tag:blogger.com,1999:blog-56127776103311280642024-02-08T12:27:44.421-05:00The Great Money Challengemoneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.comBlogger48125tag:blogger.com,1999:blog-5612777610331128064.post-62616613687625737192009-05-18T22:08:00.002-04:002009-05-18T22:34:25.697-04:00Big Changes AheadI'm moving out of state. I'm quitting my job. I'm renting out my house. I'm starting a business. I'm trying to max out my 403b before my last paycheck. I'm trying to live on $660/month (plus the money from my roommates who pay for my mortgage). I actually think this will all work out. Craziness!<br /><br /><span style="font-weight: bold;">Moving Out of State</span><br />I am thrilled to have finally made the decision to move further south. I've been in the Northeast now for almost a decade and I am SO tired of the cold, the brown slush, the SALT, the pot holes, the greyness. The sunny skies south of the mason-dixon line have been calling me for a while!<br /><br /><span style="font-weight: bold;">Quitting My Job</span><br />This one was tougher. I've stuck around here as long as I have because I love the work I do and the people I work with. But it is time. My last day of work is June 5th. My last paycheck is August 31st.<br /><br /><span style="font-weight: bold;">Renting Out My House</span><br />The idea of putting my house on the market, hoping to find a buyer, and coming back up here for closing was not at all appealing to me. I figured I might as well see what kind of potential there was for renting out the house. I do have some experience being a landlord, I have a rental property a few miles away. <br /><br />On May 7th I posted some pics on Craigslist with a pricetag that sounded good to me. I got 17 emails within 24 hours. I made appointments for the following week with 3 people. They came, they saw, they loved it, they wanted it. It's true, my house is very cute. <br /><br />I offered it to the ladies who wanted to rent it furnished for an extra $100 a month (yay, I don't have to move my decade-old stuff...!) They are coming down on Thursday to sign the lease. So, starting July 1st I will get $1295/month for a house that costs me $840/month in mortgage, insrance and taxes. That's right, that's $455/month more than I have to pay. I told you, cute house.<br /><br /><span style="font-weight: bold;">Starting a Business</span><br />Now this one will be quite an adventure. I've done a lot of research, I think I have the right market, the right demographic for my services, and some funds for start-up costs. I'm excited to see how this turns out!<br /><br /><span style="font-weight: bold;">Maxing out the 403b</span> (or Trying to)<br />I was all set to max out my 403b by the end of December. But now that I won't be getting much of a salary once I start my business, I want to put away as much as I possibly can while I'm still getting a paycheck here. I've upped my contributions to the point that my paychecks are about $660/month. I do have some roommates now who pay me enough to cover my mortgage. So, that $660 has to be enough to cover utilities, groceries, gas, internet etc. Oh, and and a $750 charitable contribution pledge. I think I can do it. I may post the exact budget some other day.<br /><br />Definitely big changes ahead.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com4tag:blogger.com,1999:blog-5612777610331128064.post-62607979512641585202009-03-30T19:57:00.000-04:002009-03-30T19:57:26.020-04:00Trying To Do Business Taxes By Myself:<div style="text-align: center;">Bad Idea.<br /><br />Starting An S-Corporation When I Don't Even Make Enough Money to Break Even Let Alone Pay An Accountant: Worse Idea.<br /><br />Waiting Until April To Figure This Out: Worst Idea.<br /><br /></div><div style="text-align: center;">*****<br /></div><div style="text-align: center;"><br />Asking A Friend For An Accountant Referral: Slightly Better Idea<br /><br />Dissolving the S-Corp: Quite Possibly a Good Idea<br /><br />Not Worrying: Definitely A Good Idea<br /><br />Making Plenty of Money to Pay An Accountant: Fantastic Idea<br /></div>moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com2tag:blogger.com,1999:blog-5612777610331128064.post-4189910123401967182009-03-29T11:36:00.001-04:002009-03-29T11:37:12.935-04:00Making Money Is My Current HobbyI enjoy making money. It's such a fun hobby! It's a little hard to explain to people that this is one of my favorite pass-times though. Money still isn't considered polite conversation in most circles. Shame.<br /><br />My previous hobby used to be <span style="font-style: italic;">saving</span> money. I got such a kick from figuring out how to squeeze the most value out of every free or inexpensive resource available to me (as evidenced by my random desire to make up a budget for <a href="http://greatmoneychallenge.blogspot.com/2008/01/how-would-i-live-on-minimum-wage-income.html">living on minimum wage</a>) But I think now I much prefer the idea of having a lot more money flowing through my life.<br /><br />I want to take a look at what I've been able to do with my income over the past few years. Let's start in 2006.<br /><br /><span style="font-weight: bold;">2006</span><br />Main source of income: job, salary of about $30,000<br />Bought a house: no income yet<br />Bought a rental house: no income yet<br />Decided to start a little online business: no income yet<br />Total: <span style="font-weight: bold;">$30,000</span><br /><br /><span style="font-weight: bold;">2007<br /></span>Main source of income: job, salary of about $32,000<br />My house: roommate income about $8700<br />Rental house: tenant income: (before expenses: $8,500) after expenses, about $500<br />Business: (before expenses: $650) after expenses about -$1500 :(<br />Total after expenses: <span style="font-weight: bold;">$39,700</span><br /><br /><span style="font-weight: bold;">2008</span><br />Main source of income: job, salary of about $40,000<br />My house: roommate income about $9850<br />Rental house: tenant income (before expenses $9500) after expenses about $1500<br />Business: (before expenses: $3500) after expenses about $2200 :)<br />Total after expenses: <span style="font-weight: bold;">$53,550</span><br /><br /><span style="font-weight: bold;">2009 (projected)</span><br />Main source of income: job, salary $40,000<br />My house: roommate income about $11,000<br />Rental house: tenant income (before expenses $9840) after expenses about $1700<br />Business: (before expenses: $6000) after expenses about $4800<br />Total: <span style="font-weight: bold;">$57,500</span><br /><br />Ah, I love watching that number go up! Now, to make it go up <span style="font-style: italic;">faster</span>.... that can be the next challenge in this Great Money Challenge.<br /><br /><span style="font-weight: bold;"></span><span style="display: block;" id="formatbar_Buttons"><span class="on" style="display: block;" id="formatbar_CreateLink" title="Link" onmouseover="ButtonHoverOn(this);" onmouseout="ButtonHoverOff(this);" onmouseup="" onmousedown="CheckFormatting(event);FormatbarButton('richeditorframe', this, 8);ButtonMouseDown(this);"><img src="img/blank.gif" alt="Link" class="gl_link" border="0" /></span></span>moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com2tag:blogger.com,1999:blog-5612777610331128064.post-9007977866227056192009-03-28T17:50:00.000-04:002009-03-28T17:50:40.739-04:00Figuring Out How Much to Charge for Organizing ServicesI think I just fell into the world of professional organizing. <br /><br />I like to <a href="http://greatmoneychallenge.blogspot.com/2008/01/being-organized-can-save-you-money.html">organize</a> and my friends know it. I've helped out quite a few of them in the past getting their homes, work places, and even classrooms, organized. Well this week, for the first time ever, a friend referred me to someone she knows who is "feeling overwhelmed and wants help getting organized". I know I can help this person but what I don't know is how much I should charge. <br /><br />There are two ways I can approach this:<br /><ol><li>Charge by the project<br /></li><li>Charge by the hour</li></ol><span style="font-weight: bold;">Charge by the Project</span><br />At this stage, I don't really know how long a particular project will take. I've never timed myself before and I don't want to quote something that will be way off. I really value my time and I don't want to end up under-estimating and be stuck with a project that will suck hours of my time without adequate compensation. Having said that however, I think once I have a sense of the time required to complete certain projects, this is a better way to go. It gives a nice wrapped up pricing package to the client and there are no surprises.