Wednesday, August 31, 2005

More reason to donate and a teal leather jacket

INXS opened Rock Star today by extending their prayers and support to the people in the flood afflicted areas down South and mentioned that they'd donated to Red Cross. So if you needed another reason to donate now you are in the company of aging rockstars. Of course, if you think of rock & roll as spoilt self-indulgent punk music of multi-millionaire druggies and sex addicts then this isn't a very good reason for you. Even if you don't it's still probably not the reason to give. But I thought it would make an anecdotal opening.

The actual damages due to Katrina remain to be calculated but I read that it's worse than Hurricane Ivan (2004) and the damages for Ivan were in the 13 billion $ mark. That's a good reason to donate.

On a lighter note I absolutely loved the teal leather jacket that Suzie was wearing today. Wonder where I can find it.

What can I say? I can be a philanthropist and a fashionista at the same time.

Another reason to donate - Free Music

If you are in the Seattle area and donate to the American Red Cross then KMTT The Mountain, Seattle's adult rock station, will play your song on Friday. I know this isn't as good as actually getting something you can take home but it's not that bad a deal. They have some pretty obscure songs that I haven't been able to get anywhere else but have been able to request through them.

Here's how to request your song:

When you donate to American Red Cross the confirmation email they send you has a tracking code at the bottom. You can email your request to The Mountain through this contact page and include your song request and the tracking code as well as who the song is going out to (if you want). They will play all such requests all Friday morning through late afternoon. If you are unable to donate due to financial constraints don't feel bad, just pass the word.

Btw: If you are not in the Seattle area you can still donate and then send in your request. You just won't be able to hear the song I guess. But hey, you can dedicate the song to me! :)

Microsoft, here I come

Accepted: 1 Microsoft job offer

Money and career prospects will have to wait a little longer. Greater creative freedom it is! Guess I should return the 2006 Quicken now. I have been trying out both MS Money and Quicken for the past month (Money was a 90-day free download and Quicken has a 60-day money back guarantee so it wasn't costing me anything) and I like different features of each but I feel I should show some solidarity to my new employer. Technically, I don't start until the 4th week of September because I have to give at least two weeks of notice here and then I am taking 1 week off to go roadtripping to California. Did I make the right decision? I am impulsive more often than not and sometimes I choose jobs the same way I choose men or shoes which I am not sure is the best way. Decisions based on impulse tend to be short love affairs. Foreshadowing perhaps? I hope not.

Hurricane Katrina Update

  • in New Orleans the flooding is getting worse by the minute
  • Gov. Kathleen Blanco wants the city evacuated in two days as the water continues to rise
  • Maj. Gen. Don Riley of the U.S. Army Corps of Engineers, the team that's working on stabilizing the two levees that broke, says it could take close to a month to get all the water out of the city
  • The Red Cross reported it had about 40,000 people in 200 shelters across the area by Tuesday night
  • The Navy has 4 ships bringing food and water to the flooded areas
  • Across Louisiana, Mississippi and Alabama, more than 1 million residents remained without electricity, some without clean drinking water
  • In many places there are only cement slabs where homes once stood

Times like this have a way of putting your life in perspective. We are born, we die and we do a lot of little things inbetween thinking they mean anything when most of the time they get washed away with our lives. But occasionally you get the chance to do something that can make a difference. I donated this morning to the American Red Cross Hurricane 2005 Relief Fund and if you can spare some change maybe you can do the same, if you haven't already...

Links: Instapundit on flood relief, Bear's Katrina Relief Aggregator Page

Tags: ,

Edited 12:46 pm - Right after I posted this I came across a similar post at Free Money Finance. He actually offers to match reader contributions up to $500 which is really nice.

Tuesday, August 30, 2005

How to make $340.65 - Part 2

Continuing the saga of my bid to recover money spent on frivolous and needlessly worldly pursuits for which I am suitably contrite (or not quite but I still want my money back):

My goal was to raise $340.65 and so far I have raised $269 (projected). Here's a breakdown:

  • Sharebuilder - $50
  • Gas card from Great Fun online - $19
  • Sony card - $100
  • eBay - $100 (estimated)
    • I opted not to sign up for the Citi gas rebate card in lieu of the Sony because the latter was the better deal in the short term and I am trying to avoid too many strikes on my credit report right now for reasons outlined before aka new home purchase. Instead I spent some time this weekend cleaning out my closet (does that make anyone else think of the Eminem song? No? It's just me then) and listing a few things on eBay. Three to be exact. One of them is already at $40. The other two do not have any bids yet but I am cautiously optimistic as they both have 70-75 views each. The value of the three items is $300 so I think $100 is a reasonably low expectation. (Ah, the joy of setting the bar low!)

      For the remaining $71.65 here's my plan:

      Sign up for magazine subscriptions: I should be doing this anyway but I was lacking the proper motivation. My excuse has always been that I may not choose to buy the same magazines every month and it doesn't cost that much but truth is every single month I do buy the same magazines and they do cost that much. I have no excuse anymore. I know I can save enough to feed a small country by getting subscriptions instead of buying at the drugstore. Next step: shopping for magazine deals.

      I know I don't need to try to earn back the $340.65 to the penny because I have at least a 5k extra coming in next month but it's not about the money. It's about discipline and follow-thru. (
      I am sure Thoreau will be pleased despite the fact that I have neither toiled on a farm nor slaughtered any ravaging woodchucks yet.)

      On the other hand I am no closer to deciding which job offer to accept. Last week I had only 1 and life was so simple. Now I keep going back & forth like a tennis ball in a close match. More money, better prospects or greater creative freedom? True to form, I want it all, and the decision isn't getting any easier with the progress of the day. Maybe I should toss a coin... just have to make sure it isn't a 1933 two-headed one or the government may confiscate it.

