Bear Market and Bear Bank Account

Two items to think about this post:

(1) Bear Market - I believe this week will continue to see the market decline, but not as badly, as investors began to see some discounted values out there. However, with the European Central Bank poised to raise interest rates, which will shore up the Euro and cause the Dollar to fall, we will also see oil prices continue to shoot upward.

Additionally, financial stocks are still being targeted by both investors and rating agencies as the fear of more write downs to come applies continuous downward pressure on those stocks.

(2) Bank account - For regular readers, you are all aware that this month has been financially very bad for me. After tallying up everything up to today (with 1 day left in the month to go), I am about $1,100 above budget on spending. I need to be very careful next month to ensure I have enough funds in my bank account to cover all my bills.

Just as important is my continued plans to recover from this month. Tomorrow, I will reset my budget to be in line with rising costs of food and gas, while also setting aside money to pay down debt.

Ameriprise Lunch

I think everyone in corporate America has had at least one free lunch from Ameriprise. Today's lunch was my second. For those who don't know, these lunches are typically a selling too for Ameriprise advisers who try to sell you on their services for the first 10 minutes of your lunch, and then leave you alone. They go away with your contact information and with the "threat" that you could be called.

I attend these type of lunches grudgingly; while free lunch is good, who has time during lunch to hear a sales pitch?

But today's lunch got me thinking. How much longer will these advisers be around for?

Most people who have significant wealth would not pick up a financial planner in such an odd fashion. I would think the target audience would be the middle to upper-middle class. Yet, with the huge rise in free personal finance blogs and the constant stream of free personal financial advice from conventional media, in 5 years, are people still going to pay for the advice?

Anyone with half a mind and access to Google could get pretty much any mundane personal finance question answered.

I would think their days are numbered.

Behind the scenes: What's in store for this blog

The 10 months that I have been blogging has been an incredible time for me. I wanted to take this time to reflect:

First and foremost, blogging has really provided me a forum to increase my own understanding and application of financial theories to practice. In every post, I attempt to provide the most accurate advice/comment/suggestion through intensive research. This research has certainly enriched me.

Second, the blog has changed slightly from its original purpose. I started the blog to attempt to catalog each new personal finance issue I was faced with and then to give readers my solution. However, as I finalized my move from college life to real life, I realized there really wasn't going to be such a regular plethora of personal finance issues. I grappled with three possibilities: only posting when I had a new problem, start blogging about mundane PF issues, or start branching out into my investments. I settled upon investments because it provided the most regular material to blog about, and investments are a huge part of anyone's personal finances.

Third, as the new year begins, and as my blogging experience increases, I will begin blogging in a more organized fashion. I will start having mini-series on PF and investment issues, delving deep into a problem for a week or two.

The first of these series I started last week on options trading. I will work hard on fleshing out this topic for the next 5 days.

Apartment found, sold, and moved all in one weekend

I officially start at my new position on Oct. 15, which meant I had to find someone to take up the rest of my lease, find a new apartment, and me moved prior to October 15. Somehow, I managed to do all that this weekend, even though everything came down to the wire.

For a while, I was contemplating forgoing the $2500 security deposit, figuring my sign-on bonus and better job satisfaction would more than make up for that small financial hit.

Thankfully, I'm getting that back. Add to that my relocation bonuses and my old company paying me for unused vacation time, I've got some large checks coming.

My plan is to save a large portion of it, but still have money to buy a new LCD TV and a cheap sofa set.

At the same time, I have to come to grips with living by myself, which means I pay for 100% of the utilities, rather than the 3-way split I had. For utilities like cable, that was a great deal. For now, my way to cut back is to decrease my monthly discretionary budget, until I see how much utilities actually end up being, and then I can readjust accordingly.

Back

Finally, things have settled down for me. I'm fully moved into my apartment, I have furniture, I have cable, and work hasn't been as hectic since quarter close.

Since then, I know I've skipped a lot of opportunities to blog, and I really need to get back into the swing things.

One of the biggest financial differences (other than paying rent) I have noticed is that I am spending way too much on food. I never really tried to quantify how much it costs to buy and cook food, but considering by typical $10 lunches and $15 dinners, that's adding up way past what I had originally budgeted for food, $400 a month.

I have to seriously reconsider by eating habits, and definitely start cooking for myself again. Although back in grad school, I did cook for myself, my time constraints were a bit different. For one, I wasn't actually exhausted at the end of the day. Second, I didn't have to worry about having enough time to both cook and eat.

