work every day.
46.) Keep my car clean inside and outside.
47.) Roll my PERA account into my IRA.
48.) Switch my IRA out of New Concepts fund at beginning of next year.
49.) Complete a century bike ride (100 miles).
50.) Save all lose change in tennis ball container. Cash in when full and put money towards emergency fund, debt repayment, or wedding planning.
51.) Form a list of birthdays and important dates of family and friends.
52.) Send out cards on birthdays and important dates to family and friends.
53.) Get a magazine subscription to Bicycle magazine and one other magazine that interests me.
54.) Take a vitamin every single day.
55.) Get two dentist checkups/cleaning every year. (March, September).
56.) Go to doctor for physical in two years. (September 2009)
57.) Only buy things on sale.
58.) Take Edgar on at least two walks outside every week.
59.) Begin to sell tickets on eBay for profits.
60.) Think of more goals for this list!
New Inspiration!
Ok, I've failed to post on here for the past two and half weeks. I'm sorry. I need to work on staying on top of posting at least once a week for an update of what is going on. Today I was checking out the The Simple Dollar blog and found a great idea that I want to try for myself. The author wrote an article about an idea which he read about on some other blog. The idea involves completing 101 goals in 1001 days. I like this idea alot and am going to come up with a list of all of my goals that I would like to accomplish in 1001 days. I'm not going to count out the days, I'm just going to pick an end date a little over 2 and half years from now. I will be working on my list this week and come up with as many goals as I can. I'm not sure if I will end up with 101 goals or not but I will have a long complete list of what I want to accomplish in the next couple years and hopefully this will get me inspired to get out and accomplish these things.
Wednesday, September 5, 2007
Cell Phones are Expensive!
I finally did it. Every month I look at my cell phone bill and it makes me soo mad because I have 500 minutes and only use about 200. I have sprint and the only option they have that would be any cheaper is 450 minutes for 5 dollars cheaper. I have put this off because of fear that I might go over 450 minutes but I am never even close. I also have told myself that it is just $5 and worth the extra 50 minutes.
So here's the deal. Using a savings calculator, I figured out if I save $5 a month for the next 35 years until I retire earning 5% interest and paying 28% tax then I will save $4,147. Cha Ching! This isn't a million dollars but I believe it is well worth lowering my cell phone bill for. Especially since I'm not using the minutes anyways.
These little costs can add up and I believe it is in my best interest to try to cut expenses as much as I can. Even little things that I don't think make a difference ($5 a month) can add up to some serious cash over the long run. And I am a fan of serious cash!
Working through the Budget Numbers
Ok, I finally worked through the numbers and have come up with a loose budget to try for starting NEXT month. I will go into October with a good plan of how my money is going to be allocated. I read a good article about budgeting and the author gave some loose zones to try to aim for. The author talks about spending 60% on committed expenses, 10% each on retirement, long term savings, short term savings, and fun.
Keeping this in mind I went to work on my own budget and came up with close numbers that I hope to stick to. My budget will consist of 65% committed expenses, 13% retirement, 7.5% emergency savings, 12% debt reduction (credit cards), and 2% fun. I want to try to lower my committed expenses but we'll see how the month goes. I think these numbers will be fine for awhile. Eventually I'd like to grow towards the 60,10,10,10 budget but for now I have credit cards that need paid off, I want to get a good head start on retirement, and I have too many monthly bills.
I plan on setting up a Fun account with Emigrant Bank to save my fun money into. The emergency fund is being saved at capital one. I also have planned to take out each month in cash what I am hoping to spend on groceries and entertainment. I am allocating $150 a month on each and hopefully I will actually come in spending less and the left over money will then go to emergency, debt reduction, and fun. I will start keeping track of all monthly expenditures and we'll see how this budget works out!
Keeping this in mind I went to work on my own budget and came up with close numbers that I hope to stick to. My budget will consist of 65% committed expenses, 13% retirement, 7.5% emergency savings, 12% debt reduction (credit cards), and 2% fun. I want to try to lower my committed expenses but we'll see how the month goes. I think these numbers will be fine for awhile. Eventually I'd like to grow towards the 60,10,10,10 budget but for now I have credit cards that need paid off, I want to get a good head start on retirement, and I have too many monthly bills.
I plan on setting up a Fun account with Emigrant Bank to save my fun money into. The emergency fund is being saved at capital one. I also have planned to take out each month in cash what I am hoping to spend on groceries and entertainment. I am allocating $150 a month on each and hopefully I will actually come in spending less and the left over money will then go to emergency, debt reduction, and fun. I will start keeping track of all monthly expenditures and we'll see how this budget works out!
Friday, August 31, 2007
Goals and Values
I read an article discussing ones values and how their goals should be aimed at ones values. After reading through the examples of values in the article, I decided on a few values that are important to me. These are the things in my life that are most important to me and nothing else should matter. If keeping up with the Jones' doesn't adhere to my values, then there is no reason for me to want to try to keep up with them. Here goes then. The values that I find are most important to me include:
1. Family, Love - For me these two are the same value. My goals should be aimed at taking care of those that I love and that are my family. Buying that brand new luxury car doesn't help out my family much and I know that my girlfriend isn't going to love me any more then she already does. Therefore, I should be and am fine driving my current used vehicle for hopefully the next 10 years.
