February's Net Worth

While this has been a super crazy week at work, I have taken the time to update my net worth and see where I stand since January.

My new net worth is just shy of $90k --- $89,807.11. This increase is primarily due to my regular savings via my 401k plan and Roth IRA because I know it sure wasn't market gains. I'm hoping by the time March roll's around I should be over the 90 mark which will be most exciting. Anyway that's all for now, back to the grind --- next week I should pick back up more regular writing.

Monday's Money Funny - 401k's

I've started a feature on my blog called "Monday's Money Funny" which are humorous (or at least humorous to me) articles/jokes/just about anything (real or satire) that I've discovered over the weekend when I catch up on all my on line reading that spark a need for knowledge. For example last week's was a joke about a man wanting to take his money with him which promoted a search for information regarding how create a will. This week's is a "satire" (at least I sincerely hope its a satire) about why not to invest in a 401k which promoted a search for information regarding reasons to invest in a 401k or other retirement savings account.

I hope you enjoy the third of the series from Time Out New York that I found via a blog I frequently read called My Open Wallet.

Below is the article: 401ks are for suckers

Five out of five financial planners think you should have one, and 70 million Americans do. This clock-puncher says they’re all wrong.

By Ashlea Halpern

Photograph: Roxana Marroquin

So here I am, 26 years old, and I haven’t saved a penny for retirement. Like many folks my age, I have a litany of excuses for opting out of my company’s 401k—school loans, credit-card debt, high rent, low pay and a minor addiction to eating out. It’s that last vice that speaks to my true feelings: I can’t rationalize budgeting for a tomorrow that may never come. I want to live now. I want to spend my cash on everything listed in this magazine, not hoard it away so I can score a nice trailer in Clearwater, Florida, 40 years from today.

For this, people think I am insane. Of TONY’s 88 eligible employees, only 11 have not enrolled in the company plan. Our editor-in-chief, the unofficial poster boy for employer-sponsored 401k plans, was beside himself when he found out I was one of them. “Why would you turn down free money?” he said. “If you saw a dollar on the street, would you take it?”

Begrudgingly, I started to research our plan. TONY’s participant-directed 401k allows me to contribute up to $15,500 pretax annually, with a 50-cents-on-the-dollar match for up to 3 percent of my salary. Pretty sweet, right?
But wait—there’s fine print.
Employer contributions are discretionary (i.e., in times of “business hardship,” they may be nixed—though TONY financial adviser Wayne Banks tells me this has never happened); and while you’re 100 percent vested in your contributions from the get-go, the company’s match follows a timetable: stay only one year, and get 25 percent, and so on. In creative fields with high turnover (like ours), that level of commitment is, well, scary.