<br /><br /><span style="font-weight: bold;">Charge by the Hour</span><br />It looks like this is what I will be going to start with. There are a couple of things to take into consideration here. How much value am I providing to the client (how much my services are actually worth) and how much I value my own time (how much will I trade my time for). <br /><br />I do value my time a lot and I much prefer to set up streams of passive income where I don't actually have to trade my time for money after the initial set-up is done. If this is all I was going by, then I would charge quite a lot. At one point I had a consulting gig where my client paid me $125/hour.. and that was nice. <br /><br />Now, how much value am I providing this client? As I said, I'm good at organizing, and I'm also actually pretty good at the psychological game of helping someone through a process like that. But, I am just starting out so I know there will be glitches. I also spent a little bit of time with this client today and I know that he's got good ideas and doesn't really need my "expertise" to help him come up with strategies and systems, he really just needs someone to be there while he does it. <br /><br />So, what are the various price ranges I could consider? Here are the price points for contract work that I am familiar with in my world, from highest to lowest:<br /><br />$125/hr Paid to me for my consulting services by a very well-off family.<br /><br />$75/hr Rate for local professional organizer<br /><br />$60/hr Acupuncture<br /><br />$20/hr What I pay friends who I hire for handyman type work<br /><br /><br />I'm thinking It'll have to be somewhere between $20 and $60. Let's figure out what I feel about these numbers...<br /><ul><li>I'm not giving up an hour of my life for just $20 or $25. <br /></li><li>$50 seems too much for just "being there"</li><li>$30 or $40? <br /></li></ul>Ok, I think I will go for $35/hour for this client and see how I feel about it by the end. I wonder if he'll accept that though? I may be willing to negotiate down to $30, but not lower than that. <br /><br />Will update after this gig is over with thoughts about a future pricing plan.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com5tag:blogger.com,1999:blog-5612777610331128064.post-56653807789278548502009-03-26T17:33:00.002-04:002009-03-26T17:36:31.703-04:00Lamenting the Lost PROh woe. That's what I get for abandoning the blog for a year. It took me less than 3 months to get up to a google page rank of 3, and now here I am, down to a 1. Why do I care? There's a competitive streak in me somewhere.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com0tag:blogger.com,1999:blog-5612777610331128064.post-80318716379198373412009-03-25T19:47:00.004-04:002009-03-25T22:06:40.786-04:00If I Had a Million Dollars...how would I spend it? I'm a fan of <a href="http://www.blogger.com/%3Ca%20href=" com="" gp="" product="" ie="UTF8&tag=theprepareden-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0143115766"">Your Money or Your Life</a><img src="http://www.assoc-amazon.com/e/ir?t=theprepareden-20&l=as2&o=1&a=0143115766" alt="" style="border: medium none ! important; margin: 0px ! important;" border="0" height="1" width="1" /> by Joe Dominguez and Vicki Robin so my focus tends to be more on my time and how I want to spend <span style="font-style: italic;">that</span> rather than accumulating stuff (which is not to say that I don't have stuff).<br /><br />I'm also a fan of <a href="http://www.amazon.com/gp/product/0446677450?ie=UTF8&tag=theprepareden-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0446677450">Rich Dad, Poor Dad</a><img src="http://www.assoc-amazon.com/e/ir?t=theprepareden-20&l=as2&o=1&a=0446677450" alt="" style="border: medium none ! important; margin: 0px ! important;" border="0" height="1" width="1" /> and the main thing I walked away with after I read that book was the idea that I don't work for money, <span style="font-style: italic;">money works for me</span>.<br /><br />Here's how I would make my million dollars work for me to give me more time: in a nutshell, I would try to set up a source of fairly passive income so that I could pay for all my expenses without having to be tied down to a job. Don't get me wrong, I still <a href="http://greatmoneychallenge.blogspot.com/2008/01/loving-your-job.html">love my job</a>, but there's a freedom that comes from knowing that you don't have to do that job, or any job for that matter.<br /><br />I know how to live pretty cheaply. Some commenters don't seem to believe my <a href="http://greatmoneychallenge.blogspot.com/2008/01/thats-my-budget-and-im-stickin-to-it.html">budget</a> is accurate, but oh well. If I had a million dollars, I would definitely want to raise my standard of living, so let's say I double it. Let's say I want $5000 a month before taxes. <br /><br />So, how can a million dollars give me $5000 a month?<br /><br /><span style="font-weight: bold;">1. Put it in a Savings Account</span><br /><br />If I put it in a savings account or CD averaging 3% APY (who knows what the economy will offer in the next few years) and took out $5,000 a month, I would run out of money in 16 years. Lame.<br /><br /><span style="font-weight: bold;">2. Invest it in Stocks and/or Mutual Funds</span><br /><br />Let's be really optimistic and assume the economy recovers well and we go back to average returns of about 10%. How long would my million dollars last? According to this MSN Money retirement <a href="http://moneycentral.msn.com/retire/planner.aspx">planner</a>, the money would not run out! That sounds good. But the 10% return rate just seems like such a dream right now :(<br /><br /><span style="font-weight: bold;">3. Real Estate?</span><br /><br />I have some experience being a landlord. I currently own my own house in which I rent out two bedrooms, and I also own a small rental house that I rent out to a family. Let's see what's possible if I replicate the numbers from my rental house experience.<br /><br />I live in a place where home prices are pretty cheap. I bought my 3-bedroom single family rental house for under $60K and I put in about $2K for repairs. Seriously. I currently rent it out for $820/month not including utilities and I pay $260/month for property taxes and insurance.<br /><br />So, let's assume I can buy a similar house for $75,000 after all closing costs and repairs and that I can rent it out for $800. Assuming I spend/save $400 each month for taxes, insurance and put some money away for future repairs, I can make $400 per month.<br /><br />In order to generate cash flow of $5000/month with that, I'd need 13 houses. It would cost me $975,000 to buy those 13 houses for about $75K each. My positive cash flow from that portfolio would be $5200/month. Even if I had two houses vacant at any given time, my positive cash flow wouldn't go under $4500/month.<br /><br />AND, as the years go on, I can raise the rent to keep up with inflation.<br /><br />I think I like this plan the best. So far.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com0tag:blogger.com,1999:blog-5612777610331128064.post-18243716042248482822009-03-25T14:31:00.004-04:002009-03-25T14:39:30.801-04:00Thirty Bucks in the MailI love getting unexpected money! A long while ago I'd filled out some random form to participate in the class action settlement for Airborne. I had forgotten all about it, but yesterday they sent me a check in the mail :big grin:<br /><br />I've started keeping track of the random bits of money that finds its way to me. I love looking at that list. Just a month ago Nielson's Ratings sent me $30 <span style="font-style: italic;">cash</span> in the mail to fill out a viewing diary. Heck, that was easy, I barely watch any television.<br /><br />Then, the week after that my mortgage company sent me about $270 dollars because I had an escrow overage for the year. AND they told me that my monthly payments were going down by $10 every month.<br /><br />I love these money gifts from the Universe.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com1tag:blogger.com,1999:blog-5612777610331128064.post-82381772346086725932009-03-24T14:28:00.002-04:002009-03-24T14:37:58.286-04:00Relearning How to Update The Progress BarsShucks, it's been so long, I've forgotten how to update them! I'll muck about with them later. In the meantime, here's where i stand right now:<br /><br />Debt<br />Credit cards -personal: $2045 due<br />Credit cards- business: $0<br />Repay my sister: $0 (paid off $10,000 last year)<br />Student Loans: $0 (paid off every last cent last year)<br />Mortgage-residence: $75,316 due<br /><br />The retirement accounts took a beating last year. I'm hovering at $16K right now.<br />Charitable giving for 2008: $10,000<br /><br /><br />Net worth is about $1500 short of where I was last year. I guess considering the economy that's not so bad.<br /><br />I still have my job!<br /><br />I have great tenants in my rental house, and great roommates at MY house!<br /><br />Things are pretty good actually.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com0tag:blogger.com,1999:blog-5612777610331128064.post-37338370621872654642009-03-24T13:56:00.003-04:002009-03-24T14:19:41.223-04:00Why Did I Stop Blogging?About this time last year I stopped updating my blog. <br /><br />I'd only been writing for three months, but it had suddenly become like a full-time job. For some reason I felt compelled to keep up with what the other bloggers were saying, to comment on their articles, to submit my posts to carnivals... and I didn't even know why! <br /><br />I never intended to make a big thing out of this blog. But my fourth post EVER got mentioned on one of the MSN money blogs (wha....?!). That little bit of attention was fun but then it set up a pattern of trying to keep that up.. and that was no fun. Yuck. <br /><br />So, one day last March I just went back to writing in my paper journal, with my ball point pen, for me. Much better.