General Life Update

Okay, it's been forever and a day since my last post. So my apologies to the few folks out there who were actually reading this blog :-) But let's just say that I've been kind of busy. At the end of March, I found out that I got into grad school. Yipee! But that acceptance letter precipitated a series of crazy events, including the need to sell my condo and find cheaper housing closer to school.

So at the beginning of April, I put my condo on the market. Exactly 18 days later, I received a lowball offer from an independently wealthy buyer. And after several rounds of negotiations, she agreed to pay 97.5% of my original asking price, which I'm told is quite phenomenal in this market. In the mean time, I had been driving my realtor in the burbs crazy, looking at everything from condos to townhouses to single family homes within a fairly huge price range. But 5 days after my place went under contract, I made an offer on a condo in the 'burbs. And after 2 rounds of negotiations, the seller accepted my offer. I'm told that I got a great deal on the condo because it was a For Sale By Owner that had been fully renovated and therefore priced well under market. So, all in all all, I feel blessed that everything turned out so well. But there was a lot of drama leading up the actual sale and purchase. Dishonest neighbors and realtors who lied about square footage, sneaky landlords who own the unit next door, feuding realtors who live on opposite ends of the hallway, and meddling doormen with loose lips. More details to come.

Happy 1 Year Anniversary

...to me! It's hard to believe that I wrote my first post exactly one year ago today. Where did the time go?

Changing Life Circumstances

I've sent in my grad school application. So, now the nail biting begins. I'm supposed to hear back from them by April 15th, at which point, I'll probably put my condo on the market. I'm meeting with my realtor on Monday, and hopefully she'll have some good ideas about how to stage the place. I've been in a mad frenzy these past few weeks, trying to declutter the guest bedroom and some of the closets. I managed to give away some electronic items, some small kitchen appliances, and a bunch of CDs. And I posted a bunch of books on bookmooch.com. But you'd be amazed at some of the stuff that I've managed to accumulate over the years. Old cards and letters and my day planner from college. In addition, I found the final distribution statement for my 401k account from my first job out of college. How times have changed. After two years at that job, I only managed to salt away $2,500 in my retirement account -- and that's with a company match. These days, with my current position, it takes me less than a month to save that amount. But now that I'm heading back to grad school, I'll be dipping into savings for the next two years. Although it's a long term investment in what I hope will be a more rewarding career, it's hard not to think that I'm somehow going backwards in life. But you know the old saying, "two steps forward, one step back."

How Low Can You Go?

No, we're not talking about the limbo. Here's the latest, according to CNN headline news.

"Stocks tumbled across the board Tuesday, with the Dow sinking about 500 points at one point. It closed 415 points down -- the biggest one-day drop since the stock market reopened after the September 11 attacks. The New York Stock Exchange tried to limit declines by imposing trading curbs. The selloff is on the back of a nearly eight-month rally."

My stock investment account plummeted by more than $5,000 today. Ouch! And the verdict is still out on my mutual funds and retirement accounts. It's a good thing I'm in it for the long haul. But still....

Steaming Stamps off Envelopes

This evening, I rode up in the elevator with a friendly, older woman I see from time to time in my building. I greeted her with a smile and a nod. And then I started flipping through my mail. I commented on the fact that we seem to get a lot of marketing postcards from Fred, one of the Realtors who lives on my floor. Sometimes one or two per day. She laughed and shrugged. "At least you can reuse the 39 cent stamps." I must have given her a confused look. "They're never cancelled," she explained. So then I took a closer look at the postcard in my hand. Sure enough, she was was right. Huh! I never noticed that before. My guess is that Fred mails the postcards from the building. And the postal carrier picks them up and immediately turns around and stuffs them into our mailboxes. I couldn't help but think about the money Fred could be saving if he only had a key to our mailroom. But his loss is my gain. Self-adhesive stamps on slick glossy paper. Can't get much easier than that. Gone are the days when you had to steam stamps off of envelopes.

Reactionary Behavior We Learn from Our Parents

One of my friends confessed that she absolutely hates DIY projects. She'll readily outsource mundane tasks that most people would do on their own. But the way she tells it, she grew up in a relatively poor household. Her parents did everything on their own. But they both worked full-time jobs, and were constantly bickering about all of the household stuff that they had to do - things like cooking, cleaning, paying the bills, mowing the lawn, shoveling the driveway, etc. So, my friend decided that she didn't want to be like her parents. She'd rather pay someone else to do all the unpleasant tasks and avoid the infighting.

