MBA or no MBA?
I graduated college almost three years ago and have been working since. I'm thinking of going back to school for an M.B.A. degree. I can really go deep into finances and business then. Also, there have been more money pouring into the markets now. The economy seems to be picking up again and business spendings are growing. Also, retirement plans are all over the ads now. Baby boomers are pouring money to financial firms. It seems like a financial major should have some grow.
Another thing I have to look at is my cost of opportunity. If I go back to school full-time, I would have to give up two years of full-time paid. My time spent in school must be able to make up for the salary I missed plus interest. Or I can find a job that pays for my masters and this way I can work and earn a degree at the same time.
Suze Orman - The Road to Wealth DVD
I rented the Suze Orman's DVD, The Road to Wealth and I have to say it's pretty good. I recommend it for those who are interested in managing their own finance and learn about different kinds of investments and savings. I agree with her that the best financial planner is really yourself and when you do go seek a finacial planner, the planner should have a good grasp of your situation and your goals and tailor a plan specific for you.
There is a good questions and answer section there where people ask all kinds of questions, ranging from IRAs, 529 plans, bonds, to real estates. I'm sure anyone can make sure of the questions and answers.
The DVD is dated 2001 so some of the information may be outdated, but the concept and the mission she projects is a timeless lesson. The Road to Wealth is always dream and she basically says everyone can do it if they believe in themselves and start taking control of their finances now.
The Money Book for the Young, Fabulous and Broke
I just received my copy of this book, Young, Fabulous and Broke. I think it's a good book for those who just graduated college or have been working for only a few years.
The biggest investment you can make when you're young is to invest in yourself. Taking extra courses in school or teaching yourself an extra skill can benefit you a whole lot down the road. Read up on real estates if you want to get into the real estates business. Take some courses, read some books, meet some people. All those things give you experience and will make you better in that field. Every time you learn something someone else does not know, that's one advantage you have over him.
Finance Talk with Sister
I talked to my sister who's still in college today about early investing and starting to be in control of her fiananes. The good thing is she's studying nutrition and she's going to be a dietition so she can related how starting early can make a big difference in the future. Because in health, it's never nurts to start eating healthy and getting doses of exercises at a young age. Just exercising 15 minutes a day can keep benefit you more than you think.
The trick that we concluded is implementing habits in our life. I told her that if she puts aside $50 a month, she will have a nice sum of money over time. She told me that if I would do 5 minutes of exercise in the morning and 10 minutes in the afternoon/evening, I will be more healthy. Every little bit helps.
The pay-yourself-first method really works. Try it.
Texas Hold'em Poker
My friends and I play poker almost every weekend. The game have become a huge hit lately all over the places due to the World Champion Poker Tournament and media publicity. Somehow the game has also become a weekly habit for us as well.
I have become more competitive lately. I begin to analyze people's face and actions, and beginning to strategize. It's really about proving that hold 'em is about skills rather than taking my friends' money. We play for fun.
My track record has improved lately. I won last night and almost every week for the past few weeks.
Here's a tip I learn. If you're holding high pockets, immediately throw down a huge bet. It forces a lot of people to fold and if someone doesn't fold, you can speculate he/she is either bluffing or
holding something you should take seriously. If everyone folds, then you claim the pot (if you're the dealer, then the pot is bigger). If one or two people call your bets, then at least you'll start with a higher probability of winning.
Ing Direct Referral
I just told my co-workers about ING DIRECT and its high interest rate. They all seem interested when they saw the orange website and the 2.80% advertisement. I told them it's easy to sign up and there's no minimum requirement. Because it's an internet bank and there's no ATM withdraws, it's a great way to save money. If you put in the account $50 a month at an annual percentage yield of 2.80% over five years, you'll come out with a total of $3,223.64. That's not a bad start for most people, especially since most of the co-workers just graduated from college. I say that's pretty good financial advice. I let them know that ING DIRECT is likely to increase the interest rate due to the fed rates going up, and that would be a higher compounding interest rate working for their investments.
Most of them make a decent pay but because they're young, they're more excited about having more money in their hands and are more willing to spend it lavishly. That's what I did two years ago; I blew all my money out on things. For some reason, it just seemed to me that when my bank account goes over $2,000 I had to spend the extras. Hot deals, hot deals!! Be careful or else you'll come back with an empty pocket at the end of the day. So I told them to put aside $50 or more every month. It's good that the bank is on the Internet, it'll be hard for them to take the money out, and this sort of forces them to save.
