Can Xmas make little thousandaires?

I was thinking about the dilemmas facing kids who get cash for Christmas presents.  Of course it’s a good problem to have, and childhood problems are so silly compared to grown-up problems (except for when certain unnamed girls used to make fun of me in the schoolyard – that pain was real).

Anyway!  Kids getting cash for Christmas… I wonder if kids are still burning Christmas cash on toys and candy, or more likely these days, apps?  I remember being really blown away that family members sent me Christmas gifts.  And usually it was written or at least implied that I was to get myself something fun because the family member was too far away or did not know what I would like.  And pretty much most of the time I did that, to respect their wishes.

But when I was a kid, my life revolved around Nancy Drew books and going to the pool.  And let’s face it: mostly pool.  There weren’t all kinds of things that I wanted, and my parents bought my clothes.  There were no apps to buy from the app store.

I think I fully learned about “saving” (real saving, not just saving up for a bigger toy) when I was 9 or 10.  But savings account interest rates depressed me (in the 90s no less).  And back then, there was no internet where you could go look at your money and visualize it.  I was pretty sure I would have to get my parents to take me to the bank to see where my money went, and that seemed like an unlikely scenario.  Especially when the South Florida weather was perfect as usual and the pool was waiting for me.

So between the boringness of banks (not to mention influences like the bank scene from Mary Poppins) and relatives asking me to spend the money on toys, very little of it got saved.  I want to teach my kids some day that it is ok to save money, even as a child.  And I would hope that if I give a gift of cash to a small child in my family, the child would not feel pressured to buy a toy (but if she just wanted to, that would be ok).

I’m still glad that I did what my family members wanted, and it gave us something to talk about on the phone.  I don’t think they would have wanted to hear that I identified a high-yield savings account, and would move on to index funds when I had amassed $3000.  But, it would would totally amuse me if my own future child said that!

Making others rich: accomplished.

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Stacks of cash!

So a couple months ago I tried to make some other people richer.  Because if there is extra money floating around, and your only options are a) give it to your most esteemed colleagues at the cost of just a few minutes’ paperwork or b) do nothing, what would you do?  Surprisingly, it worked out.

My company is quite full of brilliant and hard-working people, and I get to work with some of them.  So while the award money always gets snapped up for someone, this time I figured it could go to my comrades specifically.

It’s pretty crazy too because we’re in a general mode of belt-tightening at my company (as with many companies probably, still coming out of Recession mode).  But this goes to show that even in a slump, hard work can actually pay off with more than just a feeling of job security.  And here I’d thought I had found every trick for increasing wealth through my company.  But I was wrong!

Also what has hit home for me this year is that workplace pride and appreciation of your peers is unlimited, even when monetary incentives are limited.  You can informally give people kudos, and I have seen that it is that kind of feedback that often causes people to be promoted or put on a special assignment.  Not strictly performance or accomplishments.  But in the absence of kudos, I imagine management has only the results to go on when considering promotions.  And engineering results are like the old joke about sausage and legislation – you don’t always want to see how it is made.

So it is important to throw positive light on work and people who deserve it.  And hey, if you participate in an environment in which you give kudos to people, and people with kudos get promoted, then you are more likely to work for or with someone you really like down the road.  And then it is a better time for everyone in the working world and good folks will make more money!

I got 99 problems but a student loan ain’t one!

Loans

I am finally 100% certified FREE OF DEBT baby!!

(Don’t worry Mom – I don’t have 99 other problems – just a song lyric.)

So yes, it is pretty crazy to look back and realize that in June 2011, when Mr. Goodies encouraged me to start thinking seriously about this, I had $66,000 in student loan debt and a car loan of about $17,000 for a whopping $83,000 in total debt.  I realized it was out of control when I noticed that my rent was $950 and my total monthly debt payments were $1,004.

For the record…. I could have paid off my loans in March of this year but hung onto the last $6K and saved up to make timely investments instead.  Who knows why.. but it is done now.  Technically, I was able to pay off $83,000 in 2 years and 10 months.  Sadly, before it became a relationship discussion, I could not really envision my life after student loans.  I just figured I would always be saddled with debt, and did not comprehend how other financial accomplishments like buying a house would apply to my life.  And visualization is important to my ability to do things – so it was only this focus that truly unlocked my ability to punch the debt in its silly little face.