<br /><br />But maybe now I'll start posting again. I probably won't go back to commenting on other blogs or submitting to carnivals. And I don't know if I'll have any readers. But that's ok. Nice and slow and mellow. <br /><br />If you happen to be reading and feel like leaving a comment, go for it. I may or may not respond. If you leave a complimentary comment, it will be much appreciated (who doesn't appreciate some flattery?); if you leave a neutral comment just sharing your thoughts, I will ponder it; if you leave a negative comment blasting me for something I've written, then I may ignore it or delete it. <br /><br />I'm going back to using this blog for its original purpose! A place for me to play around with my ideas about money. How to live with it. How to love it. How to leave it. How to make more of it. How to give it away. How to experiment with it. How to make it a science. How to make it an art form. Yes, sounds good.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com0tag:blogger.com,1999:blog-5612777610331128064.post-82244425199469431712008-12-18T10:40:00.001-05:002008-12-19T09:22:28.117-05:00Whatever Happened to the $10,000 Check I Wrote in March?A lot has happened since I wrote that <a href="http://greatmoneychallenge.blogspot.com/2008/03/i-wrote-check-for-10000.html">$10,000 check</a> which I promised to keep you updated about.<br /><br />First, I stopped posting because all this blogging was getting too overwhelming!<br /><br />Second, about a week after I wrote the check, I randomly met an old friend who I hadn't seen in eight years. She mentioned that she wanted to set up a memorial fund, at the same organization I had made my check out to, in honor of her teenage son who had passed away from Leukemia a year ago. And, she wanted to dedicate it on May 19th, one day before the date on my check. Sweet synchronicity!<br /><br />Third, despite all the good happy feelings I had started off with, I suddenly got really stressed about being able to afford it. I spent an absurd amount of time worrying about it. Two months of worrying.<br /><br />Fourth, by mid-May just enough money had come in from various random sources to pump my cash accounts to $11,500. (This included the stimulus rebate check, remember that?)<br /><br />What then? I walked into the organization's office and handed in my check as a contribution towards my friend's fund. And I was still worrying and kept on worrying for a few more months.<br /><br />You know what? Worrying is messed up. I know I did a good thing but I didn't get to enjoy it! What a WASTE!<br /><br />Fifth, all that worrying led to a whole lot of financial "bad luck". Yuck! More on that later.<br /><br />Sixth, I changed my attitude, quit worrying, and started to go with the flow again.<br /><br />Seventh, the Universe sent the $10,000 back to me from another source. Yay! More on that later.<br /><br />Moral of the story: Enjoy the process, let money flow, worrying is counterproductive.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com1tag:blogger.com,1999:blog-5612777610331128064.post-86301975021649139762008-03-27T10:59:00.001-04:002008-03-27T11:01:09.835-04:00I Wrote a Check for $10,000Yesterday I wrote a check for $10,000 and dated it 5/20/2008. That's less than two months away. It will stay in my checkbook until then.<br /><br />My heart almost leaped out of my chest as I wrote that check. It wasn't fear racing through me though, it was excitement. Odd that I should be excited -and not fearful- about writing a huge check for an amount that is not currently in my accounts. Yes, that's right, I don't have all that money right now and I'm not sure where it will come from. I just know I'm ready to jump.<br /><br />This check is for my favorite charity- a place I have worked with and supported for about ten years. Ten years, ten thousand, it just seemed appropriate.<br /><br />Many years ago, right after I got married, my husband told me about a cousin who was having some medical problems. This cousin was a young guy who didn't have insurance when he had to go in for treatment and now had some hefty medical bills. I had an intense urge to give him all the money we had just received as wedding gifts to help him wipe out those bills. But I never said anything. My husband and I were pretty broke at the time- right out of college- with college loans, tiny paychecks, no furniture, and a car that was dying. I took the practical route and used the money to live on.<br /><br />I think about that time often. I don't have strong regrets but I do wonder what would have happened if we'd given the money away instead of using it. I think it would have felt really good. <br /><br /><span style="font-style: italic;">Really</span> good. Like the feeling I had last night when I wrote my check. This time I'm giving it away for sure. Just waiting for the rest of the money to arrive...!<br /><br />I will keep you posted.<br /><br /><br /><br /><br /><br /><br /><span style="font-weight: bold;"></span>moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com2tag:blogger.com,1999:blog-5612777610331128064.post-38755903313465091662008-03-19T19:03:00.001-04:002008-03-19T19:03:17.998-04:00Top 10 Ways I Make MoneyLast month I wrote about the <a href="http://greatmoneychallenge.blogspot.com/2008/02/top-10-things-i-do-to-save-money.html">top 10 things I do to save money</a>. This month I thought I'd make a different top 10 list and address the flip side of the personal finance coin.<br /><br />So here are the top 10 things I do to <span style="font-style: italic;">make</span> money:<br /><br /><span style="font-weight: bold;">1. Regular full-time job.</span> This is currently my biggest source of income. <a href="http://greatmoneychallenge.blogspot.com/2008/01/loving-your-job.html">I love my job</a> but eventually I would like to make enough money from other sources to make this a much smaller percentage of my income. In the meantime however, I did get a hefty raise in November and I have plans to <a href="http://greatmoneychallenge.blogspot.com/2008/02/salary-negotiations-more-money-for-me.html">negotiate another raise</a> soon.<br /><br /><span style="font-weight: bold;">2. Roommates</span> who pay me rent. They get to live in <a href="http://greatmoneychallenge.blogspot.com/2008/02/why-my-house-is-asset.html">my great little house</a> for a fantastic price, and I get to have most of my mortgage paid by others. Win-win.<br /><br /><span style="font-weight: bold;">3. Second job</span> This hourly job fell into my lap when a friend asked for some help with his business venture. The hourly rate is more than my full-time job but I only work about 30 hours a month. I am going to continue doing this job because I am actually learning some handy new skills and maintaining networking connections with people who I might want to do serious business with in the next few years.<br /><br /><span style="font-weight: bold;">4. Rental property </span>I purchased a small 3br single family investment house a year and a half ago and have been learning how to keep it rented. This has been a tricky source of income because occupancy is never guaranteed. If I were to do this over, I would have negotiated a lower purchase price and better terms... and maybe bought in a neighborhood half a mile north of this one. However, despite the less-than-ideal conditions, my conservative side did insist on buying a house that I could afford even if it stayed vacant indefinitely. So far, I've been putting all the income from this house back into the property (either for maintenance or in a fund for emergencies/ improvements). According to my tax calculations, which take into account depreciation, I've had a loss on this property which has resulted in a nice tax refund. I also live in an area that escaped the housing bubble so property values are continuing to hold steady and even creep up a little. In the long term, if I can keep it rented, this house will be a steady little investment.<br /><br /><span style="font-weight: bold;">5. Business </span>About a year ago I began to explore a side business. Getting this off the ground has been slow going... but fun. I have learned a <span style="font-style: italic;">lot. </span>I am starting to pay more attention to appropriate marketing strategies for this business which provides products I have created for a very small and specific niche. So far I have broken-even on this venture and expect that I will be heading into profit territory soon. Once again, my expenses here helped to boost my tax refund.<br /><br /><span style="font-weight: bold;">6. Consulting</span> Once in a while I do some freelance consulting. I am still of two minds about how much time I want to spend on this kind of activity. I would ultimately like to put less emphasis on sources of income that require a specified amount of time/personal energy to generate revenue.