Archive for August, 2007

marital money mantra #3: giving gifts is not a license to be financially irresponsible
August 30, 2007

Oh the irony of having vision with blurred discernment.

Mmmmmaybe that’s one of my top embarrassing fiscal decisions considering two things:
1) My ego thinks she’s fiscally disciplined;
2) In that same week I barked at my husband for over-spending.

Yup I’m rolling in imperfection! Dang if that mantra isn’t worth repeating and recycling over and over again in one’s marriage, partnership, whichever.

So for all our benefit, here ’tis again:

Holy Smokes(!)…giving gifts is not a license to be fiscally irresponsible.

More from:
The GiveWell Blog, an interesting blog that takes the gift-giving discussion to a community scale. They evaluate non-profits to gauge the appropriateness of their use of funding, including financial gifts from the average Joe. GiveWell also reviews the effectiveness of a non-profit’s service. That seems a prickly albeit relevant undertaking.

renting vs buying e.g. can you still afford pet food with a mortgage?
August 29, 2007

I live in downtown Washington, DC with my husband where we rent 600 square feet & love it. We long sold the car & we both walk to work (…I endure a hefty commute from the bedroom to my home studio 15′ away).

After scoping out properties with an agent – we’re delaying home ownership, despite the market stats.

I sometimes get defensive on this issue, esp with friends who’ve owned for some time. I let my self-concept get all out of whack, thinking my man & I are somehow less adult for not owning property in our 30s.

The truth is, I believe buying now makes us financially vulnerable no matter how much home price tags decline. To get into a 600 square foot home in this area, we’d:
-have to relinquish our emergency cash reserves toward down payment & closing costs;
-retain a minimum monthly mortgage of $2k for 600 square feet at a conservative purchase price of $230k;
-that leaves minimal to zero monthly margins for unforeseen expenses or increased contributions toward retirement.

Granted, we’ve chosen to live in pricey downtown near work for simplicity of living. Walking to work is addictive, especially that welcome by-product of zero car payments and insurance.

And Stephen Pollan chimes in:

Today when young clients come to me to discuss real estate, I tell them to buy their second home first. I tell them to steer clear of “starter houses” they’ll eventually outgrow, and instead buy the kind of home they would have stepped up into after selling a starter house. I tell them to plan on buying a house they could be comfortable in for the rest of their lives. If that means waiting longer to buy, so be it. That will give you more time to save money, …more time to separate your needs from your wants. The result will be a more intelligent buy.

So right now, I’m glad to help our landlord with his property ownership & tax benefits. As his renters, we’ll keep chins up while investing in our fiscal balance and discipline.

More from:
–CNN’s cost of living calculator (knocked my socks off when my cousin in Tulsa, OK said we could live in a 4 bedroom, marble kitchen estate for what we’d pay for 600 sq ft in DC);
Rent v buy calculator which assesses whether buying a home (or renting & investing the would-be mortgage payment) would be best per your current stats;
–Pollan’s book Die Broke offers frank, reasonable insight to personal finance

ask ask ask: your employer’s benefit’s plan
August 28, 2007

I rarely reviewed medical or dental coverage plans when joining a new firm (unless you consider ‘whatevah‘ as a valid acknowledgment to such material).

Today I attend a benefits fair at my husband’s work. In preparation, I’ve been humbled to learn just how much there’s to learn on our coverage — stuff like:

What percentage is covered for out-of-network consults?
Where/how should reimbursements be submitted?
What’s that flex spending plan all about?
Does the employer offer health care benefits for retired employees?

More from:
-APA outlines apt questions to ask your company’s benefits team or HR staff, even sensitive ones I didn’t first consider;
-For gay/lesbian domestic partners, this looked insightful for benefits & legal protections;
-The Money Blog, the ever credible source comments on potential benefits which you may not be aware of — cool eye care & flex spending accounts.

marital money mantra #2: protect what you can’t afford to lose
August 26, 2007

Sweet cash kitty

We learned a lot from our own cycles of incur-credit-debt-yet-not-build-savings. We still have credit card debt (from mis-calculating last year’s tax payment); yet we’ve for the first time built a cash kitty, four months of expenses, with plans to secure one year’s worth since we function on a single steady income.