Also, there's $25 to sign up for the new users. I get $10 for each person I refer. I just earned ten bucks today. I think more people are going to sign up. Maybe I should spread the word out more. I should tell the whole world. No minimum, so no excuses. Ha! If you don't have an account, you can help me earn 10 measly bucks too, but you gain a whopping 25 US dollars -- so, it's to your advantage.
I should be hired for ING's salesperson for bringing out the message. Hmm... wonder if they have an opening. I need a new job -- not sales, something related to tech or finance.
One subscriber
Wow! I got one subscriber. I don't know who it is, but that's gotta be someone who is responsible for his/her personal finances and wants to learn more. Good for you!
I wish I can get some comments. Does anyone else read this blog? Should I change the template? Would a brighter background look more appealing? Any feedbacks? Anyone out there?
At least I got one person reading. That's a good start.
Microsoft Money
I have been using Microsoft Money for a few years and I have to say using a software to keep track of expenses is really helpful. I put in all my financial accounts, whether it's banks, credit cards, investment banks or loans, and I keep track of all the transactions on each account. The best part of Money is its reporting features. I can run a report to see how much I spend each month and in what catgeories or track my net savings over time.
Money is fairly easy to set up. After you install the software, it walks you through to set up all your financial accounts. You can customize the categories and payees. I suggest setting up a cash account which you will use to keep track of your day-to-day cash activities. This way you know where your dollars are going.
The only downside to Money is that if you don't keep your activities updated, you'll defeat the purpose of using the software. When I started using the software, I didn't update my spendings frequently and there were times I forgot about it. That caused a huge gap in the time periods and my ending balance for each account. To sync the balance, I had to put all the difference in a category called adjustments. This kills the accuracy of my reports when I want to see how much I spend each month and on what.
Therefore it is important to update your software often. I make it a habit that I put in my daily spendings and it doesn't take that long once you get used to it. Also, I have my credit cards and bank accounts on electronic update so transactions from those places are electronically downloaded to my software.
Money also has a tax calcuator. I entered all my income information and my tax payments. It lets me know if I'm withholding enough and if I should expect a refund. There are also other very nice features, like loan payment calculator and investment tools.
Overall, Microsoft Money does live up to its expectations and has proven to be very useful for me. I have to say this is one of the finer products of Microsoft.
Smart Living - Part 2
There are some peope that just saves up every penny they can and hardly spend a dime in a week. While I'm all up for saving money, I think sometimes taking it to the extremes can fireback on you. I don't want to be a penny pincher; I think that takes the flavor out of life.
If you're extremly cheap you may save 10 or 20% more income, but I think it'll come back to haunt you. You're gain a little bit of extra money but you'll lose a lot in other areas.
You can stay home on weekends, bag your own lunch on weekdays to work, turn off all the lights and electronics to sleep early, take short showers to save money, turn off the heat to save money, but at the end I think going to far can hurt you. When you do all that, you're really limiting your life and preventing social or personal values in your daily life. Moreover, sometimes it's just not worth saving the extra ten bucks to turn off the heat during the winter. I had a friend who's father did that and she got a cold the next day. She had to buy medicine and take a sick day off. The money she spent on her sick day was far greater than the ten or twenty dollars the father saved.
Bringing lunch to work is a good way to save money, but unless you like eating home food or the same food over and over again, it gets tiring. I like the saving money part, but not losing value part, so perhaps you can bring in food three times a week and eat out for the other two days. You may not save as much, but in the end, it'll be less of a drag when you have to heat up your food in the office.
Smart Living - Part I
I used to go shop online a lot. I would waste most of my paychecks ordering hot deals. Sometimes I think hot deals can turn into really bad deals if you're not careful.
After a few years of working and still don't have money saved up, I come to realize my overspending and am now much more conscious about what I buy. I try to buy what is necessary and useful for me. Before I buy something now, I'll ask myself, "Is it worth it?"
Now, I don't want to be overly zealous over saving every penny. I know some people are like that, and I think that would damage the quality of my life.
I would sometimes pay a slightly higher price for an item because I think it's more worthwhile, could it be that it lasts longer or is more durable. Just because something is cheaper doesn't mean it's always better. I don't want to a be a penny wise and a pound foolish.