So what did I do, in a bullet point format that might convince someone like 4-years-ago me that it is possible to do?

  1. Moved in with my boo and cut my rent from $950 to $600.
  2. Took a second job teaching SAT at $20/hour to kick out the dental emergency credit debt.
  3. Quit the SAT job as soon as I paid off the credit debt because 2nd jobs are counter-productive.
  4. Worked wicked hard at my day job and was fortunate to get kudos and promotions over time.
  5. Cut every expense and made a hobby of doing so by broadcasting it on this blog – very motivating.
  6. Started reading about investments to get myself excited for my life after debt.
  7. Made a Plahn to keep my remaining goals on track.
  8. Challenged myself to stick to the highest level of debt payment and noticed it gets easier to pay as the loan load reduces.
  9. Punched the debt in the face and told Chase, Brazos, Sallie Mae, Navient, and the Department of Education where to stick it!

Very sadly, my father passed away during this period of time.  This event turbo-charged my loan payoff because I was forced to come up with lots of money very quickly to settle legal affairs – more money than I was already struggling to raise each month to pay loans.  But somehow I accomplished that.  And once that was done (and I paid off more loans with the reimbursed fees), I challenged myself to continue raising this crazy amount of money for myself until the debt is gone.  I know my Dad would be very proud.  He always felt I was capable of accomplishing the craziest of feats.  And he was always great at turning challenging situations into amazing opportunities.  So I was glad to prove to myself that I’ve got the right stuff as well.

So what am I going to do now?  Drink champagne… and then get ready to join the world of investment and write about that!

Get rich throwing things away.

“But you can’t throw away perfectly good stuff!” you might think.  Sure, you want to use up everything you have before buying a new one of whatever it is.  Even if it is a shampoo or face wash that you really hate.  And you want to use up all the food before it rots and you’re forced to chuck it.

But sometimes you look around your house, and in every corner you find piles of superfluous things that are expired or have no more use for you.  You find yourself asking questions like:

Why do we have 3 types of Febreeze when we only have one dog?

What is that meat in the ziplock bag in the freezer?*

If this sounds like you, you have clutter.  I think that clutter invites more clutter.  Having many types of things creates a hobbyist mentality.  You have a collection of things, and you could be tempted to improve on your collection with the latest and greatest.  Or, once a container is brimming, why not let it overflow?

Whereas if you address the clutter and get rid of the stuff that you don’t need, then you have defined what you really need.   And you are more likely to make careful choices when shopping, or might even be less likely to feel the instinct that you need more things.  Because why would you want to clutter up your now-tidy house with things that you don’t even need?

Some may feel that de-junking the trunk is essentially throwing $3 and $4 and $10 into a garbage bag.  But if it is something that you would absolutely never use, what’s the difference?  It’s a good reminder about what not to spend money on in the future.  Good riddance to junk.

Instead of “spring cleaning” I tend to get inspired to clean at odd times of the year, like Black Friday.  So I have been addressing my clutter.

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Here is my medicine box, which had become a disaster zone.  It had become so overfilled that things were spilling out of it and taking up the whole cabinet.  Now there is actually room in it!  In the future I will actually go look in here since it is so organized, rather than assuming I need to buy more things from the store.  I have actually wound up with double allergy medicine and double band-aids in the past due to not checking.

I am pretty sure that adopting a “one of each thing I need only” mentality is one of the keys to wealth.  Most of the pretty well-off people I have known live pretty sparse lives.  So here’s to clean houses and full wallets.  Hope it stays that way!

*If you don’t remember stuffing the meat in the bag, just get rid of it!

What is your biggest living cost?

In most cases I believe the answer would be your income tax.  Unless you live lavishly beyond your means, in which case you have larger problems.

Think about it… the largest visible cost of living is rent/mortgage.  And the rule of thumb is not to spend more than 1/3 of your take-home pay on that.  Well if your take-home pay is a fraction of your total pay, then the cost of housing must be less than that as well.  Take a look at the tax bracket table or check out your pay stub and behold the horror.  If you are in the 25% tax bracket, you are only getting $0.75 for every dollar you earn.  I guess that is common sense, but it is pretty crazy to think about.