It’s tough changing one’s perception of what is or is not a valuable financial habit or philosophy. I heard throughout life about debt-is-bad-pay-it-off but not as much insistence on building cash reserves aka rainy day protection. I realize saving philosophies have certainly been around for ages; cash reserves (and truly reserving them for emergencies vs a Mets game…) — just weren’t emphasized as much in my personal community.

After six years of marriage, four cats, and $6k in pet surgeries it became clear viewing a credit card as an emergency cash plan lacked….prudence. Emotionally we couldn’t afford to lose the various cats & financially, we decided we couldn’t afford to personally finance continual debt cycles.

Thus dedication to building cash reserves began as did researching pet insurance(!).

More from:
-ASPCA offers diverse pet insurance plans & good customer service;
All Financial Matters says it well: Emergencies will come whether we are prepared for them or not.

join us at dc media makers tonight .8/23rd. cleveland park library
August 23, 2007

Fantastic, collaborative, engaging, fun, & free.

Tonight at Cleveland Park Library, 2nd floor stacks with wifi, 6:30-8:30.

Check here for more on DC Media Makers & member projects.

Remaining meeting times this year

September: Th, 9/13, 6:30-8:30, Cleveland Park Library, 2nd fl stacks;

October: Th, 10/11, 6:30-8:30, Cleveland Park Library, 1st fl meeting room;

November: Th, 11/15, 6:30-8:30, Cleveland Park Library, 1st fl meeting room;

December: Th, 12/20, 6:30-8:30, Cleveland Park Library, 1st fl meeting room

marital money mantra #1: overt & unified approach
August 23, 2007


During the first years of marriage, our conversations on spending splurges went down like this:

The husband likes books – admirably. And sure I’m addicted to eating out with friends & travel.

With books though, Sean’s a read-it-once-learn-it type of brain & is a strong visual learner. Books are his friend. It’s a learning style that differs heartily from my own. I love a good Edith Wharton novel & a few graphs from business books. But I just did not appreciate his relationship with books as they related to his well being.

But more than that, his book buying irked me because deep down, I knew our family finances were shaky with our unclear financial philosophy convincingly…unclear.

Once we took actionable steps toward more stability, my emotional freak-outs eased considerably. It helps that my husband owns a really laid-back demeanor toward home finances a.k.a. “That sounds good baby!” — his reply to many suggestions tossed out for discussion.

Our facilitating questions on the topic:
–Do we agree that saving for present & future is worth it? …get mutual buy in first; establish tactics later.

–In what ways does money affect your sense of self? …sounds corny but ask. Do they want 100% control? Do they care if you do? Do you feel like a ‘less-than man or woman’ with someone else handling the bills? In what ways do you crave financial autonomy or partnership?

–How do you like to play? e.g. books, tech, travel, hobbies

–If saving & investing for your overall health is the driving goal, what are you/we willing to financially modify – or not – toward the play stuff?

I’ve heard of spouses going out of town for the weekend with the other spouse staying home. Upon return, there’s a newly purchased car in the driveway. That actually happened with my parents. Yikes that was a cherished family moment in Mustang, Oklahoma; and looking back – there were power struggles & self images at work, all tied up with money.

If at all possible, make all that overt…with some flexible conversation on what’s the healthiest, happiest shared value on money that you can agree on.

Bottom line, if all this becomes open, then spending becomes all the more fun & relaxed. …since you’ve as a team asserted responsibility toward your driving financial goal.

More from:
1) Gerri Willis, clear, straight shooter;
2) Kiplinger & financial unions;
3) Women Today mag & couples (I like what’s said about learning what constitutes a major purchase).

remember trinity in the matrix: how financial planners profit
August 21, 2007

It’s the first Matrix movie.

We see Neo (pre-freedom) in a tech dance club with Trinity leaning over, whispering in his ear:

It’s not the answer but the question, it’s the question that drives you…

And the same the-question-must-drive-you theory applies when researching how financial planners make their money. I find it central to seeing if my best interests govern their decisions -vs- their eyes for profit.

commissions? commissions on which products? salary? fee-based? a percentage of your assets?

