Mapgirl’s Fiscal Challenge

I’m dating myself by revealing that I remember the days protesting for divestiture from South Africa because of apartheid. It was a big deal to get our school’s endowment fund to divest in line with its religious principles and values. It seems like a very small act to divest in Sudan because I don’t have a lot of money, but I feel it’s a small way I can exert myself politically with my economic choices.

Penny Nickel posted a great resource for checking to see if your mutual fund or stock does business in Sudan. I checked my mutual funds there last week, so far nothing appears there, but I believe that the new Asia-Pacific fund I picked up in my new company’s 401k plan might invest in PetroChina, which buys Sudanese oil. I’ll have to watch for that.

There is only one caveat though. I believe the lookup service uses publicly available prospectus records to pull the top 10 investments of each mutual fund. At best, it’s one calendar quarter behind on what the fund currently holds, and it is contingent upon having a large enough equity stake to make it into the top 10. For an extremely bloated fund, you may not see anything truly useful. For instance, Fidelity Magellan Fund has $39 billion dollars invested in 264 companies. The top 10 make up 28.4%. That’s $11 billion dollars! That still leaves $27 billion unaccounted for in 254 companies. So know the limit of doing this. It doesn’t stop me from checking my current investments, but I might decline a new investment if I see it on the list.

N.B. I do not have money in the Fidelity Magellan Fund. I just picked it because I know it’s a really large one I could look up easily.

Someone asked me recently about investing in renewable energy stocks, but asked if there were any special mutual funds for them. Knowing that there are socially responsible investment vehicles out there, all it took was a simple Google search for “alternative energy mutual fund” to turn up two solid articles from CNN and from Altenergystocks.com. Neither article is moldy oldy. They’re within the last 2 years and the Altenergystocks.com article has a follow up link from October 2007.

Personally, I’m holding Applied Materials (AMAT). Not because they are some special renewable energy stock, but because they are the leader in semiconductor manufacturing. However, as a leader in chemical-vapor-deposition products, their machines are also used to make photovoltaic products, i.e. solar energy collectors. I bought it a little too high, but it pays a dividend and generally moves cyclically, so you can always buy more on the dip. I plan to hold these shares forever because computers are never going to go away. I’m just putting it out there since apparently their stock jumps on press releases about their solar product line. I doubt it makes much money for them, but easily every single chip in the electronic device you are using to read this post was made on one of their machines. (FWIW, Lam Research (LRCX) and Novellus (NVLS) are probably their two biggest competitors and I’d buy those too, but they don’t have dividends.)

A few of my friends have made money off of Evergreen Solar, but I’m not interested in it myself. At any rate, the person who inspired this post isn’t interested in single-stock investments for various reasons, high risk being one of them.

N.B. I wrote this post ages ago. But the co-worker mentioned in the article still needles me with her attitude. Also, small disclaimer, I have a friend who is a Gates Scholar in the UK right now. I totally forgot that it might color my perception of the Gates Foundation. But she was really cool even before she got it.

Dunno if you can read this article about Vinod Kholsa’s efforts in microfinancing in India from the NYTimes, but there seems to always be this impression that the industrial tycoons of the modern age are all horrible people and they only give money out to burnish their image. [I personally think Vinod Khosla rocks. But then again, I think Sun Microsystems computers are pretty cool stuff and yes, this is an official endorsement of their products by Mapgirl. Watch their stock go pop right now on that endorsement. hahaha. SO NOT HAPPENING.]

I admit, guys like Ken Lay, Bernie Ebbers and Conrad Black don’t help. But I ran into an interesting attitude the other day. I’m not sure if it was about money or race or both. But an African-American woman at work was telling me she was getting all verklempt over the TV program about Oprah Winfrey’s new school project in South Africa. She should have stopped there but someone mentions Bill Gates and Warren Buffett’s charitable efforts and the woman starts saying something that was tantamount to ‘those two old white men don’t do anything for minorities.’ I found her attitude shocking. The co-worker who mentioned them and I started to tell her that rather than help 500 girls, the Gates Foundation was trying to help every single person in the world by creating new vaccines so they didn’t have to die of TB, malaria, cervical cancer or HIV. 500 or entire continents of people? Hm…. Sounds like both are worthy endeavors.

