Tuesday, September 30, 2008

My Dream Computer Bag On Sale!

For the past year, I've been coveting this fashionable $300 Knomo computer bag that also doubles as a tote-bag or purse. I travel frequently for business and I've always wanted to combine my purse/computer bag so that I won't need to check any of my bags at the airport.

(I know, I know. If I get laid off at the end of the year, I won't have to worry about business travel. But if I find a new job in the same field, I will likely have to travel for business in the future as well.)

I was never able to justify (or afford) spending $300 for a computer bag especially when regular (read: less stylish) computer bags can be purchased for less than $50.

But... last Friday, I discovered that my dream bag is currently on sale for $169.90

In my prior post, I admitted to my weakness for expensive purses. As a compromise, I resolved that I would only buy expensive purses:
(a) to replace my existing purse after it falls apart, and

(b) only if I have cash to pay for it.
My current computer bag (about 10 years old) is on its last threads -- the zipper is broken and the rubber handle is ripping apart. So in essence, condition (a) is satisfied!

I also have $180 earmarked in my savings for "miscellaneous" (i.e., unplanned) spending. But... since it took me 9 months to save $180 for this kind of "miscellaneous" spending, I just feel awful blowing it on this one purchase.

Despite this misgiving, I was still so tempted last Friday that I actually had to put my credit card on-ice to give me a weekend to think this through. (I froze a tupperware of water with my credit card in it. He he.)

Now that I've had my "cooling-off" period, I still want this bag. Or, do I? I've only seen this bag on the internet. Do I really want to buy an expensive bag sight unseen?

Luckily, I found a local retailer who carries this bag. I'll check it out today to see whether I REALLY want it. This will give me one more opportunity to walk away from this admittedly frivolous purchase. :-D

Monday, September 29, 2008

A Tweak In My Snowball Debt Reduction Plan

I'm reading Dave Ramsey's book, Total Money Makeover, and I've already come to the conclusion that I'm only going to have a partial money makeover. (A topic I will discuss in detail later.)

One example: My debt snowball plan is not exactly as Dave prescribes since I'm paying the same amount ($265) on my credit card every month although the minimum payment amount on my credit card goes down every month.

For those who are unfamiliar with Dave Ramsey's Snowball Debt Reduction Plan, I am supposed to pay the maximum amount possible on the debt with the smallest balance and pay the minimum due on the remaining debts. Once I pay off the debt with the smallest balance, I roll the amount I was paying on that debt to the debt with the next smallest balance, so on and so forth.



In my case, my car loan has the smallest balance. When the minimum payment on my credit card goes down, I'm supposed to funnel the difference to my car loan to pay it off faster. Alas, I have not been doing that.

The minimum balance on my credit in June 2008 was $265. Now, it's down to $250. I figured the extra $15/month isn't going to make much difference on my car loan payoff date, so I've kept paying the same amount on my credit card. (Another reason is because my credit card has a higher APR by 1.24%.)

This month, I think I'm going to do something a bit different. The idea was given to me by My Debt Blog's earlier post where he recommended paying credit card bills on the billing date rather than on the due date to save on the additional interest accrued. This makes total sense! Why didn't I think of this?

So starting this month, I've tweaked my plan as follows:
  • The next billing date on my credit card is likely to be October 6 with a due date of October 26. I'll pay the extra $15 a couple of days before the billing date. This should reduce the balance on the bill immediately.

  • Pay the minimum due around October 6 rather than a couple of days before the due date on October 26.

  • Repeat the process the following billing cycle
  • Hopefully by doing so, I'll save some money on interest payments on my dreadful credit card!

    Friday, September 26, 2008

    My Goofiest Way I Keep Cash In My Wallet

    Today is payday! Woo hoo! And every payday, I give myself $20 in cash (aka Andrew J) until my next payday. Woo hoo hoo!

    [Cue sad violin music..]


    But... the truth is, Andrew J is my sad, sad, unrequited love. I love Andrew J but Andrew J doesn't love me in kind. I've professed my undying love to Andrew J but he ignores it. The more I desperately I try to hold onto Andrew J, the more I alienate him. (Don't get me started on Mr. Franklin. Mr. Franklin hardly visits me.)

    In all seriousness though, I'm not sure where my cash goes since I buy everything with my Amex card. All I know is that by the time payday rolls along, I usually only have a dollar (aka George W) left in my wallet.

    BUT.... [transition back to happy music] I'm happy to announce that Andrew J has stayed with me for the past 2 weeks!! How did I do it?

    Goofy Answer: I folded him into an origami polo shirt. I also folded George W into an origami butterfly.



    Just to set the record straight, I normally don't use cash as origami paper. I did this while I was on a Southwest flight to San Jose a couple of weeks ago. Southwest's in-flight magazine, Spirit, had this instruction on how to make a dollar-bill butterfly. Since I was bored, I made the butterfly. I was SO bored that I then proceeded to fold Mr. Jackson into a polo shirt.

    Since then, everytime I look in my wallet, I am reminded that I need to unfold the bills before I could spend them. I once tried to buy candy with the butterfly dollar and the clerk told me I needed to give him a non-origami bill. (I opted not to buy the candy.)

    Mostly due to laziness, I never bothered to unfold the bills. Funny thing is, I never bothered to spend them either. I'm not going to origami any more cash but I think I'll keep my existing butterfly and polo-shirt "as-is". It'll mean I'll have atleast $21 in my wallet for awhile. :-D

    Anyhoo, check out these totally cool origami bills that I wish I knew how to make. Have a great Friday and a wonderful weekend!

    Thursday, September 25, 2008

    These Are Useful Tips to Survive Joblessness??

    The Los Angeles Times touted all last week that its Sunday Business Section will provide tips on surviving joblessness. Since I expect to be laid off at the end of this year, I was eager to read this article for some useful tips I may be able to use. I was sorely disappointed.

    The article doesn't even include basic information on how to file unemployment benefits. Instead, it provided generic tips like:

  • Be Frugal

  • Talk to Your Creditors

  • Try the Safety Nets (Public and Private Agencies)

  • Take Temporary Work


  • Ummm... Duh... I guess this article pretty much sums up the helplessness of being unemployed, which is a depressing thought in itself.

    I guess I'm on my own to develop my own plan. So far, my plan includes:
  • Seek hardship forbearance on student loans

  • Update resume and draft generic cover letter

  • Prioritize debt/payment obligations

  • Look into acquiring credit card involuntary unemployment insurance while I'm still employed

  • Shore up emergency fund by selling company stocks. (As a follow-up to my prior post, I did sell 14 shares of my company stock. This will help me significantly towards this plan.)
  • I expect to hear word in the next couple of weeks or so. Until then, all I can do is plan, plan, plan....

    Wednesday, September 24, 2008

    Would You Sell In This Market?

    On 9/11/08, I wrote about how my ESOP account was down 20% for this year. What a difference a week and a half makes - - my ESOP account is now up 25%. Last Friday, the stock closed at $260/share. On Monday, it rocketed to $326/share (an increase of $60/share or 25%!).

    As I watched the stock price go up and up and up, I discovered that I absolutely have no exit plan with respect to these stocks. At what price am I willing to sell? Do I hold on to them for the long run? If I do sell, and should I reinvest the proceeds? Or do I pay off debts with this money? Put the money into my emergency fund? If I’m going to reinvest, what should I reinvest in?

    There’s no explanation for why the company stock price went from a slow downward spiral to a sudden, upward trajectory. My hypotheses include:
  • my company is one of the few companies that made tons of money by betting against the subprime mortgage and is thus considered a “safe” stock by investors,
  • short-traders are covering their bets,
  • the company has been grossly under valued and the stock price corrected itself, and/or
  • the increase is just part of the wild market fluctuation right now.
  • I doubt individual investors caused this stock to pop. What do institutional investors know that I don’t know? Is this a short-term pop or is this a sustained correction?

