Money and Financial Business

After finding my old tenants, I filed a small claims suit against them. The court date is set to February 20th, although the tenants haven’t been served yet. I spoke with the constable today and he seems to take pride in his ability to serve. He assured me that he has several tricks up his sleeve which he will use if necessary.

At this point, if I do not hear anything from the court then it means that they were served and the court date is on. If not, I’ll hear something within two weeks.

My fingers are crossed!

“CAPM is CRAP, or, The Dead Parrot Lives” By: James Montier, Dresdner Kleinwort Published: January 29, 2007, John Mauldin’s “Outside the Box” John Mauldin is a big fan of James Montier, the 34 year old Dresdner Kleinwort economist who literally wrote the book on behavioral finance.  Montier also wrote a chapter in Mauldin’s 2006 book “Just One Thing” [...]

At least if you live in a market society. Consider, for example, this Miami Herald article (free registration required) on organic foods.

It's dated 3 Jan/07, written by Susan Salisbury, and headed:

S. Florida farmers see a fresh profit in organics

In a market society, of course, "profit" is a key word:

As the market for organic produce expands from health food stores to mainstream groceries, farmers are taking notice.

While no statewide records are kept on organic production, Florida farms devote an estimated 12,000 acres to organic cultivation of rice, citrus, watercress, blueberries, mangoes and avocados, said Marty Mesh, executive director of the Florida Organic Growers Association. And organic farming is exploding in Southwest Florida, according to Gene McAvoy, a Hendry County-based extension agent.

''It used to be the organic farmer was an ex-hippie kind of guy who ate tofu burgers,'' said McAvoy. ``The new guys are doing it for profit while they adhere to organic principles.''

I'd be more inclined to hypothesize that they adhere to organic principles because there's a profit to be made in doing that. this is, after all, what the intro micro textbooks tell us: when there's an economic profit to be made in an industry, firms will be attracted into it.

In Palm Beach County, Alderman Farms, a conventional family-owned vegetable grower known for its peppers, began selling its first organic produce -- sweet corn grown in Loxahatchee -- in November. Tom Wilson, sales manager at Alderman Farms Sales west of Boynton Beach, said the certified organic bicolor corn is the first corn of its kind produced in Palm Beach County, the nation's top sweet corn-producing county.

''We are just trying to fill a niche here,'' Wilson said. ``It was something new. It seems like a natural progression. It used to be people would order 10 of this and 20 of that. Now the orders are more substantial.''

So far, the extra effort, such as having to produce the corn on land that has not been treated with any prohibited chemicals for three years, is worth it: The organic corn is bringing as much as three times the price of nonorganic corn.

Organic, of course, means different things to different people, so if you're going to be able to sell your corn at a price three times that of the regular stuff, your customers have to be reasonably sure that they're getting what they think they're getting - i.e. there's an information issue here.

Ramkrishnan Balasubramanian, program director of Quality Certification Services, an organic certification agency in Gainesville, confirmed that Alderman Farms is one of 110 Florida producers, processors and livestock producers that have met strict requirements to qualify as organic agriculturists.

The Quality Certification Services webpage is found here. Note that QCS will only be able to stay in operation so long as people trust its certificates. In the long run, there is profit to be made from being honest. Reputation, reputation, reputation.

(There's a bit of literature which says that private certification outfits might, if anything, set standards too high - by requiring a very high quality level they put up a significant entry barrier, which restricts competition and keeps the market highly profitable for the first entrants. No evidence of anything like that happening here: I mention it only because there are a lot of people who automatically assume that private certification agencies can't be trusted - that somehow they profit from letting low quality suppliers through. As long as the agency's income depends on their reputation for probity, that shouldn't happen. It's in their self-interest to provide accurate certification.)

No idea how those ex-hippy, tofu burger-eating types like it (other, of course, than the ones who've sold out to The Man and have gone into commercial organic farming for themselves), but an open, competitive market supplied by profit-maximizing producers is the mechanism most likely to make organic foods available to the wider market of people who want it. I'm no great fan of organic foods myself, but a well-functioning market can satisfy the range of consumer tastes, so long as consumers are willing to pay prices which make entry profitable. I was in a Publix supermarket in the Miami area recently, and the fruit and vegetable sections both had clearly labelled organic food sections, along with the regular produce for those of us who don't mind the idea that pesticides were used in its production. Speaking of which:

Ronnie Blumenthal, director of development at Sarasota-based Global Organics Specialty Source, the largest organic produce distributor in the Southeast, distributes Alderman's corn. He said the product is sold to retailers such as Carmine's Gourmet Market in Palm Beach Gardens, health food stores and through consumer buying clubs.