I also resent that more and more businesses are beefing up their 401k plans instead of offering living wages and bonuses. While I appreciate that companies aren’t required to offer any match at all, isn’t a vesting schedule diametrically opposed to the spirit in which 401ks were created—to empower employees after pensions went kaput?
Brian Fernandez, a financial planner at Smith Barney, paints a bleaker picture of why I should save for retirement instead of taking trips to Europe. “Social Security is broken,” he says. “Congress set up the 401k because it knew the American public needed to save its own money.”
David Wray, president of the Profit Sharing/401k Council of America, evaluated TONY’s plan and concluded that “while it isn’t a very rich match,” it’s unlikely you could outperform a 50 percent return elsewhere.
Kevin Kautzmann, founder of EBNY Financial LLC, also reiterated our 401k’s tax benefits, particularly in a city like New York: “It’s the best deduction you’re going to get.”
That’s all good, but why should Congress—or my boss, for that matter—care what I do? Is it out of the kindness of their hearts?
I’d like to think so. But there’s also an IRS rule that caps the amount of money a company’s highly compensated employees (or HCEs, defined as people who make over $100,000) can save based on the average amount put away by the rank and file. Assuming the boss is an HCE, it’s to his benefit that underlings like you, me and the janitor save for retirement. “The employer has an incentive, sure,” says Wray. “But it’s win-win.”
Win-win until your kid gets sick or your mortgage shoots through the roof. The 401ks are designed in such a way that everyone—financial advisers, stockbrokers, mutual-fund managers—gets paid before you do. I fundamentally object to that. It’s my money, dammit. Why should I be penalized 10 percent for a hardship withdrawal?
“It has to be enforced savings, otherwise people won’t do it,” says Wray. “The other benefit of a 401k is that the investment decision has been enormously simplified. That’s terrific because most people are never going to open a brokerage account by their own volition.”
But that’s exactly it—most folks enrolled in 401k plans don’t have a clue how they work. “If you offer more than eight choices, their eyes glaze over,” says Kautzmann. Clearly, I’m supposed to take comfort in knowing that the government and my employer are directing my investments. Just keep in mind, this is the same government that botched Social Security, and some of the same employers that didn’t think twice about screwing a whole generation out of its pensions. (That’s not TONY, thankfully. Enron, on the other hand…)
“Money is very emotional for people, and it’s really difficult for them to give up control,” says Wray. “A 401k requires that an employee trust his employer, trust the government and trust the financial-services industry.” Sorry, bud, but that’s a trust I just don’t have. My mother was what you might call a “mattress banker”—she ratholed money around the house, $5,000 under the sink, $10,000 in a boot. And my dad, well, let’s just say “the masses are asses” is his favorite catchphrase. So if I’m on the dole at 65, eating cat food out of a rusty hubcap, I’ll be content knowing that while y’all Steady Eddies were fastidiously stashing pennies, I was gorging myself on expensive cheese in Paris and snorting hard drugs off the backs of go-go boys in Berlin.
In other words, I was living.

I'm really hoping that Ashley Halpern is writing this article as a satire, otherwise I fear for her in retirement as she won't be able to feed her minor addition to eating out let alone her basis necessity of feeding her self. Here's an article from About.Com explaining why you should contribute to your 401k as well as an article from HowStuffWorks.com explaining the benefits of a 401k and how to contribute.

Stay tuned for next week's Monday's Money Funny. Also if you run across any Monday Funnies please email them to me at future.millionaire.blog@gmail.com and if I use them I will give you credit and link to your blog.

Sticky Situations at Work

One of my big goals for 2008 is obtaining a promotion. But some times its hard to do that when you're caught in sticky situations with a boss or co-worker.

One of my biggest problems at work and is with a co-worker who's a major slacker. This man is not my boss but he is in a position of higher rank and authority than I am. We both report back to the same boss.

I've tried to figure out a way around this situation and talk to my boss in generalities about this issue when I first got put on the same team with "slacker" more than a year ago. I did not feel I was stepping outside of my bounds since my boss asked for my feed back since several other team members were giving unfavorable reviews of "slacker" and he wanted to know if they were true. Plus until this situation arouse I've always had a really good relationship with this boss and have worked on several other projects for him. When I tired to address this issue before I could really express my concerns I was informed that one of my job responsibilities was to make both my boss and "slacker" look good to the brass in our company, which I agree with to an extent. Talk about having to suck a sour egg! But I've come to accept this situation that I'm in and realized it was only for a short time (if you call just a hair over a year a short time) and that by doing both my job and "slacker's" I would be gaining valuable experience. However, every couple of months I get mad, real mad, about the situation and it starts to eat me up inside. I start thinking about the tons of extra hours I put in each week to do both of our jobs, I think about the social activities at work I'm missing because I'm trying to keep up with everything and keep the project afloat and I start resenting the situation. Don't get me wrong I like to work hard and I get enormous satisfaction from a job well done, but everyone needs to pull their own weight, especially on a team. I keep reminding myself that its only for a short duration and it will get better but sometimes its hard, and I know my usually cheery work personality suffers because of my frustration with this problem.

It's wildly accepted and the standard that a person in my boss's place wouldn't do any of the grunt work, he's job is to manage people like "slacker" and me, maintain the relationship with the clients, and relay information from top management to "slacker" and me, but "slacker" on the other hand is fully in a position that he's supposed to be in the trenches and know the project and contribute to the project, in fact its expected and really his only responsibility. Instead "slacker" wants to pretend he's about two levels higher and I'm responsible for all of the work and he just needs to sign off and/or distribute my work, so instead of contributing "slacker" spends all day working on his high school alumni website. (As a side note "slacker", myself and the rest of the team are located in a different office and city from the boss and the boss only comes and visits about once a month to check up on us).