    Anyhow, my cost basis (including my company match) for 14 shares of my company stock is $2,986.03 (or, $213.29/share). Yesterday’s range for this stock was $300-$329.74 and closed at $322.05.

    If you were me, would you sell this stock now? If "yes", what do you think I should do with the proceeds?

    Tuesday, September 23, 2008

    My Current KISS 401k Allocation

    In my Saturday post, I referenced a couple of articles that stressed the importance of asset allocation and asset re-alignment to avoid unnecessary panic-sales during down-markets.

    The advice provided by financial advisors to retirees or near-retirees included keeping any money you need in the next 2-3 years in cash (or cash equivalent investments). Money needed in the subsequent decade should be invested in safe, fixed-income investments such as bonds. The rest should be invested in stocks to beat inflation.

    But what is the recommended allocation for people with a longer time-horizon like myself?

    When I first started contributing to my 401k in 2001, I was clueless about how to invest. (Some would argue I still am. He he.) I started with the "conventional wisdom" that I should subtract my age from 100 (or 110) and invest that amount as a % in stocks. I initially started with 70% in the S&P500 index fund, 15% in the intermediate bond fund and 15% in the US Treasury Fund.

    I subsequently readjusted my future contributions to include small-cap and mid-cap funds, but did not re-align my existing investment funds to match my new targets. As a result, my 401k asset allocation last year was: 57% US Large Cap, 2% Mid-Cap, 13% Small-Cap, 16% Intermediate Bond Fund and 12% US Treasury Fund.

    Clearly, my 401k was due for a significant re-alignment.

    My 401k administrator's (Bank of America fka Merrill Lynch) website provides the following allocation recommendations based upon one's own risk tolerance.




    Unfortunately, the above recommendations aren't very helpful since they only give a breakdown between stocks-bonds-cash based upon one's risk tolerance. It doesn't take into consideration of one's investment time horizon. Additionally, it gives no guidance with respect to the sub-allocation within equities and bonds.

    CNNMoney's Asset Allocation Calculator provides a better guideline for allocation based upon age and risk tolerance. Based upon my age (mid-30s) and risk-tolearance (aggressive), CNNMoney recommends:


    But is this allocation too broad and overly simplistic? Possibly.

    For example, this diagram doesn't differentiate between growth vs. value equity funds and between short-term vs. long-term vs. mid-term bond funds. This diagram also completely ignores mid-cap funds and other specialty asset classes such as commodities, REITS and natural resources.

    Fortunately (or unfortunately, depending upon your perspective), most of the funds in my 401k plan aren't very attractive. For example, a good chunk of the selection of funds in my 401k either have high expense ratios (i.e., greater than 1%) or are front-loaded. There are also no specialty funds available.

    This limitation of options available in my 401k plan is a blessing and a curse. Having too many choices may cause analysis paralysis. And with respect to finances, I believe in KISS ("Keep It Simple, Stupid").

    So using the CNNMoney allocation as a basic blueprint (with a small tweak), my current 401k allocation looks like:

    Investment Fund (Classification)Actual % of PortfolioTarget %
    DODFX (Int'l Multi-Cap Value)18.02%20%
    DODGX (US Large-Cap Value)19.15%20%
    BTIIX (S&P500 Index)20%20%
    NBGEX (Small-Cap Blend)21.33%20%
    PTRAX (Intermediate Term Bond)16.02%15%
    MLTXX (US Treasury Fund)5.48%5%


    A friend (who is the same age as I and who has 100% of her portfolio in equities) commented that I'm too conservative. Maybe. But I take solace in the fact that since 12/31/07, the S&P 500 index is down 17.79% but my portfolio is "only" down 13.99%. Is it a coincidence that I'm only down 80% of the broad market index? I think not.

    Besides, by sticking to my current allocation, I expect to have the recommended amount of my investments in cash or cash equivalent securities by the time I retire, through dollar cost averaging over 3 decades, rather than a panic-sale in my old age. I also try to follow Warren Buffet's advice to measure myself by what he calls the "Inner Scorecard" - judge myself by my own standards, not my friends'.

    My current allocations are pretty much in align with my target so I probably won't need to adjust it anytime soon. But I suspect that the international fund will take a hit in the upcoming months and year(s).

    Perhaps next year, I will shift some of my large-cap US fund and my bond fund allocation to the international fund. Additionally, in order to diversify further, I'll consider investing in other investments that are unavailable in my 401k in my Roth IRA. I guess that means I should start contributing to my Roth.

    Monday, September 22, 2008

    I Guess I CAN Go to the Opera!

    I love opera. I love all kinds of opera.



    The San Diego Opera's 2009 season includes performances of Tosca, Don Quixote, Rigoletto and Madama Butterfly. Unfortunately, with my new frugal budget, I won't be able to purchase the $35-$200/seat tickets this year.

    In order to compensate, I've been borrowing DVDs of classic opera performances from the local library. Of course, the opera experience is not quite the same on my non-HD, 26-inch TV.

    Now, thanks to the Metropolitan Opera's The Met: Live in HD series, I'll be able to enjoy Madama Butterfly at 1/2 the price of nosebleed seats at the local opera. Unlike my TV, the Met performances wil be broadcast in HD and in THX stereo. Best of all, I'll be able to eat popcorn and Raisinets (and sneak in beer) during the performance!

    Tonight is the Opening Night Gala starring Renee Fleming and a ticket costs $22. As much as I'd like to go, the performance starts at 6 p.m. and is 4.5 hours long! I'll take a pass on this and will likely attend other performances in the future.

    If anyone is interested, tickets can be purchased here.

    Saturday, September 20, 2008

    Why The Down Market Is Good For Me

    So.... the U.S. financial market is in the toilet, our free-market capital system is now looking a little bit Socialist and my tax bill will be huge soon. Last Wednesday, my 401k was down $14,000+. (Although it's back up slightly, I think this recent rally is a short-term, fake-out.)

    There's no other way to say it - this really bites.

    But since my retirement is 20-30 years away, I'm not (too) worried because there is still plenty of time: (1) to dollar-cost average, (2) for the market to rebound and (3) for my money to compound.

    And beyond that, there is one reason why I think this volatile, down market is good for me: I can learn, while my money is less at risk, how to protect my assets proactively in a bear market when I'm closer to retirement.



    It's The Allocation, Stupid
    Whenever the stock market tanks, there is no shortage of articles telling people what stocks/funds to buy and what defensive moves should be taken. But by the time the market is in a downward trend, it's probably too late to move assets around without falling into the trap of "buy high, sell low."

    With respect to retiring in the current bear market, Craig Carnick, who runs Carnick & Co. in Colorado Springs, Colo., recommends raising a buffer of cash ahead of time as the easiest way to keep a portfolio intact during uncertain times. In this article, Carnick says,
    "The key to overcoming volatility is that you're not in a position where you're forced to sell at a loss." Carnick recommends keeping up to 20 percent of a portfolio in cash or cash equivalents, or enough for two to three years' worth of income, plus a mix of bonds with varying maturities set to expire over seven to eight years to replenish that money.
    In the same article, Dean Barber, a financial planner and founder of Barber Financial Group, says allocating as much as 30 percent of a portfolio to treasury inflation-protected securities, or TIPS, isn't unreasonable, given shaky markets and rising price pressures.


    Barber recommends filling out a portfolio with exposure to commodities, cash, and foreign stocks, adding that no more than 30 percent of any retirement portfolio should be in domestic stocks. A few years ago, the allocation would have been 60 percent. That's just too risky now, Barber says. "Retirement is not like golf. There are no mulligans. If you mess it up, you go back to work for 20 years. People can't afford to get it wrong," he says. "The portfolio we have today is more defensive."

    Take Profits and Re-Allocate While You're Up
    In January 12, 2008, I read this article about various index fund portfolios maintained by real people. One of the highlighted portfolio is managed by Ted Aronson of AJO Partners. In the article, Ted Aronson highlights the importance of taking profits off the table and reinvesting in laggard performing funds/stocks.


