Sold Stock to Pay Down Debt

I just sold off my stock in order to use the money to pay down my credit card. Once the funds settle I will be able to request a check for about $600 and will use that money to pay down my credit card which will leave me with a balance of about $600 left to pay. I have decided this is the right decision because I have done nothing but play with the money in my stock account since opening it. I need to take some responsibility and use that money for a use that would be best. I believe I will reap more benefits by paying down the credit card debt over the next few months then I would by keeping this money in my stock account and "playing" with it.

This still leaves me with one more stock holding. I have a few hundred dollars still in Bank of America. The stock is depressed slightly from when I bought it so I did not want to sell it because I still believe this to be a strong company that will rebound in a year or two. In the meantime this stock pays me a dividend yeild of near 5%. I plan on holding this stock until a more opportune time to sell and hopefully this one stock holding will satisfy my stock urge for the time being.

Should I Sell Stock to Pay Down Credit Card?

Today I made my monthly payment on my credit card towards paying down and eventually paying off the balance. Right now I am able to throw around $200 a month at the balance so that this month it went down from $1,400 to $1,200.

I want this debt gone. It is credit card debt and I have grown a terrible hatred for credit card debt. I have always believed carrying a balance on credit cards is a bad thing to do. Due to some irresponsible moves the past couple years I built up a large balance and have been working since September at paying it all off.

Today I found myself contemplating whether I should sell some stock I own and use that money to pay down some of the debt. I have a small online stock brokerage account which only has about 800 dollars worth of stock in it. I am contemplating selling one of the holdings which would give me a little over $500 to put towards the credit card. This would help me pay off the credit card a couple months earlier then the current plan of paying down $200 a month.

Once I have that credit card paid off I will be able to save an extra $200 a month. This would help boost my savings quite a bit. My stock account is for fun. I like speculating in the market. However, I don't see myself getting rich off of this. Especially with such little capital and considering I've lost money on most of my trades except a couple. I don't see myself growing the capital I can trade anytime soon either. My fiance and I have specific goals and none of them include building up my stock account. We are saving for our wedding. We are buying a house. We are paying off our debt. After all of this we want to build our emergency fund up about $6,000 more. And after all of this we would like to start saving into a couple mutual funds. I don't see myself contributing to my online stock brokerage account any time soon. Even after our wedding and after our debts are paid off, I doubt my fiance is going to want to put our savings into my stock picking ideas. She would rather put our savings into mutual funds with a history of good performance. And since I work for a mutual fund company, we can do this at NAV with no commissions or sales charges.

It may pain me to liquidate my stock account and use the money to pay down the credit card. However, I believe it is time to face the facts and go after my first goal. Being debt free. Getting rid of this credit card debt will free up a couple hundred dollars a month and that is what I need to do.

January Net Worth Update!

This is my second net worth update where my fiance and I are combined so I can make some comparisons from last month. Overall our net worth increased just $192 or 0.84% to just over $23,000.

Our assets overall went down $1,852 or -3.09%. Cash went down $2,136 because we used my emergency fund to pay down credit cards. We also made a payment on our wedding hall and used some extra money in B's checking account to put towards the credit cards. Stocks went up $189 due to me owning Countrywide when they were announced to be bought out by Bank of America. I quickly sold to take a nice profit percentage wise. Retirement only went up $95. We probably contributed over $300 to retirement accounts so this number is no good.

On the debt side, we paid off $2,044 or 5.51%. Alot of this is from the cash taken from my emergency fund and B's checking to pay down the credit card. One card is completely paid off and we will now be working on the last. Other debts decreased with their normal payments.

Overall I'm happy to see our net worth increase. I know these next 4 months are going to be difficult to increase because of paying off our wedding. Hopefully the stock market turns around and helps our retirement accounts out so we can balance our savings with our outflows.

Stock Lesson #1

I'm considering getting back into actively trading my online stock account and while I'm at it I figure I might as well post some lessons I am learning along the way.

Yesterday after the close of the market I decided I would like to purchase an ETF that shorts the S&P. I put in my order last night which would purchase at market price as soon as the market opened. This is a bad idea. The market opened way low this morning which means the price on my ETF was up. Since then the market has been rebounding to a breakeven point with yesterdays close meaning I have been losing money.

The lesson is never enter a market order to be executed at the open of the market.

Along with this is to never enter a position the first half hour the markets are open.

I'm Back in the Market

Well, before this year started I decided I was not going to trade in my individual stock account this year. I held two positions and was going to continue holding them through the year. Then one of the positions had news that it was being bought out. I bought Countrywide when it was at it's low point and a month later there was news that Bank of America was going to buy Countrywide. I exited this position with a nice 17% gain in about a month's worth of time.