(Additional side notes "Slacker" is only one position above where I am on the career ladder. The side story about how "slacker" came to work for our company about a year ago is that "slacker" was "laid off" without a severance package from his previous two employees -- I don't know about you but to me that sounds like the man was fired, not contributing enough to his other companies since he was always first to be laid off, or he keeps choosing the wrong companies. Personally I'm going with option 1 or 2, either way they don't bode well for "slacker".)

Well anyway, I think you get the problem with "slacker" and can probably read between the lines to see my frustration, especially today -- it was one of those mad days that it really gets to me.

Well I stumbled across this article called Eight Sticky Boss Situations at CNN.com and one of the eight was "While your boss kicks back in her office making personal calls, you're doing both your job and hers. When the time comes to present projects to senior management, your boss takes credit for your hard work." And thought this might apply to my problem with "slacker", except I really believe that the boss knows this is the situation and accepts it because the work is getting done and done correctly (thanks to me) and he doesn't want to rock the boat. This is very typical of his personality, it took one other slacker loosing almost 2million for the company for him to take action and go through the chain of command to reprimand and ultimately fire the other slacker.

So while this might not completely resolve my problem I only have 3 more months of this and at least it gives me hope and a strategy try to deal with the problem. Do you all have problems like this? How did you handle it?

Fed "Emergency" Rate Cut

As you probably know the Fed's cut interest rates in an emergency today. I have plenty of thoughts to share on this but for tonight I've decided I need sleep more, since work has been so crazy lately.

So in lieu of thoughts I'll provide some links with some interesting reading on this recent rate cut.

ABC News Article "Fed Rate Cut Stabilizes Stocks"

MSN Money Articles "More Rate Cuts to Come?" and "Whom the Rate Cuts Help and Hurt"

Bloomberg.com Article "U.S. Stock Futures Drop on Concern Rate Cut Won't Stop Slowdown"

Monday's Money Funny - Wills

I've started a feature on my blog called "Monday's Money Funny" which are humorous (or at least humorous to me) articles/jokes/just about anything (real or satire) that I've discovered over the weekend when I catch up on all my on line reading that spark a need for knowledge. For example last week's was a satire on the government's debt which promoted a search for information regarding how to consolidate consumer debt. This week's is a satire about not taking your money with you after death which promoted a search for information regarding how to write a will.

I hope you enjoy the second of the series from the Joke Yard called You Can't Take it with you:

There was a man who had worked all of his life and had saved all of his money. He was a real miser when it came to his money. He loved money more than just about anything, and just before he died, he said to his wife, "Now listen, when I die, I want you to take all my money and place it in the casket with me. I wanna take my money to the afterlife." So he got his wife to promise him with all her heart that when he died, she would put all the money in the casket with him. Well, one day he died. He was stretched out in the casket, the wife was sitting there in black next to her closest friend. When they finished the ceremony, just before the undertakers got ready to close the casket, the wife said "Wait just a minute!" she had a shoe box with her, she came over with the box and placed it in the casket. Then the undertakers locked the casket down and rolled it away. Her friend said, "I hope you weren't crazy enough to put all that money in the casket." She said, "Yes, I promised. I'm a good Christian, I can't lie. I promised him that I was going to put that money in that casket with him." "You mean to tell me you put every cent of his money in the casket with him?" "I sure did, " said the wife. "I got it all together, put it into my account and I wrote him a check."

While its true you can't take it with you, you should plan on how you want your money distributed after you leave this life. Here's an article from US News on How to Write a Will Online that may help you plan how to leave your money to your loved ones and/or good causes.

Stay tuned for next week's Monday's Money Funny. Also if you run across any Monday Funnies please email them to me at future.millionaire.blog@gmail.com and if I use them I will give you credit and link to your blog if you have one.

