I put $800.00 of my federal return into the Save-O-Meter. I rounded down to that number and kept the balance as money for myself, i.e. pay off a bill or some other expense. The DC tax refund was going to get banked, but then I found out that I owe VA state taxes. About half the DC refund goes to taxes. I could try to save the rest, but I think I am going to pay down half my new car and home insurance.

The new insurance policies I picked up are written for 12 months, instead of the usual 6-month auto policy. Liberty Mutual does not offer lump-sum payment discounts like the old insurer does. Instead I pay in monthly installments which are about $100 per month, but I hope to have it paid off all of the policy in 2 months. That means my Save-O-Meter savings will be slimmer, but it’s important to me to pay this off so I can forget about it.

I got a new credit card this month to balance transfer $3000.00 for 0% interest till next summer. I didn’t read the fine print carefully enough and was charged a small transfer fee by the bank. It’s enough to make me want to cancel the card, but I’ll just leave it alone. I figure I’ll pay it all off when the 0% APR ends and then close the card next year.

I’m in flux right now with expenditures. I need to figure out the monthly payment amounts on my new credit card and insurance and adjust my planned expenses. I booked the hotel and airfare for the wedding in Puerto Rico this summer, but I still have to get tickets and a hotel for the wedding in CA two weeks prior. I would love to pay cash for all of it, but drawing down my cash cushion is not an option.

I got the final tally and I owe the state of Virginia about $300.00. Good thing I got my federal and old DC tax refunds already. I can afford to pay this straight out of my checking account. I can’t believe they tell you it can be paid with a credit card. No way! That’s kind of nuts.

I am pretty certain I messed up my itemized deductions. I don’t really get how it’s done on the VA forms, but since VA likes to send me bills in October for additional tax and then mail me a refund in December, I’ll just mail it in on time with a check and let them tell me what I’ve done wrong.

I have about a week left to mail it in since the state deadline is May 1st. I think it’s rather thoughtful of the state to give you an extra 16 days to get your state returns done, considering it’s driven off your federal return.

I like Dave Barry’s columns. I think he’s a funny guy. But this book was awful. So awful that I read about 10 pages and returned it to the library a few hours later. I just couldn’t tell when he was joking and when he was doling out an actual pearl of wisdom. If you’re not a very financially savvy person, you’re going to have a hard time extracting any advice out of this book. Rather than looking for entertainment while reading a personal finance educational guide, get serious and read a real book like The Millionaire Next Door.

Yesterday was free sushi lunch day with my team. Someone picked up the tab for me which was nice of them. Today I packed my lunch for the first time in a while. I had an unbalanced meal of leftover rotisserie chicken with two slices of dense rosemary sourdough bread. I’m happy because the chicken was 7 bucks but I think I can get 4 meals for myself out of it. I’m not a big fan of salad, but I did get some salad mix for dinner last night and ate a few bites.

I’ve been making a concerted effort to bring something to work to eat every day, even if it’s just a snack for breakfast. It’s kind of hard since I don’t really cook a whole lot. Food spoils in my fridge. Last night I threw out a sweet onion, leftover Thai soup, and a bit of salad mix. The fridge is very empty. I wonder sometimes why I bother plugging it in.

So far, my grocery bill isn’t so bad for March and April. It’s the restaurant bill that kills me. Dining out costs me the most. There are months where I will spend $400.00 dining out and my grocery bill will be $100.00. There are months when it’s evenly split $300.00 and $300.00. Since February, I have been very careful about going Dutch for most of my meals. Treating people is reserved for only the most special of occasions (like overseas family coming to visit).

This self-discipline will take some more adjustment. Till then, I’m glad the warmer weather is here. I naturally start craving lighter meals with less meat. I eat meat with nearly every meal, but now I try to use meat as a condiment rather than the main entree. It’s better for your health and your budget.

What do you like to pack for lunch? I like meat and starch with some frozen veggies. I can toss it in the microwave. Those used to be the best meals when I cooked a lot. Are you a sandwich person? Salad person? Vegetarian?

I saw this article about how to choose a fund.

First thing, fill out those retirement questionaires you get from your 401k or 403b companies. That will assess your risk tolerance and when you might need this money. Your time horizon is very important in understanding how much risk you might want to undertake. Your plan should then make some suggestions to you out of your fund offerings. But don’t take my advice, read the stuff your 401k plan provides. It’s all in there for you. I don’t have any financial advice, I only encourage you to read, read, read.

I’m under 35 and I undersaved when I was in my 20’s, so I am fairly aggressive in my investments. I’ve done pretty well in the last 3 years too. About 40% of my holdings are in the now-closed Fidelity Mid-Cap fund. (Actually as of April 28th, so hurry up if you want in!) I was lucky to be able to participate in that fund with my old company. I have really crappy investment vehicles at my new firm. I would love to just put everything in Fidelity or Vanguard but the financial whizzes bringing my firm out of bankruptcy think they’re smart fellows and pick 10 of the worst funds I’ve ever seen. If they were good at this, I think they’d be working Wall Street instead of treasury management for a languishing company, but I digress. They seemed like nice folks at the company holiday party.

