Archives for January 2007

Reminder: Track Your Expenses For A Month

Just a quick reminder that I’m tracking my expenses in February, and everyone with a similar inclination should join in the fun.

Here are the categories I assigned myself in PearBudget:

Regular Expenses – Housing, Phone, Cable, Internet, Garbage, Insurance
Variable Expenses – Gasoline, Electricity/Gas, Groceries, Dining out, Household, Personal Care, Pet Care, Recreation, Everything Else
Irregular Expenses – Car Repair, Travel, Gifts, Healthcare, Water/Sewer

My receipt spike is excited! I’ll check back in after a week.

This Week in the Carnivals

If you can’t get your fill of financial talk, mosey on over to the Carnival of Investing (Monopoly Edition!), Carnival of Debt Reduction, and the Carnival of Personal Finance. Here are a few that stood out:

Looking to learn from someone who’s had some bumps in the road and still has a great attitude about it? Check out BloggingAwayDebt.

Searchlight Crusade has some tips on how to avoid vampire properties. I wish house inspections were done upfront by a third-party and shown to all interested parties. The fee could just be picked up by the eventual home-buyer.

MyPocketChange tries help figure out how long do you need to leave your money in the market? Don’t miss the graphs, they say it all.

Wachovia Bank $50 Bonus For Free Checking Account

Wachovia Bank is offering a $50 sign-up bonus for opening one of their Free Checking accounts. The account looks pretty good, with no monthly service fee, no minimum balance, and no direct deposit requirement. However you will get a hard credit pull and you need to open with at least $100. You also have to be a little patient:

Account must be opened in good faith and remain in good standing through 04/30/2007 in order to be eligible for the offer. Account must be funded with a minimum opening deposit of $100. Offer expires on 04/01/2007. […] The $50 bonus will appear in the form of a credit to the account within 60 days of the offer expiration date.

Overall, it looks good if you have a lot of Wachovia’s around and need a low-maintenance local bank account. The interest rates on their savings accounts are awful, so link it up to an online savings account paying 5% APY. Thanks to JP for the tip.

All About Our Failed Online Business Idea

It’s failure time! I’ve talked a little bit about an online business idea that my wife and I had about a year ago. I’ve even showed a few prototypes. But we’ve finally laid all hope or desire to pursue this business to rest. Here’s the story:

The Idea Forms
It all began when we got a dog. We discovered that not only do people love their pets, but they are willing to spend a lot of their disposable income on them. Dog bakeries. Dog clothes (the bane of my existence!). Dog birthday parties. After buying a few $4 squeaky toys, and having our dog completely obliterate them in 46.6 seconds, we started thinking about making our own dog toys. You can actually buy “squeakers” for about 20 cents each on eBay. Add fabric and stuffing, and you’ve got yourself a cheap squeaky toy! But it still lasted less than a day.

My wife is great at crafts and sewing things. After several prototypes and using our dog and our friend’s dogs as beta-testers, we finally came up with a very durable double-layered squeaky toy. The outer fabric is soft and fleecy, but the inner is super-tough. It lasted almost indefinitely without puncture for most dogs that tried it. To add a personal touch we even have an embroidery machine to add the dog’s name to each toy. Here’s a late prototype, complete with label and packaging:


The Problems – Profit? What Profit?
[Read more…]

Should I Do My Own Taxes Or Hire An Accountant?

10-key calculator, image credit: OfficeDepot.comI mentioned earlier that I am forgoing all the free federal and state tax filing software options and paying an accountant this year. A reader asked why. That’s a good question, here’s what I (as a non-tax pro) think the decision process should look like:

Do I even want to deal with it?
Some people just think about taxes and feel queasy. It’ll cost at least $100 to pay a person to do it for you, but it’ll get done. Or maybe you feel your time is worth enough that it’s cheaper to just outsource it.

Try doing it online yourself for free first
Most online tax websites only make you pay for your return at the very end, when you want to print or e-file. So you can go through the entire process and even figure out your refund without paying a dime. I used to run my taxes both with H&R Block and TurboTax online just to make sure the final numbers were identical (they weren’t once!). Usually they ask enough questions to tease out any concerns you might have. If you find yourself unsure of something, maybe it’s time to do some more reading or pay for an accountant.

The side benefit to doing this is that it makes you get all your records and papers in order. This will save your accountant time, and thus save you some money!