Carmine's produce manager, Randy Sabatino, said the biggest problem he has seen with organic corn has been that some of it arrives with worms, and Carmine's discards those ears. Carmine's sells the organic corn at $3.69 for two ears, compared to four ears of nonorganic corn at $2.19.

Blumenthal acknowledged that organic corn does occasionally have worms. Unlike conventional corn, it is not sprayed with insecticides that kill them.

'Our sales director told me, `Be glad. That shows this is a living, nutritious product,' '' Blumenthal said.

Organic corn. Now with added organic animal protein.

Still needs a bit of work as an advertising slogan, I think.

Nobody emailed me about linking to the One House At A Time organization. It is really hard to get people aboard on something, even if it is good. We could be so busy with our lives that there is time for reading the web not for doing the web.

Anyhow, February’s linkdonating target is Kiva. For me this word is especially nice, because in Finnish it means “nice”. I must say that this non-profit is Kiva indeed. Rules are basically the same as before:

1. Link to Kiva
2. Email me and point me to that link
3. I will link to you
4. I will donate one US dollar for Kiva for your link
5. I will write about your site

The fifth rule is there to further sweeten the pot. So you get to donate one dollar, you get a link and an article about your site. Do good.

Recently I purchased a new Nikon D80 digital SLR. This photograph is the result of my first day out shooting with the camera. I am also learning to use Adobe's Photoshop Elements (which I used on this photograph) to bring......

Refer to lesson #1. Since mainstream media doesn't generally understand economics it is almost impossible for them to report on economic data properly. When reports are issued, they skim long reports and write three paragraph news releases in under an hour, usually in about twenty minutes. That may keep them on top of "fast-breaking" news but isn't really good for their consumers.

Most economic reports aren't all that fast-breaking. It is a report that has taken quite a while to consider and compose. Granted, the markets may move based on what the media reports, but it moves again over the next two days as the reports are closely examined and the real message gets distilled. Unfortunately, mainstream media has already moved on. If you really want to learn about what is contained in ecomonic reports you have to find a source of the report or a source you trust that thoughtfully considers the whole thing. Or else you will be thinking about the headlines and the market will be considering the details.

Since President Bush’s State of the Union Address, the headlines have been numerous and divided on the viability of “Energy Independence”. Most focus on denouncing ethanol as being impracticable, citing studies that ethanol produces 70% of the energy of an equal volume of gas or it takes as much energy to produce as it gives off.

Then there is the food-versus-fuel debate. They pronounce that we are forsaking our nation’s food supply for ethyl alcohol, like a moonshiner with needy children. Even Tyson Foods (TSN) warns that increased ethanol production will create higher global food prices with the consumer withstanding the worst of increased prices. The food vs. fuel debate has been further exacerbated by Lester Brown of the Earth Policy Institution claiming the world will be disabled with higher grain prices. Rick Tolman, CEO of the National Corn Growers Association, quickly countered stating, “All demands for corn-food, feed, fuel and exports are being met”.

Hog wash. 1. President Bush has never used the term “Energy Independence”. He has never stated that ethanol was the panacea. He has set forth policy and initiatives to ease our dependence on foreign oil with a portfolio of energy including, nuclear, biomass, clean coal, ethanol, domestic oil and other renewable solutions. 2. The market will dictate the state of ethanol. There is no current production mandate and our food supply is not being held hostage.

For us to move forward, apart from all this frivolity, three things must emerge:

1. Government Mandates such as Senate Bill 309, amending the Clean Air Act. A reduction in carbon emissions will spur technology towards improving energy efficiency and performance. According to the London Times 34 of (FTSE 100), companies have achieved cost savings directly as a result of setting quantifiable targets to reduce carbon emissions.

2. Government Incentives to seed technological advances in energy production and utilization. 6-7 Billion has been set aside for new nuclear plants but that is down the road. The government needs to follow the venture capital money now.

3. Independent Oversight to insure that special interests and earmarks are held at bay.

A good way to take advantage of this burgeoning trend is Powershares Cleantech Portfolio (PZD). This ETF holds a basket of companies that among other things, improves the efficiency of energy consumption, such as Ballard Power (BLDP) with fuel cells, Evergreen Energy (EEE) clean coal solutions, Syntroleum Corp (SYNM) natural gas to liquid fuel and Itron (ITRI) software solutions for the optimized metering of energy.

By: Douglas Appell, Pensions & Investments Published: January 8, 2007 Any of you who have tried to read this article by PanAgora CEO, Eric Sorensen will understand clearly what he meant when he told P&I in a recent interview: “We’re academics. We do practical research, (at a) very high level, and we love to do it. And oh, by [...]

