NicoleM's blog

Why Having Nothing To Wear Is Making You Broke

2008-09-29T10:51:52-05:00

Don’t get me wrong, I love to shop, buy a new outfit or two, but I have never been the type of woman who stands in front of my closet saying…I have nothing to wear. Maybe it is my oversized sense of self or just my decisive nature, but it is just something I don’t do. Many of my friends agonize over this decision daily, ultimately resulting in the purchase of more (and more and more and more) stuff.

The thing about stuff is, you will NEVER have enough, there never comes a point where you will say, yep, that’s it. Anyone remember Amelda Marcos, the wife of a Philipino dictator in the 80s? She had 3,500 paris of shoes. Nuff said.

If you are trying to get ahead financially, this infinite money suck, called your closet, is not an asset to your financial health. My suggestion is, set a monthly clothing number. You will probably spend it the first week of the month, I always do! And the number will vary wildly from person to person based on your income and other monthly outlays but setting up monthly limits will tame your inner Imelda and help release your inner Warren Buffett:)

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

Health Insurance When You Aren’t Covered By An Employer or Medicare

2008-09-29T08:57:57-05:00

Money Magazine had an interesting article this month about a man who is financially ready to retire at 56 but is not sure how he will handle medical coverage until Medicare kicks in at 65. This article jumped out at me because even as a very healthy, normal weight, self employed, 30 year old, I have had trouble getting coverage.

The article suggests the following:

1) Get in shape. Aim for optimal heath at least a year before you apply for insurance. This will help you qualify for insurance and better rates.

2) When you schedule your annual checkup, ask your doctor to review your medical history with you for accuracy. If you have applied for individual life, health, disability or long-term-care insurance within the past seven years, the industry may already have a file on you. You can get a copy of it from MIB.com.

3) Shop for individual health insurance months before you leave your job. ehealthinsurance.com is a good place to start as well as nahu.org.

4) Evaluate how your private health insurance option measures up against COBRA. Through COBRA you can stay on your previous employer’s insurance plan for 18 months, but it isn’t cheap.

5) Ask for an estimate of your premiums and assume these will grow at 10% annually as they have recently. Add up what you will pay until you turn 65. This unfortunately may dim many people’s chances at early retirement.

5) If you cannot get individual coverage after COBRA you will be HIPAA-eligible, guaranteeing certain backup coverage. States make available last resort insurance if you are HIPAA eligible. Be wary, these plans are very costly.

6) Some states (NJ, NY, VT, MA, ME) mandate guranteed group plans for businesses with even one employee, which may make sense if you plan to do any type of freelance work. Go to statehealthfacts.org. Even if you are not in these states you may be able to get insurance through your local chamber of commerce.

Whatever approach you take, please, please, please take this seriously as it is quite difficult to get insurance once you are on your own! Take it from someone with experience!

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

If I Get A Divorce, Does My Spouse Still Collect My Social Security Benefits?

2008-09-16T10:11:08-05:00

Recently, a friend of mine who is getting a divorce asked me this very question. I had just recently read a Wall Street Journal article by Kelly Greene entitled “Social Security Benefits Don’t End With Divorce” and I summarize the findings below.

The answer is yes if your ex spouse:

1) Did not re-marry

2) Earned less income than you, if any at all

3) Was married to you for at least 10 years

Luckily a divorced spouse can collect a Social Security retirement benefit based on the work record of an ex-husband (or ex-wife), and it won’t affect the latter’s retirement benefit or that of his or her current spouse.

For the divorced spouse to collect the worker must be at least 62 years old and collecting benefits or be eligible for benefits.

The divorced spouse is also eligible for widow’s benefits after the worker dies. Your current spouse also can claim Social Security based on your work history, along with widows benefits. In a situation where the divorced spouse would be collecting survivor benefits, he or she could qualify at early as age 60 - or age 50 if he or she qualifies as having a disability.

If the divorced spouse remarries, he or she typically forfeits the working spouses SS benefit based on the former spouse’s working record. However, if the spouse remarries after 60 he or she can still collect a widow’s benefit when the former spouse dies.

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

Exit Strategy

2008-05-21T22:48:01-05:00

Who Needs an Estate Plan and Why?

Everyone. A will tells the world exactly where you want your assets distributed when you die.

It's also the best place to name guardians for your children. In addition to a will, there are plenty of other unpleasantries that make you unable to manage your own affairs for a while -- that can go much more smoothly for you and your loved ones if you've prepared for them ahead of time.

What Does an Estate Plan Include?

An estate plan has several elements: a will; assignment of power of attorney; and a living will. For some people, a trust may also make sense.

How Much Does an Estate Plan Cost?

Typically a basic will plan costs $300-$2,000.

This includes a will, a living will, a health-care proxy and a power of attorney. More complex plans may include long-term tax planning as well as provisions for a bypass trust to take effect upon first spouse's death.