Taxes Too Complicated?
If your taxes are easy (you don’t itemize), I bet that any software will ask the same questions as the people at your local H&R Block. But in my case, I formed an corporation for my business this year, and with the payroll issues, qualified expenses, and deductions there is no free online version I could try for free. I could buy a copy of the beefier TaxCut Business that handles corporations, but it’s very possible that I’d still miss something.

Therefore, I want my records to be examined at least once by a professional who’s familiar with similar small businesses – an independent accountant, not a chain. If I’m lucky, I will find someone that adds value and maybe even form a long-term relationship. If not, at the very least I’ll have the finished return to act as a template for next year’s taxes.

Our 2007 Financial Goals, By Quarter

Where are my annual goals? Right now our lives are in a state of limbo, with several pieces that need to fall into place. First and foremost, we are both working towards getting jobs in a new city. After that, we’ll have a better idea of what our income will be (probably significantly higher). It is quite probable that one of us will take longer to find a position than the other. We have a lot of temporary living options with family, or we could rent again, or we could buy our first house.

Given all those variables, here’s the best I could come up with:

1st Quarter
– Find a job!
Start Tracking Expenses
– File income taxes
– Set up estimated taxes for rest of year
– Put at least $500/month away in 401k

2nd Quarter
– Reach $50,000 in cash for a house down payment (currently at ~$37k)
– Sell most of our nonessential property, aka crap

3rd Quarter
– Move; Find a real estate agent
– Maybe buy a house if the stars align correctly

4th Quarter
– Most likely buy a “reasonable” house during this period
– Long shot goal: Buy a rental property in the Portland area

We are putting off the 2007 Roth IRA contributions until we know better what our income situation will be. It’s amazing that 2006 felt like it passed right by without much action, but 2007 looks like it will be much more hectic.

AGLOCO: Get Paid To Surf The Internet

I’ve been getting a steady stream of e-mails for months now about a company called AGLOCO. Apparently, they are starting an application that shows ads on the bottom of your computer screen (screenshot). They make money off the ads, so they pay you to run it. So why do people keep e-mailing me? Because you also make money if you refer other people, and if those people refer more people, and so on…

If you remember a company called AllAdvantage from years ago, this is very similar. I remember making about $100 a month from AA. Of course, they went bankrupt! The only way I see this company making money is if the payouts are much lower, perhaps in the $20 per month range for running it a few hours a day. Now, I have no idea what the actual payout will be, I’m just saying keep your expectations reasonable. It’s kind of like MyPoints is with e-mail, and fits nicely in the Bored Money category.

To be clear, I am neither a proponent or opponent of this application. I’ve done my due diligence and it appears to be legit with no spyware or other nasties, however, nobody will know for sure until the application is actually released. I went ahead and signed up and will see what happens.

HSBC Direct Offering 6.00% APY On New Money Through 4/30

HSBC Direct is offering a promotional 6.00% APY on new money only between January 29, 2007 and April 30, 2007. This for both new and existing accounts. They are pretty restrictive on the meaning of “new” money, so you can’t just take money out and put it back in and have it earn the promo rate.

Starting Balance means the available balance in your account as of the close of business on January 26, 2007. New Money means funds not previously held by any member of the HSBC Group deposited during the New Money Period less any withdrawals, and it excludes your Starting Balance as calculated below.

If you don’t use HSBC, check out my Ultimate Interest Rate Chaser Calculator to help decide if it’s worth the hassle to move money over. Currently most other similar online banks are earning about 5.00-5.25% APY. You’re really looking at a maximum of 3 months of an extra 1% APY, after which most likely the rate will drop back down. This equates to roughly $20-$25 extra for each $10,000 you move in (the lower estimate takes into account the likely lost interest during transfer).

Added: Also see my HSBC Direct Review

My Expense Tracking Plan Of Attack! (Join Me?)

I fell off the budgeting wagon months ago, and haven’t been back on since. I’m still saving a good chunk of money each month, but it’s high time that I drink my own Kool-Aid and start tracking my expenses.

I haven’t been overly impressed with either Money and Quicken in the past, so I needed to find an alternative. After browsing through my big list of free budgeting tools, I’ve decided to try the PearBudget spreadsheet out first. It seemed to be the best candidate for me because:

It’s free, and it won’t stop working after 2 years, either!
It’s offline, so no worrying about importing files or syncing problems.
It’s flexible; I can update every day or once a month, whatever works.
It’s simple. I’m only concerned about tracking expenses. I don’t need any other features to distract me or take up more time.