I would truly like to believe the PR spin all three celebrities have for their good works. I honestly think that they are doing great things with their wealth out of a genuine humanitarian concern for the world. I don’t think this is an Andrew Carnegie type operation that’s only about spin after the Homestead Riots. I think Oprah, Bill/Melinda, and Warren are the real deal.

I know there’s some bad apples in the barrel of the wealthy. But I don’t write off anyone who is willing to try and save the world. Even if he’s silly and wears sunglasses indoors all the time and his music is overproduced crap these days. Oops. Did I write that out loud?

Having money isn’t horrible. It what you do with it.

UPDATE: Voting closed. In 12 hours, consensus seems to be option #3.

Alrighty, here’s the scenario. I owe my friend $500 for a nice used laptop. I have paid her a good chunk of the agreed price, but now that I have the computer in hand, I need to pay her the rest.

Now, when I agreed to do this, I didn’t have a $3000 dental bill. I had $500 in an account ready to give to her. But now, that $500 is long gone to my oral surgeon so I wouldn’t be tossed into collections. I would like to pay my friend before Thanksgiving, but the question now is how to do that. (I am buying the laptop for my blogging business as this is no longer considered a mere hobby with casual income after the advertising deal I signed earlier this year. So ultimately, a chunk of its cost is a write-off expense.)

I am in a short term cash crunch and I foresee myself doing 3 things.

1. Take a balance transfer/credit card check and write myself a check myself to cover both the dental surgery and the laptop. ($2066.50) There would be likely a 3% fee and 7.9% interest for doing this. I figure if I am going to bother doing an advance, it should be for a large amount, rather than a small one. (Or is my thinking wrong on that?) And that I am suffering this cash crunch because of the dental bill so I might as well pay that off now, and then use the extra cash flow for the rest of the year to pay off the debt faster.

2. I could write myself a check from my HELOC, again for the combined amount of two debts, but the interest would be 10.3% and I would be lowering my home equity to a point that makes me really uncomfortable. Ditto the reasoning above on why I am considering combining amounts again.

3. Break one of my emergency fund CD’s for $404.99, losing interest for 3 months at 5.2%, but at no other cost to me. The remaining $95.01 I can pay out of my short term savings and next paycheck. But I would still owe the doctor money rather than a bank. (Mind you, they don’t charge me any interest or late fees for the payment plan I am on.)

Sorry that I don’t have a voting widget set up. So leave your vote in the comments. You have until Monday 8pm EDT to vote because I need to resolve this quickly and let her know when to expect a check. (FWIW, like a mad negotiator, I told her that I think I can pay her in two installments but I needed to check Quicken first because I had just arrived at home. She was fine with that, she just needed to know amounts and dates. I told her I had no idea as I had lost my PC for a few days last week.)

Is this all robbing Peter to pay Paul? Meh. I feel like the first two options are mega suck and the last option is probably the best bet.

As I reflect more and more on what happened to the guy in Maryland who can barely afford his housing costs as taxes and insurance costs rise, I am wondering how he got into this mess.

I’m a big proponent of radical personal responsibility. As much as I whine on this blog, I know that my spending is MY problem. It’s not something I can blame upon anyone else as I make my choices. S.A.D.D. used to stand for “Students Against Drunk Driving”, but now it stands for “Students Against Destructive Decisions” because it applies to all areas of life. I think financial literacy is a life skill that should be taught at home and at school since destructive financial decisions can have just as much long-term impact as taking drugs or drunk driving. Unlike chronic alcoholism, where your liver could be permanently destroyed, usually poor credit can be repaired in two-three years.