I think there's some merit to my friend's argument. But as with all things in life, you can take it to an unhealthy extreme. I'm a fairly neat person, but I pay a maid service to deep clean my condo once a month. At the same time, I can't see myself hiring a personal shopper to hand pick groceries for me and then have them delivered, even though it's one of my least favorite things to do.

Why I Hate Gift Cards

I wound up ordering the Bogleheads' Guide to Investing at barnesandnoble.com because I needed to use the $25 GC that I got for my birthday 2 years ago. With tax and shipping, it came out to $25.45. I could've bought the same book at amazon.com for $20.46 with tax and shipping, even less if I qualified for super saver shipping. But I had that stupid gift card. The book was shipped in a flimsy cardboard box (no bubble wrap), so of course some of the pages were damaged. I could exchange the book at a brick and mortar, but that kind of defeats the purpose of ordering a book online.

And yes, I already tried the frugal route. Would you believe that there are only 2 copies of the book available for checkout in the entire Chicago Public Library System? Sigh...

What Boomer Pop Icons Have Learned About Money

Check out the recent article on CNNMoney.com.

My favorite quotes...

"Money doesn't make you happy. I now have $50 million, but I was just as happy when I had $48 million." - Arnold Schwarzenegger

"[F]or financial stuff I always listened to my father, a Republican investment banker. He told me if I always pay my bills with one-third, save one-third and screw around with the last third, I'll be okay, no matter how much I earn. It's the one thing he said that I listened to, and I have never been in any financial trouble." - Grace Slick

"My father used to tell me a riddle: Who is happier, the guy with $11 million or the guy with 11 kids? The guy with 11 kids. Why? Because he doesn't want more." - Bradley Whitford

"[T]he good times don't last forever, so be conservative with your money. Always try to live off half of what you make. The other half goes to taxes and investments. If you can do that, you'll succeed at money." - Bruce Jenner

Fewer Buyers Can Afford Homes

I finally finished my grad school application this weekend. I won't find out whether I've been accepted until the end of March, early April. And then I'll need to try to sell my condo. So, it goes without saying that I'm a bit worried about the current state of the housing market. According to a recent MSN article, the housing slump may not be over any time soon because houses are still priced too high for the average buyer.

"The question is when a new balance will be reached between supply and demand. The housing slowdown is unusual because it has not come amid a general economic decline. Rather, it appears that home prices simply rose to a point where fewer buyers could afford homes."

Okay, no surprise there. But check out the actual ratios of salary to home prices.

"By last year, a median-price American home cost nearly eight times average annual earnings, up from about five times earnings in 1980, according to research by New York investment firm Merrill Lynch. Now, fewer buyers can afford homes, and many speculators are trying to clear out of a cooling market."

Eight times average annual earnings? No wonder Americans have a negative savings rate!

My condo and deeded parking space cost less than 2.5 times my average annual earnings, and I put 20% down. Even then, I thought I was stretching a bit. Admittedly, my association fees for my condo and parking space are outrageously high at $500 per month. But that includes water, heat, garbage, sewer, satellite tv with premium channels and high-speed, internet access.

When the Experts Give You Conflicting Advice

Fidelity Europe Capital Appreciation Fund was recently named a best buy by Forbes magazine. But the overall Morningstar rating is only 3 stars. Same deal with Fidelity Worldwide Fund. What's up with that? This is why I don't always use stock and mutual fund 'screeners' when looking for managed funds. And yes, for a variety of reasons, I do own actively managed funds through Fidelity, rather than index funds through Vanguard.

Netflix Wins

A lot of folks in the pf blogging community have been debating the pros and cons of Netflix vs. Blockbuster. I prefer Netflix because (a) I don't live anywhere near a Blockbuster, and (b) my taste in movies is a bit eclectic.

Against my advice, my friend Shirley converted recently to Blockbuster. Admittedly, she lives right near a Blockbuster store, so it's convenient for her. But lately, she's been complaining about the limited selection. For the past 3 weeks, she's been waiting for the movie 'You Can Count on Me'. And although it's at the very top of her queue, Blockbuster has been sending her everything but that particular movie. So, as an experiment, she asked me to try to get the movie from Netflix. And the race was on. Which one of us would get it faster? Well, no contest, really. Within 2 days of bumping it to the top of my queue, I received my copy of the movie in the mail. She's still waiting for her copy from Blockbuster. Go figure.

401(k) Savings Plan Performance in 2006

Sorry it's been a while since I've posted. Life has been incredibly busy in the past few months but should be slowing down considerably in the next few weeks.