Institutional Investor’s Daily ii reports today on a story at Financial News Online about hedge funds that charge more than the regular 2% management fee and 20% performance fee.  According to Financial News Online, over half of these premium-priced hedge funds underperformed the average of “their cheaper peers” and most underperformed the S&P.  Reports Daily [...]

When applying for any type of loan or credit, you will have to include your income. Something to keep in mind is that your income will never go "on your credit report" or affect your credit score. You can have a very high credit score and low income, or high income and a very low credit score. The two are mostly independent (although it's probably easier to take the actions necessary to get a high credit score, i.e. minimizing your debts, if you have a high income).

But your income can feel like it's part of your credit score when you're applying for a loan. Sometimes it can be a bigger determinant of the outcome than your credit score! Even if you have a really poor credit score, if you've got a sky-high income and you can document that income, you will be able to get some kind of loan (although it will be at a high interest rate). Conversely, if you have a great credit score and a low income, most lenders will find it quite easy to turn you down.

This gets more important when applying for mortgages. Most mortgage lenders will require you to document your income. They might require anything from check stubs to your tax returns for the past 2 years. However, if your credit score is high enough, you can get a no-documentation loan, aka a "stated income" loan.

I was fairly amazed (and grew to appreciate the value of a good credit score) when I was thinking about buying a rental property last year. I walked in to the bank (a very large, national bank... you've definitely heard of it) and the mortgage guy checked my credit score. This bank used the median score out of the three; since my median score was above 750, I was pre-approved for more than twice what I was thinking of spending with a 5% down payment and no income documentation. In the words of the banker, "If your credit score's that high, we'll believe you when you tell us what your income is." That statement made my jaw drop.

Of course I told him my correct income, but since I'm an independent contractor who's reimbursed for lots of stuff, my "income" is unusually flexible. If you looked at the checks I get every 2 weeks, you'd say my income is X; if you looked at my final net income on my tax returns, you'd say my income is more like 0.6*X or maybe even X/2. A more realistic view would say that my "income" (as most people would figure it) is about 0.8*X. On a stated-income loan, I'm able to use this more realistic figure rather than the understated income on my tax return.

I am not suggesting that you lie on a loan application, and I'm not saying that I've done so or are even thinking of doing so. I think that would be very dangerous. But, at the same time, I appreciate the flexibility that I now have when it comes to mortgages. The whole process becomes much easier. I get to skip a bunch of forms and paperwork that I would normally have to fill out. I get to give the bank a more realistic (yes, higher) view of my income. And I wouldn't be able to have this flexibility without an awesome credit score. And I'm happy to tell you how to achieve that.

I was just reading this article on CareerJournal about using a headhunter - a recruiter who tries to find people with specialized experience to fit a certain job a company is looking to fill. The article advised against ever contacting headhunters for strategy consulting jobs:

 Very rarely do search professionals — or headhunters — assist candidates in need of jobs. Instead, their clients are the companies that pay them to find highly qualified people for specific openings. “When companies hire a search firm, it’s to find people they can’t find — typically people who work for other companies” who aren’t necessarily looking for new opportunities, says R. Gaines Baty, an executive recruiter in Dallas.

Why not contact them anyway? Because a lot of the ones willing to help you find a position use tactics that will end up hurting you. Some just accept your resume and never talk to you again, leaving you with no clue what they’ve done on your behalf. Others aren’t careful, and can tip off your current employer that you’re planning to leave - by sending them your resume.  Others will just send your resume to anyone and everyone, and then claim a commission if you later get a job with them, even if you end up doing all the legwork.

The one benefit to waiting for them to contact you is that they’re more likely to be actually interested in you for a specific position. The problem? Often the unscrupulous ones are just calling as many people as they can, without a real interest in you or what job fits you best. The two big rules you need to follow are:

1) Make sure you find out something about them from someone you trust before you use them, preferably someone who has used that headhunter themselves.

2) Make it very clear that they do not have your permission to send out a resume to anyone without your explicit permission - and limit the number of employers you grant permission for them to send it to.

You want someone taking the time to do a specialized search for you, not a resume dump. You can do that yourself, and the random employers you’d be contacting are more likely to be hiring if they don’t have to pay a finder’s fee.

Discuss this in the Free the Drones Forums.

My favorite example of this was when the local news reported that the economy is doing well because the DOW was up 16 for the day. While the markets react to broad economic conditions, one day of change in the DOW doesn't say anything about the state of the economy. Anyone reading this probably already knows more about the economy than most of mainstream media reports.

