Saturday, November 26, 2011

The Best Financial Advice Learned from Movies


This is a guest post. George Gallagher is a writer and blogger.  In his past time he helps graduates find not-for-profit student loan consolidation options.

Sitting down to watch a good movie can prove to be entertaining – but in some cases, certain films can be fairly eye-opening in terms of a good education on money as well. Over the past few years, several big screen events have made movie-goers walk out thinking about finances in different way.

Greed Is Good?

Few movie-goers from the 1980’s aren’t familiar with Gordon Gecko’s famous line, “Greed is good.” Although entertaining, this story line focuses on corporate raiders of several decades ago and on how they profited tremendously at the expense of the rank-and-file employees of their investment targets. It also ends by showing that greed isn’t really all that good after all.

It Pays to Stay Healthy

Michael Moore is the guy that many people love to hate. However, in his film “Sicko” it becomes easy to see that those who think they are doing the right thing in purchasing health insurance can still find themselves in a financial quandary.

“Sicko” exposes just how expensive it can be for those who acquire serious illness or injury, and although it doesn’t really present a solution – other than moving to a country where healthcare is free – it can make watchers think differently about how they coordinate their health and well being in terms of their financial decisions and saving for emergencies.

Taking Advantage of Great Offers

Most of us have received tons of junk mail over the years sent to us by our friends at the credit card companies. After watching “Maxed Out,” however, you won’t be able to get to the trash can fast enough to pitch these “great offers” as soon as you possibly can.

This film examines just exactly how debt – by individuals as well as entire governments – can quickly spiral out of control. If nothing else, this movie could save you thousands of dollars and a great deal of heartache as it relates to borrowing too much money.

Even Smart Savers Can Be Dumbfounded

After watching “Enron: The Smartest Guys in the Room,” viewers can get a better idea of how to invest – as well as how not to invest – their hard earned funds. This movie examines the massive fraud that was perpetrated by the top executives at Enron. Both employees and investors alike lost loads of money after being led to believe that the company – and its financials – were doing fine based on its inflated stock price.

Unfortunately, the only ones who made a profit here were a small group of top brass at the company. This was undertaken, though, primarily at the expense of Enron employees as well as investors in the company – many of which lost their entire retirement savings. Lesson here – don’t put all your investable assets in one basket because the basket could break.

A Primer on Financial Affairs

For those who are new to financial concepts, one of the best educational films that can help get you up to speed is “The Ascent of Money: The Financial History of the World.” This movie offers a great overview with regard to the current financial situation in the United States today as well as at how the country got into this predicament in the first place. This one could require extra popcorn, though, as its running time is at the six hour mark.

Saturday, November 19, 2011

Linkfest

A Practical Wedding is the only "wedding" blog I still read after being married for more than a year. That's because it has transitioned into something far more important than a simple wedding day blog - it's important as a forum for discussing what it means to be married in today's world, as a woman, as a wife, as an adult. This article from last week has been read and "kept unread" in my Google Reader pretty much every day since it was first posted - an excellent example of the power of setting goals and what that does for your life. While I am nowhere near as, well, practical about actually writing down where I'd like to see my life go in terms of larger life goals and milestones, this blog sort of serves that purpose with the monthly goal setting and general themes of where I'd like to see my life head. Peanut and I had some goals in mind when we got married, he quit his job, and we moved across the country to set ourselves up in the lifestyle we wanted to be in before having children. If we hadn't thought ahead, we might still be living in a tiny one-bedroom apartment working 70-hour weeks.

Still - now we're here, closing on a house and thriving in new jobs. What's next? It might be time for us to start thinking of that, or of thinking both broader and deeper.

What amount of money will you haggle over? My comment on that post details the great deal I got last week - I saved $30 by waiting 10 minutes for a manager to determine that she couldn't match the online deal but could order the shoes for me and have them delivered to my door. They arrived just three days later, and that was worth it to me.