So a Will Governs Where All My Money Goes?

Not all of your assets are governed by your will. Things like retirement accounts and life insurance go to the people you name on beneficiary forms. Changing your will or creating a trust won't automatically change your beneficiaries on these accounts, so make sure you update information on all your accounts.

What is a Living Will and Health Care Proxy?

A living will is a statement of your wishes for the kind of life-sustaining medical intervention you want in the event that you become terminally ill and unable to communicate.

Most states have living will statutes that define when a living will goes into effect. You increase your chances of enforcing your directive when you have a healthcare agent advocating on your behalf.

You can name such an agent by way of a healthcare proxy, or by assigning what's called a medical power of attorney. You sign a legal document in which you name someone you trust to make medical decisions on your behalf in the event that you can't do so for yourself.

A healthcare proxy applies to all instances when you're incapacitated, not just if you're terminally ill.

Why Should I Assign Power of Attorney?

No one is immune from aging or the loss of mental clarity that may come with it. And you're never immune to health crises that may leave you unable to handle the business of your life: paying bills, managing investments, or making key financial decisions.

Granting someone you trust the power of attorney allows that person - known as your "agent" or "attorney in fact" - to manage your financial affairs if you are unable to do so.

Your agent is empowered to sign your name and is obligated to be your fiduciary - meaning they must act in your best financial interest at all times and in accordance with your wishes.

There are different kinds of powers of attorney, but in estate planning there are two essential types you should know:

The first is the "springing power of attorney," which only goes into effect under circumstances that you specify, the most typical being when you become incapacitated.

There is also the "durable power of attorney." It is effective immediately, and your agent does not need to prove your incapacity in order to sign your name.

An attorney can help you decide which form makes the best sense for your circumstance. In any case, take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs, and financially secure.

Stay On Top of It

A marriage, divorce, or new child or grandchild can change your estate plan. Get the help you need to make appropriate changes and make sure that your wishes never go out of style.

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

Why I Love Financials Right Now

2007-12-10T22:09:03-06:00

So....I don't usually talk much about buying individual stocks. My philosophy is typically to buy index mutual funds and hold. But sometimes I feel certain stocks or sectors just look too good to be true. That is how I feel about financials right now and this is why I will be putting my 2008 IRA investment into either selected financials or a financial ETF.

Let's look at some financial stocks in pictures:

As you can see financials are getting BATTERED right now. And for good reason, as we have talked about ad nausem, these banks made terrible bets on the subprime mortgage market and are hemorraging money right now. This discussion does not center around fundamental analysis of these stocks. I think they are very hard to value right now. I don't know how much further these stocks have to go down. I don't think we are at the bottom. But my gut, and I purely am going by gut...says that the US government WILL NOT allow the major banks to go under. These stocks are trading as if the subprime crisis will permanently impair their earnings. I don't believe that to be the case.

I don't gamble because the house never loses long term. Similarly, Wall Street never loses long term. I am betting on the house on this one. I am a contrarian investor and I see opportunity.

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

Why The Spreads are Getting Wider

2007-11-27T10:17:13-06:00

On Friday, the 10 year Treasury note fell to its lowest level since September 2005, 4.01%. Typically 30 year fixed mortgages are tightly associated with the 10 year note. As the 10 year Treasury moves, so does the mortgage rate. But the gap between these two rates have widened substantially in June the difference between the 10 year and 30 year fixed mortgage was 2.22% last week as opposed to just 1.52% in June.

Why Did They Move Together To Begin With?
The reason they move together is because of perceived risk. Treasury Notes are considered very safe investments. The Federal government has never defaulted on its bonds. Investors in mortgage backed securities assumed the same. They thought people basing a security on individuals paying their mortgage in a timely fashion was a very secure investment.

Why Is The Spread Getting Wider?
Uh...well...not so much. With a foreclosure nightmare occurring right now, these mortgage backed securities are nowhere nearly as safe as the 10 year Treasury. As a result the spread has widened siginificantly! Risk = reward.

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

Subprime Mess Only Getting Worse

2007-11-26T10:36:27-06:00

So over the past year the subprime mortgage industry has gone straight down the tubes. So what is on the horizon? Much worse.

This weekend's WSJ had an excellent artice about the subject. Even more mortgage resets are coming due in 2008. Bank of America estimes $85 million in subprime mortgages will reset in the first quarter of 2008, $101 million in the second quarter. Falling home prices and tighter lending standards mean borrowers who can't afford the increase have few options when it comes to getting out to the debt obligation. The Mortgage Bankers Association estimates that 1.44 million homes will enter foreclosure in 2008, that up from 705,000 in 2005.

The housing slowdown is emerging as a major issue in both the presidential and congressional races as this issue could push our economy into a housing fueled recession. What will happen? Only time will tell.