But how about all those investing shows? Always remember and never forget that they are in the entertainment business and/or the sales business. They will provide you with the information you need to do whatever it was you had in mind. Test it. Think of an investment position you believe will be good. Watch for a week to see how much validation you will get. For the next week, take the opposite position and see how much validation you get. As human beings we are predisposed to see the world we choose to see.

My interview in this podcast is with Rachel Kesel, a member and spokesperson of the compact. The Compact started a little over a year ago as an informal challenge amongst a small group of friends to eliminate unnecessary purchases. They have recently received quite a bit of media attention, and thier group on Yahoo has grown to 7500 members. There is a strong environmental angle to their experiment, but in the interview we focus on the anti-consumerist perspective, and the interesting reactions they have received from friends and the media.

The Compact on Yahoo Groups:

http://groups.yahoo.com/group/thecompact/

The Compact blog:

http://sfcompact.blogspot.com/

Links to Bloggers who contributed questions:

http://www.iwillteachyoutoberich.com/

“The Asset Management Industry: A Growing Gap Between the Winners and the Also-Rans” By: McKinsey & Company Published: 2006 This McKinsey report echoes a theme discussed by Tim Price, the CIO of Global Strategies at UBP.  It essentially concludes that is is the best of times and worst of times for asset managers.  To back up this argument, McKinsey reports on a survey showing a [...]

Well I'm going to be attending Super Bowl XLI this year in Miami. Flight leaves tomorrow. I'm lucky enough to have a job that flies me to the USA every 3 months or so to work in stadiums and arenas. Although I will be on-call during the game, most of the work is completed before hand so I'm hoping for a nice relaxing day watching one of the biggest sporting events in the world. I should be

Plus: I got my $50 National City gift card in the mail today - it was a Sharebuilder bonus for signing up through my National City account that I have for CashDuck. So that's pretty cool. Sharebuilder bonuses are awesome. (I invested my $6 in an S&P 500 index fund. It is now worth $6.14. How savvy am I?)

Minus: I got two W-2's that I had forgotten about - one for Pearson, which was a test-grading job that I had for about a month in April-ish ($988) and one for Kaplan, where I worked for exactly three days during the July-ish period when I decided I needed a second job and then decided that I really wanted to go home after work ($81). So that's about $200 more in taxes to pay since neither had much withheld. And it also makes me wonder where the thousand dollars went??

Plus: I finally am able to see information about Electric Orange, the new ING checking account, and I am ALL over that. They have a payment feature where you can send someone an email, they put in their banking info, and voila they get money! This is so cool I can't even begin to describe. Plus about 3% interest on the money you have sitting around in the account. I am so opening one for CashDuck!!

EDIT: I originally wasn't happy about this feature because you had to know their account info - but the description made it sound like you didn't have to anymore. On further investigation, it's the same. So I guess that makes this a neutral?

Minus: I went to Target on Sunday with a pocketful of coupons, spent $91 and walked out without remembering to actually hand over the coupons to the Target lady (about $10 worth.)

Plus: I got a prescription filled and actually had one of the free-gift-card-with-prescription coupons (which I did use) from Target, so I got a $10 gift card from that.

Plus: I get my first paycheck from my new job on Wednesday - and $500 of it is going into my 403(b). So, from my calculations, about $1340 will actually be deposited between my employer's contributions and my voluntary and involuntary contributions. Which is about as much money as I use to live on and pay bills other than debt. So I think that's pretty cool. If all goes as planned I may have to raise my goals of how much retirement money I want to save by 30! =)

I just got a year-end summary from Chase, and I browsed through it quickly, cringing.

Some numbers, a la Time Magazine:

40: Number of times Fiance & I ate pad thai
$2,872.54: Amount I spent on plane tickets
3: Times we went to Boston
2: Times that those trips were on consecutive weekends
6: Out-of-state trips we took
13: Times I gassed up my car
4: Times I paid for expensive and irritating repairs to my car
$1,128.28: Average monthly expenditures*

I'm sure I'll have more later, after I more closely analyze the numbers. Oh, how I wish I could download this stuff directly into Excel! Instead, I'm preparing for a nice long evening of data entry.

*I used this card for the vast, vast majority of purchases, excluding those made at Costco, damn their non-credit-accepting-black-hearts.

Check out the Carnival of Investing #58: Monopoly Edition over at The Digerati Life. Lots of great entries, neat format!

My favorite entry? Keep Your Cool in Stocks and Dating: Efficient market? As if! I totally agree with this guy.