    "The equity funds in [Aronson] family's taxable portfolio averaged a return of more than 21% the past five years, thanks to his high 40% in foreign funds: But 'I realize a change -- a big change for a lazy investor -- is needed. Time to take some profits off the table,' says Aronson.

    'For a U.S.-based investor, 40% international is way too high at this juncture. With the dollar's weakness goosing up foreign returns, and emerging markets having gone almost straight up for five years, time to trim the tree.'

    So Aronson is taking 10 whole percentage points "out of emerging markets and putting half into TIPs and half into high-yield bonds." His detailed reasons:

  • Everything has gone up double digits over the past five years -- except bonds

  • Emerging markets have gained 36% a year -- nearly a five-fold increase

  • Dollar is weak retrospectively

  • Moving money from emerging markets to junk bonds leaves plenty of capital at risk (how you make money)
  • So, since most portfolios are likely out of balance, Aronson recommends this key asset re-allocation: 'If an investor held anything like 20% in emerging markets five years ago and was 'lazy' in the interim, your holding is more like 40% of the portfolio by now! Moving it down to 10% (from an original 20%) will entail lots of gains. C'est la vie.' My translation: No one goes broke taking profits.).

    Now comes this year's big lesson: Aronson warns that most investors will psychologically resist selling the big winners and buying lesser performers. But that's what rebalancing and "Modern Portfolio Theory" (the theory behind Lazy Portfolios) is all about. You stick to your asset allocations as sector performance waxes and wanes over the long-term. Otherwise you're just chasing hot sectors and engaged in high-risk market-timing.

    Alternatively: If you're serious about your long-term results, instead of doing an end-of-year rebalancing, rebalance each month. But not by selling high performers, just add new money from your regular monthly savings program to keep your portfolio in line with the original allocations."
    At the time I read this article (January 2008), I recall thinking, "But, the emerging market fund is so 'hot'! I wouldn't do this!" Well..... since 12/31/07, the emerging market fund is down over 29% and the bond fund is down less than 5%. I guess this is why Aronson is the pro and I'm the amateur. He he.

    I always thought that following market movements and trends were important to establishing your own personal asset allocation. But the more I think about it, Aronson's recommendation is less about market timing and more about having an appropriate, diversified allocation and maintaining the allocation through market ups and downs. In other words, if my current allocations are completely out of alignment with my target allocations, that should be a hint for me to reallocate my assets.

    Therefore, as I get closer to retirement, I'll need to remember to take profits off of bloated asset categories while it's up and re-allocate to a more conservative portfolio which consists of higher allocation of cash, bonds and TIPS.

    Friday, September 19, 2008

    Egads! Future Beauty Items I May Need To Start Budgeting

    Completely oblivious to my biological age, I consider myself very youthful looking. But yesterday morning, as I was brushing my hair, I noticed an unusually shiny, reflective strand of hair on my left temple. I initially thought it was just the reflection of the fluorescent bulb on my dark hair. But I soon discovered, to my horror, that it was a single, long, silvery strand of gray hair.

    Panicked, I plucked the offending hair, and then I inspected my face closely. And there it was – the deep lines running from corners of my mouth to the sides of my nose that I never noticed before.

    My graying and wrinkling have officially started. In time, the smoothness of my skin will give way to fine creases and wrinkles. I can only stem the tsunami of gray hair by plucking for so long.

    This begs the question: What will I need to start budgeting for age-related vanity costs? Is there anything I can do to minimize these age-related vanity costs?

    I figured since I better be prepared sooner rather than later, I began to research my hypothetical future beauty maintenance budget.

    HAIRCARE
    I’ve never dyed my hair. Ever. So I'm not quite sure what I’m in for.

    I took an unscientific poll of my older female friends who have their hair colored professionally and regularly. My poll revealed that my friends get their hair professionally colored (not including touch-ups) every 4-6 weeks at $200-$300/pop. This would mean that assuming I get my hair colored professionally 8 times a year at $250/coloring, I would need to budget $167/month.

    $167/month x 12 months = $2,004/year! If I instead saved $167/month in a 3% APY savings account for the next 20 years, I would save approximately $55,000. I don’t think I’ll be dying my hair professionally any time soon.

    I checked Ulta.com and found that Clairol’s Perfect 10 hair color normally costs $12.99 and the Root touch-up kit costs $5.99. It’s my understanding that at-home hair dyes don’t cover gray as well as professionally dyed hair. But at $20/month, the at home hair-dying seems like a much better and affordable alternative for me.

    My Potential Future Vanity Monthly Budget: $20/month for hair-dyes


    SKINCARE
    About a year ago, I upgraded my moisturizer to an anti-wrinkle formula with SPF 15 sun protection. I researched whether there was something else I could do to help slow down the aging process on my face.

    What I Can Do For Free:
  • Avoid the sun - Check


  • Don’t smoke - Check


  • Get adequate sleep – Usually okay


  • Sleep on my back – This one is going to be difficult. I love sleeping on my side and tummy. But sleeping on my side exacerbates the wrinkles on my cheek and chin. Sleeping on my tummy causes furrowed brows. Darn it!


  • Don’t overwash face - Check


  • Things That Aren’t Free But Are Probably Included in My Current Budget Anyways:

  • Wear sunscreen/use moisturizer - Check


  • Don’t squint – wear sunglasses (and eventually, use reading glasses) - Check


  • Eat more fish – Check. Apparently, the essential fatty acids of Omega-3 help nourish skin and keep it plump and youthful, helping to reduce wrinkles.


  • Eat more soy – Check. Animal studies show certain properties of soy may help protect or heal of the sun’s photoaging damage. In one recent human study, published in the European Journal of Nutrition, researchers reported that a soy-based supplement improved skin’s structure and firmness after just six months of use.


  • Eat more fruits and vegetables– Needs significant improvement. The anti-oxidant compounds in dark fruits and vegetables fight damage caused by free radicals, which in turn helps skin look younger and more radiant, and protects against some effects of photoaging.

  • Extra Stuff I Am Seriously Considering Budgeting For In The Future:
    The following are items that I am considering for my future budget. I have put them in the order I am likely to do:

  • At-home Chemical Peels: DIY chemical peels use low concentrations of alpha or beta hydroxyl acids to remove top layers of dead cells. The DIY peels purportedly will give me a “healthy glow” but won’t penetrate enough to improve wrinkles. According to Ulta.com, Neutrogena’s Advanced Solution Facial Peel will cost about $25.00 per jar.


  • At-home Dermabrasion Kits: The DIY dermabrasions kits rely on exfoliating “crystals” that I rub onto my face with a scrubbing wand. After a few weekly treatments of this treatment will allegedly cause my skin to “appear smoother” without much improvement in texture. According to Ulta.com, Neutrogena’s Advanced Solution MicroDermabrasion kit will set me back about $40. If I don’t see much improvement with the DIY facial peel, I may consider moving onto this item.

  • My Potential Future Vanity Monthly Budget: $25/month for DIY Facial Peel


    Stuff I May Consider In The Future But Not Likely to Budget Any Time Soon:

  • Chemical Peels at Medi-Spas or Doctor’s Office: Chemical peels at a medi-spa or a doctor’s office uses a higher concentration of acids that dissolve the top layers of dead cells, revealing fresh skin. At my local medi-spa, the Biomedic Micro Peel costs $95 and the Cosmelan Peel (whatever that is) costs $800/treatment.


  • Dermabrasions at Medi-Spas or Doctor’s Office: The combination of abrasion and suction stimulates collagen production, helping improve fine lines and minor scars," says Debra Jaliman, MD, a clinical professor of dermatology at Mount Sinai School of Medicine. The 30- to 45-minute procedure leaves skin slightly pink for up to a few days. After five monthly sessions, skin is smooth and glowing. My local medi-spa charges $95/treatment.