      Monday, August 29, 2005

      Win Some, Lose Some

      Spent over the weekend: $91.27

      New top $59.99

      The world’s cutest baby dynosaur for the world’s cutest baby, my nephew $6.52

      Dinner and Live Show at the Crocodile Cafe $0
      (I offered to pay but my date said that would hurt his masculinity)

      Magazines (In Style, Money) $9.24

      KitKat (to go with the magazines) $0.49

      Sunday brunch with friends $15.03

      Made over the weekend: $5-20k

      I posted earlier about my job offer from Msft. The first offer didn't include sign-on bonus. When I asked they came back with 3.5. I asked if they can go up to 5. They said they'd need to think it over.

      Just got the email from HR saying they can do 5k. Woo hoo!

      I also got two phone calls this morning, one right after another (it's like they timed each other) from the two other interviews I had gone on. The first is a smaller firm downtown. Their offer is $110k start (20k more than I am making right now!!) and requires 50% travel. The second offer is actually through one of my old Andersen managers. He was a great mentor back when I was working for him and I had called him to see if he would have some time for a one on one career discussion. Turned out he was looking for someone in his group and was thrilled to hear I was available so I ended up interviewing with his company. Their offer terms are the same as the MS one (current salary + 5k sign-on bonus). All three offers have full dental/medical blah blah blah and the firm downtown offers an expense account as well.

      I love my job. Sure I want to change jobs but that's because of the environment not the work. I hear people talking about retirement and I am always surprised. Why on earth would anyone want to retire? And then I remember that not everyone gets to do what they like. I think if there were more people working at what they enjoy there will be more millionaires. No, really. Bear with me. See, when you do what you love, what you are passionate about, you are not watching the clock or wasting your energy worrying or complaining about your job. All your time and energy goes into getting better at what you do and in the long run that pays bigger dividends than the stock market. That is unless you have a lot of money to invest in stocks right from the go.

      Anyway, now I have a dilemma. I have 3 job offers that all seem really good and I can only pick one.

      If I take the downtown firm offer I will be traveling a lot and I know from before how quickly that gets old. On the other hand, I will have an expense account, accumulate miles, hotel points and Amex points, always a nice thing. Plus, the office is not that far so my in-town gas expense will stay the same and the work is very similar to what I am doing right now so I can be productive from day 1.

      If I take the offer from my old manager I won't be making $110k anytime soon, nor will I get to travel or rack up points but I will be in town, gas expense will stay roughly the same (also downtown), the work will be the same yada yada. The pro here is that I get to hire in at a level above my current level and have more direct reports with a straight path to a director title. Plus I get to work with my old manager who's an absolute inspiration and one of my biggest supporters so I know I will be promoted well within the company.

      The Redmond offer, well, is all the way in Redmond which means either driving 40 more miles per day than I do now or taking the bus. Plus, the role is new. It draws on some of my current skills but it promises to be challenging in other ways and it's actually a level down from where I am right now. Or in other words if I take that offer not only am I not getting more money but I am demoting myself. Of the three this seems like the most interesting role though and that attracts me more than the 20k extra with the consulting firm.

      Decisions, decisions. I don't have to give any answers till eod Wednesday thankfully so I have 48 hrs to think about this.

      Friday, August 26, 2005

      Nirvana

      I can't keep talking about this money stuff all the time. It's such a dry subject. So in the spirit of rebellion I have decided to branch out and talk about anything and everything I feel like. Not sure who I am rebelling against though. Conventional wisdom? Myself? My 2.5 readers? Or maybe it's just this lazy Friday afternoon that's got me antsy. I want to jump into a jeep with the hood down and go offroading. Offroading with my knitting kit (hey, at least no one can accuse me of being a typical girl) Then I can sit in an wood somewhere knitting more itty bitty bikinis while pondering the great mysteries of life.

      Or maybe I can find a way to combine my passions -- work, music, art, travel -- with the more mundane things like money.

      Kurt Cobain said "Punk is musical freedom. It's saying, doing and playing what you want. In Webster's terms, 'nirvana' means freedom from pain, suffering and the external world, and that's pretty close to my definition of Punk Rock."

      Freedom from pain, suffering and the external world. I think we all want that sometimes but we go about it in different ways. Whether it is through anguished lyrics, a plate of fresh baked cookies, a bullet through your head or the prodigal accumulation of wealth. I doubt anyone sets out to kill themselves because they really want to die. They just can't bear to live anymore and death is their freedom. In the same way I don't think anyone sets out to save money because they just really, really like the color green. Most of the time money is a means to an end. An early retirement, the freedom to travel more, to enjoy a lifestyle that they are accustomed to or have been deprived of. What we are looking for is not a bigger bank balance but something else. Something that we think having a bigger bank balance will get us. And sometimes in the process the real goal gets lost and the means become the end. But being free, truly free, means being free of wanting money too.

      Or maybe that's just me. I would like to meet my financial goals but I don't want to care whether I am rich or poor.

      New Job + This & That

      I just realized with a surprise that I haven't posted in a week. Guess I have been so busy that I didn't know how much time had passed. Since my last post I had two more interviews, wrapped up one project at work and started another, finished decorating my apartment (and came in $200 under budget), made some changes to my investments, found a condo (yes!!!!! brand new, in downtown Seattle and within my budget) and accepted a new job offer with that little company in Redmond that half the world loves and the other half hates. Well, okay technically I haven't accepted yet. We are negotiating. But they matched my current salary and offered a 3.5k sign-on bonus plus I want to get out of here so I have as much as accepted in my head.