Secrets of a Self-Made Millionaire

Its been snowing all day today. And those of you that know anything about Georgia know that we're never prepared for snow, especially since it only comes about once every three years. Anyway since I'm snow bound I had plenty of time to catch up on the blogs I read.

I stumbled across an article that that JD who publishes the blog Get Rich Slowly discovered in Readers Digest called Secrets of Self-Made Millionaires, seeing that I plan to be a self-made millionaire figured I should check it out.

Below I've summarized the secrets the article lists:

1. Set your sights on where you’re going
2. Educate yourself
3. Passion pays off
4. Grow your money
5. No guts, no glory

The Biggest Secret? Stop spending.

I decided I'd check to see how I was coming on each of these secrets.

1. Set your sights on where you’re going - I definitely have my sights set. But the more important part, at least to me, I have an action plan to achieve my sights. check--- on my way to becoming a millionaire
2. Educate yourself - By creating this blog I'm helping to educate myself. I read a ton of money articles every week and anytime I run across a financial topic or a word I'm unfamiliar with I research it. My biggest problem is when there is conflicting advice trying to figure out what to follow. check--- on my way to becoming a millionaire
3. Passion pays off - I am passionate about my job and am happy to go to work every day (well most every day). I also am passionate about savings because I realize the freedom money saved will give me in the long run. check--- on my way to becoming a millionaire
4. Grow your money - I have never really lived pay check to pay check so I'm head of that curve. I also activity save. check--- on my way to becoming a millionaire
5. No guts, no glory - Okay I definitely am not doing this. I've never been a financial risk taker. I have always felt I work really hard for my money and save every penny I can, so I don't want to loose even a cent. This thinking holds me back from taking risks, even minimal ones. But I think I'm starting to take some calculated risks, this year is the first year I've invested indirectly in the stock market via mutual funds. So maybe there's time left for me, however I know I'm loosing opportunity every second I wait to take a calculated and responsible risk.

The Biggest Secret? Stop spending. - While no one ever just completely stops spending I think I've reach a point in my life were I realize I don't have to have the latest gadget or accessory and truly do want to live below my means.

Overall, I think I'm on my way to becoming a self-made millionaire. How do you check out with becoming a self-made millionaire? I hope you're on the same path and/or working to get on that path so we can all enjoy our retirement together.

Progress on 2008 Goals --- Progress on obtaining Promotion

I just got back from the airport after being out of town for work since Tuesday and wanted to take a quick second to let you all know about an interesting conversation I had while out of town before I crash in bed since I've hardly slept in the last 4 days.

In my company the culture when you're traveling with a group of people is that you're expected to go to dinner and the hotel bar with everyone each evening (not sure how productive the next day meetings are since every one's usually pretty hung-over). I always end up staying up too late and my schedule gets all messed up, but at the same time I don't think I'd have it any other way because once you've socialized and "boozed it up" with the bosses you always get to know the inside scoop of what's going on in the company. You can find out who's performing and who's not, what's the next cooperate strategy that's going to roll out, etc etc etc -- its really invaluable knowledge you receive.

Thursday night one of the Vice Presidents and my old boss (soon to be my current boss once I move back to Atlanta) was talking about the problems that he's having in his department with some of the new hires and how he's is really looking forward to having me back to set an example as well as bring positive energy and enthusiasm for the job. We'll call him "Mr. VP" goes on and on about how I'm such a valuable asset. I'm taking this all in and listening to him and he continues on, so I'm thinking this is good that he recognizes I'm a valuable asset but I also realize the man's had about ten vodka tonics and he likes to talk. But "Mr. VP" goes on and says he wants to see me succeed and that when I come back in April we should sit down and talk about my career path. Again I'm happy but he's still drunk so he might be just talking but the next day at breakfast as "Mr. VP" is hesitantly drinking his coffee and shading his eye he asks me if I remember our talk last night, I say yes thinking he wants to let me know I should keep that info to myself since my career path wasn't all he talked about, but rather he says he wants to make sure that when I do come back in April that we talk about my career path because I'm a "super star" according to him and he wants to keep me challenged and happy. Inside as I eat my bagel I'm silently jumping for joy! Exactly what I need, some one in a high place that wants to help me get ahead and recognized that I'm good at my job.