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

Money Magazine: What Should You Tip?

2007-11-14T09:58:48-06:00

Money Magazine did a poll in the December 07 issue of what you should tip for the holidays to the people who serve you throughout the year. They sound fair to me...I would be curious to see what others think.

Here were the results:

Mail Carrier $20
Hair-dresser $20
Cleaning Person $75
Occasional Babysitter $25
Full Time Nanny $270
Gardener/Yard Worker $50
Newspaper Carrier $15
Garbage Collector $20

Last Week's Great Blogs Roundup

2007-11-12T09:15:33-06:00

Some great articles!

How To Put Your Personal Finances On Autopilot
http://www.bargaineering.com/articles/how-to-put-your-personal-finances-on-autopilot.html

Beating The High Cost of Weddings
http://www.getrichslowly.org/blog/2007/11/08/beating-the-high-cost-of-weddings-how-we-did-it-and-how-you-can-too/

Kiddie Tax Loophole Soon To Dissappear
http://www.freemoneyfinance.com/2007/11/kiddie-tax-loop.html

12 Ways to Save on Insurance
http://www.freemoneyfinance.com/2007/11/12-ways-to-save.html

Napoleon Hill: Six Ways to Turn Desire Into Gold
http://allfinancialmatters.com/2007/11/06/napoleon-hill-six-ways-to-turn-desire-into-gold/

How to Get Rich on 20K a Year
http://www.freemoneyfinance.com/2007/11/how-to-get-rich.html

Use the Rule of 72 to Figure Out Compound Interest
http://genxfinance.com/2007/11/07/use-the-rule-of-72-to-understand-compound-interest/

Your Secret Credit Scores
http://www.fivecentnickel.com/2007/11/06/your-secret-credit-scores/

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

Know Thyself - What is Your Money Personality Type?

2007-11-08T10:18:02-06:00

I have written a couple articles such as this one and this one on the psychology of money. There is the MBA finance chick side of me who looks at sheer numbers, then there is the realist who says wealth building isn't all about the numbers it is even more about personality and psychology.

SO what are the money personality types as I see them:

Slow and Steady Wins the Race - These folks are the ones that follow all of the rules. They max out their 401Ks, IRAs, have 529s for their children, an emergency fund, pay their credit card bills on time.

Get Rich Quick - These folks really want to be rich but don't have the discipline for long term wealth building. So instead they typically try to build wealth with the "investment of the moment". Sometimes this strategy works, but most of the time it doesn't.

I Could Be Hit By a Bus Tomorrow - These people are the folks that aren't so focused on wealth building period. Its just not on their radar. They can range from simple to extravagant folks, the common thread being they are way more interested in living life than thinking about money. Fortunately, most of them never get hit by a bus. Unfortunately, this means they never planned financially for not getting hit by a bus.

Nervous Nellie - Nervous Nellie is a hybrid of Slow and Steady Wins the Race and Get Rich Quick. Nervous Nellie is the type of individual who knows what the rules are: invest in Retirement Accounts, 529s, etc. But gets really nervous when the market is unstable. This is the investor the buys high and sells low because they think that the world is ending when the DJIA loses 5%.

Broke as a Joke - This person is broke they don't think about money because they are barely covering expenses.

I would love to hear your thoughts on this subject and see if any of you have identified other money personality types. In a subsequent entry I will talk about how these folks should invest differently!

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

WSJ: Is It Time to Consolidate Student Loans?

2007-11-07T08:23:43-06:00

The Wall Street Journal wrote an excellent article today talking about why it is probably a good idea to hold off on consolidating your federal student loans until July 1, 2008.

Why Wait?

Current Stafford loan repayment rates are 7.22%. Alot of borrowers are eager to consolidate before their grace period is up to lock in the lower in-school interest rate in order to save .6%. This translates to a rate of 6.625%. But if the borrowers wait until July 1 of next year, borrowers would likely be able to lock in a consolidated rate of 6.5% or lower.

What Determines Federal Consolidation Rates?

The Education Department resets the interest rate on its Stafford and PLUS programs annually on July 1 using a formula based on the 91 day Treasury Bill. Since rates on the 91-day T-bill tend to closely reflect the fed funds rate, the Fed's recent moves to trim short termrates a total of 3/4 of a point should result in a lower interest rate. Of course, you also risk rates rising. But given the housing and credit crisis, that doesn't look likely. Though, you never know!

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

The Golden Rule of Personal Finance

2007-11-01T10:16:35-05:00

The Golden Rule is a fundamental moral principle which simply means, "Treat others as they would treat you." It is arguably the essential basis for human rights. Similarly, in my mind there is a Golden Rule for Personal Finance. Like the moral Golden Rule, it doesn't encompass everything you need to know but unless you tackle it, the rest is moot.