<br /><br /><span style="font-weight: bold;">7. Financial investments</span> This includes any interest earned on my savings accounts and dividends and capital gains on stocks and funds. Last year I spent a few months trying my hand at more active stock trading but decided it wasn't interesting or lucrative enough for me to devote that much time to it. Now I stick to a more easily managed portfolio of funds that I don't have to think about more than a couple of times a year. This portfolio is still pretty small but one of my goals this year is to really pump it up.<br /><br /><span style="font-weight: bold;">8. Online activities </span>My income from the internet is very small but I have decided that as long as the source/activity is <span style="font-style: italic;">interesting</span> enough, then every penny coming in counts! These activities include such things as participating in cash rebate programs such as Inbox Dollars and Mypoints and having some advertisements on my blog. Some of these activities <a href="http://greatmoneychallenge.blogspot.com/2008/01/6-hour-for-clicking-emails.html">don't require much effort</a> at all (but also don't generate much income). <br /><br /><span style="font-weight: bold;">9. Multi-level marketing </span>This is brand new and still a... twinkle in my eye! In the next couple of months I am going to get involved with a company that two of my friends have had some success with and see how it goes. It doesn't require any money to start up so I figured I've got nothing to lose except for a few hours and I can help my friend out in the process.<br /><br /><span style="font-weight: bold;">10. ..... </span>I tried. I couldn't come up with #10! I don't sell items on eBay or hold yard sales (I don't have enough stuff to get rid of and the stuff I do get rid of I freecycle). I don't babysit or mow lawns or shovel sidewalks. <shrug> I guess you could read about the money that seems to find its way into my life without my necessarily doing much for it in <a href="http://greatmoneychallenge.blogspot.com/2008/01/found-money.html">Found Money</a>.<br /><br />That's my list. Perhaps a next step would be to make a nifty pie-chart and compare how much of my income comes from the different sources.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com2tag:blogger.com,1999:blog-5612777610331128064.post-48328863694222910562008-03-17T15:47:00.002-04:002008-03-17T15:51:29.472-04:00Rolling In ItWe're only half way through the month but I am declaring March the best month of the year! Well, so far anyway; I don't want to rule out the possibility that things could get even better. I've had more money coming my way this month than I could have possibly imagined. <br /><br />Here's how it breaks down:<br /><br /><ul><li>Federal tax refund: $1800</li></ul><ul><li>State tax refund: $300 (anticipated, not yet deposited)</li></ul><ul><li>Side-business income: $1900</li></ul><ul><li>Refund from mortgage company for an escrow overage: $350</li></ul><br />Total: $4350<br /><br />This has made the following possible:<br /><ul><li>Pay off all my credit cards (including the business card)- check out the progress bars on the right!<br /></li></ul><ul><li>Fully fund my <a href="http://greatmoneychallenge.blogspot.com/2008/01/i-need-2000.html">travel account</a></li></ul><ul><li>Give about $400 away to people/causes that I support</li></ul><br />Other good stuff:<br /><ul><li>I discovered that I could still open a <a href="http://greatmoneychallenge.blogspot.com/2008/02/what-am-i-going-to-do-about-roth-ira.html">Roth IRA</a> for 2007 and deposit money into it. I did. I transferred the full $4K for '07 and another $2500 for '08 from my ING account.</li></ul><ul><li>Looks like my monthly escrow payments are going <span style="font-weight: bold; font-style: italic;">down</span> by $40 each month.</li></ul><ul><li>One of my roommates will be moving out and I am planning on moving into her room and renting out my larger gorgeous room for an extra $100/month. This will bring my housing expenses down to $265/month. Throw in the $40 reduction from above and we're looking at a monthly outlay of $225. Wow.</li></ul>At the end of the month I'll tell you more about how I've gone over budget in some areas... but it's all still good! Yay! This is my version of march madness and I <span style="font-style: italic;">love</span> it!moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com1tag:blogger.com,1999:blog-5612777610331128064.post-85708763644986004642008-03-04T18:45:00.001-05:002008-03-04T18:47:01.293-05:00February 2008 Blog StatisticsStatistics from my second month of blogging:<br /><br />Age of the blog: 57 days<br /><br />From February 1st to 29th<br /><br /><span style="font-weight: bold;">Number of Posts:</span> 12 (pretty lame, sorry)<br /><span style="font-weight: bold;">Number of visitors:</span> 1539 (yesss! blasted past a thousand!)<br /><span style="font-weight: bold;">Pageviews</span>: 2262<br /><span style="font-weight: bold;">Average pages/visit</span>: 1.47 (this is dropping, we were at 1.82 last month)<br /><span style="font-weight: bold;">Bounce rate</span>: 79.08% (yikes! lots of tire kickers... that's ok, I still love you)<br /><span style="font-weight: bold;">New visitors</span>: 64.46% (nice, over 35% of visitors came back, last month was 25%)<br /><span style="font-weight: bold;">Subscribers </span>(that I know how to track): 24 (this has fluctuated quite a bit over the month, people come and go)<br /><br /><span style="font-weight: bold;">Most visited page</span> (other than home): 382 page views <a href="http://greatmoneychallenge.blogspot.com/2008/01/what-can-i-buy-with-200-per-month.html">What Can I Buy on a $200 per Month Grocery Budget?</a> <a href="http://greatmoneychallenge.blogspot.com/2008/01/how-would-i-live-on-minimum-wage-income.html"></a><br /><br /><span style="font-weight: bold;">Highest single-day traffic</span>: 130 visits on February 12th <span style="font-style: italic;">mostly</span> to <a href="http://greatmoneychallenge.blogspot.com/2008/01/what-can-i-buy-with-200-per-month.html">What Can I Buy on a $200 per Month Grocery Budget?</a> (almost identical to last month..., obviously many are interested in other people's shopping habits)<br /><br /><span style="font-weight: bold;">Top Traffic Sources</span> (thank you!!)<br /><a href="http://www.lazymanandmoney.com/">Lazy Man and Money</a><br /><a href="http://www.frugalhacks.com/">Frugal Hacks</a><br /><a href="http://www.pfblogs.org/">pfblogs.org</a><br /><a href="http://www.thefinancialblogger.com/">The Financial Blogger</a><br /><br /><span style="font-weight: bold;">Organic search</span>: 124<br /><br /><span style="font-weight: bold;">Blog expenses</span>: $0<br /><span style="font-weight: bold;">Blog income</span>: $6.32 The <a href="http://www.inboxdollars.com/?r=seemiabdulla">Inbox Dollars</a> referrals are still giving me a little kick back and now I have a few Adsense Google ads on the site. Hope they're not too annoying.<br /><br /><br /><span style="font-weight: bold;">Noteworthy</span><br /><ul><li>I began experimenting with advertising on the site. It's slow going for now. When I manage to make a penny a day I am pretty thrilled. Don't ask me what a fool I make of myself when someone actually clicks on an ad. :blush:</li></ul>Thank you all for reading!moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com1tag:blogger.com,1999:blog-5612777610331128064.post-63396416821536696332008-03-03T07:38:00.001-05:002008-03-03T07:38:52.024-05:00February 2008 Budget UpdateI started using <a href="http://www.mint.com/">Mint.com</a> a couple of weeks ago. (Confession: I discovered it by clicking on one of the Google ads on my own site which is apparently a huge no-no).<br /><br />What an incredibly easy way to track my daily spending. The categorizing features on this free site are outstanding! It did take a little tweaking to get some of my expenses in the right categories but it learned quickly! The major drawback is that it doesn't let you create your own categories. Hopefully the folks at Mint will get that sorted out soon. In the meantime I am pretty comfortable with the choices they do offer. My favorite part? The clickable pie-chart under the "spending trends" tab. :swoon: Who knew spending could look so beautiful?<br /><br />I highly recommend you give this site at least a trial run. It's totally free to use.<br /><br />Now, on to the real reason why I have this blog: accountability. Here's how I did with my budget this month:<br /><br /><span style="font-weight: bold;">Earned Income after taxes and withholdings</span><br />Job 1: $1530<br />Job 2: $512<br /><span style="font-weight: bold;">Total income: $2042</span><br /><br /><span style="font-weight: bold;">Expenses</span><br />Housing/utilities/internet: $365<br />Transportation (gas): $72 for gas<br />Groceries and Supplies: $175<br /><ul><li>Grocery stores: $68 (wha....?!)