2. Freedom, Peace of Mind, Security - I believe these are all one in the same and are very important for me. This involves having an emergency fund and a good amount of money for retirement so that I don't have to worry about money. There are plenty of other things in life to worry about such as family and health to where I don't need to worry about money. I don't want to have to worry about whether I'm going to be able to pay the bills this or next month if something bad happens.
3. Health - This is something that has become very important to me lately. I am in love with a girl with lots of health problems. These aren't things that can be controlled but it is important to me that we both take care of ourselves and don't do anything destructive to our health and cause any unnecessary problems.
4. Happiness - I value being happy. I have a family that loves me and that makes me happy. I have a girlfriend who loves me and I can love and that makes me happy. It is important to be happy in life.
5. Balance - This is my last value. I want to achieve a balance in my life between family, friends, myself, and work. If I am ever too involved in one where my other relationships start to suffer then I will not be looking after this value.
With these 5 values in mind I want to come up with some goals. I've written about goals once before and I want to write about them again and come up with more clear goals.
1. Increase net worth - This is still my top goal and this goal will come with the achievement of other goals. A net worth of a million dollars is a nice number to think about. However, this goal goes towards the value of security. In actuality, a net worth of $100,000 might actually provide me with the security I seek.
2. Build emergency fund to 6 months expenses - The number I'm going to put on this goal is $13,944. That is 6 months worth of net pay. This also goes towards security.
3. Reduce credit card debt. Have this paid off completely and never put more on my credit card again that I can pay off each month. Security value.
4. Purchase a home - This goes towards both security and love. I want to purchase a home that both myself and my girlfriend love and will start our lives together in. This will also bring me happiness to have a home of the both of ours together. I want to save up for a down payment on a house. I believe we can find a house we are happy with between $135k and $190k.
5. Marriage - This goes towards family, love, and happiness. I want to start saving up for an engagement, wedding, and honeymoon. I have no idea of a monetary value on this goal but any money saved towards this goal will help.
6. Happiness Account - I want to set up an account that I will call my happiness account. I want to put away a small amount automatically for things that I will want to buy such as a LCD tv or a future car in 10 years. Having the cash to pay for these things will mean I don't have to incur debt for such purchases that will bring me happiness.
These are currently the goals that are most important to me. Previously I had wanted to pay my car off early. However, I feel that with an upcoming wedding and the want of owning a home, this can be put off and the car will be paid off when it is paid off.
1. Family, Love - For me these two are the same value. My goals should be aimed at taking care of those that I love and that are my family. Buying that brand new luxury car doesn't help out my family much and I know that my girlfriend isn't going to love me any more then she already does. Therefore, I should be and am fine driving my current used vehicle for hopefully the next 10 years.
2. Freedom, Peace of Mind, Security - I believe these are all one in the same and are very important for me. This involves having an emergency fund and a good amount of money for retirement so that I don't have to worry about money. There are plenty of other things in life to worry about such as family and health to where I don't need to worry about money. I don't want to have to worry about whether I'm going to be able to pay the bills this or next month if something bad happens.
3. Health - This is something that has become very important to me lately. I am in love with a girl with lots of health problems. These aren't things that can be controlled but it is important to me that we both take care of ourselves and don't do anything destructive to our health and cause any unnecessary problems.
4. Happiness - I value being happy. I have a family that loves me and that makes me happy. I have a girlfriend who loves me and I can love and that makes me happy. It is important to be happy in life.
5. Balance - This is my last value. I want to achieve a balance in my life between family, friends, myself, and work. If I am ever too involved in one where my other relationships start to suffer then I will not be looking after this value.
With these 5 values in mind I want to come up with some goals. I've written about goals once before and I want to write about them again and come up with more clear goals.
1. Increase net worth - This is still my top goal and this goal will come with the achievement of other goals. A net worth of a million dollars is a nice number to think about. However, this goal goes towards the value of security. In actuality, a net worth of $100,000 might actually provide me with the security I seek.
2. Build emergency fund to 6 months expenses - The number I'm going to put on this goal is $13,944. That is 6 months worth of net pay. This also goes towards security.
3. Reduce credit card debt. Have this paid off completely and never put more on my credit card again that I can pay off each month. Security value.
4. Purchase a home - This goes towards both security and love. I want to purchase a home that both myself and my girlfriend love and will start our lives together in. This will also bring me happiness to have a home of the both of ours together. I want to save up for a down payment on a house. I believe we can find a house we are happy with between $135k and $190k.
5. Marriage - This goes towards family, love, and happiness. I want to start saving up for an engagement, wedding, and honeymoon. I have no idea of a monetary value on this goal but any money saved towards this goal will help.