I just got my 401(k) statement for 2006, and it looks like the investment gain over the course of year amounts to a 14% increase, after you factor out the $15,000 that I invested plus a $6,500 company match. Not great, but decent, especially considering the fact that I put new money into the account over the course of eight months.

As for asset allocation, 25% in each of the following 4 sectors funds: S&P 500 Index, Mid Cap Value, Small Cap Index and International Large Cap Index. My simple allocation actually beat the company's actively managed 'Aggressive Portfolio' by approx. 1%.

My only regret is that I lost out on part of the available company match because I frontloaded my investment. You can read about it here, here and here. C'est la vie.

IRS Withholding Calculator

Remember to adjust your federal withholding allowances if you anticipate any major changes in your life this year. I'll be quitting my job to go back to school full-time this fall, and potentially selling my condo, so I actually need to reduce my withholding allowances.

Use this handy calculator provided by the IRS to ensure that you don't have "too much or too little income tax withheld" from your pay. In other words, you don't want to give the federal government an interest free loan for a year, but you also don't want to be banged with a huge tax bill a year either.

TurboTax at Costco

As I've mentioned in the past, sometimes it's still cheaper to buy things offline. I was going to order TurboTax Deluxe 2006 through Amazon.com this week, but decided to hold off a few days to see if the price would change. Well, last night I was rifling through a stack of mail, and noticed a coupon booklet from Costco. Normally, I would just toss the booklet into the recycling bin immediately because I rarely want or need any of the featured sale items. But this time, I decided to flip through the booklet quickly. And low and behold, there was a $15 off coupon for TurboTax Deluxe, for either the Federal and State version or just the Federal version. Since I don't really need the State version (you can file your IL tax return online for free), I'll probably just pick up the Federal version. Kind of interesting to note that the Costco list price is a few dollars cheaper than the price listed on Amazon.com. But even if you factor in sales tax, with the $15 off coupon, I'll definitely come out ahead by purchasing the item at Costco ($16.99 plus tax). The coupon is valid from Jan. 15 - Jan. 21 only. So, I'll need to remember to make a Costco run that week.

Update on 1st Time Experience with Craigslist

As I mentioned in a previous post, I purchased a new iPod nano for myself a few weeks before Christmas. So, now I need to get of my old iPod mini. I just posted it on craigslist last night, so we'll see if I get any nibbles. I found a comparable listing for a used mini on amazon.com, but I think the seller is asking way too much for what is essentially an obsolete item. Maybe he's factoring in the cost of shipping and amazon's listing fees? Or the fact that it's now a 'collector's item'?

*Updated on 1/5/07

Well, 2 days after I posted my ad, I got an email from K who wanted to buy the iPod for $25 less than my asking price. I did a quick search for iPod minis on craigslist, and someone had posted a similar item for $75 several days ago. So, I told K that I would come down $10 from my asking price, but that was it. A day later, he agreed to buy the iPod for $90, and we arranged to meet in person. In the meantime, I had posted the item on amazon.com for $129 because there were several listings ranging anywhere from $199 to $250. Some of the items were in better condition, some in worse condition. And wouldn't you know it, after I had agreed to meet K but before I could pull the listing from amazon.com, someone actually bought the iPod for $129! But since I'd already promised it to K for $90, I decided to go through with the original sale. Much to my regret, I had to issue a refund to the second buyer.

All this to say, my first experience with craigslist was relatively positive. I just wish I had been more patient in holding out for a seller on amazon.com. Even taking into account the amazon commission and the cost of shipping, I would've been better off selling the item to the second buyer.

My friend pointed out that I could've asked K to meet or beat the $129, but in my opinion, that would've been jerking the guy around. And I'd been on the receiving end of that kind of behavior when I purchased my condo. To make a long story short, I'd already agreed to pay list price, but after verbally accepting my offer, the seller decided he wanted more money. I wound up walking away from the deal several times because he was such a jerk. But after two other deals fell through, the seller finally agreed to my terms in writing. Personally, I miss the days when 'my word is my bond' actually meant something and handshake deals were the norm rather than the exception. As an attorney, I'm often times asked to come up with a creative argument or loophole to get someone out of having to follow through on something they agreed to. So you can see why I'm a bit disillusioned with the practice of law.

Retirement Savings - The Magic Number

Happy New Year!