<br /></li><li>Restaurants: $86 (I only drink water and I eat cheaply... this figure shows I ate out a <span style="font-style: italic;">lot</span> last month!)<br /></li><li>Entertainment: $21 (rental movie marathon)<br /></li></ul>Transfer to "Save to Spend" account: $100 (also took money out from this account to pay for filter and oil change, and quarterly water bill)<br />Student loans: $87<br />Other debt: $725<br />Gym: $45<br /><br />Repay myself for car purchase: $400<br /><br /><span style="font-weight: bold;">Total expenses: $1969<br /><br /></span><br /><span style="font-weight: bold;">Good News</span>: Well within budget in every category.<br /><br /><span style="font-weight: bold;">Bad News: </span> Apparently I haven't learned any <a href="http://greatmoneychallenge.blogspot.com/2008/02/what-my-january-spending-taught-me.html">lessons from my January Spending</a>. I am still eating bad-for-you food products that come out of a box and not out of the earth. @#$&!moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com1tag:blogger.com,1999:blog-5612777610331128064.post-59630465175244713302008-03-02T22:01:00.001-05:002008-03-02T22:02:27.412-05:00March Madness on Free Money FinanceOh man, how come so many people write so well?! I'm starting to get an inferiority complex here.<br /><br />Hurry on over to <a href="http://www.freemoneyfinance.com/2008/03/free-money-fi-3.html">FMF</a> to read and vote for the latest and the greatest posts from the past few months. I submitted my <a href="http://greatmoneychallenge.blogspot.com/2008/01/how-would-i-live-on-minimum-wage-income.html">Minimum Wage</a> post and would love to get your vote! (In fact, I would really really <span style="font-style: italic;">really</span> love it. Thank you!)<br /><br />Some of my favorite picks from Round 1:<br /><br /><ul><li><a href="http://www.indebtblogger.com/2008/02/17/saving-money-by-not-changing-your-own-oil/">Saving Money by NOT Changing your Own Oil</a> - Many people believe they are saving money by changing their automobile's oil themselves. Are they really? Others believe they can only be sure the job's done right if they do it themselves. What's the truth? Let's find out...<br /></li></ul> (Yay! Someone's giving me a financial reason to avoid learning how to do that!)<br /><br /><ul><li><a href="http://www.i-endeavors.com/2007/09/04/focus-on-making-your-first-million-dollars/">Your First Million Dollars </a>- To plan to be rich, it takes just that . . . planning. Becoming rich is hard work that requires a great deal of self discipline, basic money management skills, goal setting, focus and diligence. This post breaks down in very simple terms how to build wealth in an easy to follow step-by-step process.</li></ul> (The charts here got me all excited. Compound interest rocks.. specially after you hit a million dollars!)<br /><br /><ul><li><a href="http://www.bripblap.com/2008/a-little-too-late-advice-on-building-wealth/">A little-too-late advice on building wealth </a> - Well, we're all stupid. Some of us stupider than others, but mama always told me stupid is as stupid does. If you can read this list and you haven't messed up all of these points already, you may find a way to destupidify.</li></ul> (When I can admit I'm being stupid, I will happily take advice to destupidify. I have much to learn.)<br /><br /><ul><li><a href="http://www.thehonestdollar.com/2008/01/27/personal-finance-like-riding-bike/">Personal Finance Is Like Learning to Ride a Bike</a>- There are a lot of extended analogies in personal finance writing - budgeting is like dieting, money management is like football, debt reduction is like a snowball rolling down the hill - but I haven't seen one comparing personal finance to learning to ride a bike. Both personal finance and bike-riding are intimidating to newbies, but everyone can learn how by starting with the basics. This article draws parallels between basic biking skills and basic personal finance principles, hopefully making personal finance more accessible to everyone.</li></ul> (Outstanding post! Analogies are great and this is one of the best I've come across.)<br /><br />Help me get to the next round dear readers! And be sure to visit all the other great bloggers I haven't mentioned here.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com0tag:blogger.com,1999:blog-5612777610331128064.post-29125744458625207532008-03-02T11:37:00.000-05:002008-03-02T11:37:07.044-05:00I Need $2000: UpdateA few weeks ago I talked about <a href="http://greatmoneychallenge.blogspot.com/2008/01/i-need-2000.html">needing (or wanting) $2000</a> for a trip abroad this summer. I had decided that I wouldn't compromise my savings goals and I wouldn't overdraw from my emergency fund and certainly not put it on credit. I outlined ways that I could gather together the money from miscellaneous sources and found that I could only come up with $1600. Now, $1600 is pretty good but I was still short $400. At that point I decided to leave it up to the Universe to deliver.<br /><br />And boy, did it deliver!<br /><br />I did my taxes this weekend and it turns out I am getting a sizable refund this year- to the tune of $2200 (and that's not including the economic stimulus rebate). Last year I owed $1500 so this time I wasn't counting on much of a refund. Thank goodness for rental property depreciation and itemized deductions!<br /><br />One might argue that this isn't really the Universe's doing, it's just me not being fully aware of my financial situation. That's ok. As long as it's a pleasant surprise to me, I will accept it as a gift and rejoice. Yay!moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com0tag:blogger.com,1999:blog-5612777610331128064.post-73757276714173617482008-02-28T17:08:00.004-05:002008-02-28T17:54:28.275-05:00Salary Negotiations: More Money For Me and Savings For My EmployerWe renew our contracts in May. It may be a little early for me to be thinking about salary negotiations right now but I had an idea recently that's got me all excited.<br /><br />I have mentioned before that <a href="http://greatmoneychallenge.blogspot.com/2008/01/loving-your-job.html">I love my job</a>. I also happen to love the people I work with and for. I believe strongly in this organization and I want them to succeed. I know a little about their financial situation and am well aware that they can barely afford the salaries they pay us. On the other hand, I am also at the point in the mental game of money that I am no longer willing to settle for a pittance for my efforts. <br /><br />What I want is a win-win situation. I don't want to overburden the budget of this organization, <span style="font-style: italic;">and</span> I want satisfactory compensation.<br /><br />I have a pretty good personal <a href="http://greatmoneychallenge.blogspot.com/2008/01/thats-my-budget-and-im-stickin-to-it.html">budget</a> that is easy for me to follow. After I pay off my debts this year I am going to have a lot more money on my hands each month that I can save. I was trying to figure out a way to put that money into a retirement account for some tax benefits and I thought of my 403b. (A <a href="http://www.403bwise.com/faqs/">403b</a> is similar to a 401k but is for certain non-profit organizations. Any funds deposited are tax deferred, i.e. I won't have to pay taxes on the deposits or the gains until I begin to withdraw at retirement).<br /><br />Unfortunately I am already making the maximum employee elective contribution of $15,500 so I can't put any more money in. However, my employer is allowed to add money into the 403b beyond my contribution max. Currently my employer does not offer a company match to our 403b accounts.<br /><br />If I can negotiate a lower salary amount but request a company match, I can keep my overall compensation exactly the same but still come out ahead because I won't be paying a chunk of that money in taxes.<br /><br />Here's the part that really sweetens the deal though- this package can save my employer money as well. They will not have to pay FICA taxes on the amount they contribute to my 403b.<br /><br />I can go one of two ways with this- I can help my employer out by keeping my total package the same but benefiting from the tax savings, or I can ask for a higher total package that keeps my employer's outlay the same but gives me even more benefits. Either way, I come out ahead without adding any extra burden on my employer.<br /><br />I will have to check with our 403b administrator to see if coming up with this individualized package for me is going to have any negative ramifications on the whole system. But apart from that, I love this idea! <br /><br />Can you spot any possible pitfalls or glitches in my reasoning? I would love to hear your thoughts... please comment!moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com1tag:blogger.com,1999:blog-5612777610331128064.post-65756228265436962402008-02-27T19:00:00.000-05:002008-02-27T19:00:17.808-05:00Carnivals and ChoicesI've had a slow month of posting and I did not submit any articles to carnivals this week. However, I have been reading through the fabulous posts at Carnival of Money Stories at <a href="http://www.collectingmycash.com/">Collecting My Cash</a> and the Festival of Frugality at <a href="http://www.ncnblog.com/2008/02/26/festival-of-frugality-114/">No Credit Needed</a>. I think Carnivals are a great way to find new blogs and new perspectives.