I have been researching income tax because I need to figure out the answer to the novel question of what to do with my positive cash flow.  Most “financial health” checklists start with “max out your 401K” right after paying off debts, etc.  I have always chafed at this notion because of my gripes about 401Ks: can’t access it until you are 60; employer match usually stops well below the contribution limit; 401K plans tend to have limited options and mysterious fee structures, blah blah blah.

But then there is the main advantage of 401K beyond employer match: pre-tax contributions.  100% of every dollar gets ported safely into the 401K.  Even if I were to dump a bunch of money into 401K and the market took a 20% hit tomorrow, there would still be $0.80 left out of every dollar rather than $0.75 out of every dollar if I let it come straight to me in my paycheck.  When I think about it that way, the luxury of letting my money come straight to me (even if my intentions are to invest it) seems rather extravagant.

If you can get around the 401K gripes (401K being the only sensible way I know to divert pre-tax money), this seems like a highly logical thing to do for the tax benefit.  Yes, you still get taxed later when you take the contributions, but at a much lower rate based on realized income.

Is there something I am missing…?  I always hear that the rich understand to reduce their taxes.  I would think it should start now, with this kind of thing…

Free money!

 

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There’s nothing like reaching down into the couch cushion for the potato chip you just dropped, and finding a $20 instead.  Ah free money… so great.

I am pretty sure I keep track of my physical dollar dollar bills a little better than that.  But even Ms. Goodies can lose track of virtual dollars.  Time to go virtual couch-surfing…

It all got started because I was checking my bank balances.  Turns out I have almost 10K “points” on my Bank of America credit card.  Guess it is almost time to collect a check for that!  I have even heard that you don’t need to wait for tidy, round numbers.  I don’t need to wait for 10K, could just ask to be compensated for the 8,366 points right now.  Ka-ching, ka-ching!  $83.66 heading my way.

I also discovered that I have about 1800 points on JetBlue’s website, and $30 sitting in a bank account that I opened and never did anything with.  So I am planning to close the bank account and take back my virtual couch coins.  Once I settle these little bits of paperwork, I will be $113.66 richer.  That will have been worth about 15 minutes of work.  If only all income could be procured at the rate of $455/hour.  But we can’t all be lawyers and ballers!

Anyway, the BoA points and the JetBlue points leave my mind burning with the question of: what’s the best points credit card?  Clearly the BoA card is compelling enough to let me neglect it for several months at a time, so I suspect I could find more spicy and tangy free money somewhere else.  More on that to follow….

Killing it with Christmas Gifts!

At the risk of giving interested parties a chance to guess their Christmas gifts (who also happen to be the top readers of this blog…), I will tell you about the perfect gift that combines frugality and philanthropy with holiday excellence: non-profit organization fall fundraiser giveaways.

Actually that sounds really awful.  But if you look carefully, you can find great gifts through these resources!  If you are like me and my family, you enjoy classical music, adopted dogs, public broadcasting television, and hiking and biking through the majestic lands protected by the various Roosevelt administrations.   

Here is documentation of enjoyment of such things just in 2014:

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Bowers Spring Bolton, MA

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Sudbury, MA Conservation Land

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Cape Cod Rail Trail

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Cape Cod National Seashore

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Adopted pooch admiring the majesty of the Cape Cod National Seashore

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View from summit, Pack Monadnock

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Ice-walking in Ashland State Park

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Marlborough, MA Conservation Land

It is amazing how many beautiful places you can walk right into, 24/7/365, for free.  Of course parks are paid for by tax dollars, but many other things critical to my life, including converted rail trails and public classical radio, exist solely based on charitable donations.  It is frightening to think that the preservation of natural beauty might not have occurred to anyone at the turn of the last century, or that public radio stations go out of business due to lack of support.

Incidentally I have started contributing to non-profit fundraising drives over the past couple years, as my debt burden evaporates.  It’s funny how one day you wake up and think “wow I’ve been listening to countless hours of commercial-free classical music for free.”  The amazing classical programming piping from Boston, MA is like having a gigantic MP3 collection that would take years and thousands of dollars to curate.  And ironically, the intrusion of ads into Facebook, Pandora, Hulu – everything we used to think was “free” – underscores what is actually being provided to you absolutely free of charge.