6. Happiness Account - I want to set up an account that I will call my happiness account. I want to put away a small amount automatically for things that I will want to buy such as a LCD tv or a future car in 10 years. Having the cash to pay for these things will mean I don't have to incur debt for such purchases that will bring me happiness.
These are currently the goals that are most important to me. Previously I had wanted to pay my car off early. However, I feel that with an upcoming wedding and the want of owning a home, this can be put off and the car will be paid off when it is paid off.
Need of a Plan
I've decided that I need a plan. I have several goals and I am going to need a plan of action to put in place to achieve these goals. Therefore, over the weekend I want to figure out exactly what my goals are and figure out and begin to implement a plan for achieving these goals. This weekend I would like to come up with a rough budget to try to stick to for the month of September. I would the like to open up a couple more online savings accounts to give me a place to save for separate goals. This will involve a little bit of math to figure out what I can afford and how much I can hope to save towards each goal. I will set targets for each goal and track my progress of each goal separately. This might take me until the end of the month before I have been able to implement my plan and be heading down the path towards achievement of my goals and dreams.
Net Worth
I have updated my net worth on NetWorthIQ for the complete month of August. I feel this gives a better snapshot of where I am at the end of the month. Hopefully the end of September will see a higher net worth number. I would like to see my credit card debt number go down and my cash and stock numbers go up. The retirement number should start to go up because I will also start contributing to my 401k the second pay period of the upcoming month! My big concern is the credit card debt. I think I am going to put my Capital One credit card away for awhile until I can get the balance down under $2,500. In order to do this I hope I will spend less if I am not using my Capital One card. This weekend will be a spending fest though because I will be going up to Truman to visit some friends and will be eating out and drinking some beer. I will try not to spend too much.
Sunday, August 26, 2007
What to do on Weekends!
For me, weekends are the toughest times to try and not spend money. Weekends are two whole days off work and they can get fairly long and boring if you don't do anything. Unfortunately for me, it seems like doing something over the weekend is going to cost me money.
For example, lets take a look at my spending this weekend. On Friday night I hit up the Kansas City Royals game with one of my friends. Here I spent $14 on my ticket and about another $10 on parking and food. Luckily it was buck night so it only cost me about $5 for some hot dogs and sodas. Next comes Saturday. Saturday I did pretty good as we didn't do much. In the afternoon we watched a movie recieved from Netflix. This subscription costs $10 a month but I feel it is well spent because it usually keeps us in on a Friday or Saturday night every week and gives us entertainment. Saturday night we went out to eat but my girlfriend paid because it was her turn. Today, I we are going to the grocery store which we do every weekend. This is unavoidable because we need food. I would also like to try to go to Target because I have a couple things I want to buy. This will cost me probably around a hundred dollars for the filing cabinet and paper shredder I want to get. I have a gift certificate to Nebraska Furniture Mart but we are going to take that to pay for our furniture we bought a couple months ago that was financed with 18 months no interest.
So you can see my problem. On weekends it is hard to find things to do that don't include shopping and spending money. Next weekend I am going back to my college town for an alumni event but the weekend after I think I will try to see if I can get by without spending too much money. I think some good tips for us to do on weekends to keep from spending money are to do chores on the weekends. I mowed the yard Thursday night, but it would be better to wait until the weekend to do this. Cleaning the house will also keep us distracted. Doing our grocery shopping on Friday night will keep us busy that night so that we aren't wanting to go spend money. We need to try to focus on saving money.
For example, lets take a look at my spending this weekend. On Friday night I hit up the Kansas City Royals game with one of my friends. Here I spent $14 on my ticket and about another $10 on parking and food. Luckily it was buck night so it only cost me about $5 for some hot dogs and sodas. Next comes Saturday. Saturday I did pretty good as we didn't do much. In the afternoon we watched a movie recieved from Netflix. This subscription costs $10 a month but I feel it is well spent because it usually keeps us in on a Friday or Saturday night every week and gives us entertainment. Saturday night we went out to eat but my girlfriend paid because it was her turn. Today, I we are going to the grocery store which we do every weekend. This is unavoidable because we need food. I would also like to try to go to Target because I have a couple things I want to buy. This will cost me probably around a hundred dollars for the filing cabinet and paper shredder I want to get. I have a gift certificate to Nebraska Furniture Mart but we are going to take that to pay for our furniture we bought a couple months ago that was financed with 18 months no interest.
So you can see my problem. On weekends it is hard to find things to do that don't include shopping and spending money. Next weekend I am going back to my college town for an alumni event but the weekend after I think I will try to see if I can get by without spending too much money. I think some good tips for us to do on weekends to keep from spending money are to do chores on the weekends. I mowed the yard Thursday night, but it would be better to wait until the weekend to do this. Cleaning the house will also keep us distracted. Doing our grocery shopping on Friday night will keep us busy that night so that we aren't wanting to go spend money. We need to try to focus on saving money.
