Resolutions 2007

The Financista’s New Year’s (Financial) Resolutions

In no particular order...

- Max out Roth IRA
- Increase 401(k) contributions to at least 10%
- Post more frequently on blog (hey hey, you all can benefit, too!)
- Increase charitable donations to tithing status
- Increase odd job income
- Double Net Worth by year’s end

These are the main objectives. How about you? What's your most important resolution for the new year?

Best wishes for a Happy and Prosperous 2007!


Photo: Karl Hilzinger

Free Stuff Friday: Soft and Dri Deodorant Sample

I seem to be developing a real trend with finding deodorant samples. Oh well. I am pretty loyal to Ladies' Mitchum, but we will see what Soft and Dri has to offer. (Sorry to any male readers - I'll try and find something good for you next Friday!) Check it out here.

What I've Been Reading in Preparation for 2007

This time of year always heightens my optimism for the upcoming year, as I think to myself,

"This year will be the year I get in shape;"
"This year will be the year I have my finances completely in order;"
"This year will be the year that I catch up with old friends;"
"This year [insert another well-meaning determination here]."

To get me in the spirit, I always read all of those articles highlighting the Best Ofs and Worst Ofs, Resolutions, and Promises for a Brighter Tomorrow. I am ever the optimistic realist, so here's a sampling of some of the articles I have been reading, which hopefully will provide some real practical advice for your new year:

Kiplinger has a host of thoughts on the matter, from Getting Rich by Getting in Shape to How to Decide Whether to Rent or Buy to Advice More Aimed at Younger Folks just starting out (like moi - though I heartily disagree with #2 for responsible consumers). Their primers on Ways to Get Ahead and How to Start Investing are also worth a read.

The Fool never disappoints. It had 10 Good Resolutions, some of which I will actually use, for 2007.

Since there are a lot of similarities between physical health and financial health goals, from the small steps needed to start to the ways to actually achieve them, I have also been glancing at how to actually do that as well this year. The government's even in on the idea - check out Small Step for some help on getting started.

My list is forthcoming, but in the meantime, I would love to know what's on your New Year's Resolution List for 2007 and what you accomplished from last year's list? Best of luck!

What Should I Do With My Money?

This question has often plagued me. Sure, I've been frugal, counted my pennies, rolled my quarters, but now what? What should I do with all of that money? The Motley Fool had some excellent suggestions, in their suggested pecking order, of where you should park your cash:

1. Employer plan with a match
2. Roth IRA
3. Employer plan without a match
4. Traditional IRA
5. Taxable investment
6. Annuity

The whole article is informative and worth the read. Sometimes it's nice just to have an answer! That's one of the things I like about the Fool. Instead of just replying, "Invest it," the Fools tell you the details - where, how, how much, etc. Mind you, you do so at your own risk (as you do at following The Financista's advice), but it's nice to hear some demonstrative ideas.

A Practical Gift: Stocks

My brother is quite the golf enthusiast. He caddys at the best country club in town, plays in tournaments, spends his free time watching the Golf Channel, and dreams of going pro. This year, for his 19th birthday, I was at a bit of a loss as to what to get him. Sure, a gift certificate to Golf Galaxy might be nice, but he would use that once, and that would be the end of it.

So, instead, I bought him a few shares of Golf Galaxy stock (GGXY). I was lucky to get in on the stock before they were bought out by Dick's. The ROI (return on investment) is over 42%. The idea is similar to a gift certificate, in that it is cash to a place the receiver of the gift enjoys, but it is a gift that keeps on giving (my favorite kind).

For Christmas this year, I am setting up a Roth IRA for him (with the help of my mom to secure his SSN and checking account info) at Sharebuilder. I first saw the link for the Costco bonus $70 at My Money Blog and couldn't pass it up. I am matching the funds from Costco to purchase 2 (a bit meager, I realize) shares of VWO, Vanguard's Emerging Markets ETF (The Motley Fool's Best ETF for 2007). With their promotion of one month of 6 free trades, this will not end up costing my brother a cent for $150 of a very good stock.