Anyway, tuning into these non-profit fundraisers has heightened my awareness of the Relative Awesomeness of the “thank you gifts” that come with moderately substantive donations.  Without going into too much detail pre-Xmas, I have already scored 1) an amazing gift (not yet available in stores) which will rock one family member’s socks right off and 2) a pretty snappy stocking-stuffer which I know will be heartily enjoyed. 

These were procured relatively on discount along with charitable contributions I wanted to make anyway.  These items will be shipped to me for free.  And this whole arrangement will take place well before high holiday madness season, allowing me to stay out of the mall and stay in with hot spiked apple cider! 

I was originally excited that these gifts are actually tax-deductible as well.  I have since found that this perk probably will not pan out because the total donations will not reduce my taxable income to a lower bracket.  But you never know what magic TurboTax will produce roughly in February.  Either way, I think the benefits way outweigh those of the alternative (mall schlepping).

Update to follow next month on the outcome of Awesome Gifts 2014…

Scary Stories

Happy Halloween!

Last year on this day I posted about my scariest money decisions of all time.  First time I had ever confessed to some of them.  That brought me up to present day, so today I thought I would share my scariest money stories of 2014.

Even a year full of financial wins such as paying off a metric ton of student loans and building a savings account can have some real hare-brained schemes in the mix.  Consider the following:

  1. The time I almost bought a house.  OK this one doesn’t really count because I didn’t really do it.  But it gave me the opportunity to act on a hunch that I have learned through my adult life: if a financial move makes you really scared, even if at first you were excited about it, don’t do it.  Something otherwise right for you might be wrong because of timing or inadequate planning.  Better to wait until all the stars are aligned.
  2. The business trip that cost me money.  Needless to say, if you have to pay at the end of an expensed business trip, you are doing it wrong.  I failed to notice a mistake on my expense report (and got all whinypants and blamed that on the stress of my job).  It just sat there until I received really angry, corporate-y emails and fixed it.  By that time the balance on the enormous travel bill had racked up $35 in late fees.  Ughhh.  Also really scary is the possibility that your management could be angry with you, which fortunately they were not in my case.
  3. When the chickens flew off.  Of course chickens are cute, and I would do whatever I can to help any animals under my care or even in my vicinity.  But when I bought two little white chickens this year and they flew off into the sunset the moment I opened the box, on some level I just thought “if I never see them again that’s like $20 down the toilet!!!”  As luck would have it, they hung around the general area and are now happily (or at least chicken-happy, which is to say adorably cranky) coop-bound egg-layers.  Lesson learned: open the box directly into the coop, not pointing at your face.
  4. Chiropractor madness.  Earlier this year my neck starting hurting real bad, and I blew great sums of money on various massages and pillows, culminating with about $360 worth of chiropractic visits across multiple offices.  In conclusion: a) neck feels better now b) all chiropractors are crazy people.

OK ok.  It’s been a pretty bland year.  I’m sure you won’t need to sleep with the lights on after those stories.  But it is crazy how even a person obsessed with personal finance can land some doozies and near-doozies just from occasional forgetfulness, poor judgement, and outright muppet-ocity.  (That is when insanity results from unleashing flocks of animals and you go running around in a dither with head back and arms forward.) 

Now time to go find myself a last-minute costume from stuff I already own :)

Your loans have been taken over by a firm that stole from US soldiers and got caught.

If you have received a letter from a company called Navient, then you had a Sallie Mae loan that is now processed by Navient.  I got a Navient letter.

I have noticed over the years that nearly every new company that loans are transferred to is worse than the previous one (hello, Brazos).  So I decided to check this one out, out of curiosity.

It turns out that Navient, which used to be owned by Sallie Mae but which Sallie Mae split off this spring, has been investigated for stealing from US soldiers.  According to a Huffington Post article surprisingly titled “Obama Administration to Reward Student Loan Company Accused of Cheating Troops,”

In May, Navient and its former parent, Sallie Mae, agreed to pay a combined $139 million to resolve Department of Justice allegations that the two companies had swindled up to 60,000 service members out of tens of millions of dollars and forced other borrowers to pay unfair fees on their student loans.