This is a great round-up of what to do during open enrollment. My open enrollment period started six weeks late this year, because my employer was negotiating pricing on our health insurance premiums. Even after such a delay, they are increasing by 12% - so I'm really glad we're switching over to Peanut's high deductible plan, for which his employer covers premiums 100%. Still, there are other things we'll be taking a closer look at:
  • Retirement contributions. Because we switched jobs, we haven't been able to contribute. We're now out of the trial period and are both able to start taking advantage of employer matches. (We already each maxed out a Roth for the year).
  • Heath savings account. We'll take advantage of this to cover the high deductible insurance plan, and to cover dental work for which we are no longer insured.
  • Reviewing life and disability insurance. I recently read Insurance for Dummies, and was ASTOUNDED when I realized how terribly underinsured we are.

I plan to meet with an insurance agent during our open enrollment period to review homeowner's insurance as well as do an audit of our existing car insurance and employer-offered life, health and disability options. I can manage on my own, but it'd be nice to have a professional check-in for once.

The must-read list of personal finance books. 

Krystal talks about the cost of hobbies over at GMBMFB. Last year my hobbies were pricey! But then we moved, and I no longer have dance classes, costumes, makeup, or accessories to buy. 

My family has put a $3 limit on gifts for each other this Christmas. That means getting creative, so things like this homemade sugar scrub sound just right!

Tuesday, November 15, 2011

Weekly Money Check-Up

Weekly Money Check-Up is a weekly series on My Pretty Pennies

1. The most I’ve spent this last week was on plane tickets for our trip to visit my family at Christmas. Just over $300 each, which is more than I wanted but less than it could be!
2. Today I am thankful for a day off! I took today and every Monday for the rest of the year off to use up my vacation time and deal with some things that need to be dealt with during business hours. Today was super-productive, and I'm feeling good.
3. Money can’t buy happiness. One free thing I did last week that made me happy was attend a conference for work. Okay, it's not like I really had a choice in the matter, but all my expenses were covered and it will help me be better at my job.
4. I will consider this week a success if I make a decision about home owner's insurance and sign up for a policy.
5. I am looking forward to Thanksgiving! Five days off in a row - what a luxury!

Sunday, November 13, 2011

Update on the house-buying process

Man, when things rain around here, they really pour.

So, 18 days ago we got pre-approved for a mortgage. Eight days ago we found a fantastic house. Seven days ago our offer was accepted and we put down earnest money. Five days ago we passed inspection with flying colors. Three days ago we discovered our scheme of delaying closing per the sellers' wishes wasn't going to pass muster so we agreed to a rent-back option (yes, making us defacto landlords on the first house we own). Yesterday we got revised numbers from our mortgage broker and were asked to decide whether to finance the mortgage insurance, pre-pay, or pay it monthly. Today we locked in our interest rate and have written the check for the appraisal fee. This week, I guess, we get the results of the appraisal and do some more paperwork, and start shopping for homeowners insurance so we can finalize the rent-back agreement. Then, I think we just sit on our laurels until closing, which will happen right after the holidays.

Oh, except for all the time I'll spend on virtual makeover sites seeing what the rooms look like in different colors.

The process is still going very smoothly and fairly quickly, but it's in the middle of a whirlwind of other things, including a weekend-long sales conference for me that's left me hardly able to type in complete sentences.

This whole homebuying experience has taught me that I really know nothing. Earlier this year, I said a 20% downpayment was a necessity for Peanut and I to buy a house, because I was really morally opposed to paying private mortgage insurance, or PMI. I really had no idea what PMI was, exactly, except that it was something only suckers -unqualified buyers- got dinged with and something to be avoided at all cost, probably about a 20% fee on your annual payment. Turns out, it's a charge on the sales value of the home that enables you to go in with less of a downpayment, and the cost of it varies by the amount of your downpayment - in our case, less than half of one percent (not the violently evil charge I was expecting!). Trent's article at The Simple Dollar explains it well.