      Money spent this week = $353.75 ($185 on my cousin’s visit, $69.60 on groceries/misc household stuff, $3.20 on the new Lucky magazine, $36.16 on gas and $76.04 on the Creedence Clearwater Revival boxed set that I have wanted, oh, only since before I was born)

      Money made/saved = $50 sharebuilder promo + $19 gas card through Great Fun + $100 Sony card offer + $200 (savings from decorating budget) + $30 (estimated savings by making my own bikinis -- oh yeah, I can make crochet bikinis. How's that for talent? The ones I wanted were $50 & I think I spent about $10 on supplies + an hour to make an identical pair so that's a $30 savings after subtracting an additional $10 for labor) = total savings $399.00

      A busy week is a good week.

      Thursday, August 18, 2005

      How to make $340.65 in 1 weekend

      I had a blast at the Coldplay concert and I am sure Chris Martin appreciated my new bag. Now that the euphoria has died down a bit I have to turn to more mundane things like how to recoup my losses from my recent shopping binge. I don't think I did that bad. $587 for a concert ticket, a bag and a pair of shoes just doesn't strike me as much. But then that's my problem. $587 for a concert ticket, a bag and a pair of shoes just doesn't strike me as that much when in reality that money saved could probably have made me a millionaire by 90 or something.

      Ok, truth is, I don't care all that much about being a millionaire, 90 or not, but I do care about meeting my goals. What bothered me about the sudden burst of spending this week was not that I was spending too much but a) that it was unplanned, b) that it was unnecessary and c) that I could have used that money better.

      Last night I spent some time with my new toys, aka MS Money and Quicken, and realized that the Coach bag can come out of my shopping budget. I also have 2 concert tickets in my budget at $75 each. So technically the amount I went over by is $587.65 - $172 - $75 = $340.65

      Ways to make $340.65 in 1 weekend

      1. Sign up for Sharebuilder promotion - $50 gain
      2. Sign up for GreatFun trial with $1 and get the $20 gas card - $19 gain ($20-$1)
      3. Sign up for a 5% cashback credit card that works at gas stations - $30 gain (estimated through end of this year)
      4. Sign up for the $100 Sony card offer - $100 gain (i don't know about this as this will lower my credit score & I will just end up paying more when I take out a mortgage. Since I am planning to do that in the next 12 months this may not be a good move for me but for now I will keep it in the list)
      5. Become a mystery shopper - $141.65 (but have to find a legit source to sign up through first so this is also kind of iffy)

      Total $340.65

      I need backup ideas for #s 4 & 5 just in case they don't pan out.

      Tuesday, August 16, 2005

      Temptation

      As I went up the stair
      I met a man who wasn't there
      He wasn't there again today
      I wish, I wish he'd go away

      Who was that man? Or maybe there was no man, invisible or otherwise. Maybe the man who wasn't there is symbolism for whatever particular demon that drives you, making you do the things you do. In my case today or this week that'd be the temptation to spend.

      $157 - Coldplay concert tickets
      $172 - New Coach bag
      $232 - Brown BCBGirls pumps
      $26.65 - Chanel Portofino

      $587.65 total so far

      What makes the whole thing so heart warmingly humorous is that not a single thing above was a planned or necessary expense:

      The tickets my boyfriend had bought initially but since we broke up it's only fair that I pay for mine.

      The bag I decided was a reward for being such a good girl and not buying any new clothes for the concert.

      Of course, then I had to buy the shoes because none of my shoes really went with the new bag and there was no time for eBay.

      Oh, and I had to get the Chanel Portofino because without that perfect shade of red lipstick my life would have been incomplete today.

      I wish, I wish he'd go away...

      Maybe the little man who wasn't there is conscience. I can afford to spend $587 every now & then and I have been pretty good since June but I don't "need" any of this stuff and I can't help but feel wasteful. I could have donated this money to United Way, to the tsunami relief fund in Japan, to the earthquake relief fund in Venezuela or to any number of people around the world who need the money more than I do. Of course, I will end up doing just that out of a sense of guilt and then I'd have spent over $1000 by the end of it all. My Microsoft interview went pretty well though (I think) so maybe there's a sign-on bonus in my near future.

      Oh well, I will worry about this tomorrow. Right now I am off to see Chris Martin sing!

      Friday, August 12, 2005

      Spending Analysis - Wrap Up

      There are three sections at the end of my annual performance review form: keep doing, stop doing, start doing. It's pretty neat. First I get to fill it in and then my boss reviews it and adds his comments. It's kind of an at-a-glance summary of the good and the bad. I have decided to use the same technique to break down my spending habits.

      Keep
      Basic cable (it's basically broadcast channels but I need the cable for reception
      Current cell phone plan (I don't know if there are better deals but $45 a month for 500 anytime minutes + free unlimited in-network calling doesn't seem bad)
      Not drinking much coffee or drinking at home
      Using regular unleaded gas
      Exercising for free
      Buying shoes on eBay

      Stop
      Spending so much on food
      Buying books, CDs, movies at full price
      Buying more stuff for the home
      Paying retail for handbags and clothes
      Buying more products (shampoos, soaps, scrubs etc) before using up existing ones

      Start
      Brownbagging it for lunch (work in progress)
      Buying books, CDs, DVDs at discount (BAMM, BMG, Amazon, eBay, half.com, local half-price stores)
      Using up things before buying more
      Shopping around for the best deals on concert and other tickets and travel packages before booking anything

      Maybe I should start tracking how much I save by doing this. Could be interesting. I could invest the savings in something like hedge-funds or ETFs or the million other things that I don't understand and am therefore too chicken to invest my current savings in.

      Microsoft Interview

      I have an interview with a Microsoft product group on Monday. I have been somewhat unhappy at my current job. The work is great, it's the group that leaves something to be desired at times. So, a couple of weeks back I went on an informational and then last week I got a call back saying they would like to set up an interview loop for the 15th. They did warn me that I wouldn't get the confirmation until a day or two before the interviews but when I still hadn't heard anything this morning I was about to give up. And then, just now, got the email. 9am - 4pm Monday. Woohoo!