Saturday, August 25, 2007
The Importance of a 401K
In September I will have been working for my company for a year. This means that I am now eligible to take part in our company's 401k plan. I have friends that think it's ridiculous that I am so excited to finally be able to contribute to a 401k. What do I need to worry about retirement for? I'm only 25 years old! Well, for me it's not just retirement I'm thinking about. The 401k is a component of my wealth and as my 401k grows, so does my wealth. Since I receive a nice match from my company for my 401k, my wealth will grow at a much quicker rate then if I am just putting this money into a savings account or even an IRA.
At the beginning of the year I began contributing 5% of my salary to a IRA. I decided to do this so that when the time came to contribute to my 401k I would be used to the 5% less in my paycheck. At the same time, I would get a head start in retirement savings and now I have a little over $1,500 in retirement savings already. The plan was to contribute to the IRA until I was eligible to participate in the 401k and then switch the funds over. Now, I have decided that I can do some more adjusting and am going to continue contributing to my IRA while also contributing an additional 5% to the 401k. If I put in 5% in the 401k, my company will put in 4% of my salary as a match which is the full match. Here is the good part. With my contributions and the company match, my retirement savings will grow to just over $921,000 by the time I'm 60 years old. This is assuming an 8% rate of return. If I decide to start contributing more or my annual salary goes up from it's current level (which it better) then I will have even more money. If I decide to wait until I'm 30 years old before contributing, then this will change my end amount down to just over $599,000. That's a huge difference of $322,000!! Wow, I know I will be glad I am getting started right now. And for those that argue that a million dollars in 35 years won't be worth as much as it is right now, yes you are right. But, a million dollars in 35 years will be worth more then half a million dollars in 35 years. That is a promise.
The lesson of this post is if you have the opportunity to contribute to a 401k then get started right away. If you don't have the opportunity, then open up an IRA and start contributing what you can.
At the beginning of the year I began contributing 5% of my salary to a IRA. I decided to do this so that when the time came to contribute to my 401k I would be used to the 5% less in my paycheck. At the same time, I would get a head start in retirement savings and now I have a little over $1,500 in retirement savings already. The plan was to contribute to the IRA until I was eligible to participate in the 401k and then switch the funds over. Now, I have decided that I can do some more adjusting and am going to continue contributing to my IRA while also contributing an additional 5% to the 401k. If I put in 5% in the 401k, my company will put in 4% of my salary as a match which is the full match. Here is the good part. With my contributions and the company match, my retirement savings will grow to just over $921,000 by the time I'm 60 years old. This is assuming an 8% rate of return. If I decide to start contributing more or my annual salary goes up from it's current level (which it better) then I will have even more money. If I decide to wait until I'm 30 years old before contributing, then this will change my end amount down to just over $599,000. That's a huge difference of $322,000!! Wow, I know I will be glad I am getting started right now. And for those that argue that a million dollars in 35 years won't be worth as much as it is right now, yes you are right. But, a million dollars in 35 years will be worth more then half a million dollars in 35 years. That is a promise.
The lesson of this post is if you have the opportunity to contribute to a 401k then get started right away. If you don't have the opportunity, then open up an IRA and start contributing what you can.
Friday, August 24, 2007
Good Article of the Week
I have decided while reading many other blogs that I would like to pick out one or two articles each week that catch my eye and talk about them.
This week, Advanced Personal Finance wrote an article titled "The Cost of Prepaying." In this article the author writes about how they prepay thier mortgage even though they are told it is not the financially "smart" thing to do. The author figures out some math and comes up with a number of $78,000 cost for prepaying his mortgage. However, this is based on certain assumptions like getting an 8% return from the market for your money that could or could not happen.
I agree with the author in this article. Anyone who has read a book by David Bach (The Automatic Millionaire), knows he is an advocate of paying off your mortgage early. By making one extra payment a year you can decrease the life of a 30 year mortgage by 8 or 9 years or something like that and save thousands of dollars. Bach doesn't figure out how much you would have if instead of making that extra payment, you put that money into the market and earned a higher return. I don't think he needs to. There are a couple reasons I like the idea of prepaying your mortgage. Keep in mind I don't have a mortgage so I can't actually do this yet and my mind may change when I do buy my first house. But for now, I like the idea of prepaying your mortgage because for one, I hate debt. I don't like knowing I owe someone else money. I am prepaying my car and I will prepay my mortgage. By prepaying I am going to save thousands of dollars in interest and will be able to stop paying 8 years earlier then if not prepaying. At that point, I will continue to make these payments, however they will go to myself instead of the bank.
Another reason I like the idea of prepaying is brought up in the article. If I have a mortgage with 7% interest, then I know I am saving 7% on my money by prepaying. Lets say I take that $1,500 extra payment and put it in the market instead. Well, I will need to be sure that I am going to earn over 7%. I can't be sure of this. If I could be sure then I would take my emergency fund which pays me 5% and put it into the market. No one is telling you to do this. Why not take the sure return instead of gamble for a couple extra points return in the market? Why not build my equity faster and owe less to the bank when and if I decide to sell? If I decide to stay, then I completely own the home sooner and feel better about myself. In the end isn't that all that is important? Money is a good thing and I am obsessed with it. But like they say, money can't buy you happiness. I need to do what makes me feel the most comfortable and secure. In the end, I think I will have the most security if I don't have debts hanging over my head. Let me know what you think!
