Entries Tagged 'Investing' ↓

Since the hubby and I do not have any debt, we do not know the stress of debt, but there is definitely stress in saving money. First, you have to be vigilant about deals and sales when you want something.  Then you make sure you use your coupons. You also do things like budgeting to make sure that you have money to save.  Then after you save your money you have to figure out how to allocate it and manage it so you don’t lose what you worked for to inflation and other larger forces. Sometimes I do find managing our growing portfolio to be a pain in the butt.  One time my hubby laughed at me when I groaned at the dropping interest rate on our accounts and he jokingly said that he used to manage his money by spending it and I should do the same and cut out all this stress.  I glared at him a bit and told him that the interest rate on his entertainment fund as prescribed by The Baglady Budget also dropped.  At that moment he screamed in a dramatic fashion, “Nooooooooooooooooo! SCREW YOU FEDERAL RESERVE! YOU STOLE my game money!”

Surprisingly after eight months of marriage, the hubby and I almost never fought about money issues even though he is more of a spender.  I think one reason that we do not fight about money is that we have no debt.  From what I have read in the news and heard from friends, the stress of debt is very draining and even debilitating. One woman wrote me saying that she feels like she is always behind on the bills and she hates that feeling because it is like she doesn’t have control over her own life.  Unfortunately sometimes it creates a vicious cycle because research showed that when we are sad we tend to spend more money than usual. When I watched the movie Maxed Out, I was shocked that people actually killed themselves over credit card debt. I can’t say I know how that feels,but I imagine it is extreme psychological torture for people to take such extreme measures.

I think will take the stress of saving money over the stress of debt any time of the day. I don’t mind that the hubby and others laugh at my Ferengi ways because I find it funny, too. I have also learned a lot about the world and the economy through my research into how to manage my money.  In the end, the work I put into saving money gives me a sense of security and well being. Every month I pay our bills and then add up the amounts in our various portfolios and give the hubby a short net worth report. It’s always good to know that we have a financial cushion to fall back on and we are  ahead of the bills, and I truly believe that it is good for our marriage.

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One thing I have noticed about insurance and investment ads on TV is that the spokesperson is often a middle aged male. Usually the ads have a person deliver the product information and show the company logo. They are good and classy ads, but they don’t appeal to me very much. As a woman I feel like investing firms do not market to women very much. I think financial firms could gain a lot by effectively marketing to women, and here are some of my thoughts on the topic.

In a way, I think the traditional financial ads show the belief that middle age men control the most money in this world. For the most part that is true, but women are starting to earn more money than ever before and they need to manage it. Usually women love to research for extensive information before they plop down their hard earned money on some investment so pithy ads that says “My company is awesome” do not work as well. I think what appeals more to women are community portals or human representatives. However, in depth content like that costs more to build.

I hate to say this, but women can be more emotional than men and be irrational sometimes. So advertising could take advantage of women’s emotions. For example, I have read a lot of complaints by men who say that their wives forced them into buying a house in the recent years. I have to say that in nine out of ten couples I have met it’s the wife that wants to buy a house. So the entire housing industry sold the idea that “you are buying a home” and many people fell for it. Even now, the ads from the housing industry seem to be targeting women more than men, and they are very effective because they try to emotionally attach people to a few walls and a roof. If the investment industry could be as effective as the housing industry in marketing to women, I am sure they could make quite a bit of money because even though a man could be the breadwinner in the house, it’s the woman that’s in charge of distributing the money.

I think if financial firms took an effort to attract female investors they will not only get more customers, but better customers. A survey from a few years ago which studied 100000 portfolios showed that female investors outperformed men by a good margin. Women are more tolerant and studied investors and take less risk, and their portfolios grow bigger with patience. If an investment firm gets a female customer they are more likely to get a customer that holds a fund or portfolio for a while, and that means better returns for the company. Women also live longer than men on average, so investment firms should definitely learn to market to all those rich widows.

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According to various measurements, the price of food and energy have increased anywhere from 6% to 9% in the past year. Meanwhile the interest rate on savings accounts have been slashed dramatically to less than 2%. In this environment, it is easy for a saver to feel like a fool, but there are ways you can mitigate the effects of inflation and still save for the future.

1. Stockpile food - Obviously, you can’t stockpile fresh food for very long, but you can certainly keep quite a bit of dried, canned, and freezable goods.  If you have room for storage, things like pasta or wine can be kept for a pretty long time. Sales are even better for stockpiling. For example, in my story about Safeway’s promotion I got quite a bit of pasta roni,canned tomatoes, and toothpaste for very little money. Now I wish I bought more because we went through the food pretty quickly. Stockpiling food is a form of non-financial investment that could pay off better than stocks as long as you do eat the food before it goes bad.