CNN had an article about who to blame for the current mortgage crisis (which unfortunately I can’t find right now). Of course they said borrowers were to blame, but then they went into a litany of other parties like mortgage bankers, appraisers, and the Fed, etc. It was cutting a wide swath, but really, it boils down to the people who sign all the freakin’ papers at settlement. I admit, the Truth-in-Lending sheet you get is still pretty damned confusing. Even for someone with a higher level of education, I sure was still confused. However, the first people and the people who MUST acknowledge their part in the a mortgage debacle are the buyers themselves.

The American Dream of owning your own home is powerful and strong. The government encourages it with a huge tax incentive on mortgage interest. The notions of ‘Home Sweet Home’ and carving out a space of your own are psychologically extremely potent. No wonder it’s easy to get sucked into buying a home when everyone else is doing it and seems really gosh darned happy about fulfilling their dreams of owning a home.

In 2004, when I bought my home, I think 7 of crowd had purchased properties in the same year. Planning housewarming parties was a b*tch, let me tell ya. All of us were in our late 20’s-early 30’s and starting to slow down and cocoon, etc. I watched my friends buy places that were way bigger than mine. I was envious. But I didn’t let my house envy show by buying something comparable or better. I bought a place I could afford. I still have the smallest place of all. When it looked it I was having a hard time affording it, I got off my duff and pursued more income, which ultimately was a great long-term career move. But it was me. All me. I am the one who asked my parents for financial help and its attendant cultural burdens. I am the one who pays the bills monthly. I am the one who knows what the cash flow is for making the payments. I alone signed the condo documents. I am the one who pays the insurance. I am the one who lives in it. I am the one who decorates it. I am the one who loves living within its walls. I clean it up. I make it a mess.

I return though to the notion that our financial decisions are about our egos, psychology, vanity, black box of issues, whatever you want to call it, whether it’s an aspiration to a lifestyle, an acknowledgment that of our means, or disregarding our means. Buying my place was a bit of fantasy fulfillment for me. I felt that I would be more at peace if I could live without roommates. I felt that I could stand more own my own if I was the solely responsible for everything, rather than splitting costs. It’s been scary and somewhat trying. I was sleepless knowing that I was entering adulthood so completely by signing at settlement. I really don’t know what all these people were thinking when they signed huge mortgages. It had to be more than the money that drove them to these decisions.

I admit freely to being irrational about my financial decisions. Part of why I blog is delve a little into why I do what I do. But when it came to purchasing a home, I tried to be as coldly rational as possible. I ran a LOT of spreadsheets, doing the math. Cutting different scenarios for down payment amounts, interest rates, ARM terms, etc. I couldn’t afford to eff things up. My parents could help with the down payment, but sure as sh*t they couldn’t bail me out if I couldn’t make a payment. I vowed I’d never take another dime from my parents because it was now my turn to give back.

Maybe I am a pessimist and all these people are optimists. I don’t know. All I know is that sometimes I can be really good getting off my lazy butt and taking action when I think things are going badly. It doesn’t happen overnight (well, maybe if you are laid off). A foreclosure proceeding starts happening after 2 missed payments.

A commenter wrote to me that I’m really defensive about comments that aren’t full of praise. Well, whatever. I didn’t write this because I wanted people to tell me how great I am. I wrote this because I really don’t get it. Taking care of business is important and forecasting your future ability to pay is part of getting it done. The numbers don’t lie. I cut a long list of figures trying to assess how much money the man in the article made, and realistically what kind of mortgages could be written on a presumed salary and I couldn’t do it without getting creative and using really unusual loan products. It was really difficult and that’s when it dawned on me that he was really in trouble and he and his mortgage provider brought the situation on themselves. From ten different ways, I just couldn’t get the numbers to add up.

There will be another post shortly about owning up to your actions and making choices.

Which would you rather lose?

I am kind of shocked by this article in the Washington Post about homeowners who are current on their credit cards, but not on their mortgages.

They opted to let their mortgage payments go while keeping current on all their cards. “I would rather be late on one thing than on several things,” said [Teesa] Rossman, who works at a local church, pointing to the “very high interest rates” on their cards and the need to keep accessing credit.

I don’t have a lot of deep thoughts on it since I’m super busy at work at the moment, but it does occur to me that folks figure that her logic has some merit. Only one creditor after you, rather than 5. But you’re losing your house? That seems crazy to me.