  • Stuff I Won't Consider Anytime In The Near Future But Never-Say-Never Items:


  • Wrinkle Fillers (e.g. Restylane, Juvederm, etc.): These are considered the putty and spackle of medicine. In this treatment, doctors fill wrinkles with a variety of substances, including collagen, hyaluronic acid, and other synthetic compounds. Treatments last 6-12 months. My local medi-spa charges $550/1.0 cc syringe and $300/0.4 cc syringe (for touch-ups) for Restylane injections.


  • Botox: An injection of this purified version of the A-Botulinum toxin relaxes the muscle just underneath the wrinkle, allowing the skin on top to lie smooth and crease-free. Treatments last 3-6 months. My local medi-spa charges $295/1 area - $775 /3 areas.


  • CONCLUSION
    This little research project was an eye-opener. It appears that in the near future, (i.e., in the year or so), my beauty budget will only increase by $45/month.

    The cosmetic procedures offered by my local medi-spa is prohibitively expensive since it appears that I'll need to get multiple treatments per year ad infinitum. The treatments also are pretty distasteful since it involves injecting toxins or acids and/or scraping off or peeling off my outer-dermis.

    But the biggest concerns I have in starting these cosmetic procedures is that it may become a gateway towards other more invasive procedures. I know this is a big leap, but if I start using cosmetic procedures and surgeries to compensate for personal insecurities or lack of self-esteem, it can lead to a never-ending personal hell where I'll end up looking like Jocelyn Wildenstein.

    Perhaps the best thing for my budget (and myself) is to accept myself as-is and to grow old gracefully and naturally as much as I can.

    Thursday, September 18, 2008

    Why Did My Paycheck Go Up?

    Last Friday was payday. Hooray! But I also noticed that my paycheck was $18.47 higher than usual. Double Hooray!! But why? I'm always suspicious of unexplained (and undeserved) pay increases...
    I compared my current paycheck to my last paycheck and discovered that my withholding for the California State Disability Insurance (SDI) tax went down $18.47.

    According to ADP's State Tax Fast Facts website, the maximum employee withholding for this item is $693.58. As of this pay period, I've maxed out my withholding and I'll be getting $31.09 extra per pay period.

    Unfortunately, this increase will all go towards repairing my windshield. As an update to my prior post, I got my windshield repaired yesterday and it cost me a little over $267. I checked my auto insurance and my deductible for comprehensive damage is $250. Sigh... I've decided it's not worth making a claim for $17.

    Wednesday, September 17, 2008

    Evaluating the Soundness of Banks

    Now that WaMu stock is trading at penny-stock prices, my friend closed his account yesterday at the bank because he was worried about its imminent collapse. He told me that there were 20 people ahead of him withdrawing significant amounts of money, clearly due to the same concerns.

    I referred my friend to this article from the Los Angeles Times that discusses ways we can evaluate (or at least get a better idea) of a bank's solvency.

    The Federal Deposit Insurance Corp.’s website lists 11 firms that rate banks and thrifts and provide reports online, by mail or even over the phone.

    The articles states:

    "Some of these services are expensive and oriented toward financial professionals. But Bankrate.com and BauerFinancial Inc. give free access to their ratings on all 17,000 U.S. banks, savings and loans and credit unions. Most institutions get three or four stars, with five best.

    Veribanc issues twin ratings: one on the institution's current condition, plus a forecast of its prospects. The ratings for one bank or credit union cost $10; additional institutions are $5 apiece.

    The rating experts take pains to caution that a low rating does not signal that collapse is likely. Even the worst-off banks -- those on the FDIC's secret list of troubled institutions -- have failed only 13% of the time, the agency says. Most worked their way back to health." (Italics mine.)

    The best advice given in this article is to NOT trust bank employees' assurances or opinions about what's covered and what's not. Greg McBride, senior analyst at Bankrate asked, "Do you really want to have as your financial advisor someone making $10/hour on the other side of the teller window?" McBride instead advises looking at 2 calculators that estimate your deposits' insurance coverage: 1.) FDIC's EDIE calculator and 2.) NCUA's credit union share estimator.

    If you want to do more than to rely upon Bankrate or Bauer Financial's rating system, Bankrate.com also offers free access to selected financial data for each institution.

    The link in the article points out things to look for:

    "Ratio of nonperforming assets to total assets, an indicator of the scale of a bank's problem with bad loans. A ratio of less than 1% was traditionally the badge of a healthy bank, but the housing bust and mortgage meltdown have catapulted many institutions far beyond that threshold these days.

    Equity-to-assets ratio. This is a bank's equity -- also known as its capital or net worth -- relative to its loans and other investments. The ratio is a measure of the bank's cushion against losses. IndyMac's ratio was 5.8% on March 31, its last public report. That compared with 8.2% at Bank of America, 8.9% at Beverly Hills-based City National Bank and 19.9% at Long Beach's Farmers & Merchants Bank.

    Total risk-based capital ratio. This is a bank's capital adjusted for the riskiness of its loans and other investments. Look for 11% or better, advises Anaheim banking consultant Gary S. Findley. Although 10% meets the definition of "well-capitalized," Findley said, a ratio that low these days "raises regulatory concerns -- a lot of banks want to be 14%-plus."

    Other data. The ratio of non-interest-bearing deposits to total deposits is essentially how much of the money a bank "borrows" from its depositors is interest-free. Higher is better. By contrast, the lower the ratio of loans to deposits, the stronger the bank will tend to be, at least from a depositor's perspective. A lower ratio of jumbo CDs and borrowings to assets is also a plus.

    If you're especially intrepid, or suffer from insomnia, you can plunge into the quarterly reports banks and thrifts are required to file with federal regulators. These highly technical filings, known as call reports, contain a large amount of financial data. They are available online at FFIEC's website. There you can check out:

    Past due and nonaccrual loans as a percentage of total loans and as a percentage of capital. These are loans on which borrowers are behind in their payments or have stopped paying altogether. If such loans exceed 5% of total loans or 50% of capital, that's a red flag and should be looked into, Findley said.

    Brokered deposits. These are deposits placed by intermediaries on behalf of savers looking for the best rates they can get on substantial nest eggs. Less is better. "Too many brokered deposits raises potential liquidity issues," Findley said."

    Additionally, when I looked up WaMu on Bankrate, I found 2 choices: (1) Washinton Mutual Bank, Nevada and (2)Washington Mutual Bank FSB, Utah. Which one do I choose?

    This other link in the article explains that the FDIC's online directory helps you sort this out. Bauer Financial lets you search for ratings using a unit's unique FDIC certificate number, which you can get at your branch or the FDIC insitution directory.

    Since the most common sense advice we are given with respect to our investments is to diversify, why would this be different with where we keep our money? I have my money split between 4 banks and 1 credit union. All have varying degrees of accessibility and I'm sure, solvency. But since I haven't kept all my eggs in one basket, I feel very comfortable knowing that I'll won't lose access (even temporarily) of all of my liquid assets.

    Tuesday, September 16, 2008

    Dangerous Penny-Pinching

    (NOTE: This post references a sensitive topic and is not intended to be a political commentary about Palin or her tenure as mayor of Wasilla.)

    I recently read this article that during Palin’s tenure as mayor of Wasilla, the city charged rape victims $300-$1,200 for the cost of rape kits and forensic examinations. The Police Chief of Wasilla opposed a state bill to stop this practice, saying it would require the city to come up with more money to cover the costs of buying the rape kits and conducting the examinations.

    Beyond offending all sense of justice and common sense, Wasilla’s now outlawed policy is a perfect example of “penny-wise, pound foolish” idiocy. Assuming that the 1998 national rape rate applied to Wasilla (pop. 7000 people) at the time, Wasilla’s cost for this item would have been less than $6,000/year. This type of bone-headed, bean-counting policy presumably discourages victims from reporting sexual assault crimes which consequentially would make any city less safe for its residents.