At that point I was in a debate with myself. It didn't seem like a good time to purchase another company with the market going down every day. I thought about withdrawing the money and using it to pay down some credit card debt. My other idea was to leave it in because I knew one day I would be antsy to trade again. That day has come.

I am reading the book "Trend Following" by Michael Covel. This is getting me all pumped up about the markets again like any book I read. So with the markets seeming to be crashing I jumped back in. This time I bought an exchange traded fund that shorts the S&P 500. Thus, if markets continue to go down, I will make money. I should have waited until finishing the book but when I get an idea in my head, I jump on it. We'll see how it plays out.

Money Decisions

My fiance and I have decided this weekend to use my emergency fund and some money from some stock I just sold to pay down some credit card debt. I have an emergency fund saved up of $1,000. On top of that in the same account I have been saving a set amount each month for my next car insurance payment. My fiance and I decided that she has a big enough emergency fund for both of us, close to $19,000 and that my emergency fund would be better off used to pay down my credit card debt. We have decided to leave $200 from the $1,000 in the account to help with the fiances auto insurance and this leaves us $800 to use. We decided that I would use $500 to pay towards the credit card debt and the other $300 would go into our wedding fund.

On another note, I owned some preferred shares in Countrywide which recently had a nice run up due to being bought out by Bank of America. I sold these shares today for a nice 17% profit and have decided to withdraw the money from my stock account and use it to pay down more credit card debt. This will leave me only a couple hundred left in my stock account which is invested in Bank of America. I don't want to completely close the account but have decided to put my dreams of being a rich stock trader on hold until we are more financially stable in other areas of our lives.

So, I will be putting a total of $300 into the wedding fund and a total of $1,150 paying down my credit card. This will leave me with credit card debt around $1,500 which I will still be working towards paying down!

A Look Back at 2007

2007! The first year I started keeping track of my finances. I graduated from college in May of 2006 and took what I consider my first real job (current job) in September of 2006. Now I have worked for an entire year and have made significant financial progress.

I started keeping track of my finances more in depth in August of 2007. Back then my net worth started at $2,952. I know have a net worth of $5,321 for an increase of 80.25%. That is quite an increase. My best month was December which accounted for almost half of those gains.

2007 wasn't just a good year for my net worth. This was my first year out in the real world after college and I want to take a look at some things I did right that I am proud of and some things I did that were probably bad ideas.

First lets take a look at what I did right this past year:

1. I began the year by opening a traditional IRA. I contributed 5% of my salary a month into the IRA until I was able to start contributing to my 401k.
2. Once eligible to contribute to my company's 401k in September, I took full advantage. I contribute the maximum amount needed to recieve the company's full match.
3. I opened an online money market account and funded it with $1,000 for emergencies through automatic savings.
4. I got engaged to a beautiful woman who I love with all my heart. I can't wait to get married next year and spend the rest of our lives together.
5. I took a nice vacation with my girlfriend (now fiance) to Mexico. A great experience and well worth the money to enjoy a vacation with her.

Now lets take a look at the things that could've gone better:

1. I racked up quite a bit of credit card debt through the year before I got serious about finances. I paid for last christmas with my credit cards. I overspent on christmas trying to impress my family with the money I now make. I also paid for the Mexico trip with a credit card. I now know I would have been better off saving for things before I spend money on them and not racking up the debt.
2. I bought a new bike and took out a loan to pay for it. The loan is at 0% interest and will be paid off so I won't owe any interest on it. I still count this as part of my current debt. The bike was an impulse purchase and if I would have waited a few weeks I probably would not have bought the bike.
3. I opened up a stock brokerage account and tried trading stocks without really knowing what I was doing. I felt like I've read alot about investing but I ended up losing over a thousand dollars. I funded the account with $1,700 and now have about $600. I now plan on leaving the money in the stocks I currently have them in and earning dividends and hopefully seeing some appreciation over the next year. However, I absolutely will NOT add any more money to the account this year. Once I have a better financial base, I will consider trying to invest in stocks on my own. If I had not tried jumping into the stock market prematurely, I would have a net worth of about $7,000 instead of $5,300. In the long run this will be an inmaterial amount but currently, it would have been nice to have that much less debt or that much more into my retirement account.

So, I generally feel like I had a good year. I made some good progress and since tracking my finances have increased my net worth and lowered my credit card debt. Hopefully I continue to make good progress in 2008.

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.

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.

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.

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.