But what about chump change?

One must ask the fee question to be clear on a planner’s loyalty. Do they get a percentage for select products? If so – how compatible are those products with your needs?

Liz Pulliam Weston with MSN Money outlines clear, crisp questioning for potential financial planners, and the compensation point.

To avoid a good ‘ole head spin on this topic, I find knowing how to verify planners’ answers is key. Frankly compensation can range from fee-only per product sold or an annual fee based on your assets or wrap fees where management fees + annual percentages + fee-based amounts are rolled into one charge or hourly charges or annual retainers.

It’s plenty if not too prickly to process if it’s not your profession. (alliteration addiction…)

So ask to at least learn how your assets & purchases impact their fees, and therefore their judgment. And if the potential planner admits to offering limited services with limited products — I vote walking out the door. They would be admitting to having limited capacity to advise your overall financial reality.

To reiterate, knowing how and where to cross-check answers is useful (and empowering to the layman). Weston says it well, referencing where to cross-check your potential planners’ answers to the payment question:

Ask — and then do more research. If your planner is a registered investment adviser (RIA), ask for a copy of his form ADV, Parts I and II. This document, which must be filed with the Securities and Exchange Commission, outlines whether the adviser accepts fees, commissions or both. If the adviser’s practice is too small to be regulated by the SEC, ask for the state equivalent of this form.

To cross-check their licenses, check these registered authorities:
Certified Financial Planners Board of Standards
American Institute of Certified Public Accountants, financial planning division
Society of Financial Services Professionals

get tough, 10 second vid: wanting a hard arse for a financial planner
August 20, 2007

Kiplinger’s annual retirement planning issue gives keen & concise interview tips for your financial planner search.

One example here re: learning their client complaints policy:

I’m meeting with different planners and comparing their advice.

I liked last week’s planner, his personality & warmth. But after considering Kiplinger’s points to consider, I wouldn’t trust him with significant decisions. I’m not sure why except he seemed almost too warm and fuzzy. Professional, yes; dressed in fine business attire, yes.

But he didn’t offer that clear, decisive tone aka “Jill I want you to consider, this, this, and this.” Possibly this would emerge after that initial meeting. I led the meeting, which is what I prefer. So – ha – maybe I didn’t give him a chance to be decisive. And Russell Bailyn makes an intriguing point about emotions, financial planning, & cookie cutter advice.

More questions to ask per Kiplinger’s:
— what process do you follow to identify goals and evaluate performance?
— what are your sources of research and information?
— what’s your fee structure?

And what you should be very honest about, even if your gut says they’d be fun for beers:
are they candid & intelligent?

QOTD, class & income, spending habits with barfy stats
August 17, 2007

10 second clip:

That really made an impact on my financial thinking.

—as have articles like this re: income growth rates & class. The article talks broadly on income, class, & happiness in the US yet these stats are what got me:

According to Census figures, the average inflation-adjusted income in the top quintile of American earners increased 22% between 1993 and 2003. Incomes in the middle quintile rose 17% on average, while the incomes in the bottom quintile increased 13%. Over the 30 years prior to 2003, top-quintile earners saw their real incomes increase by two-thirds, versus a quarter for those in the middle quintile and a fifth among the bottom earners.

This is telling & worth looking at. The issue of earning ability in the states has its place at the financial planning table.

Yet my expertise is not in that arena; it’s in my family’s ability to learn & recover from mindless spending habits. In 2006, we spent over $1k in banking fees (vs using our bank’s ATM exclusively), $2k toward retirement savings, and wait for it, wait for it, $11k in eating out + entertainment.

Puke with me.

And that’s during my sales commission manager job where many times I wouldn’t submit for reimbursement on those client lunches or staff rewards to protect those tracked margins. Imagine what the numbers would be if I had tracked that? I’d still be numb with liquor.

So cheers to new habits, conscious spending, all sprinkled with joy in between.

And may we all take time to cook cuz oh mercy — that habit really impacts the bottom line.