    As indicated above, I am not citing this article to throw partisan political stones at Palin, the Police Chief or the good citizens of Wasilla. (Although I will admit I was angered when I read about it.) Rather, this article made me think of ways that I pinch pennies that are short-sighted, irrational and may ultimately be harmful or dangerous in the long term.

    A recent example is my reluctance to repair the cracked windshield on my car that I’ve had for 2 weeks. Since the crack is over 6 inches long, I need to get my entire front windshield replaced, which would cost me $250 (the amount of my automobile insurance deductible). The dangers of driving with a cracked windshield include police citations, roof cave-ins and broken glass injuries.


    I have absolutely no reason not to get my windshield repaired other than I’m being cheap at the expense of my own safety. Since I currently have $100 earmarked for future car maintenance and have over $3,000 in my emergency fund, I can easily afford the $250 deductible, yet I’m being completely irrational.

    Not to make excuses, but this form of myopic loss aversion is not uncommon, since humans would rather avoid losses than reap future gains. This month, I've been helplessly watching my net worth plummet everytime the market tanks. In my mind, repairing the windshield is an immediate, real reduction of $250 of my net worth, while repairing the windshield only eliminates a potential danger posed by driving with a cracked windshield. Absolutely idiotic and insane. I cannot believe I am weighing the loss of $250 over the benefit of driving a safe car!

    Now that I’ve identified my irrational behavior (and since those living in glass houses shouldn’t throw stones), I am getting off my soapbox to get my windshield replaced ASAP…

    Sunday, September 14, 2008

    Simple, No Cooking (Microwave) Lasagna Florentine Recipe

    I was cleaning out my bookshelf today and discovered an old recipe I used to make during my college days. There's been a lot of chatter lately that manufacturers are shrinking food packages to maintain prices. The lasagna recipe from the early the 90's certainly bears this out. The recipe calls for 1 can (16 oz.) of whole tomatoes but I was only able to find 14.5 oz whole tomato cans at my local supermarket. The recipe also calls for 1 container (15.5 oz.) of ricotta cheese but the supermarket only sold ricotta in 15 oz. containers.


    As you know, I often make one-pot-wonder meals on Sundays to take to work for the upcoming week's lunches. Despite the shrinking packages of some of the ingredients, I was still able to make a delicious, easy-to-prepare, vegetarian lasagna that is completely cooked in the microwave. This means no pre-cooking of noodles necessary!

    Hope you enjoy this recipe (courtesy of Colleen Harris):

    __________________________________

    Makes 8 servings. Nutrient Value Per Servinces: 430 calories, 25g protein, 21g fat, 37g carbohydrate, 687 mg sodium, 96 mg cholestrol (This would vary depending upon the ingredients used, of course.)
    __________________________________


    1 jar (14 oz.) prepared spaghetti sauce (Cost: $1.69)

    1 can (16 oz., now 14.5 oz.) whole tomatoes, with their liquid (Cost: $0.79)

    1/2 cup water (Cost: Already had.)

    1 container (15.5 oz., now 15 oz.) ricotta cheese (Cost: $4.29)

    1 package (16 oz.) shredded mozzarella cheese (about 4 cups) (Cost: $7.00)

    1 egg (Cost: Already had.)

    9 uncooked lasagna noodles (Cost: $1.99)

    1 package (10 oz.) frozen chopped spinach, thawed and well drained (I cooked fresh spinach rather than using frozen spinach. Cost: $1.99)

    3 tablespoons grated Parmesan cheese (Cost: Already had.)

    1. Combine spaghetti sauce, tomatoes with their liquid and water in bowl. Stir to blend and break up the tomatoes. Set aside.

    2. Combine ricotta cheese, 1/2 cup of the mozzarella, egg and garlic powder in small bowl; mix well.

    3. Spread 1/3 of the spaghetti sauce mixture in bottom of microwave-safe baking dish, about 12x8x2-inches. Place 3 noodles on top of sauce. Spread 1/2 of the ricotta mixture over noodles. Layer with 1/2 of the spinach adn 1 cup fo the mozzarella. Repeat layers (sauce, noodles, ricotta, spinach and mozzarella). Cover with the remaining noodles; pour on remaining sauce mixture.

    4. Cover dish with microwave-safe plastic wrap, turning back one corner to vent. Microwave at full power 8 minutes. Rotate dish 1/2 turn. Microwave at half-power (50%) for 30 to 36 minutes until noodles are tender, turning dish another half-turn after 15 minutes). Sprinkle the top evenly with Parmesan cheese and the remaining mozzarella cheese. Cover dish again with plastic wrap and let stand on solid surface for 10 minutes before serving.

    TOTAL COST: $17.75 div. 8 = $2.22/serving

    One More Hurdle Before My $800/Bonus

    My company offers a $500-$800 bonus to any associate who obtains an industry professional designation. In addition to the $800 bonus, the company will pay for the education and examination costs associated with obtaining the professional designation.


    This year I opted to obtain my Associate in Commercial Underwriting designation from AICPCU. In order to obtain this designation, I need to take 3 exams consisting of 85 multiple-choice questions each.

    I'm happy to report that I just passed my second exam yesterday! Now I only have 1 more exam to go. Since I'd like to get my education reimbursement and bonus money ASAP, I'm motivated to pass my third exam by early October. (This bonus money will pay for Christmas!)

    I've been employed with my company for 6 years and this is the first time I've ever taken advantage of this program. Other than the bonus, I decided to obtain this professional designation in order to "pad" my resume for when I get laid off at the end of the year. This is one of the many things in life I've taken for granted that I didn't appreciate until it's gone (or will be gone in the near future). Hopefully I've learned my lesson to appreciate all opportunities that are available to me and not squander them until it is too late.

    Friday, September 12, 2008

    My Financial Kryptonite

    Since I was feeling a bit blue and melancholy recently, I did what I often do when I’m feeling down – I flipped through my vacation scrapbooks.

    While I was growing up, my parents couldn’t afford to take my sister and me on very many vacations. I spent most of my life listening enviously to other people’s tales of travels to far-flung, exotic places.

    I can still recall how I was instantly transported to Italy when my high school classmate, AR, described the beautiful frescoes of the Sistine Chapel. I eagerly eavesdropped my law school classmate, DP's, tales of her sailing trip to Costa Rica during winter break. I remember how I looked longingly at my friend SB’s pictures of himself cuddling tiger cubs in Indonesia.

    In 2003, I received a nice bonus ($7,000 after taxes) from my company. Rather than using the bonus money to pay off debt, I blew it on a fabulous, extravagant trip to Australia. I was instantly hooked.

    I no longer wanted to travel cheaply like I did when I was in school. I live frugally day-to-day, and a vacation is my escape from the daily drudgery of life. If I’m going to vacation, I want to stay at luxurious accommodations and I want to eat extravagantly!




    I watched a documentary on MTV called A Map for Saturday, where Brook Silva-Braga, a 20-something year old, documented his year’s travels through 26 countries on 4 continents. Silva-Braga’s budget travels required him to deal with lack of privacy in hostels, bed bugs, cheap eats and travel scams. As much as I envy the breadth of his travels, I know I don’t want to explore the world through this type of prism. I can live with the trade-off of not being able to travel so frequently or extensively when I have a relatively expensive travel budget.

    Traveling is clearly my financial kryptonite, my Achilles' heel. But I'm okay with that since I don’t toil away in a cubicle 9 hours a day because I find it rewarding - it is merely a means to an end.

    Although I don’t regret one bit that I used my bonuses to travel rather than to pay down debts, I do rue the fact that I often used my credit cards to finance my vacations. The biggest difference now is that I will budget my trips, save, and will never go into debt to go on a little holiday anymore.

    Non PF-Related Post - Hoping The Best Re: Ike

    A fellow blogger will be dealing with Hurricane Ike very soon. I am hoping and praying for the best for Penny and all of the residents of Houston.

    I created this post on 8/30 with respect to Hurricane Gustav, but I am repeating it again here in hopes that Ike won't be destructive.