2. Invest in High Yield Dividend Stocks – I have a few stock holdings that have been giving out very high dividends. The ones I own are mostly natural resource and mineral stocks. I’m not an expert in stock picking, though, so the percentage of my individual stock holding is about 6% of my entire portfolio. There are a lot of ways to pick your dividend stocks and a simple and popular method is The Dogs of the Dow. In the current market, you have to be careful with the stocks that give too high of an yield because some of them may be dying financial services. As always, do your research before you invest.

3. Buy a Reasonably Priced House to Live In – If buying a house makes sense in your area it may be a good hedge against inflation. I am a staunch bubble sitter here in San Mateo because home prices are still way too high to justify buying a home. If inflation actually drove rent to within 10% of mortgage prices, I would consider buying, but the situation I am facing now is that home prices are falling but rent is still 1/3 to 1/2 the price of a mortgage on a comparable unit. However, if you can afford a home and in your area it is cheaper to buy than rent, it makes sense to buy a house to protect yourself against further rent hikes. As long as you get a fixed rate mortgage, your payments will stay the same throughout the term of a home loan.

I am sure there are many other ways people protect their savings from inflation. I have read that many people invest in I-Bonds or TIPS, which have variable rates related to inflation. I actually own some I-Bonds because they are state tax free. The problem is that these treasury bonds fluctuate with the core inflation rate, which doesn’t include food and energy. The result is that the return is lower than the real inflation, but they are generally better than dumping all your money in the bank or in a money market. The key is that you can manage your money well and diminish the effect of inflation when you put a little time into it. What have you been doing to fight inflation?

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Welcome to the 55th edition of The Carnival of Money Stories. It’s that time of the year again. In Vietnam they are celebrating the national holiday of Gio to Hung Vuong, but here in the United States it is time for all of us to hand in our tax forms. I just begrudgingly mailed out my tax forms with payment, but today’s carnival certainly cheered me up. We have nearly 30 great stories about life and money. Enjoy!

Editor’s Choice

Praveen writes that The IRS Are Humans, Too… at My Simple Trading System. Apparently you don’t have to be freaked out when you receive a letter from the IRS.

Will presents Rogue Debt Collectors Illegally Freeze Debtors’ Accounts posted at Your Finish Rich Plan. This is a scary story of debt collectors who would freeze pension statements.

Silicon Valley Blogger tells us I’ve Left My Job! Tying Up The Loose Ends posted at The Digerati Life. I am so jealous!

Booze Tax

Kyle from Amateur Asset Collector gives us Top 4 Money Wasters in Your 20s. It seems like Kyle paid a bit too much taxes on alcohol when he was in his twenties.

Mr. Cheap presents Cross Border Shopping posted at Quest For Four Pillars. This is Mr. Cheap’s story about the tariffs he had to pay on hard liquor. That will teach him to be a cheap boozehound.

Gas Tax

The rising cost of gas is really cutting into many of our pocketbooks. Here are some stories. about how gas affects people.

MoneyKing presents Ditch That Huge SUV! Blah. Blah ,

Financial Learn presents The Frustration of High Gas Prices posted at Financial Learn.

Business

Mark Butler presents My Big Fat Learning Experience: Vending Machines posted at The Butler Project. We can all learn quite a bit from this story of entrepreneurship.

Career

FFB presents Four Ways I Upgraded Out Of My Raises posted at Free From Broke. More money means more taxes, but it doesn’t have to mean more expenses.

Life. Money. Development. presents The 7 Attributes of Leadership posted at Life. Money. Development.

Credit Cards

FIRE Finance presents UAL Visa Story! posted at FIRE Finance.

Ryan Taylor presents How Much I Make in Cash Back Credit Card Rewards posted at Millionaire Money Habits.

Hank presents The age old question: How many credit cards should I have? posted at My Investing Blog.

Debt

Here are two stories about snowflaking! You can get rid of debt one flake at a time and these two stories illustrate how you can do it, too.

NtJS presents What is: Debt-Snowflaking? posted at not the jet set.

paidtwice presents How I Started Snowflaking at I’ve Paid For This Twice Already….

Investing

Passive Income Investor presents Cheney Betting Against The Dollar posted at LIVING OFF DIVIDENDS & PASSIVE INCOME.

MoneyNing presents Financial Cost of Being Careless posted at Personal Finance Blog by Money Ning.

The Dough Roller presents Reader Question: Should $15,000 be invested in P2P Lending or in a Better Mortgage? posted at The Dough Roller.

Net Worth

Want to retire early? These stories of people who managed to accumulate a huge net worth at a relatively young age.