It might not be the most exciting gift, but if all goes well, 10 years down the road, but brother will be thanking me that he has several hundred bucks to his name instead of a rusty putter sitting in the corner of the garage.

Merry Christmas and Best Wishes for a Prosperous New Year!

A New Bank in Town: Everbank

It seems that there is yet another new online bank. However, where this one differs is that it is offering a whopping 6.01% APY for the first three months! Not bad. Also, the bank is actually a checking account, not a savings account.

Some other perks:
- First 50 checks are free
- No maintenance fees if there is a $1500 balance
- Free Visa check card

The fine print:

The special 6.01% annual percentage yield (APY) on EverBank's FreeNet Checking Account is current as of 10/01/2006 and will apply for 3 months after account opening, and may change at any time prior to account opening. The current APY as of 09/01/2006 without this special offer will be the applicable ongoing rate based on the average collected daily balance on your account.

Current APY tiers are: over $100K, 4.41%; $50K-$99.99K, 4.00%; $25K-$49.99K, 3.60%; $10K-$24.99K, 3.30%; and under $10K, 3.25%. During the 3-month period after account opening, the special rate will be applied to the first $100,000 in your account and any balance above $100,000 will receive the applicable ongoing rate, based on the average collected daily balance on your account. Any rate or any tier may change at any time without notice. Fees may reduce earnings.

This special APY offer is available to first-time account holders only and is limited to one account per household. The FreeNet Checking Account introductory APY may not be available through all delivery channels or divisions of EverBank. Minimum opening deposit of $1500 is required.

Please note that you need to apply through this ad at Everbank to get this promotional 3 month rate.

If you have no problem moving your money around every few months, that this is a great deal for you as this rate rivals even CD rates, without the problem of not being able to access your money.

Cash is not crass.

During a watercooler discussion at work, the topic of giving cash (in this case, to the wonderful woman who cleans the office) came up. I have discussed the idea with a few folks, and it seems that most people the same way: we love to receive cash! So what's with the hang-up over giving it? Is it perceived as crass in some way?

My opinion is that cash is truly the one size fits all gift. After standing in line at the bank to obtain some crisp 20s to give as gifts, I overheard a woman next to me buying some Wachovia Visa gift cards. The teller asked her, "And how would you like to pay for the $1.95 service charges?" Service charges?! On gift cards?! At that point, I would have halted that little transaction altogether.

While money is no substitute for a well thought out gift from the heart, nowadays it is a much preferable option to gift cards whose fine prints are longer than Santa's naughty list. Give the green if you want a gift that truly can be used anywhere and has no crazy hidden fees. And, if properly invested or saved, it really is a gift that keeps on giving.

GoldStar Events

I found out about this service a few months ago and was skeptical. Why would I get tickets for half off and not have to pay outrageous service fees? It seemed almost too good to be true. Lucky for me (and you for that matter!), it wasn't. I recently purchased tickets to the Washington Ballet's Nutcracker here in DC (a truly festive and fun experience) and was able to receive orchestra tickets for $37.50! Out the door, with taxes and fees, I paid $42 for each ticket. The regular price was $75.00 for each ticket, so this was a substantial savings. I will definitely use GoldStar again and have already been eyeing a new play that's in town. If you are interested in joining GoldStar, you can click here to be taken to the sign-up page.

GoldStar is receiving The Financista's $$$$$ rating (out of $$$$$).

(A bit tardy) FSF: BBO

I don't think I ever written of my love of Blockbuster online. It is far superior to Netflix. Since I split the cost with my roommate, if I were to only get one movie per month, I would get my money's worth. Now, with the Total Access program, I can get almost twice as many movies without paying a dime more. Feel free to try it out for yourself for a month. Use the promo code: friend1.

And the Award for Least Romantic Idea Ever Goes to...