When I was visiting the hot deals forums/websites frequently I would always try to buy more items so I could use a xx dollar off yy coupon. Sometimes I ended up spending $50 more to save $5. That wasn't smart. Multiply that by hundreds of orders, I was getting so many hot deals, I was silently burning a hole in my wallet. When the bills came, I had to draw all the money in my bank accounts to pay off the credit cards and I end up with a lot of items at my apartment that stood in the corner collecting dust.
One day I just sat down and looked at all my receipts, the boxes in my home filled with useless items, and the bills I had to pay or have paid, and I have decided to do something about it. As I look more into my finances and learn how to better manage my money, I become more financially wise and mature. I control my spending much better now.
I still look at hot deals websites and forums, but I make sure I only buy the items I need, even if it means forgoing a xx dollar coupon. I rather give the $5 saving than to pay another $30 to buy another item that I will not touch.
ROTH IRA
ROTH IRA is basically a retirement plan where you put in your after-tax dollars and when you retire, you can withdraw from the account tax-free. If you earn under 95K and single (150K for married) you can contribute a maximum of $3,000 for 2004 and $4000 for 2005. If you're 50 or older, you can put in an extra $500. Also, when you reach the age of 70 and a half, you are not required to take mimium distributions.
The beauty of the whole ROTH IRA idea is to have your earnings avoid tax when you take them out. There are also some other nice additions to the plan. You can take your contributions out without penalty at any time. Another thing you can do is to take out up to $10,000 without penaly/tax to pay a downpayment for a primary home, provided that your plan is opened for 5 years. There are a lot more details and technicals which you can read up on here.
I want to talk more about taking advantage of the plan and how that will benefit you. If you qualify, it is very important to set it as a priority to contribute as much as you can, and because the limit is so low, it is best to put in the maximum. In the worst case scenerio, when you need the money back, you can take the deposits out without penalty.
While ROTH IRA does allow the flexibility to withdraw deposits, I strongly suggest you not to do that. Putting funds into the account is like planting money seeds. If you take them out, you give up the opportunity for the seeds to grow and sprout. The end result is you having less money working in your favor.
The sooner you plant the seeds, the sooner it'll grow. And the more you plant the more you'll have growing for you. Therefore, it is very important to start early. A $3,000 contribution this year vs. five years from now makes a big difference over time. Assuming a 8% average return per year, your $3,000 deposit this year can make you $30,187.97 in 30 years, but starting five years late with the same amount will only net you $20,545.43. That's a difference of almost $10,000 for holding back five years. Now, if you had been contributing for five years straight, the difference is much more significant.
The bottom line is, if you have no idea what a ROTH IRA is, take the two minutes to read up on it and sign up as soon as you can. You have up until April 15 to make a contribution for 2004. If you're low income and use the no-money excuse, then you should know that the goverment is already working in your favor. Any contribution you make will get you a 50% credit (or less depending on your AGI) from the Savings Credit. Having someone else put in half of your contributions, there are no more excuses. This is a benefit for you that will pay you big in the long run.
Financial Independence
I have been working for three years in the real world and I'm getting pretty tired of it. I have to show my face at the office by nine o'clock in the morning and sit there until at least 6pm. There are many times I have to work overtime (without paid) up until 10pm or later on busy days. I can see the same story repeating for the next 40 years.
Now that's a picture I really don't want. I want financial freedom. I want to decide when I get up, what I want to do for the day and when I get off. I want that power and as I sit in the office from one day to the next, I crave more strongly for that freedom.
I've read Rich Dad, Poor Dad and that book has really inspired me. I can't say much for the validity of his contents, but the thoughts and the point of the book motivates me to get out of the rat race.
Even if I become wealthy now, I will still work, but it'll be my own projects and business. The more I read up on financial articles and books, the more I become fascinated by the knowledge I can attain and develop for smarter investments -- basically, make my money work for me!
But even knowlege can be short-handed by a lack of funds. I need something to start with. That's why I'm working for someone else now. I'll need to save up more and invest wisely in the meantime, and eventually when I have enough money I can do something for myself.
In the end, I just want more free time. Life is short, why waste time working for someone or doing something you don't enjoy. I don't mind working hard, but I want to be the one that gets rewarded. I'll plant the money seeds, and hopefully in the future, I'll have a forest of gold.