<br /><br />I was struck by a number of articles that reminded me of the power of <span style="font-style: italic;">choice</span>. The value I put on choice and individual empowerment and responsibility runs through most of my posts (if it doesn't then I need to become a better writer because I'm certainly thinking about choice whenever I'm writing about money)<br /><br />Cash Money Life describes an instance where he had to make the choice between <a href="http://cashmoneylife.com/2008/02/19/choice-of-easy-and-right/">what is is right and what is easy</a>.<br /><br />Small Cents tells us about a friend who is having trouble making the choice to get out of her financial mess in <a href="http://cashmoneylife.com/2008/02/19/choice-of-easy-and-right/">The Grass is Browner on the Other Side of The Fence</a>.<br /><br />The Wastrel Show has a detailed article about how she and her family <a href="http://wastrelshow.blogspot.com/2008/02/setting-your-priorities.html">set priorities</a> and now live debt free.<br /><br />Smart Easy Money argues that you don't have to judge someone for the choices they make. Those choices may not work for you but they may be perfectly appropriate for them. Read her thoughts on why she doesn't <strong style="font-weight: normal;">think living a frugal life means being anti-luxury</strong> in <a href="http://smarteasymoney.blogspot.com/2008/02/consumerism-vs-frugality.html">Consumerism vs Frugality</a>.<br /><br />And finally, Quest for Four Pillars gives us an example of how luxurious our lives can actually feel if we choose to take on a different perspective in <a href="http://www.four-pillars.ca/2008/02/20/living-the-good-life-as-a-custodian/">Living the Good Life as a Custodian</a>.<br /><br />There are many many worthy articles at these carnivals so be sure to check them out!<br /><br /><span style="display: block;" id="formatbar_Buttons"><span class="on" style="display: block;" id="formatbar_CreateLink" title="Link" onmouseover="ButtonHoverOn(this);" onmouseout="ButtonHoverOff(this);" onmouseup="" onmousedown="CheckFormatting(event);FormatbarButton('richeditorframe', this, 8);ButtonMouseDown(this);"></span></span>moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com2tag:blogger.com,1999:blog-5612777610331128064.post-7217183771850220912008-02-26T19:05:00.001-05:002008-02-26T19:07:08.636-05:00What Got You Into Credit Card Debt?From what I can gather, credit card users fall into two main categories:<br /><ul><li><span style="font-weight: bold;">Those who use credit cards as a tool</span>: they pay off balances every month and collect rewards, or use low APR offers to make money, and they like the organizing features of credit cards that can <a href="http://greatmoneychallenge.blogspot.com/2008/01/simplify-your-finances.html">simplify finances</a>.<br /></li></ul><ul><li><span style="font-weight: bold;">Those who use credit cards as a crutch</span>: they carry a balance and pay interest because, for one reason or another, they were unable to have access to personal cash when they needed/wanted it.</li></ul>What are the folks in this second category putting on their credit cards? I am really curious. Sometimes I am just appalled at the number of people who are deep in credit card debt and I just can't understand how they could let it get to that point. I am tempted to assume that they spend on "frivolous" things. Am I right? Am I wrong?<br /><br />The absolute foundation of personal finance is to <span style="font-weight: bold;">spend less than you earn</span>. If you spend more than you earn, then you're in debt. If you spend as much as you earn, then you're fine until something unpredictable happens, and then you're in debt. If you spend less than you earn, you will probably be ok unless you get hit by a <span style="font-style: italic;">serious</span> emergency.<br /><br />So, what's behind these huge credit card balances? Here's what I've been able to figure out:<br /><br />I can understand the following expenses, although I do think almost all of them can be prevented.<br /><ul><li><span style="font-weight: bold;">Healthcare costs</span>: If a big chunk of your credit card debt is on hospital bills etc., then you were either going without insurance or were under-insured. My cousin recently had a crisis situation with her toddler needing neurosurgery after a fall while they were in the middle of a move, two weeks before their new plan kicked in. Yikes! They set up a payment plan with the hospital and the miscellaneous health care professionals. No credit card needed.</li></ul><ul><li><span style="font-weight: bold;">Living expenses when you've lost your job</span>: This is why an emergency fund is so important. If my emergency fund was still small and I lost my job, I would be out there picking up hours even at <a href="http://greatmoneychallenge.blogspot.com/2008/01/more-on-how-to-live-on-minimum-wage.html">minimum wage</a> to make ends meet while I hunted for a better job.</li></ul><ul><li><span style="font-weight: bold;">An unexpected home or auto repair</span>: Yep, two words: "emergency fund"<br /></li></ul><br />Now, I <span style="font-style: italic;">don't</span> understand why one would carry a balance for the following:<br /><ul><li><span style="font-weight: bold;">Wants:</span> electronics, gifts, books, dining out, travel</li><li><span style="font-weight: bold;">Standard living expenses</span>: groceries, utilities, phone, car insurance, clothing</li></ul>Both these categories, wants and standard living expenses, should be paid for by your income. These are things that can be planned for. If you want them and there isn't enough money coming in, earn more money. If you're putting these items on your credit card and paying interest, then there is a fundamental flaw in your understanding of income. <span style="font-weight: bold;">Credit cards are </span><span style="font-style: italic; font-weight: bold;">not</span><span style="font-weight: bold;"> income.</span><br /><br />So I want to know, when the media talks about the huge credit card debt statistics, what category are they referring to? The people who are using credit cards as a tool? Those who are using it as a crutch to get through tough emergency situations? Or those who simply don't know how to manage their money enough to not spend more than they earn?<br /><br />Any ideas?<br /><br />(In case you were wondering, my credit card debt is all at 0% and will be paid off before I have to pay interest. I used it for doing some home improvements when I purchased my <a href="http://greatmoneychallenge.blogspot.com/2008/02/why-my-house-is-asset.html">house</a>. I have always had the money to pay it all off if I chose to do so.)moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com3tag:blogger.com,1999:blog-5612777610331128064.post-16874583375163793122008-02-25T17:35:00.001-05:002008-02-25T17:38:32.849-05:00Why My House Is An AssetEver since <a href="http://www.amazon.com/gp/product/0446677450?ie=UTF8&tag=theprepareden-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0446677450">Rich Dad, Poor Dad</a><img src="http://www.assoc-amazon.com/e/ir?t=theprepareden-20&l=as2&o=1&a=0446677450" alt="" style="border: medium none ! important; margin: 0px ! important;" border="0" height="1" width="1" /> by Robert Kiyosaki came out, there has been some confusion about the definition of <span style="font-style: italic;">asset</span> and <span style="font-style: italic;">liability</span>. Flexo explains this succinctly on this comment at <a href="http://www.lazymanandmoney.com/your-home-asset-or-liability/">Lazy Man and Money</a><br /><blockquote>An asset is something you (can) own. A liability is something you (can) owe. Kiyosaki wants to make up his own definitions, but a “Kiyosaki asset” is simply a cash-flow-generating asset and a “Kiyosaki liability” is an expense-generating asset. It’s one thing to say that expense-generating assets should be *treated like* liabilities, i.e. eliminated wherever possible, but it’s another thing to say they *are* liabilities.</blockquote>I admit, I read Rich Dad, Poor Dad and it changed my whole perspective on how to approach money. I love the idea of money working for me rather me working for money. How revolutionary!<br /><br />In Kiyosaki's opinion, your residence is a liability because it generates expenses. There's the mortgage you have to pay every month, there are home repairs, maintenance, and property taxes. That's quite an outlay. Depending on the market you are in, your home may be appreciating in value but that equity is not liquid. You cannot access it unless you sell the house or take out a loan or line of credit. <br /><br />Even if you don't go by Kiyosaki's definition and refuse to call your house a liability, it's still a pretty clunky, cumbersome asset. Is it worth all the work?