In fact, there are only 2 steps that require any effort:

PearBudget Steps Screenshot

I just finished the first step today, which is name the categories you want to track and give some rough estimates. It really did only take 10 minutes.

To help me with the second step, I went out and bought one of those restaurant receipt spindles from OfficeMax for $2. My plan is to get receipts for everything, and whenever I get home to spear them all on the spike. Every day or two, I’ll empty the spike and punch in a few quick numbers into PearBudget. All tax-deductible expenses will be stored in a folder for tax time. Sounds reasonable, doesn’t it? I plan to start tracking in February. I invite anyone interested to join me and discover exactly how our money is spent during any given month!

Free iPod Shuffle From Hedgestreet Arrived

For everyone that joined me in the Hedgestreet iPod promotion, your patience should be rewarded shortly. In fact, I’d check your inbox for an e-mail titled “HedgeStreet iPod Shuffle Promotion” if you haven’t gotten it already.

I think I should be getting two more of these puppies later for the referrals I gave out (thanks!), as I got multiple iPod e-mails. I decided that one of these will be given away as a prize for my Make A Goal Experiment. The other one, we’ll have to see…

If you did it right, the $79 Shuffle should have cost under $3 – or maybe you even made money! This is another one of my little activities that nets me an extra few thousand dollars a year. Here’s to free stuff!

Model Portfolio #4: The Intelligent Asset Allocator

(This is the fourth in my series of Model Portfolio Comparisons.)

I hope people aren’t getting overwhelmed by all of these portfolios. Remember, the law of diminishing returns applies to investment complexity as well. After a while, adding more asset classes and mutual funds doesn’t get you that much more expected return. If you’re getting bored, try some of the earlier portfolios and tune out the rest. Personally, I don’t mind having 8 funds or so, and I’ve found that after the initial setup the maintenance is pretty minimal.

William Bernstein, both a neurologist and a founder of his own money management firm, is the author of the challenging but information-packed book The Intelligent Asset Allocator (my review). Here is one model portfolio for those that desire moderate complexity and high risk. The author warns that while this asset allocation has very high expected long-term returns, it will behave much differently than the S&P 500 fund that many people use as benchmarks.

Bold Investor Model Portfolio

Asset Allocation Pie Chart, Bold Investor

Asset Allocation for 70% Stocks/30% Bonds ratio
[Read more…]

What’s Your Dream Job?

ESPN Dream Job Logo, credit: ESPN.comMy wife and I are both job-hunting, and I’ve been thinking a lot about careers in general. I also recently watched the movie High Fidelity. If you haven’t seen it, there is a scene where John Cusack has a list of his top 5 dream jobs if “qualifications, history, time, and salary were no object.” After going through them, he realizes that he is already doing one of his dream jobs, owning his own record store. So I wondered, what are/were my dream jobs? Here they are, sorted by era, along with why it didn’t work out.

High School – High School Math Teacher
High school was where I first realized that good teachers can change your life by showing the beauty in a subject. Seriously. I also tutored some math and ACT/SAT students, and it was very rewarding. The problem? I was afraid that I would feel more like parent than a teacher, and I don’t have that kind of patience. Also, let’s face it, the pay is horrible.

College – Professor of Physics [at a small liberal arts college].
I still think about this sometimes. I love physics, also in large part to a great teacher. Besides the difficulty in getting the degree, the number of Physics Ph.Ds churned out every year compared to the number of tenure-track positions available is insane. You need to graduate from a top school to even have a chance. On top of that, you would have no power to choose where you lived. If a position opens up, you had better take it!

Corporate Worker – Optometrist
I have to admit, this was a very selfish choice. I was tired of feeling like an under-appreciated worker bee, and I wanted out. Being an optometrist seemed like the best combination of salary, autonomy, and quality of life. I really have no idea what the true life of an optometrist is like. It also would have required a lot more schooling and tuition.

Currently – Own My Own Educational Software Company
See a theme? I think that educational software is going to be a huge field in the future. We need to improve how our children learn. If the government doesn’t support this, then pro-active parents will buy it themselves as a supplement. You already see this in many areas, such as the SATs. I still have a ton to learn before I can achieve this, and my dream job may change in the meantime, but there you go.

So, what’s your dream job? (Pro athlete or big-inheritance aspirations aside.) It’d be especially awesome to hear from people actually doing their dream jobs.