Golden Rule of Personal Finance: You must earn more income than what you spend.

Sounds simple enough but so many folks don't follow this rule.

Shameless Plug: The IT Girl’s Guide to Blogging With Moxie

2007-10-31T15:05:55-05:00

Today's post is a shameless plug for a good friend of mine, Katherine Scoleri, who just wrote her first book "The IT Girl's Guide to Blogging With Moxie" with her business partner Joelle Reeder.

I am indebted to Kathy because she is the person who turned me on to the power of blogs. As a first mover in the blogging world she established herself as a highly sought after blog designer and joined forces with Joelle to form "The Moxie Girls".

"The IT Girl's Guide to Blogging With Moxie" is a sassy, brassy technology guide — written by women for women — with a practical twist. Dynamic duo Joelle Reeder and Katherine Scoleri put you on the fast track to creating your own blog, polishing your prose, accessorizing with podcasts and photos — and that's just for starters! You'll find chats with famous female bloggers, tips on how to promote your blog, and loads of information on the geeky basics for beginners — all wrapped in hip dialogue.

Buy this book, you will not be dissappointed!

Shameless Plug Over....

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

What To Do When Your Company’s Retirement Plan Stinks

2007-10-29T21:13:40-05:00

A problem that many Americans face is the choice of whether or not to invest in a less than stellar retirement plan (401K, 403B) at work. I’m talking about plans filled with lousy mutual funds with high expense ratios and bad returns. So what do you do when you want to sock your money away for retirement and there are no good investment alternatives in your employer’s plan?

1) Complain to your employee benefits department. This isn’t always going to help and certainly not fast. You also risk pissing off the people who hired you.

2) Consider, “Do I get a company match?” If the answer is yes, you should at least contribute up to the match. That is and always will be free money. Virtually any match on your money will beef up crappy returns significantly.

3) After the match has been reached or without a match the decision becomes much harder. Most people like the ease of investing in a company retirement plan because the money comes right out of your account. Many people do not have the discipline to save outside of their retirement accounts for an IRA or after tax investing. If this is you, use your company’s retirement plan. A lousy plan is better than nothing.

If you have the discipline to save outside of your work account than you are probably better off investing your next dollars in a low cost IRA or Roth IRA. After these are maxed out you really need to run the numbers and see if after tax investing will make more sense than investing in underperforming mutual funds.

Banks Stocks vs. Traditional Cash Accounts

2007-10-24T00:14:07-05:00

A good friend of mine who we will call DKNY (Darling Karen from NY) is my personal finance soulmate. She was one of my college roommates, Wharton grad, former Wall Street investment banker and currently a real estate broker in Manhattan. She and I love to get together or talk on the phone and discuss our love life, our friends and making dough. DKNY is 4' 11", under a 100lbs and a financial powerhouse.

Bank Stocks, Huh?

DKNY employs a tactic for a portion of her portfolio that is very popular among some financially savvy individuals. The portion of her portfolio that she holds in "Cash" is not actually held in traditional "Cash" vehicles such as money markets, high yield savings or CDs but rather in large retail bank stocks such as Bank of America, SunTrust and Wachovia Bank.

Why?

1) Bank stocks typically pay a high dividend yield rivaling the returns of traditional cash holdings. A dividend yield is a company's next 12 months' dividends divided by its current share price. For example, your yield would be 10% if you paid $10 per share for a stock expected to pay out $1 per share over the next year ($1/$10). However, another investor's yield would only be 9.1% if he bought the same stock a week later for $11 per share ($1/$11).

2) Dividends from stocks are taxed at the long term capital gains rate (15%) much better than income from savings accounts, CDs and Money Market Accounts which are taxed at higher income tax rates (as high as 35%).

3) You have the opportunity to grow your principal investment with the growth of the stock price. The flip side of this coin is that you could also lose value of your "principal" if the stock tanks. With traditional cash investments you are insured up to $100,000 by the FDIC if the bank were to go out of business. With a stock your money is not protected at all.

Current Rates:

A high yield savings account right now will yield about 4.5% (ING Direct, HSBC Direct, Emigrant Bank, etc.)

A money market account can yield as high as 5.23% right now.

At press the highest yielding one year CD is from Countrywide at 5.49%

Current dividend yields on Bank of America, SunTrust, and Wachovia are as follows:

Bank of America: 5.4%
Sun Trust: 4.10%
Wachovia: 5.5%

So Is This Where I Should Stash My Cash?

My role here is not to tell you what to do - it is to present you with your options. I don't stash my cash in bank stocks. I use high yield savings for my short term cash. I like monthly interest deposits; dividends are not paid that often. I access the money in my savings frequently and this would incur unnecessary trading penalties and it doesn't make sense for me. But for some I feel it can be a very wise strategy.

Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834