Thursday, August 23, 2007
Confessions of a Street Addict - Book Review
Last night I finished Jim Cramer's book "Confessions of a Street Addict." I enjoyed this book for the entertainment factor. "Confessions of a Street Addict" is more of a biography of Jim Cramer starting with his younger days when he was more interested in reading the stock quotes in the paper while other kids his age were reading the comics or sports. The book goes up through Jim Cramer's retirement from his hedge fund. He is still involved with his startup dot com TheStreet.com.
I know alot of people don't like Jim Cramer. However, if you watch is show, alot of people do. I'm not really leaning one way or the other. I think he is an interesting and entertaining personality. His show, Mad Money on CNBC is entertaining, but I would never take stock advice from Cramer.
I didn't really know what the book would be about but I usually read books looking for some investing tips. I didn't find any from this book. Cramer's hedge fund made money in a way that the average investor would not be able to do. I don't have access to all the companies CEO's. I can't call up the analysts and talk to them on the phone to get a feel for where a company is going. I don't have a man down on the trading floor that can give me an idea of investor sentiment. However, even though I don't get much investing advice from this book, I was interested in reading about how Cramer got started. I found it interesting reading about his struggles for control at TheStreet.com.
If you are looking for a book to gain some advice on investing, I would suggest looking elsewhere. If you are looking for an entertaining book about Wall Street, gaining some insight into the hedge fund business, and a biography of one of the wackiest personalities on Wall Street, then I think this is a book you would enjoy. Let me know what you think.
BRLC Questions
Well, I thought BRLC was coming out with earnings today but instead when I checked on Marketwatch to see the news I see an article stating that BRLC will release Fiscal 2007 and 4th quarter earnings on September 11. I'm not sure if this is a change and they pushed back the release date or if I was wrong in the first place. I'm hoping for the first.
Another article about BRLC caught my eye as well. BRLC sells $20 million in shares to TECO Electrics for $6.4852 per share. This may be a good move for BRLC entering into a strategic alliance and raising some money to support thier elevated growth which according to the article includes expanding thier manufacturing base and supporting efforts to continue elevating awareness of the Olevia brand among consumers worldwide. All of this is great. However, I feel like they sold off part of the company for $6.4852 per share when the shares yesterday were valued at $6.96. Today shares have plummeted so far to $6.40 a share or down 8%. Apparently $6.48 is more along the lines of the correct value of this company.
Either way, I have sold covered calls on this position and will remain in this position at least until expiration which isn't until September 22 so I shouldn't worry to much about this peice of news. I will continue to look forward to the earnings release.
Disclosure: I am long BRLC.
Another article about BRLC caught my eye as well. BRLC sells $20 million in shares to TECO Electrics for $6.4852 per share. This may be a good move for BRLC entering into a strategic alliance and raising some money to support thier elevated growth which according to the article includes expanding thier manufacturing base and supporting efforts to continue elevating awareness of the Olevia brand among consumers worldwide. All of this is great. However, I feel like they sold off part of the company for $6.4852 per share when the shares yesterday were valued at $6.96. Today shares have plummeted so far to $6.40 a share or down 8%. Apparently $6.48 is more along the lines of the correct value of this company.
Either way, I have sold covered calls on this position and will remain in this position at least until expiration which isn't until September 22 so I shouldn't worry to much about this peice of news. I will continue to look forward to the earnings release.
Disclosure: I am long BRLC.
Wednesday, August 22, 2007
The Markets and the Masses
The markets. How do they work? When investing, we are told to look for solid companies with good earnings history, solid management, and strong growth. Try to find the companies that are financially stable with strong growth in earnings if we are a growth investor or possibly a low P/E if we are a value investor. This is great and I believe over the long term if you stick to your guns and look for good solid companies with a nice history of earnings and dividends and growth and proof that they have withstood some challenges and are still going strong then you will make a good investment over the longer period. Money will come to your pockets. It's just going to take 10 or 20 years of slow growth of your money.
Not for me! I want money now! Sure my retirement account is for 35 to 40 years from now. That's fine. Let those fund managers worry about investing for the long haul. But in my stock account, I want to see results. I want them fast. I want to see a 20% plus return this year and every year following no matter what the market is doing. This morning I was reading the book "Confessions of a Street Addict" by Jim Cramer. I'm not really a fan of Cramer. I'm not going to go out and buy everything he says to buy and sell everything he says to sell. His show on CNBC is a circus and he's the clown. He's just there to entertain us and it is entertaining. I'll admit if I'm flipping the channels and his show is on, I might pause to check it out for a few minutes. It grabs your attention. His book is interesting. It goes through his biography basically which I find interesting. It's not really helpful on my journey towards wealth but as a form of entertainment, I enjoy reading it. This mroning I read a section where Cramer talks about the markets are all about psychology. The underlying fundamentals don't matter. When you are trying to make money in the short term, you need to be able to understand the psychology of the masses of the people. And I couldn't agree more! Every little piece of news that comes out affects the price of this stock or that stock. Good earnings and the stock jumps. Bad earnings and the stock falls. It doesn't matter what the company has consistently done. Coca Cola is still going strong and not too worried about the current sub-prime mortgage crisis. Yet COKE fell along with all the other stocks this past month because of sub-prime credit worries.