Yes, Peanut and I could have waited until we had 20% to buy a house, which would have taken us another year or so to save up. In the meantime, we would be putting the rest of our life plans on hold, and possibly paying a higher interest rate a year from now - meaning we wouldn't be much further ahead anyway (and that increase would be over the life of the loan, not until we'd eared another 10% equity). As it is, we are putting down 10%, which is apparently a very good number since the housing crash a few years ago. We'll still have a healthy emergency fund in the bank, and our monthly costs will be less than our rent in New York, for THREE TIMES as much living space. It'll still make more sense to pay back our student loans on an accelerated schedule before attacking the mortgage to get rid of the PMI - 6.8% and 5% are way more evil than 0.49%. (Trent explains this philosophy here.) We'll be able to handle the mortgage payment on either of our salaries alone, which was a big requirement. And with two incomes, we'll have enough money to sock away a healthy chunk each month for quicker student loan payments, an eventual second car, new furniture, and so on.

Just goes to show that what you think you know about finances, when you haven't actually had to make these decisions or looked at the numbers close up, isn't necessarily an accurate portrayal of reality.

So. I'm Little Miss Moneybags. I'm a personal finance blogger, and I will be paying PMI. I also put all my monthly expenses on a credit card, took out loans for graduate school, closed my oldest credit card, merged all my accounts with my spouse, and only contribute to a 401(k) up to the company match. Sometimes, I buy shoes just because I like them - even if they're not on sale. If those things bother you, oh, well. That's why it's called personal finance. :)

What was a financial term or decision you thought you understood, but when you faced it personally, you felt differently?


Friday, November 11, 2011

Linkfest

Interesting discussion of city mouse vs. country mouse over at Get Rich Slowly (the comments are great). I'm definitely a city mouse, although I grew up a country mouse and it wouldn't surprise me if I retire to be a country mouse. Andrea at So Over Debt covered living in a small town last week as well.

Trent has a saving pennies or dollars post today (love that series!) about saving money by driving under the speed limit - and it saves dollars!

Spend your money where you spend your time - so true! Peanut and I have discussed getting some nice computer desks and chairs for our house - we really spend more time there than anywhere else, so we should make sure we're comfortable! Likewise, spend your time AND money where you reap the most rewards - should be a no-brainer but sometimes I need that reminder to let things go.

Money Saving Mom is doing 21 Days to a More Disciplined Life. I'm using my Mondays off for the rest of the year to accomplish a similar goal.

7 Ways to Simplify Your Life from Pick the Brain: I especially like the note about noticing when a task moves from list to list and figuring out if it's really worth doing based on that.

GREAT points on this post about managing vs. micromanaging your money.  I frequently fall into the "micromanaging" category, which takes up more time - and as we all know, time is money.

I read this article about improving home security with great interest. I think a house is much more likely to be broken into than an apartment, so there are some things for me to think about in there.

JD at Get Rich Slowly asks the readers how much money you need before you have kids. Great question - I think you're never truly prepared, but if you know it's something you want in the future, you have to take steps (including saving) to make it easier on your future self.

I want more winter clothes! So this post on how to update your winter wardrobe on the cheap was very well timed. I do need some warmer things, living in such a colder climate, but I don't need to get them new/full price.

I'm thinking of suggesting a Yankee Swap for Christmas with my family. I managed to cancel Christmas last year, because we weren't traveling and I didn't want anyone to ship us anything. This year, all my siblings and our SOs will be together under my parents' roof, so I don't think the idea of canceling all together will fly. But we could draw names and shop that way - fewer gifts to buy, less time spent shopping, more time together. Has anyone else switched to a Yankee Swap for Christmas? How did it go?

If you've read any great posts this week that you'd like to share, please leave them in the comments!



Sunday, November 6, 2011

I've had more stress over which grocery store to go to

So Peanut and I bought a house this morning.

I don't think I've even had time to do a post about the mortgage preapproval process, which we completed a week and a half ago. Yesterday we went out house-hunting for the first time, and came across a house that was within our budget, in our desired neighborhood, had all the big things on the list and some we didn't anticipate, and is super cute to boot. Realizing that there were absolutely no drawbacks to it, we put in an offer last night, and lo and behold, it was accepted this morning!

