Saturday, March 1, 2008

Funding IRA and Financial Education

Not fully funding my "father sponsored" IRA

When I was 18 my father started a Roth IRA for me and pledged to match whatever I put in till I was 25. During those seven years I managed to put in $0.00 dollars. I must say that I sure do wish for those seven years back! Last year I finally opened up a Roth IRA and have slowly started to put money in so as to begin forming a good habit. I have been trying to pay down debt first, but getting in the habit of contributing to an IRA is very important to me. I am self-employed and as such I sponsor all my own retirement plans.

Educating myself on financial matters

One of the best forms of self improvement comes in the form of education. It can be as simple as heading to the local library, or you can move it up to taking online courses or going to college.

If you don't know where to start reading check out The Simple Dollars book review .
Trent gives great reviews of 52 financial books

If you are looking for online education check out MIT's Open Courseware. It offers 1800 of their courses online for free! No credits are given of course, but it is a valuable resource.

One of the easiest is just surfing the web and starting to try new ideas with small amounts of money such as ING, Prosper, Sharebuilder.

There is a lot of information out there to help you on your financial journey, the sooner you begin learning, the better off you will be in the long run.

Tuesday, February 26, 2008

not paying off accounts and establishing automatic withdrawals

1. Not paying off accounts

My first year of college I opened a credit card. It had a limit of $500 which I maxed out fairly quick. I would like to think that I made a few payments on it, but cannot be sure. So I saved up $500 to pay it off finally and was going to charge a plane ticket on it immediately. When I called them to pay it off they said they had closed the account, and I figured "to hell with you!". So I went out and spent my saved $500 on a plane ticket without charging it and just kind of forgot about the account. So began my career with payments. As the years went on multiple little accounts cropped up that I didn't pay off; dentist here, old phone bill here, sears card, jcpenny card. I was moving around a lot at the time and creditors could never find me, but when I finally wanted to set up lines of credit for a possible land purchase, and other things, my credit was ruined.
So I set off on my quest of finally repaying all my past debts and I must say when all the collections were finally paid off I had a great sense of peace.

1. Setting up automatic withdrawals

I realize this is not a new or amazing idea, but it is something that is easy to do and doesn't hurt as much as I thought it would. I will admit that I only have this set up for my sharebuilder and ING IRA account. Due to the fact that I work hourly not salary, my paychecks vary, so larger sums are a bit harder to set up at this time but I plan on setting up a more permanent AW in the future for savings. By doing this money is taken out of my account with no effort on my part as long as I remember to count it in my balance. It has allowed me to get in the habit of setting aside money in small yet diversified accounts. It goes along with David Bachs theory of pay yourself first.

So the key things to remember are to keep all payments up to date and on time, and set up regular monthly automatic investments. It is all so basic and easy, now just make it a habit!

10 best, 10 worst

Over my life I have made plenty of financial decisions, this is a list of my ten best and worst choices. Hopefully some of you will be able to learn from my mistakes and growth!

  1. Not paying off accounts on time; if ever early in my life
  2. Not funding my "father sponsored" IRA early on
  3. Having no money set aside monthly into savings
  4. Spending all if not more than I made
  5. Buying items at full price, than selling them for half price
  6. No financial goals established earlier on
  7. Not carrying health insurance
  8. Not buying property when I had the chance
  9. No investments set up early on
  10. Buying stocks I knew nothing about
  1. Establishing automatic withdrawals
  2. Educating myself on all financial matters
  3. Asking for what I was worth at my job interview
  4. Opening up an ING account
  5. Driving vehicles to their death
  6. Saving for future expenses
  7. Grocery shopping wisely
  8. Getting my library card
  9. Quitting smoking
  10. Learning to do repairs myself instead of paying someone else to do the work

I will expand on these topics in my next posts, Stay tuned!

Sunday, February 17, 2008

net worth

ok, it has been a month since I first wrote of my finances, time to take a look at what has happend in the last month


Savings $4201.35
Checking $1800
Roth IRA $364
HSA $1227.33
Stocks/ETFs $897.30
prosper $157.17



Credit Cards ($3563)
Truck ($14803)
Medical bills ($7700)


Net Worth ($17418.85)

change of $1677

The big changes this month in assets was my regular adding to my accounts. liabilities look a little bigger due to me runnning up a card that I have not paid off yet. It will be $1000 less in a few days.

The other problem is that my savings account will also be used to pay off taxs in a few months, and that will mess up my net worth pretty quickly, but I will be able to recover fairly well.

Tuesday, January 15, 2008

taking time for large expenses

So I finally bit the bullet. I have been putting off the purchase of a table saw for about two years. I have always been tempted but kept thinking it through. But last night I finally went and purchased it, $500 on my rewards card, a $500 write off. I am a self-employed carpenter by trade, so it was only a matter of time.

Big expenses, all expenses, need thought and research. Always make sure you think about your purchases and research them well before you splurge. There is so much information and knowledge on the web about products. After all my research and price comparisons, it was beneficial for me to buy "locally" (out here that is an hour away!).

Well hope you all have a great day, and THINK before you spend!

Sunday, January 13, 2008

Paying VS. Saving

This is a topic that comes up fairly often, and is something I have given much thought too. Which is better, to pay off your debt, or to begin saving money?

Paying off your debt tends to be a better option on paper due to the fact that most debt is above the average returns from investments. As such you will end up with more money if you can pay off those debts first.

But for people just getting into the mindset of improving their financial standings, saving and investing is an important habit to begin.

As you can see by my last post I have small investments that I contribute to regularly which has gotten to be a habit. I spend more each month paying off debt than I do investing, but at least I have started the process . It is important for me to be able to see positive growth in my finances to keep me motivated. $50/month towards my IRA and $100/month towards my stock/etf's is not much, but it is a start. Over this next year I plan to increase each to $200/month.

My Savings account is set up for multiple reasons. The first of which is to provide me with my Emergency fund. I am a self-employed carpenter and as such need cash that I can use in case of personal injury which could put me out of work. This account is also my catch for the tax money I will owe come April 15th.

Good habits with money is what we all strive for. For myself I needed to set up these avenues to save and invest for the motivation and security they provide. Paying off debt first would be better short term, but for long term goals it pays to begin forming your habits as soon as possible.


Habits are something which take time to form and even more time to break. In march of 2007 I had a wedding to go to back on the east coast. I showed up with two maxed out credit cards ($8000) and $175 cash in hand. That was all I had. The tux ran me $160 and I had $15 left to my name. This was the point in my life that I realized I had habits that needed to change. So I began my financial quest to get back on my feet. through the last 9 months I have made great strides to clean up my mess. So here is how my finances break down:


$2300 savings
$1700 checking
$332 Roth IRA
$1500 HSA
$675 stocks/etf's
$157 Prosper

$6604 Total


($2700) Credit card
($15200) Truck
($7800) Medical Bills

)$25700) Total

NET WORTH ($19,096)

So there you have it, my starting point for this blog