Well thanks for listening to my exciting news, in April I'll have to let you all know how our talk goes, but for now I'm crawling to bed and won't resurface until late on Saturday.

Monday's Money Funny - Debt Consolidation

I've decided to start a feature on my blog called "Monday's Money Funny" which will be humorous (or at least humorous to me) articles (real or satire) that I've discovered over the weekend when I catch up on all my on line reading.

I hope you enjoy the first of the series from The Onion

Below is the article: U.S. Takes Out Debt-Consolidation Loan

WASHINGTON, DC—Plagued by late fees, high interest rates, and harassing creditors, the U.S. took out a debt-consolidation loan Monday, combining the nation's $6.1 trillion debt into a single, easy monthly payment.

Enlarge Image

Bush watches an E-Z Debt commercial on a White House TV.

"My fellow Americans, we have just taken the first step toward regaining control of our finances," said President Bush at a press conference. "Thanks to a joint arrangement between the Treasury Department, the Federal Reserve, and E-Z Debt Services of Baltimore, we are finally on our way to freedom from debt."

As of press time, the national debt stands at $6,144,393,982,061.52.

Under the terms of the consolidation, E-Z Debt Services will repay the nation's estimated 45,000 creditors, a majority of whom are foreign investors, insurance companies, banks, and other privately held entities. In return, the U.S will make a single monthly payment of $9.26 billion, adjusted for inflation, to E-Z Debt every month for the next 70 years.

"We are proud to enter into this arrangement with the federal government," E-Z Debt spokesman Phil Rizzo told reporters. "We know how hard it is when you're buried under a mountain of bills with seemingly no way to get out. When you don't know where else to turn, E-Z Debt is there to help get you back on your feet."

The government first became aware of E-Z Debt Services on July 10, when Sen. Max Baucus (D-MT) happened to see a commercial for the company while watching late-night television. Two days later, President Bush saw the same ad during a 3 a.m. M*A*S*H rerun.

According to White House press secretary Ari Fleischer, Bush was sitting at his desk clutching a fistful of past-due notices when he saw the ad.

"He was holding all these unpaid bills, and tons more were piled high on his desk, including a three-month-old bill from Lockheed-Martin for $5.3 billion worth of jet fighters," said Fleischer, who was in the Oval Office working late at the time. "He raised the handfuls of bills above his head and shouted, 'I can't take it anymore!' That's when the ad came on."

Enlarge Image

Bush poses with a Lockheed-Martin X-35A fighter that was saved from repossession, thanks to E-Z Debt.

After extensive meetings between E-Z Debt officials and the Treasury Department, an arrangement was reached which provided a manageable payment plan—with no threatening phone calls or military invasions from creditor nations.

Though the House Of Representatives swiftly and decisively approved the consolidation plan by a vote of 285 to 103, the Senate took longer to rally the necessary support, debating the issue for weeks.

"I was definitely skeptical about E-Z Debt, as were many of my colleagues," Senate Majority Leader Tom Daschle (D-SD) said. "I'd heard horror stories about those debt services. England used one to get out of a recession in the late '80s, and they're still paying for it."

"But E-Z Debt is different," Daschle continued. "Jim [Smoller], our E-Z Debt representative, sat down with me and the other senators and really convinced us that debt consolidation was the way to go. He was extremely helpful, taking the time to patiently answer all our questions. He even gave us a free quote."

Opponents of the plan charge that it unnecessarily endangers the numerous national assets offered as collateral. Among the valuable properties being put up are Yellowstone National Park, NASA, and the state of Alaska.

"Holding the nation hostage to a single creditor is hardly preferable to the original situation," said Sen. Dianne Feinstein (D-CA) during a lengthy Senate debate on the consolidation. "Besides, I am confident that if we just trim a few unnecessary expenses from the budget and somehow get a little bigger GNP, we can climb out of this hole without help. We just need a little more time."

"Okay, so we mismanaged our money a little bit—who doesn't every now and then?" Sen. Bill Frist (R-TN) said. "But that's no reason to resort to using one of those get-out-of-debt-now services."