I don’t understand why they thought they could buy a house going in with no money down. It seems like a poor financial decision on their part.

Ms. MiniDucky called me out in her post about loaning her parents some money for a new business venture. This took some time and soul searching for me. I don’t usually respond to direct solicitations for advice. I’m not an expert on financial matters. I’m not professionally trained, but I think she’s asking me because this is about family relationships and the link between love and money. This scenario takes filial piety to a whole different level. I keep editing out stuff about me and my parents, telling all, and then scrubbing it. It’s so damned PERSONAL.

Basic outline, if you don’t want to click through (but you should to get more info), is that she’s considering loaning her father some money for a new business venture supplying other service companies vs direct to consumers. Complicating it are some past intrafamily loans she’s made and her feelings about those loans, as well as her feelings about her own financial stability as well as that of her family. I wrote a good chunk of this post directed at ‘you’ but I actually mean ‘her’, Ms. MiniDucky.

(more…)

Apparently he’s been notified by the FBI of a criminal investigation.

From my very limited experience, he’ll probably only go to jail for 3 years and then like the defendant on whose case I worked before, he can get out of jail and go right back to fraudulent practices and get indicted again about 5 years from now.

Rob thinks I am obsessed with Mr. Serin. It’s not that. I have schadenfreude and I have enough knowledge of what the feds do to prosecute a case like this. The banks should be so lucky that it’s only 8 properties he bought and not the 50 or so that I had to process. I read through HUD-1 after HUD-1 (These are settlement sheets used in real estate transactions) and saw the fishiness over and over again. I feel bad for the settlement attorney and appraisers who might have worked on these transactions. They may be dragged into the much for associating with such an idiot.

Who knows if any creditors will actually see any money again. I worked on this from the bankruptcy side, which is how the defendant was undone basically. Since Mr. Serin hasn’t actually done a filing, there may be no civil remedy here for them, only the satisfaction that he is in jail.

Disclosure: I worked a the case for the bankruptcy trustee who administered the defendant’s bankruptcy proceeding, and we were cooperating with the FBI to serve justice properly (and find a missing Mercedes). As part of the federal indictment, the defendant had to cooperate with the trustee to recover as much money as possible for the creditors because the jerk made a lot of preferential payments. If you really want to know who it was, I can tell you if you want to email me privately. There are several news articles or court documents you can easily Google to verify what I am saying.

I’m not kidding. Everyone who is tracking their money ought to have a software program to look at their accounts. Unless you are an anal retentive accountant who keeps old school ledgers, I doubt you balance your accounts by hand and keep it up to date all the time.

I have got a serious cautionary tale for you. Full windmilling arms and all. This Chicken Little has a true story to tell.

Once upon a time, (this past March) Chicken Little got a bonus. (hooray!)

Chicken Little’s old miserable place of employment did not take a 401k contribution from her bonus check or give a corporate match. (boo!)

But her new merry place of employment is generous and takes a contribution and offers the corporate match. (yay!)

Chicken Little, being the diligent little scratcher, runs home with her paystub and enters in all the numbers from her bonus paycheck into Quicken.

A few days later, Chicken Little’s 401k plan administrator buys new mutual fund shares with the fresh influx of cash. (mmmm, tasty!)

While her new shares start to grow and grow, Chicken Little minds her own business. A few weeks later, Chicken Little decides to check her garden of 401k money and opens her 401k account to key in her bonus check transactions.

As she inputs data into Quicken and sees there is a problem. (oh no!)

For some reason, there is a cash balance in her 401k account. (how strange!)

Chicken Little, being a wee ditzy, decides to let it slide. (silly!)

She lets is slide for weeks and weeks. Many paychecks come through (yay!) and she creates her 401k mutual fund transactions and still there is a mysterious cash balance. (weird!)

Eventually Chicken Little calls the 401k company and complains. (cue scary music)

The friendly agent (surprise!) takes the information and promises to investigate.