And oh, my, I was an editor's pick (!) with my Anatomy of an Arbitration, where I describe what it is about investing that keeps me in business.

Got a call today to come fill out the paper work to start my second job. All I can say it's about dadgum time. Took me long enough
Thanks to my friend for helping me get the job

“Alpha-centric investing” refers to more than just “portable alpha”. As we have reported on this blog, it encapsulates new operational infrastructures (UMAs), new fee arrangements (performance fees with benchmark hurdles / fee-per-alpha), new metrics (ranking funds based on alpha instead of absolute returns), new organizational structures (small teams of alpha producers), and new advisory models [...]

As you probably know, you can get a free credit report yearly at AnnualCreditReport.com. This is mandated by the federal government. You can get one per year per each of the 3 credit agencies.

Note the ambiguity in that last statement: one per year. A reasonable interpretation of this is one per calendar year; i.e., one in 2005, one in 2006, one in 2007. I thought that this would be the case because of the way they rolled out the free reports across the country in 4 phases; the first 6 months, only the Eastern part of the country could receive their reports, then it expanded from there. I can't remember the exact rollout plan, but it doesn't matter. The point is that there were set dates when you could get your reports, according to where you lived in the US. Somehow this led me to believe that the "annual" thing was based on the calendar year.

But noooo. They apparently mean that there must be a year between each credit report. Since I didn't really need it in 2006, I purposely waited till the end of the year to obtain my free reports, thinking that I could get them in 2007 whenever I wanted. But I recently tried to pull my TransUnion report through AnnualCreditReport.com; due to a minor issue, I wanted to see if something had come up as a new inquiry. However, it wouldn't let me. It said that I already had obtained my report. I last pulled my TransUnion report in November of last year.

So clearly they aren't basing it on calendar year. I assume (will have to wait until November to find out for sure) that they are basing it on the amount of time from one report to the next. So, the take-home lesson here is that your free "Annual" credit reports are only "annual" if you get them at the same time every year. By waiting longer between free credit reports, you are putting off the earliest time when you can get your next free credit report. Your "year" resets each time you get the free reports.

Hope that helps somebody.

A few weeks ago, while looking for online video of NBC's "The Office", I stumbled upon two websites that have transformed my free time and may in the future transform my finances.

peekvid.com and Alluc.org both offer massive amounts of media content. Television programming makes up the majority of their content (both have every episode of 24) but their movie content is also great.

Unlike the days of Kazaa/Morpheus or the current Limewire, these two sites have nothing to download. Peekvid appears to host its own files while Alluc provides links to a variety of sites that host the content. Since Alluc isnt hosting any content, it is likely more viable long term (less risk of getting sued).

So far the only financial impact I've seen has come from thier movie content. The past three weekends I havnt rented a movie as I have used their content. I would typically rent 2 movies over a 3 week period. Savings: $10.

Based on their content one could potentially go without cable or at least reduce it to basic. Savings-$25/month + until these sites get shut down.

This week's Blog of the Week goes to The Tao of Making Money, a blog written by a graduate student (I'm not sure which discipline). I enjoy reading blogs by people in different phases of life. Not all readers are in their mid-30s with kids and a mortgage. Therefore, it is cool to read blogs from people who are facing different circumstances such as finishing college and starting a career. I only wish blogging had been around when I was in college. I would probably be a different person than I am now.

So, if you get a chance, stop by The Tao of Making Money.

I try to. But not as much as I should. This has been a very very busy month for me and I haven't done much in the area of personal finance.

Granted, I've gotten a lot of things on "cruise control" but I haven't spent the time to find out new things and be proactive.

However, on that note, I think I have all my tax information, so I'm going to attempt to do my taxes soon and that will be my personal finance focus for the next few weeks.

All my life, I've lived paycheck to paycheck. I'm 43 years old, and this month and this year is the first time I won't be living paycheck to paycheck. And it's saving me money!

I shouldn't be surprised. Being poor costs money. I live in a middle class area, and work in a very well to do area. Gas is ten cents cheaper a gallon in the rich area. I'd have thought it would be more expensive in the richer area, because people there could afford to pay for it, and "charge what the market will bear" and all that.

What does surprise me is how small the amount in my checking account needed to be, in order to save me money. I got $2,363 back from the IRS. I immediately moved $2,000 over to my emergency fund. Out of sight, out of mind. It doesn't "exist" for me, except for me to sleep a little bit better at night. This left me with an extra (unbudgeted for) $363 in my checking account. $363 is a lot of money, but it's not an unattainable amount. I probably could have had that much in three or four months. What does that extra $363 do for me?