This increased expense has me worried. For now, I tell myself it's a temporary increase in expenses, but I need to start clamping down on that by next week.

Also, it's getting to the end of the month, ever closer to updating my networth, and frankly, I'm a bit scared to do it.

Rising Costs of Living

As I prepare to move out, I realized that I have a large chunk of fixed costs involved in moving into my apartment. I currently don't own any furniture, or even a bed, so I have to go out and buy a mattress, bed frame, and matching bedroom furniture. I'm also going to need a desk.

Here is what I'm thinking of spending:

Mattress - $400, I want to get a nice one. Probably the most important purchase
Bed Frame - $250
Nightstand - $40
Dresser and Mirror - $250
Desk - $125

All told, that's about $1100, on top of which I have to pay first month rent and two months security deposit. Theses big cash outs almost empties my bank account until my next paycheck.

I think it's an ironic twist that with all the education and pay I'm receiving, I'll still be living paycheck to paycheck. Of course, things will improve next month, since I'd obviously won't need to buy furniture or pay security deposits again.

Sticking to a budget

Is really tough. So far this month, I have already gone through 25% of my food budget and 15% of my "discretionary" budget.

Food has mainly just composed of going out to eat, while discretionary budget has been spent mainly on expensive bars / paying for parking.

I expect even more expenses this weekend, as I have my fun night in NYC planned, plus someone's birthday on Saturday.

With all of these unexpected expenses occurring, my budgeting is all out of whack. Maybe I'll only eat and have fun for the first two weeks of the month, and turn into a monk for the last two weeks.

Networth Update

It's that time again to check out where I am in life, and just exactly how much closer I am to my million dollar goal.

As always, I've checked out my networth sheet twice, and I still don't like how far away I am.

Compared to last month's networth update, I have made a 0.13% improvement toward my goal, increasing by networth by about $1,400. This decreased change can be blamed on increasing consumption last month with a student loan consolidation that increased my outstanding loans about about $500, because my new lender over paid my old lender. This problem should be resolved by next month.

My new networth -$19,076.48, making me -1.91% on the way to my goal.

Moving out, pt. 2

In my last post about moving out, I was still debating the merits of moving out, while actively checking out possible roommate situations. I had an "interview"-type meeting with a potential roommate this weekend, and I was told today that there were 3 other people looking at the apartment, and that he had chosen someone he knew better.

Frankly, that is good for me, because although I know I want to move out, I didn't think the situation was the best for me. I now know that I'm looking for a community where people are closer to my age, rather than the late 20s and early 30s crowd. Also, my potential roommate was the stereotypical bachelor, with similar cleanliness ideas, while I am much more of a neat freak.

Anyway, my search continues. I have been told there is someone seeking a roommate in one of the younger upscale communities so I will be pursing that the rest of this week.

My target is still to be moved out by end of July. Now I just need to buy a bed and other bedroom furniture.

That's a budgeting nightmare in and of itself...

Moving Out...?

I have been living at home with the parental units the past 3 months, which is about 20 miles from where I work. As I approach my 90-day review, I have increasingly become aware that I need to move out from the parents for three reasons:

(1) The commute is 1 hour each way
(2) I'm not learning independence by having the parents do everything for me
(3) I need to move out before I became a sad pathetic loser living in my parent's basement

I don't have any relationship issues living with the parents. I enjoy my parent's as much as any child can, and having my little brother around is an added bonus.

However, it is the nagging fear that if I don't do it now, I may never want to later that prompts this. But that fear is difficult to quantify, so I have been busy trying to place dollar values to my issues living at home.

The nominal cost of living at home is $0. The cost of the 2BR apartment I want to share with someone is $1200 per month per person. The best justification for moving out still remains the commute. Two hours a day versus 15 minutes a day is a huge difference. Multiplied out to the usual 20 business days a month, that is a 35 hour savings! On top of that, I will probably save about $100 worth of gas.

If I consider my personal time to be worth at least $25 / hour, that is a combined savings of $975, leaving $225 of my rent as a proxy for what I value as my independence and the value of not being called a sad pathetic loser.

Are those two things worth $225 a month? I'm not sure. And my parents do add value to my life, so to do an accurate cost-benefit analysis, the cost to me would be more than $225 a month. I think all together, the cost is really $500 a month to move out, versus staying at home.