I expect to keep on an aggressive growth track for another 5 years. I am only looking for 7-8% gains, but would like 10% gains to catch myself up. In the meantime, I’m contributing 10% of my pre-tax salary and an additional amount of about 2-5% of my pre-tax salary goes into a regular savings account at the moment to build up my cash reserves.

I hold a Roth IRA equity account, but I’ve been ignoring it. It has very little in it and that’s my next area of focus once my emergency fund is set. I’ve had some ups and downs with stock trading. I’ve gotten lucky on a few things, but I’ve watched all that dwindle through poor investment choices and neglect. When I was living paycheck to paycheck, my Roth didn’t seem like a good place to focus my saving efforts. I didn’t have the wherewithal that Miserly Bastard thinks you need to make a serious study of investing. I would have to agree. Now that I’m more inclined to invest in stocks and build up this portion of my net worth, I’m breaking out my copy of the investment classic, A Random Walk Down Wall Street, by Burton Malkiel. Modern Portfolio Theory has been good to me in the past. Study up on it.

For the curious, my first picture. It’s from Quicken and breaks down all of my investment accounts. It sums up the expected return in my target range and reminds me that I have a lot of risk, which is to be expected since I won’t be retiring for at least 35, almost 40 years. I hold a lot of stocks on purpose. I only recently bought an international fund because I felt that there is good growth waiting to happen overseas. In fact some of my favorite stocks are actually ADR’s (American Depository Receipts, basically overseas stocks traded on US Markets). I also started purchasing a bond fund in recent years on some whim that I shouldn’t hold 100% stocks in my portfolio. In that account, it’s more like 10% of the holdings, but only 3% of my overall. I wonder if I should buy some more, say like the savings bonds that Jane Dough is about to start getting again.

This is the second part of this book review. Part I is here. It’s also a very long post.

The Good News:

1. His initial story about the McIntyres may be the only thing you have to read in the book at all. That story illustrates everything and is pretty powerful. After that, you can almost stop reading.

2. I did like ‘Pay Yourself First’. My best girlfriends are pay yourself first types. They always have savings. If anything, I’m the spendthrift amongst us. Ironically, I’m the only one that owns a home though, because I’m the only one spoiled enough to ask my folks to help me out. (but that’s another post)

3. I also liked calculating how much of your work day is for you section. I calculated that my hourly wage is around $30.00 and I work about 4.7 hours a week for me. At first I thought that was high since his calcuations say people work about 22 minutes a week for themselves, but I double checked it. The 401k savings contribution really does make that difference.

4. Caveat on his advice to pick a percentage to contribute and then do a little more. You have to keep in mind *when* you can change and how easy it is. I worked for a small company last year and though the plan was administered by a large corporation with lots of online services, I could not change my contribution monthly. It had to be done quarterly and I always had to ask HR to make sure it was done. Sometimes they didn’t make the change.

5. He did a good job outlining tax-sheltered retirement savings options. He explained the difference between an IRA and an SEP-IRA very well. I’ve always wondered about that. Now I know that my parents could be putting a lot more in to their SEP-IRA and I will have to talk to them about that. He also introduced me to 401k plans for small businesses and how to obtain one.

6. ‘Emergency Basket of Cash’ I have to give him credit. He’s got the catchy phrases. I really like this one. I’ll have to start using it. It makes me picture myself swinging a deep Longaberger basket of money while skipping down the street in an Easter bonnet. Though I do think he’s a little paranoid about accessibility. I’m ok with locking up my money in laddered CD’s. He is all about the money market account. If you really need liquidity that fast, that’s what balance transfers are for on credit cards. Who needs three thousand of dollars in a blink of an eye? I honestly can’t think of a situation like that which is realistic. If you can get to $1000.00 within 30 days from a laddered CD, isn’t that reasonable?

7. I totally agree when he says keep your rainy day fund and your regular checking account totally separate. One of the biggest failures I’ve had in saving money is accessibility. I have a credit union account that is hard to access, and therefore I don’t touch it. It’s why I’m a big fan of CD’s. The only bad thing about this cache of money is that the interest rate is sickeningly low. Inflation has eaten it up.

8. His 50-50 Savings-Debt strategy makes a lot of sense. I believe in it because the Emergency Basket of Cash is so important. And if you save enough in your EBoC, you can pay a big honkin’ chunk of your debt off at once, feel good about it, and feel like you can afford to do it if you aren’t going to take the cash cushion balance down to zero.

All in all, I think this book offers a lot of hope, which is great. This book is for people who really haven’t started saving at all and need help with getting started. I just feel hesitant because I don’t think he illustrates risk at all. He has one single message, GET STARTED SAVING NOW AND DO IT AUTOMATICALLY. Ok, bud, I got you after the first 4 chapters. It’s repetitious, but if it hammers the message home, then I guess it’s ok. I could see myself giving it to a friend who really needs a kick in the pants to start saving.

Punny Money has it up here

I think he’s done a really good job this week. It’s one of the best I’ve seen for it’s thoroughness and commentary. I like his “editor’s choice” logos.