1. I can add $50 a month to my car loan payment. I couldn't do this before, because there were months (Feb, March, and April, to be precise) when paying that extra $50 would have caused me to be overdrawn at the bank. And even though $300 = six extra payments of $50, in actual fact I'll be able to make that extra payment for all of this year, and I don't see any reason why I won't be able to do it next year, too. Plus, I'll be saving money on interest over the life of this loan.

2. I can save money when shopping. I like to do my sundries shopping on line. Drugstore.com is the one I use, but I also use cvs.com. I'm sure there are plenty of others. Having that extra little cushion in my account means when I order through the website, I can order enough to qualify for free shipping. This saves me the cost of gas, my time, and gives me bonus dollars to spend the next time I go shopping at that website. I can save a minimum of $60 a year, by shopping at drugstore.com. That's not even counting sale prices. Because I am buying enough to qualify for free shipping, I'm ordering more than what I need for just "right now". Which means I can stock up on something when there is a sale, or put off ordering something because it's not on sale.

3. I can apply more money towards savings, which also gets me interest.

I'm saving a ton of money this year, just by having a $300 cushion in the bank. Wow, if I'd known it was that simple, I would have done it years ago.

I've decided to increase my car payment by $50 a month. It looks like this means I'd be paying it off a year early, but I'm not totally confident in my math.

Which reminds me, can someone give me the math formula for calculating simple interest? It's not amount times interest rate, and it's not (amount times interest rate)/12 (though that's closer). My Google fu isn't up to finding the formula, probably because I'm tired and not using precise enough search terms.

Basically, I'm just trying to update my spreadsheet to include a way to forecast how my savings will grow over at ING.

Update: D'oh! I just had to add "excel" to my search terms to find a lot of good stuff.

A few months ago, I had mentioned in my post about “25 Ways I Save Money” that I saved by buying in bulk at Costco.  A couple of weeks later, I wrote a “retraction” saying that I end up not saving money when I go to Costco because I end up buying stuff I didn’t originally intend to buy.  I thought it was interesting that in this Sunday’s New York Times, Julie Bick wrote about this, dubbing it the Costco effect.

In the article, she quotes Joel Benoliel, a senior VP at Costco:

We try to have hundreds of items that are different each time a customer comes to the warehouse, to create a treasure-hunt atmosphere.  We’ll always have the same staples — the cereal, the detergent — and then we add in the ‘wow’ items.

She also cites a typical shopper who says that he goes every month or two to get household supplies and while there, usually ends up throwing in some books, DVDs, and baked goods.  Looks like I’m not alone in being tempted by all the goodies at Costco.

Yesterday in a youth program that I run at a local YMCA I stumbled across a great lesson in economics. Our club was trying to make a decision between taking on another community service project or planning a social event at the Y. This led to a great discussion about opportunity cost and economics. Economics is [...]

I think I was a little in conservative in my estimate about how long it would take for me to reach my 2007 goals. It's not even the end of January, and I've paid off my credit cards, and I've saved up one month's income for my emergency fund. (Ok, I didn't actually save it, it was my tax refund from Uncle Sam, but it was my money and I have a one month emergency fund now.)

So, maybe I should add a couple of more goals and see if I can meet those. First is to increase my emergency fund to two month's income. Second, I'd love to see if I could max out my Roth Ira contributions for this year. $333 a month. I don't think I can do it, but it would be interesting to see how close I can get.

Or maybe I should concentrate on getting rid of my car loan debt. *That* would be nice. I wonder how long it would take?

“2007 Global Pension Assets Study” By: Watson Wyatt Published: January 24, 2007 “Alpha/Beta Separation” isn’t just another pretty face.  This year it’s listed third on Watson Wyatt’s list of the “Six Faces of Change” for pension investing.  The “six faces” include: Liability-driven investing Absolute return strategies / alternative assets Alpha / beta separation & integration Beta prime innovation / capturing systematic “alpha” in [...]

The Annual Meeting of the World Economic Forum in Davos, Switzerland is a media outlet’s dream.  With hundreds of CEOs, academics, public figures and leaders of civil society in one place, interviews are easy to set up and chance meetings in the hallway are common.  So with the surfeit of news and blog postings already [...]

I forgot to mention that our net worth has been updated through December 31, 2006 at NetworthIQ.

Starting a business is daunting. Adding to the stress is an array of administrative tasks, not the least of which is dealing with the IRS. If you are self-employed and wondering how to calculate and pay your taxes, there are many helpful online resources that should lower your blood pressure, get your taxes out of the way, and allow you to focus on important tasks, like making money.