Two long, agonizing weeks pass, and Chicken Little’s desk phone rings at work. (hello?)

It’s the 401k company! (wow!) They have investigated the purchases around the time of the bonus check and indeed, they only received X amount of money. (boo!)

Fear not though, the friendly agent has a plan. (yay!) He recommends calling the payroll department and asking them about their transfer of funds.(yay!)

So Chicken Little contacts payroll and the friendly lady says bring your paystub down and we’ll investigate!(yay!)

Chicken Little is still on pins and needles waiting for the friendly payroll lady, but at least she has her Quicken to tell her when her accounts are not balancing properly and there is a ~$70.00 shortfall of money in her 401k account, which throws off her net worth reporting on her blog. (boo!)

I know. Very silly. But it’s true. I never would have caught the error if Quicken’s running account balance hadn’t been thrown off week after week by a suspiciously familiar amount of money. (It just so happens to be the amount of corporate matching I got last year on each check.) After about 2 months I decided there was definitely something wrong and not just me messing up my data entry.

So far so good. There is an acknowledged discrepancy from my paystub and what was received by the 401k firm. I still have to follow up with the payroll department. I hope they compensate me at the current rate of shares for the lost investment, but I will be happy if they just make sure I get the money that’s missing.

Go get a personal finance software program like Quicken or MS Money. I don’t think YNAB is good enough. Budgeting isn’t enough here. Neither is something like Yodlee which lets you view your balances all at once.

You really should have something that shows you transfers between accounts to ensure they actually balance out. If I couldn’t see that there was a balancing/reconciliation problem between my paycheck deposit into my checking account and my 401K account, I could have lost ~$70.00 for good. As it is, I have a chance at recovering it. That’s a pair of cheap tickets to the opera, or else a single really good seat for one!

JD of Get Rich Slowly has the 105th Carnival of Personal Finance available now. He’s done it DJ-style. “Stacks of tracks on tons of wax, etc.” I think I can almost hear Casey Kasem.

Madame X at My Open Wallet with Who Do You Think You Are? I’m serious. I think I can hear the song play when I read that title. Anyone else remember it? “A star?”

Accumulating Money has a really fascinating post about buying experiences over things. I suppose this is one reason why I don’t own a TV. It forces me to do things I want to be doing like hobbies and chores.

Mighty Bargain Hunter explains exactly how being disorganized costs you money. If you’ve never been able to see the direct connection, he lays it all out for you and invites commenters to leave more.

Jim at Blueprint for Financial Prosperity has chosen his post Money isn’t everything and it isn’t you.

The Sun’s Financial Diary on opening a T-Bill account with Treasury Direct. He references Jonathan at My Money Blog, but I actually think you have to read Jonathan’s T-bill category for truly complete information.

Wealth Building Lessons on Canadian Royalty Trusts or “Canroys”, one way our northern neighbors save. It’s like an industry mutual fund, similar to an REIT.

SFOrdinaryGirl, my recent guest blogger, claims her best post is Giving Old Clothes a Second Chance. Pretty good advice since I’m about to go through my closet soon.

Clever Dudette with the famous packing your lunch post. This was put up on a high traffic website and has generated a lot of comments about lunch ideas. I highly recommend reading through all of them.

Five Cent Nickel says his best post is Ten Simple Ways to Cover Your Ass(ets). I agree! This is one of the best posts I’ve seen at his blog, but certainly not the only one. I definitely think you should take the long view on planning, and contingency planning like this is very important, especially if you have kids (say like, 4 boys).

A new blogger, Grace, at GRACEful Retirement only has 8 posts, but I do like this one on Special Needs Trusts. As many of you know, I’ve thought about something like this for my cousin. This might be the advice I’ve been looking for.

GolbGuru at the Tao of Making Money says his boss is lame, er, no. He writes about sharing knowledge about paying bills and investing. Though many couples decide on a division of labor, perhaps that’s not the wisest route. This is the only “couples” post I put on my list since most of them don’t apply to me. However, I watched my parents divide this labor and I think my dad is a disaster with money, so I agree a lot with the advice.