      Wednesday, August 10, 2005

      15.6 mpg

      I forgot about this. I got very excited this morning thinking my car had suddenly become more fuel efficient. I was sitting in the car fiddling with the radio when I happened to look up and that's when I saw it: Fuel 15.6 mpg. It took me a moment to get back to reality and the fact that I was still parked in my garage. Apparently the secret to getting a semi-decent mileage on a Saab is to not drive it. I thought that was really funny.

      Spending analysis

      After yesterday's post I started thinking about where I spend and where I don't.

      Cable - $13.20 for basic cable and that's it. Other than that I have Netflix (just switched from 3-at-a-time to 2-at-a-time because I wasn’t renting that much) which is all the extra TV I need.

      Cell phone - I have a 500 anytime minutes + unlimited mobile-to-mobile free plan for $39.99. I used to have 1000 minutes but I realized I was coming in under 500 pretty regularly so I called and switched a long time ago.

      Coffee - Don't drink much and when I do I make my own at home. On the other hand I do end up running down to Starbucks to pick up a biscotti or danish to go with my coffee.

      Gas - I use regular. Six years ago when I went to lease my first car the car salesman told me that regular unleaded worked just as well as premium and not to buy premium. I have used regular ever since.

      Exercise - Free gym membership through my employer + free 24-hr fitness at home (in the form of exercise tapes, free weights and an exercise bike). Only spend about $2-300 a year on shoes and gym clothes and the occasional aerobic or kickboxing class.

      Food - Turns out, I spend a lot on food. Until I started tracking I didn't know just how bad it was. I easily spend $500-600 a month which is crazy. Mostly I think I pay for convenience (lots of takeout) and my sweet tooth. I did the math - I spend $900 a year on ice cream and frappuccinos alone.

      Books, CDs, DVDs - I have a compulsive buying habit when it comes to books, CDs and DVDs. I buy everything! $100-200 a month.

      Gadgets - I am not a gadget-fiend. Other than the occasional iPod, digital camera and palm I don't spend much on this except for headphones. For some reason I have a ton of headphones.

      Home stuff - I am an engineer. I spent 4 years studying design and bent over drawing boards. When I see an Eames Eiffel chair, I don’t just see a chair. I see art, I see a masterpiece, a triumph of design and architecture. I also buy a lot of paintings, sometimes from new local artists who may or may not become famous someday. I like flower vases and nice sheets. Next to food this is probably where I spend the most.

      Clothes, shoes, handbags - This is another area where I spend but probably not as much as people think. I mix designer jeans with Old Navy tees freely so overall it's not that bad. eBay is great for shoes. I bought a pair of brand new Ferragamo pumps($200+ retail) for $9.99. Beats buying Nine West or Payless for the same price. Where I do spend is bags. I love Marc Jacobs, Louis Vuitton and Coach bags. LV and Coach both come with lifetime warranties though so when you think of how many bags an average woman goes through in her lifetime it's not that bad. Total: around $2-3k/year.

      Hair, skin, makeup - My haircut costs $35-50 which isn't too bad but I have poor sales resistance when it comes to bubble baths and soaps and scrubs and shampoos and such. No idea how much I spend overall but I'd imagine quite a bit.

      Concerts/movies/going out - Another budget buster. I love concerts, I like going to the movies and I like nice restaurants. No idea how much I spend overall.

      Travel/vacation - I love to travel but I think I still spend less on vacation than I do on food! I have a yearly cap of 3-4k. What I don't do that I should be doing is shop for deals when I make my travel arrangements.

      Transportation - Seattle has a great public transportation system which I don't utilize. Instead I zip around in a car that gives me 14 miles per gallon. I love driving though so I don't think I would be quite as happy riding a bus.

      Rent - My rent isn’t that high for Seattle. I could probably do a little better but I love living downtown and I have the most breathtaking view of the city framed against the mountains. It's something out of the movies. That view is my therapy.

      I think I do pretty well in some ways and not in others which is what I expected. My food cost should go down as I have started bringing lunch from home at least 3 days a week and my home cost should hold steady because I don't plan on buying a lot of new stuff right now until I have moved into my new house or condo. Plus, if i keep paying with cash maybe people will give me enough change to supplement my income! :)

      Tuesday, August 09, 2005

      Who needs change

      Apparently not many people.

      I have been paying with cash all week and people have started giving me change. The first time it happened on Sunday night I thought it was an aberration, albeit a fortuitous one. I was at Rite Aid buying bulbs at the time. The total came to $4.58 and I was just counting out the change when the girl interrupted me and said, "Just give me $4.51" and to my utter amazement proceeded to conjure up 7 cents out of what appeared to be thin air. Turned out a previous shopper had left his change lying on the counter with the simple explanation that he hated carrying around pennies. Well, good for him.

      Then it happened again yesterday at Safeway. I was buying some snacks. This time the total was $7.98. Normally when people are behind me I don't try to count out exact change because I don't want to hold up the line but there was no one behind me this time so I started sorting through my pile of loose change. Suddenly the guy pushes a dime towards me and says, "here." At first I thought I must have dropped it but no, it was his dime. He was offering it to me because turns out he just didn't like carrying change either.

      And then it happened again at lunch today. My total was $7.52. I gave the girl $8 and she gave me two quarters back. I started pointing that she gave me too much back when I noticed that she had already grabbed two pennies from somewhere and was dropping them into the cash register.

      I can't decide if this is more funny or sad. Guess change does burn a hole in some people's pockets.