Okay, so everyone in the pf blogging community is talking about New Year's Resolutions and Goals for 2007. I haven't put much thought into that particular topic yet because I have too many variables in play right now. If I get into graduate school, I'm going to quit my lucrative job and try to find a part time job. If I can't find a part time job that pays enough to cover my property taxes and monthly assessments, I'll need to sell my condo. If I sell my condo, I'll need to figure out where to live. And so on and so forth. You can see why it's a bit difficult for me to set any concrete financial goals for 2007.

So to ring in the new year, I thought I'd blog about retirement savings instead. When I first met with my financial planner in 2004, he told me that given my lifestyle and values, if I decided to quit saving for retirement altogether, I would still have enough money to retire comfortably at the age of 67. I couldn't tell if he was joking or just being overly optimistic. But a recent article in the Your Money section of the Chicago Tribune makes me think that perhaps he was right.

Where are you on the road to retirement and how much should you have saved by now? According to senior financial planner Christine Fahlund, here are some rough guidelines. If you're...
30 years away from retirement, 100% of your income
20 years away from retirement, 2 times your income
10 years away from retirement, 6 times your income

The article goes on to say that the above "goals are generally achievable if you've been socking away 15 percent of income steadily since your 20s or 30s….if you started late, you need to save a higher percentage of your paycheck.”

I'm guessing that by 'savings' they mean liquid assets vs. equity in your home. Either way, it looks as if I'm well ahead of the curve, which makes this whole career transition thing a bit more palatable, thank God.

Amazing Money Jar Bank

Okay, don't laugh. But my nephew keeps all of his loose change in his Amazing Money Jar Bank, and I've been thinking about buying one for myself for over a year now. I know it's all in my head, but $14.95 just seemed a bit too pricey for me. So, I've been waiting for it to go on sale. And my patience has finally been rewarded. I happened to stop by the local Walgreen drug store today, and saw the same toy on sale for $9.99.

The neat thing about this toy is that it automatically recognizes the amount of each coin as you drop it in the jar and then displays a running total on a little LED screen. So, if you're like me, and you want to know exactly how much loose change you have lying around in the house, this money jar is a great thing to have on hand.

Peace of Mind

Ben Stein came out with a new op-ed entitled A Season for Peace of Mind. It's definitely worth reading.

My point here is simple: If you're not rich, please don't show off at this time of year by spending money you don't have. It's Madison Ave.'s task to make you think you can spend your way into someone's heart at Christmas. That's fine, but it's not true. No one who can be bought is worth buying. That's especially true where romantic love is concerned. Besides, this is the season of peace. For any real friend or lover or relative, your peace of mind comes first. This is easy to forget at this time of year, but it's truer than ever now. To be broke and scared about money is not what "Merry Christmas" means. Give love, not heartache, this time of year -- and all year, every year.

Electricity Bill to Increase by 22%

Enclosed in my ComEd bill this month was a pretty little pamphlet entitled "Your 2007 bill is changing!" So, you would think this means that they're improving the layout and the format of the bill, right? Wrong.

"Since 1997, ComEd rates have been cut 20 percent and frozen. Your rates will increase in January because the cost of energy has risen and a nine-year rate freeze ends this year. Most residential customers can expect to see an increase of about 22 percent, which amounts to about $13 on the average residential customer's monthly bill."

Umm, thanks for the heads up, ComEd. Happy New Year to you too.

Bought a Nano

I finally gave in and bought an Apple 8GB iPod Nano to replace my 4GB iPod mini. The battery on the mini dies after only a few hours of use. Also, I had a $25 credit at amazon.com that I wanted to use before it expired. But I ordered it through target because I wanted to be able to return/exchange it easily. The online reviews indicated that some of the units were defective - something about buzzing noises. Shipping and handling was free, but the sales tax was over $17. Ouch!

To be honest, I really don't need 8GBs of flash memory because my music collection isn't all that extensive. But it's the only version of the 2nd generation Nano that comes in black. And if you've ever tried to clean the white clickwheel on a regular iPod, you'll know why I'm insisting on a black clickwheel. Otherwise, I would have ordered the 4GB special edition Product Red because Apple contributes $10 of the purchase price to the Global Fund to fight HIV/AIDS in Africa.

Admittedly, I could have purchased a refurbished 1st generation nano in black, but my friend says that they're pretty flimsy. The new nanos harken back to the minis and are encased in anodized aluminum. Also, the battery on the new nano lasts up to 24 hours (supposedly), in contrast to the 14 hours on the old nano.

Anyway, here's hoping I won't experience buyer's remorse.

*Update - I just got an email indicating that the item has been shipped. But oddly enough, they decreased the sales tax from $17 to $14. So the total came out to $239.05 instead of $242.42.