We'll have the inspection and appraisal this week, but we expect everything to go very well. The house is in really great shape (new roof, new siding, new trim, nice carpet or hardwood throughout, updated appliances, lovely landscaping) so it'll likely pass both with no problems. We've scheduled closing for just after the new year - the sellers need to find a house, and we weren't expecting to find anything until January or February, so we're in no hurry to move. The longer we wait, the more money we can sock away for moving expenses, furniture, etc. Also, the sellers agreed to lock in our mortgage rate, so if rates go up between now and closing, they'll pay for it - a great bargain for us!

This whole thing was the least stressful thing I have ever had to deal with in my entire life - finding our current apartment was more stressful than this. Planning my wedding was way more stressful.  Going to the grocery store is frequently more stressful than finding and buying this house!

Of course, the deal could still fall through for any number of reasons - which is fine, actually. We looked at enough houses to get a good sense of what we want and what we don't, and we know we didn't see everything out there. If we have to start looking again, no problem.

On the other hand, we won't wonder "what if" for the rest of our lives if we do get it - we definitely saw enough houses to get a feel for things, and I can't think of anything I'd change about this one. We're in the best negotiating position we could be in, although since they took our first offer, there isn't much to negotiate on.

I'll post update as they come in - in the meantime, I've got to go return all the "Home Buying for Dummies" books I checked out of the library last week!

Friday, November 4, 2011

Linkfest

Life insurance is one of the things I'll be investigating during my day off in the next few weeks - here's a great rundown of why term life insurance is great.

I love Beks' plan for Black Friday, as inspired by Cosmo. I'm right there with you!

Is it possible to live for for free? Coupon Mountain tackles the question and determines which items you never have to pay for again.

When is rental car insurance worth it? I couldn't have said it better myself.

Tomorrow Peanut and I are spending the day house-hunting. Fun times!

What are you doing this weekend?

Wednesday, November 2, 2011

Review: The Nametag Principle

I recently got the chance to review the book The Nametag Principle, by Scott Ginsberg - a guy who's been wearing a nametag for the last 10+ years. In the vein of Seth Godin, Tim Ferriss, and Ramit Sethi, Scott has boiled some truths about marketing and branding down to their very essence, and compiled them into a book of daily thoughts about how to connect with people in a real, authentic way.

Some of my favorites are as follows:

January 20: Be not humiliated by having others see you truly.
"My clients hire me because I'm a person - not a personality."

February 2: Bother to do things.
"To come. To call. To stay. To ask. To reply. To say hi. To clean up. To give it some thought. To include people. To learn their names."

February 9: Calm comes from experience.
"There's nothing more calming than communicating your mutual humanity."

February 20: Come out swinging and you'll be perceived as a threat.
SO TRUE! This is one I've had to learn repeatedly in my own life - my instinct at having been "wronged" means I go firing off to a company or colleague or loved one, only to find that there's just been a mistake or miscommunication. Oops.

Note: I did read through the entire book! It just so happens that most of the anecdotes that really stood out to me were at the beginning. Part of this reason is that much of the book is repetitive, sharing the same idea in a different way. This is to be expected - even desired! - in a title that's intended to be read in short bursts, every morning or evening or whatever. (Unlike the way I read it, in two sittings.) That repetition helps to drive home the point, and many of these points are really good. I work in marketing and I've done a lot of these types of branding brainstorming sessions, webinars, and workshops. Much of it is nearly impossible to put into practice, because it ignores what Scott drives home again and again: it's about people.

The only downside about this book is some language - it does come off as authentic (if a bit immature), but it's unnecessary. It distracts me from the message, and would make me think twice about sharing the book with some people who I think could use it but who I know would be offended. I don't consider myself a prude, but I also don't like the use of profanity, vulgarity, and slang in books for professional growth. Otherwise, I thought it was a neat little book full of useful ideas presented in an interesting way.

If you like books about using marketing/branding as a tool for connecting with people or using your brand to connect with your customers, this is a good book for getting ideas percolating.


Thanks to the author for providing me with a copy to read. I was not compensated in any other way for this post, and my opinions are my own.