In the short term, if you pay attention to the news and market psychology, you can make money. I don't have enough capital in my stock account to take advantage of this. I can't put $1,000 into a stock and watch it rise 1% like I knew it would and sell it for a quick profit. With the commissions I pay, I'd lose $4 on this trade. But if I had $10,000 and did the same thing, I'd make $86. So I'll stick to my covered call strategy. Until I have more money. Then I will use some capital to trade on the news and begin to bring in some good returns quickly.
If you have an opinion on this let me know. If you have enough money to trade, the markets up today, why not take out a percent or two. Go get yourself some returns. I'll just continue to hope that my covered call position will make money over the next month. Until next time, I'm a dreamer.
Not for me! I want money now! Sure my retirement account is for 35 to 40 years from now. That's fine. Let those fund managers worry about investing for the long haul. But in my stock account, I want to see results. I want them fast. I want to see a 20% plus return this year and every year following no matter what the market is doing. This morning I was reading the book "Confessions of a Street Addict" by Jim Cramer. I'm not really a fan of Cramer. I'm not going to go out and buy everything he says to buy and sell everything he says to sell. His show on CNBC is a circus and he's the clown. He's just there to entertain us and it is entertaining. I'll admit if I'm flipping the channels and his show is on, I might pause to check it out for a few minutes. It grabs your attention. His book is interesting. It goes through his biography basically which I find interesting. It's not really helpful on my journey towards wealth but as a form of entertainment, I enjoy reading it. This mroning I read a section where Cramer talks about the markets are all about psychology. The underlying fundamentals don't matter. When you are trying to make money in the short term, you need to be able to understand the psychology of the masses of the people. And I couldn't agree more! Every little piece of news that comes out affects the price of this stock or that stock. Good earnings and the stock jumps. Bad earnings and the stock falls. It doesn't matter what the company has consistently done. Coca Cola is still going strong and not too worried about the current sub-prime mortgage crisis. Yet COKE fell along with all the other stocks this past month because of sub-prime credit worries.
In the short term, if you pay attention to the news and market psychology, you can make money. I don't have enough capital in my stock account to take advantage of this. I can't put $1,000 into a stock and watch it rise 1% like I knew it would and sell it for a quick profit. With the commissions I pay, I'd lose $4 on this trade. But if I had $10,000 and did the same thing, I'd make $86. So I'll stick to my covered call strategy. Until I have more money. Then I will use some capital to trade on the news and begin to bring in some good returns quickly.
If you have an opinion on this let me know. If you have enough money to trade, the markets up today, why not take out a percent or two. Go get yourself some returns. I'll just continue to hope that my covered call position will make money over the next month. Until next time, I'm a dreamer.
Monday, August 20, 2007
Ouch!! Stop the Addiction!
Ok, I am addicted to eating out! I knew this already but today my credit card statement came in the mail today. I put everything on my credit card in order to get the air miles rewards. This month I spent way too much money on everything but when I look closely it appears that most of the transactions are to restaurants. I know I eat out almost every day for lunch and frequently for dinners as well especially on weekends. I decided this was an area where I need to try to cut back and spend less. This will help boost my net worth month to month.
In order to get an idea of how much I spend and what my goal should be, I went back the past 3 months statements. Here are the results:
June - $276.01 eating out or 26.99% of total expenditures.
July - $133.04 eating out or 19.95% of total expenditures.
August - $185.56 eat out or 20.06% of total expenditures.
My goal is to cut this spending in half and spend between $50 and $75 per month eating out. I also need to try to cut the whole bill down. My august statement showed transactions of $924.97. My goal is to cut this down to under $750 per month at first and then try to keep reducing it so that I am spending less then $500 per month. In order to do this I need to be aware of my goals each time I think of spending money and ask myself if I really need to make this purchase.
In order to get an idea of how much I spend and what my goal should be, I went back the past 3 months statements. Here are the results:
June - $276.01 eating out or 26.99% of total expenditures.
July - $133.04 eating out or 19.95% of total expenditures.
August - $185.56 eat out or 20.06% of total expenditures.
My goal is to cut this spending in half and spend between $50 and $75 per month eating out. I also need to try to cut the whole bill down. My august statement showed transactions of $924.97. My goal is to cut this down to under $750 per month at first and then try to keep reducing it so that I am spending less then $500 per month. In order to do this I need to be aware of my goals each time I think of spending money and ask myself if I really need to make this purchase.
Bank of America!