My Salary and Comparisons
I started with a salary of $37K in 2002. After working for several months, I was given a raise to $38.5K in February of 2003. Then I had to work a full year before they gave another raise. In Feb. 2004 I was at $40.5K. The 5% increase was mediocre compared to the field I was in. I was not satisfied, because I knew a lot of people in the same industry as me with relatively the same amount of experience and they were making over $50K.
This year, they postponed the raise to March, but the increase was much more substantial for me. I had a 11% raise to $45k. Although the percentage increase is good, my salary is still low compared to the same position in other companies.
Let's take a look at table:
Year Salary Increase
2002 37,000.00
2003 38,500.00 4%
2004 40,500.00 5%
2005 45,000.00 11%
The 11% increase this year doesn't make up for the poor raises in the previous years. I would expect to make $50K with 3 years of work experience in tech. Perhaps, a jump to another company will help boost that.
Education and Job Background
I graduated college in 2002 with a BS in computer science. At that time the tech market has just been decimated and thousands of tech employees were laid off every month. I have been working part-time in a small company during college and they need someone for tech. They offered me a $35K salary, but I barely negotiated it to $37K. I wanted $40K but the supply and demand of the market at that time was really working against me so I had to lower my expectation and accept the offer.
It was a good decision at that time because while many new graduates were hunting desperately around for a job, I was already working in an air conditioned office on a hot summer day. And in terms of finances, it was also good, because I had income coming to me immediately.
What to do with 1K, 5K, or 10K of savings and in your twenties?
I see on financial forums a lot of students graduate from school and wonder what the best investment is for their one or several thousand dollars of savings.
The best suggestion anyone can give is to park your money in a liquid, high interest-bearing bank account while you read up on different types of investments and find your risk tolerance. There are several banks with very high paying interest rates like Emigrant Direct (3.25% APY) and ING DIRECT (2.80% APY).
The biggest mistake you can make is to look at the stock market and without any research, sink your money into it and think you can double your money in a short period of time. That type of behavior is called blind gambling. If you don't know what you're doing, don't do it. It is very important to prevent disastrous mistakes that can hinder your financial success. I know... I've been there (more on that another time).
With that said, I hope you take the time to plan your goals. Park the money in a high interest savings account to gain interest while you do some research Find your risk level. If you can tolerate high volatility, you could read up on the stock market or real estate investments. If you don't have the stomach for much volatility or the time to do tons of research, go with mutual funds, high-rate CDs, or safe bonds.
Ultimately, you're going to be the best financial planner for yourself. It doesn't have to take up much time. Spend a few hours planning for your future and it'll make a big difference in the long run. And take an hour or two every month to keep your focus in check. You can do manage your finances while looking for a job or working full-time.
2.80% APY - Ing Direct Savings Account
Ing Direct raises their rate to 2.80% Annual Percentage Yield.
Short Term Goal - Get out of debt
In 2002, I graduated college with 30K in student loans and 10K in credit card debt. I got a full-time job right out of school and worked as an Applications Analyst. I have been making additional payments on top of my regularly student loan and credit card payments.
This month, I have lowered my student loan balance to 20K and credit card balance to 5K. I contributed as much as I could to my student loans because my credit card balance was on a 0% APR.
At the end of this year, I am projecting a 10K balance on my student loans and 2K on my credit cards.
Six months after the end of this year, I am aiming to have only 5K left in my student loans and 2K solid savings in my bank account.
By the end of 2006, my student loans should be completedly paid off, and I'll come up with 5K solid savings.
Road Map
2002 - 30K student loans and 10K CC
March, 2005 - 20K student loans and 5K CC
End of 2005 - 10K student loans and 2K CC
Mid-2006 - 5K student loans and 2K savings
End-2006 - 0K student loans and 5K savings
*This is not my entire net worth.
3.25% APY - Emigrant Direct Savings Bank
Emigrant Direct is offering a highly competitive savings account rate for your money now. You do want to still keep your brick and mortar bank for checking, ATM withdrawals and branch access.
http://www.emigrant-direct.com/
3.25% APY
- America's Highest Rate*. No Fees. No Minimums.
- No need to change your checking account. Your American Dream Savings Account™ will be linked to your current checking account.
- Up late? Access your account 24/7 at EmigrantDirect.com.
- Open your account online - It’s quick and easy.
- FDIC Insured