PT presents Where Are They Now? Podcast Interview with a Millionaire in the Making: Todd French posted at Prime Time Money.

GBlogger presents Success Stories: $800,000 Net Worth By His Early 40s? posted at CAN I GET RICH ON A SALARY.

Real Estate

Dorian Wales presents How to Successfully Navigate Your Way through Home Renovations: 10 Practical Tips posted at Personal Financier.

Retirement

Amy presents Yale’s Investment Wizard posted at My Daily Dollars.

Saving

FMF presents Do You Buy Things and Never Use Them? posted at Free Money Finance

Other

Chief Family Officer presents Why I Decided Not To Join Revolution MoneyExchange posted at Chief Family Officer. The loose privacy policy prompted Chief Family Officer to not join the new PayPal clone. I haven’t joined either, because I’m just not really into having another financial account.

First Lady Of Poker presents Women Are Naturals At Poker posted at Shopping and Poker Blog. This is an interesting story about why women can beat men at poker.

The Financial Blogger presents We Are Living In A Good Country.

Raymond presents U-Haul Rental Trucks Suck But They Are The Cheapest Around posted at Money Blue Book.

Jeremy Zongker presents All I Really Needed to Know About Managing Money I Learned From Music posted at Debt Advice.

Madison presents Applying the Five Fundamentals of Financial Success posted at My Dollar Plan.

That is all for this edition of the Carnival of Money Stories. Thank you all for participating and a link back to the carnival is always appreciated. If you have more stories you can always submit it to the next carnival which is being held at Can I Get Rich on a Salary. This is a relatively new blog that is very well written. Now if you haven’t already, go out and file your taxes!

Photo Credit: Paul Keleher

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It is the debt consolidation loans that have brought a state of global debt upon all of us. Deals like cheap car insurance, interest free loans and non-authorized grants have brought this day. People need to learn to use their free business cards properly and resist the temptation to look at all the homes for sale.

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So we finally finished doing our taxes for the year of 2007. Since it was the first year for us to do taxes together it was a little more annoying than usual. Things used to be as easy as taking the standard deduction and reporting my W-2s and investment income. This year I had to read a lot more about filing as a married couple and the various marriage penalties. There were a few things we could have done to reduce our taxes. For example, I told the hubby to increase his 401k contributions last year, and he did do it, but his company seems to not have updated his contributions percentage. Since we didn’t get married until end of August last year I never looked at his paychecks for most of the year. It seems that financial planning for engaged couples really should start at the beginning of the year they intend to marry because the tax status is based on their marital statuses at the end of the year. By the time I got the hubby’s W-2 for last year it was too late to contribute more to his 401k for 2007. Another thing is that our W-4 status was wrong for most of last year because we didn’t change it. I don’t think that affected our taxes so much, though.

The end result is that we owe money this year simply because we got married. Both of us were bumped into the next tax bracket due to the marriage penalty. If we were both single we would both get tax refunds this year. However, we did donate a good amount of money so the tax bite isn’t so bad, and we don’t have a problem paying it off. This year, we are putting the following plans in action to reduce our taxes:

1. Got the hubby’s HR to up his 401k contributions - The hubby contacted his HR and now his 401k contributions are at the same level as mine. Last year I saved a lot more than him in my 401k and it is only fair that he gets to save as much in his own retirement account. This move reduces our combined adjusted gross income, and it means we will pay less taxes as a couple.

2. Donate more money - We are upping our donations each month to our church and charities because we have been blessed financially and we want to give a bit more out. I rather see the money go to causes I care about than the IRS or the Franchise Tax Board. Some people said to me that it is a dumb plan because I don’t really save money by giving money out, but donating isn’t about saving money.

3. Put more in tax advantaged funds and bonds – Treasury bonds do not incur California state tax and the Vanguard California Tax exempt money market fund is exempt from both Federal and State taxes. I am already putting money into these funds, and I plan to add some more. This is in our joint account and we can use the money for a house in the next couple years.

4. Maybe have a kid? – Our plan is to have a kid two years after we get married, and though a kid would reduce taxes he or she would increase our expenses quite a bit, too. We can’t really control the exact time of conceiving, but hopefully it will happen in a year or two.  I am reading up on this quite a bit.  I think it is best for us to have a kid sooner rather than later because each year the cost of having children goes up.  Also, I think the hubby’s mom is so lucky to have two adult children out of the house at the age of 46!  I want to be a young empty nester in twenty years.

The funny thing is, we still qualify for the economic stimulus tax rebate this year, but it is just enough to cover the taxes we owe so we will come out even.  Since we owe taxes I am trying to write the checks as late as possible and send out the returns in April.   Hopefully this year we will not owe anything!

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