<br /><br />I bought a house two years ago with the sole purpose of <span style="font-style: italic;">decorating</span>. I had been renting for my entire adult life and I was tired of white walls and boring kitchens. I wanted to get creative. Oh yes, my home buying decision was no walk down investment lane. But, being the frugal person I am, I did my research and got a great deal on my property and on my renovations.<br /><span style="font-weight: bold;"></span><br />As a renter I paid about $550 a month for a 500 sq foot apartment. I had to step out into the elements to do laundry. I had to climb up and down stairs to get to the parking lot.<br /><br />Now I pay about $850 a month for a 1200 sq foot house with a yard and a private driveway. I have all the creative freedom I want. My laundry is on the second floor <span style="font-style: italic;">right next to my bedroom</span> (!!!!!!) and my house is beautiful. <br /><br />Over half of the $850 is tax deductible because it covers interest and property taxes which saves me about $100/month. That leaves me with an average monthly cost of $750.<br /><br />I live in a part of the the country that totally escaped the housing bubble. In my neck of the woods property appreciation just about keeps up with inflation. A home is not a nifty retirement savings vehicle here.<br /><br /><br /><span style="font-weight: bold;">So What Makes My House An Asset?</span><br />According to the standard definition of asset, my house is one simply because I own it (not fully yet because I have a mortgage, but I do have some equity in it). But my house is also an asset by Kiyosaki's definition because I found some roommates. I got roommates who cover the remaining $750 worth of payments. There are still some housing expenses that I have to pay but I am still way ahead of where I was when I was a renter. <br /><br />I call my house an asset because it generates some income for me that has improved my bottom line. I like those kinds of assets. <span style="font-style: italic;">Money working for me</span>.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com2tag:blogger.com,1999:blog-5612777610331128064.post-64877859334590414852008-02-24T18:20:00.001-05:002008-02-24T18:21:42.713-05:00Why Do People Hate the Word 'Budget'?I've been trying to figure this out. The word "budget" seems to be one of those heavy words, full of negative connotations for many many people. Why is that? It's just a word. It doesn't have any more power than you give it.<br /><br /><span style="font-weight: bold;">What's So Bad About a Budget?</span><br />Where does this strong reaction to the word budget come from? Is it because of early life experiences and imprinting from parents who were stressed out about money? Does it make you think of disappointment, deprivation, and squashed dreams? Does it make you think you are poor? Does it make you afraid of money?<br /><br /><br /><span style="font-weight: bold;">Why I Love Budgets</span><br />I love having a <a href="http://greatmoneychallenge.blogspot.com/2008/01/thats-my-budget-and-im-stickin-to-it.html">budget</a>. It's my map, my plan, my path to my dreams. It reminds me that I want something bigger than the little impulses that pop up during the day. It puts me in control of my destiny. My budget <span style="font-style: italic;">removes the fear that I do not have enough</span>. With my budget I can see clearly that I <span style="font-style: italic;">do</span> have enough to pay my bills and buy the things I need. If it looks like I don't have enough in one category then I can move numbers around until it works. And in the extreme cases where there really isn't enough money coming in... then my budget points it out and I can start taking steps to increase my income. That makes me feel powerful, not poor.<br /><br /><br /><span style="font-weight: bold;">Focus on the Positive</span><br />I think people often use their distaste for the word budget as an excuse to avoid dealing with the reality of their situation. So if the word is turning you off, change your attitude towards it. Figure out what unpleasant images and feelings it brings up for you and compare them to what the word actually means. My description of why I love my budget is the polar opposite of why I think people hate budgets. The same word brings up <span style="font-style: italic;">exactly the opposite</span> feelings for me.<br /><br />A quick-fix short term solution is to give it another name that doesn't bring up the same feelings of dread. But don't be fooled, you will eventually have to look those scary feelings in the eye and tell 'em to scram. There, add that to the list of <a href="http://greatmoneychallenge.blogspot.com/2008/02/of-courage-and-carnivals.html">courageous things</a> one has to do on the path to financial freedom.<br /><br />Whether you call it budget, spending plan, cash flow plan, goal, or even Frank, ultimately we're talking about being aware of the money that flows through our hands and consciously directing that flow. We're talking about living on purpose.moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com4tag:blogger.com,1999:blog-5612777610331128064.post-11924185024506546542008-02-20T09:00:00.001-05:002008-02-20T00:12:03.938-05:00Of Courage and CarnivalsOnce again, I am awed by the number of bloggers out there who share such fantastic information and insights with the rest of us on our personal finance journey. I've been perusing three carnivals this week and thought I would pick out a few articles that highlight something I've been thinking a lot about lately: courage.<br /><br /><span style="font-weight: bold;">Courage</span><br />It takes courage to make changes in your life. <br />It takes courage to step out of your comfort zone. <br />It takes courage to look at yourself and admit you've been making mistakes.<br />It takes courage to keep pushing through even when things are <span style="font-style: italic;">really</span> hard.<br /><br />Congratulations to all of you who are working courageously towards your goals. <br /><br /><br /><span style="font-weight: bold;">Where I Need Courage<br /><br /></span>The gaping courage-hole in my life is my resistance to stepping out of my comfort zone. For some reason I have decided that most DIY projects are too much for me. If I could just muster up the courage to learn a few skills and not be so afraid, I could definitely save a few hundred more dollars every year. <br /><br />At the <a href="http://www.collegeofcash.com/carnival-of-money-stories-47/#comment_288855">Carnival of Money Stories</a>, <a href="http://www.getting-out-of-debt.info/2008/02/how-doing-my-own-simple-car-repair.html">Getting Out Of Debt </a>writes about a simple car repair that I don't yet have the courage to handle. <a href="http://www.paidtwice.com/2008/02/11/sometimes-the-little-things-can-make-a-big-difference/">I've Paid For This Twice Already</a> talks about a simple dryer vent repair that I would have spent way too much money on.<br /><br />At the <a href="http://www.mightybargainhunter.com/2008/02/19/welcome-to-the-festival-of-frugality/">Festival of Frugality</a>, <a href="http://dailysaving.blogspot.com/2008/02/unnecessary-expenses-that-are-still.html">A Dollar a Day</a> asks what unnecessary expense is worth it to you? I have a few that I could give up if I had the courage to deal with the inconvenience of creating and adjusting to a new routine.<br /><br /><span style="font-weight: bold;">Big Courage</span><span style="display: block;" id="formatbar_Buttons"><span class="on" style="display: block;" id="formatbar_CreateLink" title="Link" onmouseover="ButtonHoverOn(this);" onmouseout="ButtonHoverOff(this);" onmouseup="" onmousedown="CheckFormatting(event);FormatbarButton('richeditorframe', this, 8);ButtonMouseDown(this);"></span></span><br />There are some things that require tremendous courage. It is when we tap into this "big courage" that we begin to find out what we're really made of. These posts from the <a href="http://www.thefinancialblogger.com/carnival-of-personal-finance-140-prison-break-edition/">Carnival of Personal Finance</a> might give you some food for thought .<br /><br /><a href="http://www.mytwodollars.com/2008/02/12/you-are-not-your-stuff-your-stuff-is-not-you/">My Two Dollars</a> reminds us that we are not our "stuff". How many of us base our identities on our possessions because we're too afraid to look ourselves squarely in the mirror?<br /><br /><a href="http://dailysaving.blogspot.com/2008/02/emotions-and-money.html">A Dollar a Day</a> is reflecting on some emotional issues surrounding money. As women, many of us have been raised to reject our power and it is going to take a lot of courage to reclaim it.<br /><br /><br />I've only pulled out a few articles here but I highly recommend that you check out the rest of the great entries at the following sites:<br /><br />Carnival of Money Stories at <a href="http://www.collegeofcash.com/carnival-of-money-stories-47/#comment_288855">College of Cash</a><br />Festival of Frugality at <a href="http://www.mightybargainhunter.com/2008/02/19/welcome-to-the-festival-of-frugality/">Mighty Bargain Hunter</a><br />Carnival of Personal Finance at <a href="http://www.thefinancialblogger.com/carnival-of-personal-finance-140-prison-break-edition/">The Financial Blogger</a>moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com2tag:blogger.com,1999:blog-5612777610331128064.post-4938601224684304832008-02-14T15:44:00.000-05:002008-02-14T15:44:46.208-05:00What Am I Going to do About a Roth IRA?One of my goals for the year is to fully fund a Roth IRA. I have never had a Roth so I need to do a little research to figure out the why what where when and how of it.