      10 ways to raise your credit score

      Maintaining good credit is a fine balance. Your credit score can drop if you have too many credit cards, too few credit cards, if you close too many accounts, if you open too many accounts, if you have too much debt, if you have too little debt, the list goes on. The converse is also true. Just as a number of things can lower your credit score, there are a number of things that can raise them too so if your score is below 720 (the national median that mortgage companies use to decide who gets what interest rate) take heart; there's hope.

      The first thing anyone setting out to improve their credit score should do is to understand how they are calculated. There are 5 major factors that make up your credit score:

      35% payment history
      30% amount owed
      15% length of credit history
      10% credit history overall
      10% types of credit

      That is, 35% of your score comes from your recent payment history and 30% from your outstanding balance and so on and so forth. It's not quite as simple as that because within each category there are further factors that influence your score. For example, although payment history overall gets 35%, your current payment patterns carry far more weight than your payment habits of 5 years ago. This is both good and bad. It's good because even if you have been late with payments in the past provided you keep paying your bills on time you will see your score improve each year. It's bad because even if you have had been meticulous about paying all your bills all your life a recent slip (meaning a late payment in the last 24 months) can result in a severe penalty and lower your score by as much as 50-100 points.

      MyFico.com has some excellent articles that explain your credit score and also offers a free credit score simulator where you can see how your score will improve over time if you make certain changes like paying off the account balance on one credit card first vs another. If you haven't yet I suggest signing up for it and using the tool to analyze your current credit record to identify areas where you can improve. If you are not ready for that hassle yet here are 10 relatively uncomplicated ways you can raise your credit score:

      1) Pay all your bills on time. If you can't make full payment, at least make the minimum payment. As you can see from the 5 major factors that make up your credit score section above, timeliness of payment carries more weight than your outstanding balance.

      2) Pay delinquent or high-risk accounts first. If you have an account where you are already more than 30 days past due pay that first. If you have an account where you are carrying a balance dangerously close to your credit limit whereas you only carry a small balance on another card, pay the first card first even though you may be tempted to pay off the second in full. Creditors will see a near-limit credit balance as a bigger threat than two small balances on two cards.

      3) Apply for different types of credit. Having a mortgage, a car loan, a bank card and 3 or 4 department store cards will actually make your score higher than having only department score cards even if your overall number of accounts is lower. I am not saying run out and buy a new car but just be aware how different types of credit affect your score.

      4) Don't open any new accounts in the 12 months prior to applying for any major credit like a car loan or a mortgage. Don't close any old accounts either even if you are not using them because closing older accounts reduces your length of credit history which can count against you.

      5) Don't close accounts if you are within a few months of applying for a loan. Any activity on your credit report can be viewed with a wary eye by a potential lender if it happens too close to the loan date. On the other hand if you have 10-12 months to go, go ahead and close newly opened accounts. Try to close newly opened accounts before older ones for the same reason outlined in #4 - length of credit history. If the newly opened accounts are department store accounts even better. Right after you close these accounts your credit score may take a slight downturn but at the end of twelve months your score should be higher than what it was before. One caveat - closing accounts lowers your total available credit and therefore raises your debt to credit ratio. Optimal D/C ratio is 0.5. That is, if your total available credit across all accounts is 50,000 your outstanding balance should be 25,000 or lower.

      6) Time your payment. You may think you are paying in full every month but your credit report may show something else. Why? Because they creditors report your account status to the credit agencies on a monthly basis at the same time (typically beginning or the end of the month) which has nothing to do with your due date. The amount that gets reported is the amount you were carrying on your credit card at the time they reported it. Find out when that happens and try to make your payments before that date. This does not matter so much if you have a small balance to start with but if your debt to credit ratio is over 0.5 it may help your score quite a bit over the long run.

      7) Call creditors. Check your credit report and if you see anything in there that is making your score lower, call the creditor who reported that to the credit agency and request, respectfully, deferentially and politely, for it to be removed. I had a recent late payment on my Amex account but when I called them and explained that I was shopping for mortgages and it was making my score lower they actually offered to take it off my report. I didn't even have to ask. So, make that call. If you have an account in good standing with a creditor they will be willing to work with you.

      8) Contest bad credit marks. Mistakes happen and things may end up in your credit report that rightfully belong on someone else's. Make sure to check your credit reports from all 3 agencies at least once a year and look for discrepancies. If you find any, be sure to contact the credit agency and let them know. Do this in writing, use correct language and know what you can contest. e.g. You cannot contest a legitimate delinquency (contact the creditor) but you can contest an unauthorized credit inquiry and request its removal.

      9) Check your credit report at least once a year or if not that then at least 10-12 months before you apply for any big credit (e.g. mortgage or car loan). As of June 1st this year all western, southern and midwest states are eligible for 1 free cedit report each year from each credit reporting agency. (Eastern states & other US territories become eligible for this starting Sep 1). You can make your request at AnnualCreditReport.com which is an Experian, Equifax and TransUnion supported centralized site for just this purpose.

      10) Carry copies of your credit reports and scores with you when you go loan shopping. Credit report inquiries can hurt your credit score. Every time you apply for credit, the lender will look at your credit, which creates an inquiry on your report. Supplying your own copy of your report to the lender if you are just shopping around for rate quotes can prevent this. In the event that the creditors insist they must pull a report, try to do your entire rate shopping within a two-week period. A quick influx of inquiries only counts as one.

      I have decided to table my house search for now and focus on improving my credit score. Real estate prices in Seattle have been skyrocketing over the last few months and I am not sure it's the best use of my meagre savings at the moment. (See the comments here.) I am not entirely giving up looking at properties but for the most part I will keep it informational so I can find out more about neighborhoods and such while I work on raising my credit score.