In my last post I discussed some different securities I was thinking about putting the remainder of my money in my stock account in. I decided to put my money into Bank of America. I liked Bank of America's low P/E and the higher dividend yield offered. Bank of America was purchased for $51.20 a share. When looking at the chart for the past 2 years I noticed the stock traded typically between $55 to $80 range going up and down within that range frequently. I'm hoping the stock will turn around and head back up towards $80 soon. I look at this as a conservative play that hopefully won't be too volatile.
I also sold 2 call options for BRLC. I sold the September options with a strike of $7.50. I collected a premium of $0.25 for each of these options.
Disclosure: I own shares of BAC and BRLC. I am not a professional advisor so do your own research before purchasing any stocks.
I also sold 2 call options for BRLC. I sold the September options with a strike of $7.50. I collected a premium of $0.25 for each of these options.
Disclosure: I own shares of BAC and BRLC. I am not a professional advisor so do your own research before purchasing any stocks.
BRLC and Choices!
I purchased 100 shares of BRLC at the open today for a price of $5.90 per share. I plan on waiting until mid day and then selling a call. Hopefully we see the share price rise and I can get a higher premium for the 2 calls I will be selling.
With my remaining money in the account, I am debating on what to do. I am considering a few different options. The first option is to hold the money in cash. There is over 200 dollars though and I don't want to hold that in cash unless it was in my money market account. The stocks I am considering are as follows:
COF - Capital One Financial. I believe this is a good company. I have my money market account and credit card through capital one. Capital One was trading this morning at $69.10. It has a PE of 10.5 and a Debt/Equity of 1.19. Capital one gives a ROA of 2% and a ROE of 11.7% The dividend yeild is 0.16%.
BAC - Bank of America. Bank of America is rated a buy by S&P and is the official bank of the NFL. Lots of publicity this fall and winter for NFL fans. BAC traded at $52.01 this morning with a PE of 10.8 and a D/E of 4.05. They have a ROA of 1.5% and a ROE of 16.6%. The dividend yeild is 4.95%.
AA - Alcoa is Dow Jones 30 company that I have been interested in for awhile. AA trades at $33.87 with a PE of 13.4 and DE of 0.47. The ROA is 6.9% and ROE is 14%. They return a dividend yeild of 2.04%.
I feel all three of these companies would add some stability to my portfolio. They are all companies that have been around for a long time and will pay a dividend. I will see where they trade through the day before making my decision. Stay tuned!!
Disclosure: I own shares of BRLC. I do not own shares of BAC, COF, AA yet. I am not a professional so do your own research before purchasing stocks.
With my remaining money in the account, I am debating on what to do. I am considering a few different options. The first option is to hold the money in cash. There is over 200 dollars though and I don't want to hold that in cash unless it was in my money market account. The stocks I am considering are as follows:
COF - Capital One Financial. I believe this is a good company. I have my money market account and credit card through capital one. Capital One was trading this morning at $69.10. It has a PE of 10.5 and a Debt/Equity of 1.19. Capital one gives a ROA of 2% and a ROE of 11.7% The dividend yeild is 0.16%.
BAC - Bank of America. Bank of America is rated a buy by S&P and is the official bank of the NFL. Lots of publicity this fall and winter for NFL fans. BAC traded at $52.01 this morning with a PE of 10.8 and a D/E of 4.05. They have a ROA of 1.5% and a ROE of 16.6%. The dividend yeild is 4.95%.
AA - Alcoa is Dow Jones 30 company that I have been interested in for awhile. AA trades at $33.87 with a PE of 13.4 and DE of 0.47. The ROA is 6.9% and ROE is 14%. They return a dividend yeild of 2.04%.
I feel all three of these companies would add some stability to my portfolio. They are all companies that have been around for a long time and will pay a dividend. I will see where they trade through the day before making my decision. Stay tuned!!
Disclosure: I own shares of BRLC. I do not own shares of BAC, COF, AA yet. I am not a professional so do your own research before purchasing stocks.
Sunday, August 19, 2007
BRCD or BRLC? That is the Question!
As I mentioned in my last post, I am deciding between two covered call positions to take with the extra cash in my stock account. Here I will discuss the numbers and facts of both positions and state my decision.
BRCD - The first idea I am considering is Brocade Communications (BRCD). BRCD is in the computer storage devices industry in the technology sector. They design, develop, market, and sell data storage networking and management solutions. BRCD closed friday at $6.49/share. In the news is the SEC charging BRCD's ex-CEO and CFO with options backdating and fraud. This case has dragged the stock down considerably and will continue to be a drag on the stock until resolved even though these execs have been removed from thier powers. BRCD has quarter 3 earnings expected at .11 per share. Earnings are expected to be released this coming Wednesday. BRCD however, has announced that they have revised quarter 3 revenue guidance below analyst estimates. Usually a bad sign. BRCD has a PE of 23.1, a PB of 4.4, PS of 2.7. ROE is 8.4%, ROA 5%. They have a debt/equity of .14, current ratio of 2.07 and quick ratio of 2.02. Analyst rate BRCD at 2.39 which is slightly better then the 2.47 and 2.63 ratings from 4 and 12 weeks ago respectively.