<br /><br /><span style="font-weight: bold;">Why a Roth?</span><br />If you've been reading for a while, you know that I liquidated some old stocks just before the market tanked with the intention of paying off some debts and funding a Roth. But why a Roth IRA instead of a traditional IRA? I first heard about the Roth on the radio back in 1998 when I was working in the back room at Borders. I was obviously making very little money at the time and had nothing left over to consider retirement planning, but even then I recognized that this was a good deal. <br /><br />What's so great about a Roth? You pay taxes on that money now, put it into your account, then all the growth on it is tax free. And as a bonus, you can take the money that you already paid taxes on out of your account at any time (after 5 years) without any penalties. (Read about some <a href="http://www.fairmark.com/rothira/distrib.htm">restrictions</a> here).<br /><br />This can be huge. If you have a long time before retirement, then your growth potential is fairly high. This means that under a traditional IRA you would have amassed a substantial chunk of money that you will eventually be paying taxes on. With a Roth, you've paid the taxes on the smaller amount, and hopefully at a time when your tax bracket is lower (I for one am hoping to increase my income and consequently my tax bracket as time goes on. This may not be the case for those of you who are already making a lot of money). That's the simplified explanation that makes sense to me. If you want to get into more detail and compare the pre-tax value of this money, play around with this calculator at <a href="http://www.moneychimp.com/articles/rothira/rothgraph.htm">moneychimp</a>. Also read <a href="http://www.fairmark.com/rothira/bigroth.htm">Roth Accounts Are Bigger</a> at Fairmark.<br /><br /><span style="font-weight: bold;">What Should I Invest In?</span><br />Ah, the million dollar question. There are as many choices as there are grains of sand in all the beaches of... well, not exactly but you get the picture. The key here is to figure out what my parameters are.<br /><ul><li>I don't have the time or interest to heavily research stocks and individual investments.</li></ul><ul><li>I want to keep my finances simple.</li></ul><ul><li>I want a decent rate of return that will beat inflation.</li></ul><ul><li>I want risk to be accounted for as I get closer to retirement.</li></ul>There are two categories of investments that fit these parameters. Index funds and Target date funds.<br /><br />Index Funds are mutual funds that invest in companies listed on any of the major market indexes such as the S&P 500. The advantage of this type of fund is that your returns will essentially match the market without you having to do any work. The disadvantage is that you might miss out on the high gains that could be possible from a more actively managed portfolio and that the market could be falling in the years you want to withdraw money. But then again, they say you can't time the market right? Index funds are easy and typically have very low fees associated with them. However, I am anxiously awaiting a post by Jacob at <a href="http://earlyretirementextreme.com/">Early Retirement Extreme</a> about why one should <span style="font-style: italic;">not</span> invest in an index fund.<br /><br />Target date funds are a new breed that have become popular in the last few years. Once you select your target retirement date, the fund automatically adjusts its allocation of stocks, bonds, and cash as the years pass. In the early years the fund will be more heavily invested in stocks for aggressive growth, and will shift towards safer bonds and cash as you get closer to and into retirement. The main advantage of a target fund over an index fund is the fact that your portfolio is safer when you are close to retirement. You won't be as affected by a sudden market drop like we saw last month if your holdings are mostly bonds and cash. Read why <a href="http://www.kiplinger.com/retirementreport/features/archives/2006/10/Cover_Oct2006_02_01.html">target funds may not be for everyone</a> at Kiplingers and their more recent article <a href="http://www.kiplinger.com/magazine/archives/2008/02/target_funds_under_fire.html">advocating target funds.</a><br /><br />At this stage I am leaning towards a target date fund for my Roth rather than an index fund.<br /><br /><span style="font-weight: bold;">Where should I Invest?</span><br />I'm not going to work too hard on this one either. I want<br /><ul><li>low fees</li><li>an easy online interface</li><li>a solid reputation<br /></li></ul><a href="https://personal.vanguard.com/us/content/Funds/FundsVanguardFundsTargetOverviewJSP.jsp">Vanguard</a> fits that bill for me. I used to have an index fund with them and I am familiar with their website and their service.<br /><br /><span style="font-weight: bold;">When and How Will I Invest?</span><br />This sounds like a simple enough question. The answer however may not be quite so simple. I have two options:<br /><ul><li><span style="font-weight: bold;">Invest in a lump sum.</span> This is not possible for everyone, but I do have the money sitting in my ING account and I can invest the maximum within a week or so. That will get it out of the way and I won't have to think about it for the rest of year. I won't be tempted to spend it on other things that may seem more important in the moment such as <a href="http://greatmoneychallenge.blogspot.com/2008/01/i-need-2000.html">traveling abroad</a> this summer.<br /></li></ul><ul><li><span style="font-weight: bold;">Invest a certain amount each month.</span> If I have the money, why wouldn't I invest in a lump sum? That's the other million dollar question. I wouldn't have considered this as a real option if the market hadn't suddenly decided to wobble in January. With all this talk of a possible recession and an uncertain market, it is likely that stock prices could continue to fall over the next few months. I could take advantage of a strategy called <a href="http://www.quarterlifefinance.com/the-plan/dollar-cost-averaging/">dollar cost averaging</a>. If stocks prices do continue to fall, then this would be a good way to get in on the sale prices. Of course, I can't predict exactly what the market is going to do, but with the way things stand, this might be the year when dollar cost averaging comes out ahead. <br /></li></ul>What's going to work for me? I think I will probably go with the psychologically simpler method and just do a lump sum investment.<br /><br /><span style="font-weight: bold;">Conclusion</span><br />Here's what I have decided: I will put a $5,000 lump sum into the <a href="https://personal.vanguard.com/us/content/Funds/FundsVanguardFundsTarget2035SummaryJSP.jsp">Vanguard® Target Retirement 2035 Fund.</a><br /><br />Okay wait! Being able to summarize all that thought and research into one sentence just seems <span style="font-style: italic;">wrong</span>!moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com2tag:blogger.com,1999:blog-5612777610331128064.post-43428598060874257742008-02-12T19:04:00.000-05:002008-02-12T19:05:39.178-05:00Carnivals AboundI've had a very busy week of not posting. I am a little taken aback at how quickly this week has flown by. I need to make some sort of commitment to myself about posting more frequently. More on that later!<br /><br />In the meantime, if you're looking for useful personal financial stuff to read, head on over to some of the carnivals published today:<br /><br />Lazy Man and Money has put together the <a href="http://www.lazymanandmoney.com/festival-of-frugality-112/">Festival of Frugality #112.</a> There are links to a great set of articles about frugal tips, romance, grocery spending, travel, money management, health, and entertainment.<br /><br />Mrs. Micah is hosting this week's <a href="http://www.mrsmicah.com/2008/02/12/46th-carnival-of-money-stories-living-it-out/">Carnival of Money Stories.</a> This carnival is a good resource for learning about people's personal experiences on their journey to controlling their financial lives.<br /><br />I also discovered The Random Yak. They hosted the <a href="http://www.randomyak.com/?p=2444">Showcase Carnival (of new blogs) </a>yesterday. There are numerous posts worth reading, and some new blogs I am tempted to bookmark! I enjoyed <a href="http://writingcareercoach.blogspot.com/2008/01/lesson-learned-and-how-i-got-here.html">this personal story</a> by Tiffany about taking responsibility for missed opportunities.<br /><br />Happy reading!moneychallengehttp://www.blogger.com/profile/14244314336175189118noreply@blogger.com0