      Other than that one late payment on Amex I haven't missed any payments. However I have closed some older accounts (alas this was before my days of credit score enlightenment) and opened a few department score cards in the last twelve months. In addition I also got a new car at the end of 2004 and just signed a new apartment lease last month. All this is making my credit score lower. Left alone my score should adjust over time as the new accounts age but I do think I have too many accounts so I plan to close some of them. I will close the newly opened department store cards first because they have minimal effect on my score, good or bad. My debt to credit ratio is already pretty low but I noticed that on my TransUnion credit report some creditors reported only the balance without the limit which gives a false effect that my D/C ratio is higher (my TransUnion score is also the lowest). I plan to contact both the card companies and TransUnion to see how that can be fixed. According to the MyFico credit score simulator my score should be at least 37 points higher or 751 by next June if I make these changes.

      Disclaimer: I am not an expert on the subject of credit. Please do your own research and double-check facts before you use any of the information provided in this post.

      Monday, August 08, 2005

      Diversification pays

      Particularly on days like today.

      Take my Ariel fund and DODFX for example. Ariel is down .11 and DODFX is up .11. It's like that Seinfeld episode where Jerry explains how he always breaks even. Of course, I don't exactly have the same amount in both funds down to the penny. I had started with the same but over the weeks as they went up & down that has changed. Right now my Ariel Fund is down $9 while DODFX is up $17. That's pretty much the story today with all my US vs INTL funds (although my 2 US stocks are up).

      Overall I am down about $700 on my brokerage account since the beginning of the month (that works out to -0.93% for anyone keeping track) but when I think what would have happened if I had all my money tied up in US funds I feel a little better. I cannot say what the quantitative advantages are of diversification over a 40 yr period (as opposed to putting all your money in, say, US small value stocks) but it definitely helps if you have low risk tolerance like I do.

      Thursday, August 04, 2005

      America's Riskiest Real Estate?

      In my attempt to educate myself on the real estate market of Seattle I have been reading anything and everything I could lay my hands on for the last few days. Today I found a couple of articles that I thought were interesting:

      America's riskiest real estate: In this article the author talks about the coming real estate bubble burst. Boston tops the list as the city most at risk for decline in prices followed closely by New York. Seattle actually comes out at near the bottom although it's still not as safe as some smaller east coast cities.

      Seattle Times also had a good article this past weekend titled "Distorted prices or room to grow?" This article does a good job of presenting conflicting expert opinions on the current state of real estate in a manner accessible to novices like me. The article also talks about the rising interest rates and its potential impact on the economy in general and affordability for first time buyers in particular. I have already been thinking about ARM vs fixed rate. An ARM in 1977 would have made sense considering interest rates were as high as 18% but at today's low 4-5% rate a fixed definitely seems the best choice. Even if interest rates fall it can't fall that much (and if it does I can always refinance) but if it rises it can rise quite a bit.

      I found a house today. Sort of. It's a 2 bedroom, 2.5 bathroom townhouse in a great neighborhood. The price is $367,000. Considering most of the houses nearby are valued at a million or more I think $367,000 is a great price. It's a lot smaller than the million dollar mansions of course but it's the perfect starter home for 2-income young families and the school district is one of the best. I am thinking ahead to when/if I have to sell the house. The proximity to park, school, highway and the fact that it's in an established neighborhood can only count in its favor when the day comes and that's a plus. It doesn't have the stunning water view of the Kirkland highrise condo but it has a nice trail leading into the woods nearby which has a very fairy tale-ish Little Red Riding Hood feel about it that's rather charming.

      My FICO score (I got all 3 credit scores last week) is +/- 714 which is lower than the 720 desirable to lock in the best rates. I also just signed a lease on a new apartment and if I break that I have to pay a $2,000 early termination fee. I am wondering if I should talk to my real estate agent (oh yeah, I got an agent too) about the house. But then, I don't know if I am going to buy it. On the other hand if I wait another 10-12 months like I originally planned I would have spent another $10-12 thousand on rent and prices may go up even more by then. It's hard to know what to do.

      Wednesday, August 03, 2005

      Roots

      Someone asked me in comments how I saved my money. Mostly I think it was luck, although not quite the way one might think.

      My parents didn't have any money set aside for my college. It taught me how to turn adversity into opportunity early in life. I started working when I was fifteen, got good grades and by the time I went to college I had $5,000 in savings from various part time jobs as well as a full scholarship.

      I worked all through college too. At times I felt like I was working all the time while my friends were out partying. At times I felt rebellious and thought "it's my money, why can't I spend it?" But I had seen what debt can to do people with my own parents and I didn't want the same outcome for me. In the end it was worth it because I graduated top of my class with a great job offer and zero student loans.

      After I started working things stayed more or less the same for the first year or two. There were the occasional happy hours and a few more trips to the mall but for the most part my lifestyle didn't change. I had a modest apartment that I shared with a friend. We lived just west of downtown Chicago and rode the L everywhere. I didn't have cable, ate at home most days, went to the library a lot. I had fun too but fun a lot of times was as cheap as an ice cream cone and a ride at the Navy Pier or a road trip across the country. As a result, by the end of my first two years in the workforce I had saved almost $27,000. I remember opening a $20,000 CD and the guy who was helping me exclaiming "Wow, you are so young!" It felt great.

      That was six years ago. I have been working almost 8 years now. In this time I have changed three jobs, traveled to and worked in Europe and Asia, seen meteoric rises in my fortune as well as pay freezes and have even been unemployed. I have received no inheritances or windfalls. On the contrary, I have helped my parents out of debt and my brother through medical school.

      My lifestyle has also changed and my spending increased along with my salary. One too many lattes and designer handbags have gotten in the way of my savings goals more than once. I have moved into bigger apartments and I still haven't balanced a checkbook. But all through it all I have kept to the same values that saw me through school -- hard work and avoiding debt like the plague.