For an easy to digest overview of self-employment taxes, visit Wachovia's Self-Employment Tax page with ways to report the self-employment tax to the IRS and available income tax deductions.

For forms and an in-depth review of the self-employment tax, visit the Internal Revenue Service.

To estimate your self-employment taxes, visit H&R Block's self-employment tax estimator. If you are paying self-employment taxes for the first time, then prepare for a shock. The good news is that a portion of your self-employment tax is an income tax deduction.

Finally, Moneysmartz offers a complete list of self-employment tax resources.

This is the part about blogging that I am just getting used to - sharing my opinion. I am not an expert, I DO NOT give financial advice. I intend to use this blog to help me work through and continue to develop my understanding about investing. So as what I share changes over time, that is evidence of learning, bear with me.

Some of my thoughts that I will expand on in future posts:
1)The media doesn't know much about economics or markets
2)Reports of financial data are incomplete at best, but frequently misleading(See #1)
3)Revised data numbers are more important than first released data
4)The stock market sells stocks more than it sells equity in companies anymore
5)My favorite investing book is The Millionaire Next Door
6)Diversification means something much different than most people think (including what your stock broker tells you)
7)The best investments for me personally are those that get me excited to save money to put into the investment
8)The big economic advisors and the independent economic advisors frequently don't agree (one group has significant pressure to report a point of view)
9)The experts aren't all that expert in predicting the future
10)I don't want to spend all my time on my investments, so I'm just watching the big picture.

The Festival of Under-30 Finance is up at Golbguru's journal.

A few interesting entries:
55 Ways I Saved (or Considered Saving) Time and Money Planning my Wedding, which is nice and relevant. I love saving-on-weddings tips!

Top 10 Resume blunders--even though I'm not looking for a job right now, you never know! Plus, I'm on the hiring committee right now--and he's right on the money about what we toss. :)

Don't Rely on the Lottery. I have a co-worker that spends quite a lot of money on the lottery every day, and I just want to hit him over the head and shout: "The lottery is not a retirement plan!" Yeah, it's nice to fantasize about what to do with the windfalls, but for pete's sake. Lottery=tax on people who are bad at math.

Five Rules for Investing is a great set of rules for beginning investors. Of course, if everyone followed these rules, nobody would ever file a claim, and I'd be out of work!

See previous parts I, II, III, IV.

We finally get to the last component of your credit score, "recent credit requests and recently obtained credit", which comprises 10% of your credit score. This is the one that many people seem to freak out about. "I don't want to apply for X, because I don't want the inquiry on my credit report!" is the common refrain heard on forums and weblogs everywhere. The thing to realize is that 1) you have to have quite a few inquiries in a short amount of time for this to have any impact; and 2) even so, the impact will be quite minor, as well as short-lived.

First off, let's examine the reasoning behind this component of your credit score. The first part is "recent credit requests." Say that you have applied for 7 credit cards in the past 3 days. That will be enough to cause any lender to worry. First off is, even if your credit is otherwise good, why would you be applying for so much credit in such a short time period? Maybe your finances are in disarray, or maybe you've gone crazy. In any case, it's a red flag. If you're denied this new credit, that's a knock against you. Moving along to the "recently obtained credit" part, if you're approved, that's also a problem because now you have a new line of credit which you have not proven yourself able to use responsibly.

So that's the negative part. The positive part is that any normal behavior will hardly ever be punished, and any punishment will be very limited. The max that your score can be decreased for this purpose is 50 points. That can be enough to make a difference in interest rates for a mortgage, but it's not enough to make "good" credit look "bad." According to the MyFICO site, inquiries can affect your score for up to 12 months, but they seem to stay on your report for longer (I've got some that are 23 months old on my credit report).

Another positive thing is that, assuming your application is approved, chances are that your credit score will go up overall instead of down. This is especially true with credit cards or other revolving lines of credit. Adding a new line of credit will increase your overall credit limit, which will decrease your debt to limit ratio, the second most important part of your score. I guess that obtaining a new installment loan (such as a mortgage or auto loan) will probably decrease your score overall; you'll have first the inquiry, and then a bunch of new debt added to your report. However, I'm not sure how much of an impact this would actually have on your FICO score. I'm lacking data here.

Basically, my point here is that you really shouldn't worry about this aspect of your credit score too much. If you know that you are going to be applying for a mortgage very soon, you should probably not apply for any other credit if you can help it. Checking your credit score and talking to your lender will help you find out if you might be close to the line between two interest rates or loan package programs. If so, a couple of points could make the difference, and these particular couple of points are easily managed. Otherwise, though, don't worry about it. The natural variation in your credit score (due to timing issues when lenders report to the credit agency, etc.) will probably be quite a bit larger than the tiny amounts you might get docked for recent inquiries.