    (Illustration courtesy of Yara's Photostream.)

    Teru teru bōzu (Japanese: てるてる坊主; "shiny-shiny Buddhist priest") is a little traditional hand-made doll made of white paper or cloth that Japanese farmers began hanging outside of their window by a string. This amulet is supposed to have magical powers to bring good weather and to stop or prevent a rainy day. "Teru" is a Japanese verb which describes sunshine, and a "bōzu" is a Buddhist monk (compare the word bonze), or in modern slang, "bald-headed." Source: Wikipedia.)

    Thursday, September 11, 2008

    My ESOP Account Down 20.82% for the Year

    I contribute approximately $250/month into my company's ESOP. So far this year, I've accumulated 12.92844 shares of my company stock and the actual cost basis (including the company match) is $3,472.79. As of 9/7/08, the current value of the stock is $2,749.62. That's a loss of $723.17, or -20.82%. This is really depressing but I've decided to look at it differently for my own sanity.

    My actual out-of-pocket contributions to the ESOP to date is $2,179.05 and the company match (30 cents to $1 contributed) is $1,293.74. (To my sharp-eyed readers: the reason why my company match amount totals more than 30% of my contribution amount is because my employer, for the first time I've ever been employed with this company, paid out a stock bonus due to a very profitable 2007.)

    Since the company match is considered taxable income, I've calculated $362.24 of the company match as part of my cost-basis while $931.50 is treated as a windfall. So, if I re-adjust my actual cost basis to $2,541.29, I'm up by about 8% this year, all thanks to the generous company match and bonus.

    I've pondered whether I should stop contributing to my ESOP and instead use the extra $250/month to pay off my debt. Afterall, if I use $250/month to pay off debt, I have a guaranteed a return on my money. In contrast, with the market being what it is right now, I have no idea whether I'll break even by continuing to contribute to the ESOP.

    After considerable mulling, I've decided to continue to contribute to the ESOP. How many investment vehicles do I have where my investments can go down about 22% (after taxes) and I still come out even? Secondly, as you may know, I expect to be laid off at the end of the year. If anything, at least I could sell my company stocks if I ever need it. Since my EF is currently woefully inadequate, I guess this is another form of an automatic savings that I've implemented for myself for those inevitable rainy days...

    Wednesday, September 10, 2008

    Lessons to Learn from Oil

    In July, I paid $4.16/gallon to fill my car and yesterday, I "only" paid $3.68/gallon. Now that crude prices are at a 5-month low and are closer to $100/barrel than the feared $150/barrel, it seems like the urgency to conserve fuel and to find alternative sources of energy have tapered off. I've noticed more cars on the road, and as MoneyNing points out, discussion of oil prices have precipitously dropped off from our daily lives. (Thank you MoneyBeagle for referring this article!)


    A friend of mine commented that since gas prices have come back down, she can now get her Starbucks coffee again. This was one of those head-slapping comments that made me wonder whether we have extremely short memories.

    Do people really believe that this recent price drop will be permanent? If people are expecting the return of the good ol' days of $1.50/gallon gas, they're delusional.

    Today, OPEC oil ministers decided to trim output by more than 500,000 barrels a day and crude prices are rising in Asia. SHOCKING!

    But some people argue that OPEC's recent cuts will have little to no impact on near-term oil prices. Who cares about near-term prices? I would've thought that the recent skyrocketing oil costs would have scared most of us straight to think in the macro-sense and in the long-term. The lesson we should have learned was that we need to wean ourselves collectively as a nation from our dependence on foreign crude.

    The U.S. only accounts for 5% of the world's population yet consumes 25% of the oil. The world population is increasing and as Third-World nations become more industrialized, we will be competing more for these finite resource. Simple economics dictate that the only way we can accomplish this is by reducing demand and increasing supply.

    Drilling off the U.S. Coast and in the Alaskan Arctic National Wildlife Refuge won't sufficiently eliminate our foreign dependence on oil and this effort is going to take at least a decade before we see any increases in our supply. However, by drilling in these areas, the U.S. can take inventory of its own reserves and supply, which would be necessary to determine our future needs. With respect to reducing demand, we need to reduce consumption and find alternative sources of energy.

    The process of reducing consumption and increasing reserves will be slow, tedious and will require a long-term commitment. Come to think of it, this lesson also applies equally to our personal finances: We need to eliminate debt by reducing consumption and exploring additional sources of income. By eliminating our debts, we become self-sufficent and reduce our reliance on others.

    Tuesday, September 9, 2008

    Sleepwalking My Way To A Layoff

    I’ve heard that prior to slaughter, cattle are resigned to their fate and walk in a trance-like state. Similarly, I feel like I am sleepwalking through my days until I get laid off at the end of the year.

    I hate this feeling. I know I should be appreciative that I currently have a job and making a very good income. My work has always treated me well and I have no reason to be disgruntled. Yet I find it very hard every day to focus on my day-to-day tasks. I often find myself cyber-loafing or finding anything to do other than work. I remind myself that I need to be professional, yet I remain unmotivated.

    I don’t only feel this way at work. When I am home, I can’t bring myself to do any housework or to do any of the activities that once brought me joy.

    The good news is I used to deal with my blues through retail therapy. Now that I have a budget and a debt reduction/savings plan, I don’t feel tempted to go shopping at all.

    I just need someone to slap me and tell me to “Snap out of it!”

    And that someone should be me.



    Sorry for this downer post. I just seem to be feeling a bit more blue than usual this morning...

    Monday, September 8, 2008

    In Defense of Expensive Purses

    Now that Labor Day has come and gone, I've packed away my white shoes and purse. I cleaned my white Coach purse with a leather cleaner and conditioner, and put in a clean cotton bag before I stored it away in my closet.


    I looked at my purse collection and started pondering about how I came about owning all of my purses.

    My confession: One of the reasons why I'm $13,000 in credit card debt is because I like "expensive" purses. I'm not talking about Louis Vitton, Chanel or Hermes expensive. (I knew even during my financially irresponsible days that I couldn't afford those purses!) But I've always fancied Coach and Kate Spade handbags. My one big splurge was on a black Ferragamo purse.


    My defense to owning these purses: I always buy purses with classic designs, maintain them, and use them for several years. Since the craftsmanship of these expensive purses are superb, they can last many years. For example, I've owned my white Coach purse for 3 years. I've had my Ferragamo purse for 13 years now. (It's a vintage!)

    Since I'm not in the fashion industry or a Hollywood insider, I really don't need to have a new trendy purse every week, month or year. (I just need different purses in different color for different occasions.)

    If the purse still looks clean and new, no one cares whether I'm carrying a Coach purse from 2 seasons ago or a Kate Spade purse from last season's collection. Besides, does my Ferragamo purse look 13 years old?

    So I've made a new commitment: I will continue to buy "expensive" purses but only to replace my current purse when it truly shows its age and/or it falls apart. I will only buy a purse if I have the cash to pay for it. I will no longer go into debt to buy an "expensive" purse.

    I'm glad to report that I've already exercised this restraint during my visit to Paris in May. While I was at the JFK airport terminal (before our flight to Paris), the metal screw on the handle of my Kate Spade purse came loose. I tried screwing it back in (really, I TRIED) but it was of no use. When I arrived in Paris, I purchased a Lamarthe purse for 194 euros (approx. $310 at the time) that I paid in cash.


    Oh, and here's another benefit to buying an expensive purse -- Kate Spade will repair my purse for free.

    Sunday, September 7, 2008

    Big Savings During Spa Week - $50/Treatment


    From September 15-21, participating spas in California, Arizona and Washington lower their rates of their full-length signature services to $50/treatment!

    Go to Spa Week's Website to register (you'll need to give your name and email address) to get a list of participating spas near you.

    Spa Week will be moving to the Midwest and East Coast from Oct. 13-19.

    Since this really isn't included in my budget, I'll unfortunately have to forego this deal.... Sigh...