Smart Money ran a story today about a phenomena called the "Non-Divorce" - the idea that people stick together because it's the path of least resistance. Mind you, I am not a proponent of divorce, except in very rare circumstances, but it just sounds so terrible the way they put it.

FSF: Start Sampling

I don't think I have mentioned this website before, but I have received a few good free samples from them: Start Sampling. There's a lot of junk on there that doesn't interest me, but the Dove hand soap I received was GREAT. If I find a coupon for it, I may just buy it.

Paying for Grad School

A few days ago, I took some of my own advice and wrote a question in to be answered by my very own personal financial planner. I was quite impressed to receive, not 1, but 2 answers! Unfortunately, they didn't tell me really anything I didn't already know (namely that I am up the creek sans paddle), but since they were kind enough to reply, I don't mind giving them some free (abeit limited) press. See below for the exciting exchange!

Question:
I am 23 years old, with some undergraduate debt, a steady job,and a 401(k) and Roth IRA that I regularly contribute to. I am hoping to return to graduate school sometime in the next 2-3 years. What can you recommend as the best way to save for graduate school?

Answer:
Continue using the Roth IRA and setup a high yielding money market account. Many fund companies like Vanguard or ING's Orange Savings account offer high yields. You could continue to fund the Roth IRA for educational needs because the Roth IRA offers an exception for educational needs. Just check with the IRA custodian for filing requirements to get the exception.

Good Luck. Robert Ratti, CFP
FINANCIAL INSIGHTS
www.financialinsightspa.com
800.828.8957 (TOLL FREE - VOICE)
215.938.8811 (LOCAL - VOICE)
215.938.1747 (FAX)
---------------------------------------------
Answer:
Considering that grad school is only 2-3 years away, you don’t have that many options as far as savings vehicle is concerned. I recommend a safe investment such as a CD or money market fund. The time frame doesn’t allow you to take any risks. You might consider a 529 Plan, but unfortunately, the short time frame also complicates matters.

Hope this helps.
Jimmy S. Sarmiento, CFP®
Certified Financial Planner Practitioner
707-552-9919
www.yourwealthplanners.com

Life Events, Financial Decisions, and Being S-M-R-T.

Today, I stumbled upon a gem at the Financial Planning Association's website that gives advice for most of life's major life happenings, i.e. marriage, college, school, retirement, etc. While I didn't see something for the way to fund grad school precisely (this seems to be a topic that no one talks about!), the website as a whole was impressive and seemingly sound, and even better, free! It's somewhat rare to be able hear advice from a real financial planner (as opposed to someone who just puts their personal finance thoughts on the internet for free...). If you are someone who tries to handles their finances on his or her own like I do, this is a real treat. Check out the link here.

Also at FPA's website, I found an excellent article about how to become a smarter investor. I am ashamed to admit that I do not do all of their things on the list, including a proper asset allocation. This is something I hope to work on at the start of the new year, once I can start to reinvest in my Roth again. I have a real aversion to bonds, but may have to consider at least a small piece devoted to them. It's just a matter of sitting down and figuring it all out.

Banker to the Poor Follow-up

Well, I said that I would provide a review of Muhammad Yunus' book on the start of the Grameen Bank, so here it is:

Banker to Poor is an inspirational story of the start of a revolutionary way to help the poor raise themselves out of the stranglehood of poverty. The book is surely worth a read; I finished it in two days. There is some technical jargon, but it's not overwhelming. The book easily could have been twice its size, since Yunnus often glosses over wide expanses of time or processes that surely took a lot of time and effort, probably to hold the reader's interest. He had mine! I wish that he would have delved a bit deeper, but overall, it's a great read.

Financista Rating: $$$$ out of $$$$$

FSF: Claiming money that's yours

Motley Fool has an excellent reminder of an article telling folks to make sure that the IRS doesn't owe them money! What an awful thought: the government is actually trying to return the money they took from me, but can't find me! Here's a link to the article that contains further links to the IRS treasure trove of money owed.

Happy treasure hunting!