Despite such opposition, ultimately, the Senate's pro-consolidation voices won out.

"In the end, everybody came to see that E-Z Debt isn't just another loan. It's a way to get out of debt without declaring bankruptcy," Daschle said. "Thanks, E-Z Debt. We couldn't have done it without you."

I hope no one is in quite as dire situations as the US government's debt, however in case you are facing these type of problems I have included a link to an article at Bank Rate on how to best consolidate your debt.

Stay tuned for next week's Monday's Money Funny!

How Much to Spend to Buy a Car

The other day I was having dinner with one of my good friends and knowing that I'm into personal finance, he sought my advice about buying a car.

My friend, "Car Fanatic", has always been a big car enthusiast, in fact he's the only one I know who every month goes to a different car show. However, ever since I've know him he's always driven the crappiest car of the group. (Keep in mind I've known him since we were freshman in college -- so most college students, or at least the one's based in reality, drive crappy cars). Anyway he used to drive a 1981 Mitsubishi and then about two years ago when he graduated from college he upgraded to a 1992 Honda Civic. Well now "Car Fanatic" is looking to get a "real car" in his words and now that he's financially stable wanted my advice on what he could afford.

I know he was looking for something like "$20,000 max" or "no more than $250 a month" or any other solid dollar figure. I'm usually rather opinionated and am always willing to contribute my two cents and sometime even twenty-five cents, so "Car Fanatic" was taken back when I said that I really couldn't give him a firm answer and it really depends on him. He said no, Future Millionaire, seriously what can I pay a month for a car payment?

First off the idea that he has to finance it, doesn't sit well with me, especially since I know he paid cash for his other two cars. But none the less, I'm not one to judge (okay I take that back, I judge but tell myself I shouldn't). So the best advice I could give him was:
It really depends on how much you value a car and what you're willing to sacrifice for it, for example would you rather have a rockin' ride or be able to go to a nice dinner with friends every week? etc. In the mean time while you're figuring out how much you value a new car, you should start playing house by setting aside whatever amount of money you feel you can a) afford and b) would align with a car payment for your future car. And play house for several months (at least 4-6) to see if this is a realistic amount of money and on top of that when you go to buy your call you'll have a nice down payment already set aside.

On top of that I advised "Car Fanatic" to avoid at all costs going into a dealership when he was ready to buy a car with the attitude that he could only afford X amount of dollars per month as many times they will fluctuate the interest rate and length of load based on this information instead of dealing strictly in the lump sum price of a car. With an attitude of money per month the dealership can really end up having you pay more for a car than you were ever intending.

Well that's my 2 cents on buying a car, and my no means am I an expert car buyer so for your used I've listed several good car buying advice articles that may be of help:
Edmonds.com --- check out the real price of cars
Inside Car Buying Secrets
How Stuff Works : Buying a Car
Car Buying Tips

Spending Money to Save Money

Its nearing the end of January which means W-9's are on their way and I'm starting to think about preparing my taxes.

2007 was the first year I've ever been eligible to contribute to a 401k account, which will complicate my taxes and make me uncertain. In the past my taxes have been pretty straight forward; W-9 + Bank Statement with Total Interest + Standard Deductions means complete in about 30 minutes. Now that I have the 401k complication, I've tried to investigate on my own how to impute this data into my return but if you've ever read the IRS info on 401k its about as clear as mud. If you'd asked me even two years ago if I'd pay someone to do my taxes I'd have said no way -- I was frugal and could do them on my own.

I used to think I was a frugal person but really I was just cheap. I'd buy the cheapest of any product I needed, I needed paper towels I'd buy the el cheapo brand, I need a pair of black pants and would also get the store brand that was on sale for 75%. Its only within the last couple of years that I've realized that I wasn't being frugal, I was cheap because it was taking me 5 paper towels to complete the same job that the bounty brand (or whatever you preferred brand is) and that those pants I thought I got a steal at for $20 only lasted about 2 wearings.

So this year I'm biting the bullet and spending the money to get my taxes completed, but at the same time I'll ensuring my return is correct and more importantly learning how to complete my taxes with these complications.