    Friday, September 5, 2008

    Why I Don't Use Automatic Bill Pay

    I read this sad blog about a 70-year old man in Lancashire, England, whose death went undiscovered for 2 years, while his expenses were continuously paid by his bank’s automatic bill pay service.

    As a single gal, I often worry about how, if I was wrongly accused of a crime, I would have no witnesses or alibi while I'm home alone. (I think about this every time I watch Law and Order re-runs.) Now I’ve got this to worry about!


    Fortunately, this would never happen to me since I haven’t subscribed to an automatic bill pay system. I haven't done so because I like the control of deciding when I pay my bills. Ha ha ha. The real reason why I pay my bills manually is because I want to make sure I have enough money in my checking account before I pay my bills.

    But even if I had a significant cushion in my checking account, I doubt I’d subscribe to an automatic bill pay system. I’ve read anecdotal tales about how some vendors continue to withdraw funds for cancelled accounts and how others withdrew erroneous amounts (usually in the payee’s favor). Victims complain about how they were forced to spend enormous time and effort to rectify these “errors”.

    Aside from these nightmare stories, I worry more that automatic bill pay would cause me to become complacent. Would I continue to review my spending as carefully? Would I check my bills as carefully for errors? I may never know.

    I guess the most important lesson to learn from the deceased 70-year old man is that I should never become a recluse and remain connected with my friends and family. I would be extremely sad if my death was discovered only because I didn’t pay my rent and utilities on time.

    Anyhow, it's TGIF! Have a great weekend everyone!

    Thursday, September 4, 2008

    Will A Cash-Only Lifestyle Really Save Money?

    There's been quite a buzz in the blogs and the media about how a cash-only lifestyle will save people tons of money. I'm convinced that a cash-only lifestyle will only help those people who do not budget, since the cash-only policy will force these people to live within their means; the cash-only lifestyle will not save much (if any) money to someone who already lives on a budget.


    Here are some proponents of the cash-only lifestyle:

    • In Total Money Makeover, Dave Ramsey advocates a cash-only lifestyle (but allows the use of debit cards) and instructs his readers to eliminate all use of credit cards. Mr. Ramsey cites a Dunn and Bradstreet study that "showed that credit-card users spend 12 to 18 % more when using credit instead of cash." Mr. Ramsey further cautions that, "When you play with snakes, you will get bit."

    • As an experiment, the couple in this Good Morning America video clip agreed to live one month without using credit cards (or even a debit card) and found that a cash-only lifestyle saved them 24%. The couple decided to continue to use cash only (with the exception at the gas pump).

    • Financial columnist MP Dunleavy concludes that people spend more using credit cards because credit cards make spending seem painless. (The same reason why casinos use colorful chips versus cash in all of their table games.) Ms. Dunleavy points out that:
    "[R]elying on credit can create a carelessness about your personal finances, a blind spot the size of a barn, that paves the way for overspending and ultimately a lifestyle anchored by debt.” (Italics mine.)
    So there appears to be plenty of studies and anecdotal evidence that show that credit card use causes people to spend more than they otherwise would. My own credit card balance clearly supports this as well.

    But isn’t it the carelessness and apathy that causes people to over-spend, not the credit card itself? Isn’t this analogous to an obese person complaining about how fast-food restaurants are making him/her fat? Where does individual responsibility come into play here?

    For the record, I take full responsibility for the fact that I’m currently $13,000 in credit card debt. I’m in this hole because, until very recently, I didn’t care that I was going into debt.

    I used to feel hopeless that I could never dig myself out of my student loan debts so I didn’t care about going deeper into debt through credit cards. I bought expensive clothes, shoes, jewelry (collectively known as junk) and took expensive vacations that I clearly couldn’t afford. Instant gratification took priority over debt avoidance.

    Is it really the credit card company’s fault that I, as an adult, didn’t exercise restraint from spending money I didn’t have?

    The wife in the GMA video clip said, “I think I’ll definitely pay attention now, ‘Do I have enough cash to go check out?’” Later, the wife said, “I don’t have enough money in my purse to go buy this dress or this new shirt that I want, so you don’t even step foot into the store because you don’t have the money.” This made me wonder whether this couple previously lived on a budget? (Doesn’t seem like it.)

    Without a budget and without a list of items to purchase, I can see how someone can carelessly make spur-of-the-moment purchases using credit cards. But I suspect that if someone lives on a budget with a strict commitment to pay off the credit card balance every month, any savings from a cash-only lifestyle will evaporate.

    Anecdotally, I’ve now set myself a $500/month budget on my American Express for groceries, toiletries and any other irregular purchases. I carefully track my spending on a weekly basis and I’ve found that I normally come under budget every month. For example, I only spent $369.29 in August for groceries, entertainment and other miscellaneous spending.

    I doubt I would do much better living on a cash-only basis. Thus, the inconvenience of the cash-only lifestyle would seriously outweigh any purported savings that I would see living a cash-only lifestyle. I've decided that I will continue to live on a budget and use my credit card judiciously.

    I’d like to hear about other people’s opinions and experiences.

    Tuesday, September 2, 2008

    Wednesday Pay It Forward Award!

    Sallie’s Niece was very kind enough to give me a Pay It Forward Award a while back.



    According to the rules, I must forward the award to other worthy PF blogs. The recipients can then:

    1. Put the logo (above) on their blog.
    2. Add a link to the person who awarded it to you.
    3. Nominate at least 5 other blogs.
    4. Add links to these blogs on your blog – don’t forget this step. This is great free advertising!
    5. Leave a message for your award recipient on their blog.

    (Please note that this of course, is done in the full spirit of fun. There is no obligation.)

    Here are some blogs that I enjoy reading:

    MoneyBeagle started his personal financial blog the same time I did (in August 2008). Unlike me, Money Beagle is a smart guy (he has an MBA) and says he's always enjoyed budgeting. (Is he serious??) I like that he started his blog as a medium to share and exchange experience and knowledge.

    FruGal has the coolest job in one of the coolest cities – she’s a personal finance writer in London! She provides great tips on frugal living even though she often misspells words like “labor”. (I’m kidding, of course.) Check out her FruGal recipes. (I love’em despite the fact that I had to Google what “capsicums” are.)

    Pennies For Pedicures is a young professional who loves the food and culture of Paris as much as I do. Despite being so young, she’s very financially wise and motivated. I love the fact that she budgets for the occasional pedicure.

    Living Paycheck to Paycheck is a young woman in D.C. coping to live in an expensive city while paying off her student loans and car debt. Like me, she also has to deal with friends whose spending habits don’t jibe with her budget.

    Uncommon Cents writes his blog from the beautiful Aloha state. As much as I envy him, he reminds me about certain challenges unique to living in Hawaii. (For example a lot of the free shipping deals are only available within the Continental U.S.) I love the fact that he shares discounts he’s found in coupons, online, etc.

    Please check'em out. I'm sure you'll enjoy these blogs.

    Monday, September 1, 2008

    How I Survived on $6.75/day for Groceries in August

    This year I decided to start living frugally and made a conscientious decision to eliminate luxuries and excess fat from my budget. Last week I was pleased to discover that I only spent $6.75/day for groceries in August.

    Please note that this is not an article about how I ate fabulous gourmet meals for less than $7/day. If you’re also looking for tips on how to feed a family of four on less than $7/day, you’re out of luck. I’m just a single gal trying to live on a frugal budget.

    Here are some of my tips on how I survived the month of August on less than $7/day for food:

    1. I didn’t eat out: Okay, this is a lie. I did go to On the Border Mexican restaurant with my friends for lunch. But, I didn’t spend a dime since I paid my share (including tips) with a gift card I received for my birthday. I also used a $5 off coupon which I shared with my friends.