      In late '99 I joined a big consulting firm and over the next three years I traveled within US as well as abroad for projects. My company paid for all my expenses on the road so my only out of pocket expenses most of the time were meals on weekends, my apartment and the car and even the car I didn't have for long. I was traveling every week and it didn't make sense to have a car just sitting there so I got rid of it. On weekends when I flew into town I would rent a car at the airport and then drop it off on my way out. I typically got free rental days every few weeks so it was cheaper than car payments and insurance. On top of the free rentals, I also racked up tons of frequent flyer miles and Amex points which also helped supplement my income. I bought my TV & VCR with the Amex points and it wasn't until recently that I had to start paying for my own air tickets.

      These perks didn't come cheap though. I worked 90-100 hr weeks for three straight years for these privileges and paid the price. By the end of it I was drained. I had no social life to speak of. I never got to see my friends anymore and my relationships didn't last long because I was never around. And then I got lucky. I got laid off.

      It's kind of interesting how it all happened. The company I was working for was bought out by another company. Shortly before the sale went through I got a call from my partner saying I had the choice to stay and take my chances with the new employer or leave with a severance package. He offered six weeks severance, I asked for twelve. This was October 2002. Layoffs were everywhere. Cashing out seemed like the better choice for me. In the end I was able to negotiate 2 months of severance and 1 month of unused vacation payout for a lump sum payment of $18,000.

      Of the 18k I put all but 4k in the bank. The 4 I used to buy a printer and a laptop, get a freelance license and set up a home office. It was a bleak year. Companies weren't hiring much let alone outsourcing work to contractors. Despite my best efforts I only worked about 5 months that year. My family obligations also increased. My parents were in debt, my brother was getting married. My life was some kind of a black comedy. I had a really nice apartment at the time. 1000 sq ft with a view to die for. I sublet it and moved to a much smaller one in a less preppy part of the town. I sold a lot of my nice furniture and cut back on expenses drastically. I also started a side business making and selling custom fragrance blends a la The Body Shop although that didn't really take off as well as I would have liked as a business. And then things turned around again.

      Early in 2004 I got a job offer from a company in Seattle, moved out here and I have been here since. Over the last 18 months I have had time to reflect on my life and my priorities. Other than the car I have not made any big purchases and have managed to save a big chunk of my salary and bonuses. I also started a 401k last year and have been trying not to lapse back into my old spending habits ever since.

      I think most of my savings come straight from my salary. I did get a couple of really good bonuses. The consulting firm I worked for used to hand out hardship allowances for people who were over 100% productive or traveled more than 45 weeks a year. I qualified on both counts and saved most of the bonus I received as a result. Other than those and the $18k I got for taking the severance package I can't think of anything else that contributed to my bottomline. No real estate appreciation, spectacular investments or parental boons here. Honestly, I am a little surprised I have as much saved as I do. Don't laugh but I think what helped me was not knowing how much money I had. Seriously. Not knowing my net worth meant instead of counting the money in the bank I only counted my current income and I tried to stay below it. Over the years as my income increased or decreased so did my expenses but I never tapped into my savings. Other than that I don't really have a very good answer because mostly I have just muddled through. I didn't set out to save. I set out to avoid debt. Somewhere along the line I got lucky and grew up financially.

      What kind of car do you drive?

      My Money Blog has this post about what kind of car PF/money bloggers drive. It's pretty interesting. The predominant trait seems to be to buy a car and drive it till you get your money's worth instead of upgrading to a newer model every few years. This makes a lot of sense because cars lose most of their value in the first year or two. I read somewhere that with luxury models the car can lose as much as $5,000 the moment you drive it off the lot. That got me thinking.

      I drive a '05 2-door Saab 9-3 arc convertible that I got fresh from the assembly line when they first rolled out at the end of 2004. Plus, I lease. In retrospect it wasn't the smartest money move I ever made. That scrap of metal guzzles gas like it's going out of fashion. I am lucky if I can get anything over 14 mpg, ecstatic if I hit 15. But there are perks to owning a Saab too. It handles curves like a dream, I love the dual transmission and the 17" alloy wheels and the metallic color and trim. The fog lights are nice too as are the individual seat warmers. Heck the whole cold weather package is great not to mention the back seats that fold down for extra cargo space. And the computerized dash with the scrolling digital display with complete readouts of your speed, fuel consumption, air speed, inside temp, outside temp etc is just plain cool. It even tells you what song's playing in the radio and who it's by. How neat is that? I also love the integrated car phone system that you can activate by touching a button on your steering wheel (incidentally you can control the radio & CD players the same way as well without taking your hands off the steering wheel) although sadly the satellite car phone service isn't available in the US yet.

      But all that's fluff really. The one thing that sets Saabs apart from a lot of luxury imports in my mind is its safety rating. The 9-3 convertible in particular has the highest NCAP safety rating and I can personally attest that it lives up to it's reputation. I should post a picture of my car right after the crash sometime. It looked like it had been run over by a bus which is exactly what had happened. The car needed $15,000 worth of parts & repairs whereas all I had were some cuts and bruises and a sprained ankle. Not bad for an accident that big.

      Still, when picking a vehicle it comes down to three things - function, safety and cost. If you can get another car that performs the same functions (in my case work commute mostly with the occasional going out and trips to the grocery store) and has a high safety rating but costs less then financially that's the smart choice. Right? Except I don't think it's that simple with cars. I think cars for a lot of people can be an emotional buy. At least I know it is for me. I tend to walk into a dealership armed with three weeks of research and sheaves of paper only to look at a car and start hyperventilating. Half a second later, all my research forgotten, I am cooing in delight over the shiny trim and the power alloy wheels. I form attachments to cars the way some women form attachments to shoes. Is it any wonder that I don't make better car buying decisions?