 

Another HuffPost article notes that

Federal authorities said Sallie Mae and Navient broke the law in three ways: The companies failed to honor troops’ requests after receiving them, did not follow up with troops whose documents may have been deficient, and failed to inform troops of the 6 percent cap when they requested other benefits under the law.

“Defendants’ conduct was intentional, willful, and taken in disregard for the rights of servicemembers,” the Justice Department said.

 

All this was done knowingly out of accordance with the Servicemembers Civil Relief Act, which was established specifically to reduce interest rates and fees for soldiers.  Apparently Navient did not deny it, but did indicate “processing errors.”  Disgusting.

So Sallie Mae/Navient paid fines.  And as a result of this non-denial of criminal activity without any criminal punishment, you would think that the Department of Education would at least punish Navient by way of canceled federal contracts right?  (Because as you will recall, the DoE under the current administration changed the student lending system from servicing federal loans to giving contracts to private companies to service them.)  Well the answer is no, the DoE actually decided to give Navient more contracts since this happened!

So now the watchdog orgs are outraged.  They are calling for the head of the Education Secretary.  Interestingly, Navient was actually ranked last among the four major student loan contractors.  And yet, despite criminal activity and the worst ranking, still more contracts.  I am with the watchdog orgs.

In other news, since Sallie Mae shed this albatross and calls itself “just a bank” now, it actually posted higher profits this quarter.  Good for you Sallie Mae.

So I just wanted to share this with you, in case you got a Navient letter.  Naturally I find the deliberate abuse of both deployed and non-deployed soldiers ethically repugnant.  I suppose because of the nature of their work, they may be a bit too busy to notice bogus fees or spend time on the phone challenging inaccurate interest rates.  So to the student lending industry, this may make this demographic “fish in a barrel.”

It shouldn’t surprise me is that a slimy company like Navient would stupid enough to target (or at least equally swindle) a group that is specifically covered by protective federal legislation.  But it should be noted that if they did this to troops, even out of ignorance, they will do the same to everyone else.  Until caught anyway.  Since the DoE did not cancel any contracts or call for the termination of any Navient executives last time, this is business as usual just like on Wall Street.  And DC.

Making other people rich…

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One of the advantages of creeping ever so mildly up the corporate ladder, as I have, is the ability to increase the wealth of others.  Or at least the opportunity to attempt to do so.

The leaves are changing and it is getting cooler in New England.  And it is rating/ranking/review season at my company.  Also the end of the fiscal year.  So it is a perfect time to apply for last minute achievement awards!

I am really amazed that after 5.5 short years at my company, I have gone from complete peon to a person who has earned achievement awards… to a technical lead who actually nominates teams of other people for such awards!  I tell you it feels awesome.

At the beginning of this year, I was placed in the most daunting role of all my time here: sent to a newly merged business unit to lead a small program for my functional division (new role), and to lead all related proposals for new business in this area (new role as of 2013).  This business unit did not even have support from my engineering division previously, and predictably did not want us around.  It has been an incredibly challenging time.  Right from the start I figured “well regardless of how it goes, everyone up the ladder must realize this is a totally ridiculous situation.”  I thought that I, as well as the people enlisted to work with and under me, were thrown in here as fodder.

But for all the good, bad, and ugly, 2014 blossomed into a decently good (or at least minimally bogus) year in this new area.  There were some confrontations.  There was some BO, I’m not going to lie.  But I also got surprising kudos here and there and took them back to the old headquarters.  Nearing the end of the year, I realize it’s gone well enough that it’s time for a party!  The corporate version of a party anyway.  Money.

So I put in for a team achievement award for the 6 folks who were technically assigned to work under me in various capacities.  These awards are not always selected and awarded, and I got mine in 2 days past the deadline.  But I am getting ready to pester the award people with all the perspiration with which I do everything else around here, to make sure it goes through.  If it works, not only is it a nice little financial reward in time for the many holidays coming up, but it is also a great accomplishment for everyone to add to their annual review paperwork – a great security in a time of economic uncertainty.  Finally, there is a residual benefit to me that the higher-ups can see that I am generous and value the others around me.  But the copious chicken eggs I bring to work already demonstrate that :)

I am totally jazzed that this might work, and further that I might be able to present these awards myself to each person.  This is gonna rule!