    I generally don’t eat out very much but if I do, I try to go to restaurants for which I have coupons or gift-cards. (See my prior post on how to get free food from restaurants.) I usually also get my food to-go, so I can save on drinks and tips.
    TOTAL COST = $0


    2. I knew what my weekly food budget was and I kept a weekly spending tally: I already know that I can comfortably spend about $8-$9/day on food. I always save my receipts and tally them over the weekend to see whether I’m overspending. If I am, I adjust my future spending accordingly (See, #3).


    3. I ate leftovers: Since the lunch portion at On the Border was generous (not to mention I stuffed up on free chips and salsa), I took home half of my beef burrito (with sides of rice and beans) and ate it for lunch the following day.

    Any time I went overbudget for the week, I ate what was already in my freezer and pantry. I didn’t go grocery shopping until I was back on track.
    TOTAL COST = $0


    4. Avoid hunger rule #1 - I never skipped breakfast: Every time I’m hungry, I’m tempted to run to the closest In-N-Out Burger for a Double-Double and fries. I keep hunger at bay by eating breakfast everyday. My breakfast normally consists of grapefruit (half), 1 egg (boiled or scrambled), a glass of V-8 juice, tea/coffee and quarter cup of oatmeal with milk. The more sensible my breakfast, the less hungry I am at lunch.
    TOTAL COST: $44.00


    5. I planned my meals for the entire week on the weekends and I shopped from a list: My Debt Blog offers great tips on saving money on groceries. I’m glad to see I follow most of these rules religiously!


    6. I reduced my alcohol / junk food consumption: I haven’t eliminated these items from my life completely but I don’t drink everyday either. In August, I bought a 6-pack of beer and junk food with my proceeds from recycling. I also bought a $5.99 bottle of a Sauvignon Blanc from Trader Joe’s that I’ve been drinking over time with a wine preserver spray and pourable wine cork.
    TOTAL COST = $8


    7. I don’t expect variety in my lunches: On most Sundays, I prepare a “one-pot wonder” dish that I split into individual servings to take to work for lunch. In August, I made a pot of curry (week 1), a pot of spaghetti sauce (week 2) and a pot of corned beef and cabbage (week 4). I’ll admit that by Thursday, I was usually sick of eating the same stuff. When I really can’t bear to eat it, I freeze it and I splurge on a reasonable take out meal.

    Chicken curry: SUBTOTAL COST = $11/week
    Spaghetti: SUBTOTAL COST = $9.00/week
    Corned beef and cabbage: SUBTOTAL COST = $13/week (only 1/2 of corned beef used)
    TOTAL COST: $33 for lunch for 3 weeks


    8. I made “French” sandwiches for lunch: I traveled for the first time to Paris this May, and had a delightful sandwich that consisted simply of baguette, butter, lettuce, 2 slices of ham and gruyere cheese. It wasn’t stuffed to the gills with meat like most American sandwiches, but it was delicious and filling! (And it’s cheaper than Subway’s $5 footlongs.)
    TOTAL COST : $12 for a week’s worth of sandwiches


    9. Avoid hunger rule #2 - I have snacks in the afternoon: At work, I have a jar of nuts at my desk and frozen bagels in the freezer. I eat a handful of nuts or half a bagel with peanut butter when I get hungry in the afternoon.
    TOTAL COST: $5


    10. I supplemented meat with rice, pasta, veggies and beans A LOT: It’s obvious that meat costs way more than vegetables, beans, rice and pasta. Meat, chicken and fish are never the “main items” in my meals. I bulk up a small serving of meat with rice, pasta and beans.

    For example, I made one rotisserie chicken ($7.99) last over a week by immediately shredding the entire chicken off the bone and splitting it into individual serving size containers and freezing them. I used each serving of chicken to make: rice bowl (see below), chicken stir-fry, chicken fried rice, chicken and pasta, and ramen (see #12).

    I really enjoy making “rice-bowl” dishes since they’re easy, quick and filling. Here’s a recipe for a Japanese comfort food called oyako-don. I also love arroz con pollo!
    TOTAL COST OF MEAT/FISH/POULTRY: $50.00
    TOTAL COST OF RICE/BEANS/PASTA/VEGGIES: $30.00


    11. I shop at Trader Joe’s and ethnic grocery stores/bakery: I don’t buy perishable food at Costco since I can’t consume everything by myself before it goes bad. (One exception: I bought 3.5 lbs of corned beef from Costco for $11.25. I only used half of it and froze the remainder for later use.)

    I shop instead at Trader Joe’s and ethnic markets where items like seafood are much fresher and cheaper. Also, who knew that my local Vietnamese bakery had cheap and delicious baguettes (40 cents per baguette)?


    12. I don’t dis the ramen: I don’t care if Top Ramen and Cup O’ Noodle only cost 25 cents each. They’re disgusting. If you have an Asian market in your neighborhood, I recommend you venture into one and ask the store clerk which ramen he recommends. The ramens from Asian markets are of superior quality, tastes great and usually only costs about $1.50 each. With any ramen you choose, add some chopped green onions, some left-over chicken or ham, stir-fried veggies with bean sprouts, a hard-boiled egg and you’ve got yourself an inexpensive, delicious meal.
    TOTAL COST: $20.00

    Well, these are some of the tips that help me get through the month on a tight budget. If you have any tips, please feel free to comment!

    Fell Off the Frugal Wagon Over Weekend

    This weekend I spent a couple of days with my friend (and male colleague) from the east coast, MB.

    Saturday

    My Saturday started innocently (aka frugally) enough. MB and his pals went sailing for the day, which I did not go, since I would only be good for chumming the waters (if you know what I mean). I instead ran some errands, bought groceries and ate breakfast and lunch at home. (So far so good.)

    While I was watching the USC-VA blow-out game on TV, MB invited me to the Waterfront bar where MB & pals were eating and drinking at the patio. I went to the ATM and withdrew $80 from my WF savings account.

    When I got to the Waterfront, I opted to only drink 2 glasses of ginger-ale since the cheddarwurst sandwich I made myself for lunch was not sitting well in my stomach. ($5 incl. tips. Excellent!)

    Afterwards, MB + pals and I went to Mr. P's in Coronado for dinner and drinks. I drank a pint of Guinness and had a plate of onion rings for $15.00. (So it wasn't a healthy dinner. But I needed deep fried crunchy food with my beer!) Since the gang was exhausted from sailing and drinking, we called it an early night (around 9 p.m.)

    TOTAL DAMAGE ON SATURDAY: $20. (Not bad at all.)

    Sunday
    Sunday did not go as well as I hoped. MB's pal was playing rugby in the morning so MB and I decided to take a leisurely 2 mile RT stroll to Balboa Park.


    By the time we got there, MB and I were drenched so I bought 2 bottles of water to cool us off (Cost: $3.50). We strolled along the museums, but ended up at the bar of the El Prado Restaurant where we ordered chips, queso, salsa,and 3 margaritas for $35.00 incl. tips (my share $15.00).

    When we returned to MB's pal's place, MB + pal and I headed to a bar called The Hole, which prides itself as "a pretty much world famous dive". Neither MB nor I are of the sexual orientation of the Sunday patrons at The Hole, but we had a great time nevertheless, since the atmosphere was fun, lively and friendly. What especially helped our mood was the $5 pitcher draft beers and burgers from Flaco's Grill.

    A word of note: I'm 5'1" and 105 lbs and my friend is 6'2" and probably over 200 lbs. The boy loves (and can) drink. I, myself, cannot drink a bottle of beer without slurring my words.

    I recall drinking my first pitcher of Blue Moon beer and eating a cheeseburger. The rest gets a little bit hazy. I checked my wallet and I only have $20 remaining, which must mean I must have spent $20 or so on beer. (I think MB bought the cheeseburger so I need to pay him later.)

    TOTAL DAMAGE ON SUNDAY: $40-ish.

    TOTAL WEEKEND DAMAGE: $60-ish.

    Sigh.... This weekend reminds me of Chumbawamba's Tubthumping song. But all is not lost since my company owes me $121.75 for out-of-pocket cash I spent during my business trips. I'll use some of that to replenish my savings. :-D