      I don't think I did so bad with the car though. I am leasing at 0% APR + I got $500 below the dealer invoice price. I don't know what the math is on that one but I am paying $8,300 less over the life of my two year lease than I would have if I had bought the car. Still, The Millionaire Next Door and that post on My Money Blog made me realize that I could be doing better.

      Anyway, this post has meandered along long enough. I meant to just put up that link and then it became all about my baby (yeah that's what I call my car :) So, go check it out and let him know what kind of car you drive.

      Tuesday, August 02, 2005

      Monthly Review & Net Worth Report - July 2005

      Net Worth as of 8/1/2005


      My net worth baseline is from 7/18/2005 so the change is for the last 13 days of the month. However, that doesn't mean I saved almost $5820 this month although that would have been nice. It just means that I pay all my bills at the beginning of each month so typically my net worth sees a sharp decline around the 6th or 7th and then climbs upwards after that.

      The biggest movement this month was between my savings and investment accounts as I decided to invest some of the cash that was sitting around in savings. At the beginning of the month my brokerage and Roth IRA balances were at $0. Over the last 4 weeks I transferred $77k in from my savings and slowly set up a globally diversified portfolio. I am really glad I did this because even after three $75 transaction fees and two $8 trade fees I am up $364.11 on my brokerage & IRA accounts for a total gain of $605.11 (364.11+3x75+2x8). I am not sure what rate of return that is since I invested $5-6k at a time throughout the month but it's definitely better than the $3.08 interest I earned on my savings account this month!

      My 401k also appreciated $267.60 in the last couple of weeks in a surprising show of solidarity (I am being rewarded for my newly found sense of money maturity!) helping my net worth out a little more.

      Unfortunately, I didn't start tracking my spending until a couple of weeks ago so I don't know how much I spent overall but I can do the math.

      A) Total Income = salary + credits + 401k employer match = 7541.66 + 52.20 + 226.25 = 7820.11

      B) Savings from Income = net worth gain - (capital appreciation + interest income) = 2910.42 - (605.11 + 267.60 + 3.08 + 6.33 + 46.05) = 1982.25

      C) Taxes paid/withheld = 1750.75

      Total expense for the month of July = A - B - C = $4087.11

      The good - I saved about 25.3% of my total income. The bad - I went over on expenses. After deductions and tax withholdings my net take home pay as of July is $3580 and I spent $507.11 more than that. However, I also had a couple of big expenses this month. I was in a car accident at the beginning of June. I was in the hospital for a few days and my car was in the shop for what seemed like weeks and weeks. Last week I had to pay the extra days on the rental car, the deductible on the hospital bill and tests etc so that pushed me over by a few hundred. Fidelity brokerage and transaction fees also added up to an extra $241 in expenses this month. The 3 $75 funds I picked though had a much lower expense ratio compared to the NTF funds in the same category. If I had picked the NTF funds I would have paid $225 less upfront but would have ended up paying that much in operating expenses. In fact, over 40 years compounded 8% annually the NTF funds would have actually cost me an extra $26,308.81 in lost earnings so I am happy with my decision to pay the fees although I'd much rather have not paid any fees at all.

      July score: B (behind saving goal mitigated by manic Seattle bus driver)

      To do for August: Start tracking expenses (incidentally I am still soul searching over Quicken vs Money so if anyone else wants to share their thoughts and help me out I will appreciate it)

      Quicken or Money?

      I have become a walking calculator. Gone are the days of blissful ignorance when I could justify paying for a $965 handbag as an investment in my wardrobe. Now I reach for a cup of coffee at Starbuck's and immediately start a monologue in my head.. "how much have I spent today? Do I need this cup of coffee right now? How much will $2.50 invested in the stock market become in 40 yrs?" hmm... Weird but effective I suppose if it helps me curb spending but sometimes I just get a headache from all that mental math. So I am thinking I need a personal finance software. Having never used either, I read up the reviews on both Quicken and MS Money but am no closer to making my decision. The masses seem split somewhere down the middle. Very democratic but where does that leave me? So come on readers (all 2 of you) help me out - tell me which you prefer, Quicken or Money, and why.

      ps: Doesn't have to be Quicken or Money. If you know of any other software or service that works the same way, please let me know.

      Monday, August 01, 2005

      Me

      I am inconsistent.

      What I spent this week - July 31

      Credit reports & credit scores from the 3 bureaus - $17.90* (prep for home buying)
      Books/Magazines - $53.99 ($50* for a 2-yr of Fitness magazine from two kids selling magazine subscriptions to raise money for college + $3.99 Vogue)
      Gas - $37.72*
      Dining out - $67.93* (mostly breakfast & lunch during the week...yikes & this in addition to about $50 in groceries)
      Trip to the Bellevue Arts & Crafts Fair with 2 friends - $9.11* (in lieu of the typical dinner & drinks. The $9.11 was for lunch at a wrap place. It was a fun, low-cost outing + we walked tons so it counts as exercise as well)
      Candy/ice cream/shakes/junk foods in general - $13.64* (back to my caramel frappuccino addiction + a root beer float with a coworker after work)
      MAC returns (shadestick & lipgloss purchased last week) - ($31.55)
      Haircut - $50*
      Painting - $42.43*
      West Elm Aloe Chairs (2) for the home - $239.98*
      Floor lamp - $49.95
      Hardware for hanging up new paintings - $2.95
      Netflix - $16.31*
      CitiShopper- $8.99
      GreatFun - $9.99
      Amex finance charge - $9.51

      *Includes tax & tips, where applicable

      Total = $603.86 (additional tax calculated on 3.99+49.95+2.95)
      Total for home decor = $339.96
      Total for all other = $263.90

      All these expenses are in addition to rent, utilities, car payment, insurance, phone and groceries. Uh-oh.