There’s a lot of good stuff in there. Educating the Wheeler’s meal planning post is probably my favorite, along with Single Ma’s household tips

And it wasn’t through GEICO!

What did I learn through this?

1. Shopping around is worthwhile.
2. Higher deductibles will reduce your rates.
3. Homeowners insurance is cheap if you don’t have expensive stuff.
4. Identity theft riders are available for homeowner’s insurance.
5. Affinty group discounts are worthwhile.
6. Knowing your net worth is good, because that will help you figure out how much liability insurance you need to carry.

I got a solicitation from Liberty Mutual through my university alumni club. I usually toss these things out, but it was timed perfectly. My auto insurance expires this month. The other incentive to call was a $5.00 Visa gas card just for getting a quotation.

I increased the deductibles for comprehensive and collision on my 5+ yr car. I found out they run a CLUE report, Comprehensive Loss Underwriting Exchange to find out if you’ve ever filed a claim. This is different from your insurance score, an Isaac or Beacon score.

I was paying over $900.00 for auto insurance through an insurance company that does not sell homeowners policies in VA. With this new company, I was able to save myself $60.00 a year, getting just as much auto insurance for higher deductibles, and a homeowner’s policy on my condo which also includes a rider for identity theft at $24.00 a year.

I’m super happy about all this. If you like, I’ll give you the name of the nice man on the phone. He has a direct line. He explained what CLUE was. He’s the one who advised me that in the future as my assets build, I may want to increase my auto liability insurance because I should protect those assets. When I get more assets, I’ll think about it. But as you can see, I don’t need much right now since my net worth is so low!

Warning: This is extremely long and will be in two lengthy parts.

Bad news first:
1. I really couldn’t bear his writing style. I felt like the formatting was like a transcript of a lecture. I’ve never heard him speak, but I don’t have to. I read enough of his book to know how he talks, what he emphasizes while speaking, and even the spots where he would probably be gesticulating or jumping up and down. It’s that obvious in his text.

2. I think in his examples, 10% rates of return are WAY TOO HIGH. I try to stay at a conservative 7-8% when calculating ROI (return on investment). Per Jeremy Siegel’s book, that’s about what the market makes and I’m not too itchy to beat the market in my calculations, lest I fall woefully short and end up in the poorhouse.

3. As much as he says 401k’s are great, he does not EVER say that it is possible to lose money in a 401k plan. These are investment vehicles that are not as safe as FDIC deposits. I think that’s a little irresponsible of a guy who’s supposedly passed a Series 7 exam. The other part of it is that he doesn’t warn you at all about crappy plan investment options. I’m staring at some right now and it’s enough to make me stop contributing to my 401k because I’m so close to losing money after inflation is factored in.

4. I didn’t like his IRA advice because he never factored in tax rates before and after you retire. You are most likely going to be in a lower tax bracket after retirement and that’s one of the main reasons why IRA’s are so useful. You’ll be sheltering your high bracket current income, and essentially moving it to a lower bracket. Example, say you are in the 33% bracket making $200K a year before retirement. After retirement, you make withdrawls equal to about $70K a year. You’ve just moved down two brackets to 25%. Of course, at the same time, you are gambling on future tax rates being somewhat static.

5. Listing contact information for companies in a book is a bad idea because you have to revise it all the time. So if you do get this book, try to get a newer edition. Some of the institutions in my library copy are gone due to mergers, so watch out if someone hands you their old copy. I suppose he added it so that there’s no excuse why you can’t start saving automatically, but keep it in mind if you want to call while the book is in your hand.

6. He promotes getting non-traditional low-downpayment mortgages, but doesn’t outline that in a seller’s market buyers holding FHA 3/97 loans get dinged. Those bids are often passed up for bids backed by 20/80 or even a 10/10/80 mortgage.

7. Like many personal finance and morgage books, (even the Miller book I endorse on the right) does not explain property tax re-assessments and how those effect your payment. I know I was hit with this because I grew up in a place that reassessed every 3 years. In VA, the entire state reassesses property every year. That means your property tax bill will skyrocket in a hot market. I don’t think his book, or any book I’ve read adequately tells people to factor this into their calcuations.

8. I like real numbers and like in point 7, a lot of personal finance and mortgage advice books don’t really use sample property tax rates, upkeep estimates, insurance premium estimates very well. I had no idea that I could insure my property for cheap. I always thought I couldn’t afford it even on my crappy salary. I have no idea what it costs to replace a window or a roof, or even re-tar the driveway. All that factors into whether or not you can afford a home.

Whoopee! I added another $902.29 to my savings account today. That moves my Save-O-Meter to 72% of its $4,000.00 goal. I am painfully close to meeting my goal, I’m tempted to eat ramen all month to get there.

I received my 2004 DC tax refund today. It’s kind of funny. The final check was cut for $637.24, which over a hundred dollars more than I calculated my refund would be on my return. So basically the DC Office of Finance gave me approximately 20% interest for the past year. That’s not too shabby! Little did I know that my long-missing refund would end up being one of my best savings investments ever.

Thanks Caitlin and Jane Dough for your support in meeting these goals! I will OBEY the Save-O-Meter and deposit my DC refund into my savings account.