BRLC - The next idea is Syntax Brillian (BRLC). BRLC is a designer, developer, and distributor of HDTV's in LCD format. They sell under the brand name Olevia. BRLC also sells Vivitar cameras. I currently own 100 shares of BRLC. In the news, BRLC recently added new sales channels in Chile, Columbia, and Mexico. Earlier in the year they expanded into Brazil and Venezuela. Quarter 4 earnings, to be released on Wednesday, are expected to be 0.08 per share. On July 16, management reaffirmed Q4 revenue guidance and raised 2007 calendar year guidance. BRLC has a PE of 24.9, PB of 5, PS of .9. The ROE is 14% with ROA at 6%. Debt/Equity is at .48, current ratio of 1.33, and quick ratio of 1.17. Analyst rate BRLC a buy at 1.17. Four weeks and 12 weeks ratings were 1.43 and 1.5 respectively. Analysts are getting more bullish on this stock.
After doing my research, I have chosen to put my money in BRLC. They have more positive news coming out. Thier numbers aren't quite as good as BRCD but close. They have a higher ROE and ROA which I like. Another reason I like this position is because I can sell two of the same calls for less commission. The main concern I have on this position is having most of my account in this one position. After entering this position, I will have about $300 to put into another position that is not a covered call. I'm not sure yet where this will be. Possibly sitting in cash for awhile.
Disclosure: I don't own BRCD and do own BRLC. As always, do your own research and don't just go by my opinions. From my past performance, I'm not a very reliable person to listen to for stock advice.
My Stock Account
Back in June I opened up my first real stock trading account with Scottrade Online Brokerage. At first I wasn't sure what trading strategy I wanted to use. I have always been a fan of Warren Buffet and value investing. I am also a fan of "The Little Book That Beats the Market" and it's magic formula investing. I have had a mock portfolio made up of securities using the magic formula and it is done incredibly well. When I opened my account I bought a couple securities trying my hand at both of these methods. I lost money. My first purchase was Aspreva Pharmaceuticals. I lost 16% of my investment. Next I owned IVAC and FLIR. I gained around 2% on FLIR and lost about 14% on IVAC.
After my experience in these securities, and reading a little more on the internet and in books such as Market Wizards, I have decided once again to change my strategy. My current strategy that I am using and used in a position for a month now is covered call writing. Covered call writing involves the purchase of 100 shares of a company and selling (writing) a call on the same security. I believe this is a great strategy to make slow but consistent gains throughout a year. A 2% gain every month will put you up 24% on the year. I am getting ready to read the book "Options as a Strategic Investment" to make sure I know everything I can about this strategy. There are also a couple blogs I like to read about other people using this same strategy. Unfortunately with my low capital in this account, I am limited on the positions I can take. Securities have to trade in the under $10 range in order for me to be able to purchase a hundred shares.
Currently my account looks like this. I currently own a hundred shares of Syntax Brillian (BRLC) and as of Saturday my option I had sold expired. Last week I sold out my positions in IVAC and FLIR and now have funds of just over $800 to invest. I am considering two covered call option positions to get into. My next post will discuss my research on these two positions and my decision. As for my account. I have put in a total of $1,730 into the account. The current balance is $1,419.48. This amounts to a $310.52 loss or 17.95% since the beginning. This is terrible and I hope to reel in these losses by the end of the year to hopefully even or positive. I will update each month to see how much I am up/down for the month and overall. Since I am trying out a covered call strategy, these updates will come after the expiration date for options each month.
After my experience in these securities, and reading a little more on the internet and in books such as Market Wizards, I have decided once again to change my strategy. My current strategy that I am using and used in a position for a month now is covered call writing. Covered call writing involves the purchase of 100 shares of a company and selling (writing) a call on the same security. I believe this is a great strategy to make slow but consistent gains throughout a year. A 2% gain every month will put you up 24% on the year. I am getting ready to read the book "Options as a Strategic Investment" to make sure I know everything I can about this strategy. There are also a couple blogs I like to read about other people using this same strategy. Unfortunately with my low capital in this account, I am limited on the positions I can take. Securities have to trade in the under $10 range in order for me to be able to purchase a hundred shares.
Currently my account looks like this. I currently own a hundred shares of Syntax Brillian (BRLC) and as of Saturday my option I had sold expired. Last week I sold out my positions in IVAC and FLIR and now have funds of just over $800 to invest. I am considering two covered call option positions to get into. My next post will discuss my research on these two positions and my decision. As for my account. I have put in a total of $1,730 into the account. The current balance is $1,419.48. This amounts to a $310.52 loss or 17.95% since the beginning. This is terrible and I hope to reel in these losses by the end of the year to hopefully even or positive. I will update each month to see how much I am up/down for the month and overall. Since I am trying out a covered call strategy, these updates will come after the expiration date for options each month.
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