“Improved Study Finds Index Management Usually Outperforms Active Management” By: Millicent Holmes, Brownson, Rehmus & Foxworth Inc. Published: Journal of Financial Planning, January 2007 The debate over whether hedge funds produce any alpha is essentially the same as the age-old debate between active and passive management.  This recent piece of research weights in on the state of actively [...]

For the past couple weeks I have had a leak in my basement. I figured it was due to insufficient slope at the side of my house. Being as it was cold and topsoil was hard to come by this time of year, I put it off until the spring.
This week I discovered that I in fact had a leak in one of my pipes. It was dripping directly into my insulation and appeared to be coming from outside. The leak appeared to be at a tough to reach point where the pipe reached an elbow and went up through the floor. I felt this fix was best left to the professionals.

A plumber was at my house the next afternoon to surmise the damage. Turns out the leak was under my sink at a T where the main hot water line split off to the dishwasher. The previous owner had apparently used a cheap plastic T when remodelling the kitchen. The plumber informed me that when it came to these plastic parts it wasn't "if" they would leak, but when.
After about an hour of work, a new copper T was installed. Total bill: $300! OUCH.

Moral of the story, spend the extra $5 when choosing plumbing supplies.

If anybody out there has any tips on how I could have had this done cheaper (other than doing it myself) I would love to hear it.

I went quote shopping for new term insurance on a couple of those internet sites. Wow! I have been getting barraged by calls from agents, all of whom claim to be independent. All but one have been pushing one company over another, each a different company. I can't help but think it's because that's who they'll be getting the biggest commission check from. No bother. I'm after the lowest rate and I don't care how much commission they get, as long as the company is rated A+ or better by AM Best and gives me a great price.

One good thing about these calls is that one agent really took the time to show me that I'm woefully underinsured. As a result, I've doubled the coverage that I'm seeking. Whichever policy I do choose, it will be a bigger bite than I was hoping before because of that. Still, since I'm the only breadwinner, I have to make sure my family is secure if I'm gone.

So far, only 3 agents are credible. 1 pushing West Coast Life, 1 pushing US Financial and 1 pushing Prudential. I currently have West Coast Life, and my health has only gotten better since I took the policy two years ago. If they quote me based on the health info they have, I know it's a real price. I think some of the other agents were giving me too optimistic of quotes saying I'd fit into a catagory that I don't think I can fit it. My health is fine, but I'm way overweight for my height.

I'm surprised that not one agent has tried to push me into whole life or variable life or any of that other garbage. The one agent who talked me into seeking higher coverage even told me that term was the best way to go, and that any extra money should be invested in my retirement program, rather than a cash value life insurance policy. He's got a lot of credibility right now with me.

If any readers have any useful tips to pass along, please leave a comment for me.

I’m giving away a $25 ShareBuilder Investment Cash Certificate.  Here’s the scoop: We’re In Debt (soon to be “Were in Debt”) today posted a comparison of online snowball...

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This past year was a crazy one for us and my inability to post consistantly is a testament to that. I have spent some time the past three weeks to de-clutter my life and hopefully that will result in some consistent posting.

As for 2006, it ended with a bang. We wife gave birth to our third child on December 31st. He is a healthy kid and his older siblings enjoy him immensely. As for our finances, we managed to reach both of our short term goals which is fantastic. I have started to craft new goals for 2007 and will post those shortly. (I hope)

Also known as "intelligently using my resources," depending on whether or not you are inclined to be charitable.

This is pretty much my MO for wedding planning--step one is always asking, "Do I know someone who does this professionally?"

In several cases, I do. Most of them I wouldn't exploit, exactly, but if, in asking advice, they offer tips on getting better prices or offer freebies, wonderful! The best example of this is my tiara. I was prepared to pay through the nose for a really nice custom-designed, crystal- & amethyst-embellished piece, as I don't plan to have too many other accessories. And that's what most people will see of me, anyway (I'm a bit short). Also, I like tiaras.

So my first* step: ask my crazy Welsh friend who makes tiaras for Halo & Co. what my best option would be. My best option, she explains, is for me to sit tight and wait for her to send me a CD of the new collection photos, among which will be the perfect tiara.

On this CD is a price list, which has wholesale prices. Score! I say to myself. Wholesale! I e-mail her my order. "Wholesale? Pfah!" she says. "At cost! I'll let you know next week after I make it for you."

Considering the fact that the pound is just under two dollars at the moment, it's quite a relief. I'm doing little happy dances here at my desk.

*Also last.