Tuesday, November 1, 2011

October Recap/November Goals

October Goals
1. Weekend projects! Done-ish. I did finish our Halloween costumes, and they turned out great, but I didn't really go to the rest of the list - in fact, I effectively extended it by starting to search for a house!

2. Try some new crockpot recipes. Done! Unfortunately, we didn't really like most of them, but I did try them.

3. Save another $2,000 to the house fund. Done!

4. Up our student loan repayments to $500. Done and then some, thanks to Direct Loans screwing up my payments.

5. Change the oil in our car. Success - I took it to the mechanic, which turned into an ordeal, but it ended up only costing $25 and introduced me to public transit here.

6. Speaking of chilly, here's a bonus goal: buy winter boots. Fail - it didn't get cold enough or rainy/snowy enough to need boots so I put it off. Snow is forecast for tomorrow, however, so I'll be getting some this weekend!

November Goals
1. Sell two costumes. I may never get back to dancing, at least not in the sense of joining a company and performing regularly. There are some costumes that I will never wear again because they are so specific to my old company, so I'm going to get rid of them. I'll start by offering them to new members of the old company, and then stick 'em on ebay if no one's interested.

2. Get more critical. That seems like a weird goal, right? I've noticed over the last few months that I feel like I'm getting stupider. I blame it on reading blogs and short form news stories, skipping over things that bother or challenge me, reading unedited books for work. Really ever since finishing grad school, I haven't tried to do much of anything that's very mentally taxing. I'd like to continue to hone those skills, and that means being more critical. To achieve this goal, I'll be seeking out more difficult reading (fiction AND nonfiction), attempting to think critically about what I read or see (instead of "Oh, I liked it"), and trying to cut down on entertaining media in favor of educational media. I'll also be attempting to be more thoughtful and critical in my own writing.

3. Complete my car winter preparedness checklist. Pretty self-explanatory!

4. Do a work-at-home day. As I mentioned last week, I've got some stuff to take care of that I just can't get to during evenings and weekends. I've picked my day and am starting a list of everything that needs to get done! If you've got any suggestions, leave 'em in the comments.


5. Book all holiday travel. I should have done this in September or October, but I just didn't get to it. I'm sure prices are outrageous already, but we're still figuring out when we can be off work and when we need to be back and - it just needs to get done.


What are your goals for this month?


October Spending Review

Business expenses (reimbursable) $3,583
Business expenses (deductable) $3.89
Car $143.27
Clothing $33.93
Electronics $51.48
Entertainment $55.72
Food—dining out $318.14
Food—groceries $326.17
Gifts $102
Household $52.15
House $25
Hygiene/Medical $407.66
Mystery Shopping $59.80
Rent $830
Sewing/Quilting $133.46
Student loans $629.03 ($225.20 more than normal)
Transportation $10
Travel $99.57
Utilities $207.59
Yoga $40
Total Spending: $2,899.83
 
Things of note: 
New categories: sewing/quilting and house! The house fund includes expenses related to the house search and eventual purchase; this month was a credit check fee that will eventually be applied as a credit at closing. The sewing/quilting category is for my newly rediscovered hobby and our Halloween costumes. Many of those expenses were one time things that I'll use repeatedly (self-healing mat, rotary cutter, patterns) and some were just for the costumes (fabric, thread, trim). I don't expect it to be very high in general.




Take a look at all those reimbursable business expenses - can anyone say POINTS with me?! I get reimbursed very quickly, too (if I file quickly, that is) and so far I've been reimbursed before the bill comes, so I'm liking this arrangement quite a bit.

I also brought in $76.75 in mystery shopping income, and our retirement accounts had an EXCELLENT month - almost $5,000 in gains! We are within $500 of our highest net worth ever right now, and that's after moving across the country and buying a car, so I am quite pleased. We also had the third cheapest month this year in terms of cash outflow, and I'm proud of that. It seems like the effects of the move are officially wearing off, and while I'm not sure we can keep it up through the holidays, we really seem to be back on track. I made my house savings goal for the month, too!

How'd your month go?