And... I still have to buy bed, furniture, and my own food. Is my independence and not being called a sad pathetic loser worth that much a month? It's not a clear-cut decision.

Graduation Over!

I just got in a few hours ago, and boy was a few days away exactly what I needed! I got some good R&R time catching up with friends, hanging out at bars, and getting sunburned at the amusement park (not to mention the fun screaming that goes with roller coasters).

But all of that does not compare with having your friends and family watch you go across the stage, and be given a Masters in Business Administration hood and listen to alumni speak of where their degree has lead them.

This time has also led me to a renewed sense of organization and drive for better personal accountability, especially as it pertains to my finances. I have finally written down all my current open credit cards, bank accounts, and brokerages, consolidated that information all into one Excel workbook, and password-protected it so that I have a reference everyday as to my fiduciary situation.

On another bright note, I had expected my expenses to be well over $500 for this event, but I ended up spending no more that $440!

Graduation

From Wednesday to Sunday, I will be going back to school... for my own graduation week and ceremonies. Although I have technically graduated with a MBA, this is the official "hooding" ceremony, where the large sash-like object is put over my head, symboling my new ability to bear the brunt of business world.

Or so I like to believe.

I am a big fan of ceremonies, both for the memories and for the clear delineation of an end to one aspect of your life and the beginning of another.

While I can't wait to see old school buddies, and have fun at all the graduation week festivities, I am a bit worried about how to account for the expenses according to my budget. Maybe I should start contributing monthly to a "big event" fund, that I can deduct for birthdays, travel, and other large expensive items.

A quick glance at the expected costs:

Round-trip gas: $100
Food: $15 / daily, $60
Drinks: $15 / daily, $60
Saturday Night: $250, dinner for family
Graduation memorabilia: $100

All totaled: $570

It's going to be a financially rough, but emotionally fun week.

CFA Level 1s

Oof, what a rough day. Starting your weekend with a 6-hour test is never a good thing to do. But that's what I did today. I had to take my CFA (Chartered Financial Analyst) Level 1s today. There are 3 levels, and once you pass all 3 levels, you obtain the designation of CFA, which essentially means you get the merit badge that deems you worth to manage other people's money professionally.

The CFA is a tough designation that most financial analyst of any rank or experience is trying to obtain, because inherent in the designation is a large amount of prestige, and more importantly, a quick way to boost the salary (we're talking probably $20-40K differences, all else the same).

So how tough is it? Well, according to the CFA website, only 39% passed the level 1s last December, and unlike the SATs, people who take this test actually want to be there. That is a scary statistic considering the pass rate hovers at 40% year to year.

Although at the test, I did notice about 50% of the available seats were not filled, implying that there were supposed to be more people there. I hope that the low pass rates include those who don't even show. If anyone knows how the pass rate is calculated, please tell me!

Grill Purchases

Unlike my usual PF talk, I do not have any specialized knowledge of grills, so forgive me if I forget some features.

This year, I really needed to upgrade my old gas grill. It has been a trusty old friend for the last 6 years, but its become dilapidated. The grill is rusting in places, the two original wheels are long gone, and only one spare wheel has been found to replace both.

So I began my search, and quickly found myself with the usual purchasing quandary: form or function?

The grill that immediately got my attention was this beauty: The ultimate grill, 60,000 BTUs, 3 burners, a side burner, a refrigerator, and a small island with umbrella. List price? $4,999.00.

While certainly BTUs, the amount of heat generated, counts when you're BBQing, 60,000 is overkill. And what am I going to do with an on-board refrigerator?

I reluctantly moved on to the smaller, more affordable, and more importantly, closer to what I need, rather than what I want.

I settled upon a more reasonable CharBroil 40,000 BTU 4-burner grill, costing around $149.00.

It also comes with a side burner, but lacks the refrigerator and umbrella. Not real losses, but certainly decreases the cool factor.

While this was not the cheapest grill (see lower picture), I chose this one because it provided the functionality I needed, but still looked nice enough to be presentable at BBQs.

But I think this purchase helped me draft a more principled theory for purchases. There are always going to be multiple variations on a product we are looking to purchase. On one end, is the $49 stand-alone charcoal grill, which has all function and very little form. On the other end, is the $4,999 60K BTU BBQing monstrosity, which has a lot of form, and probably some function.

It's finding the middle that balances your budget and your desire to have both form and function that really suggests the perfect (or right) purchase you should make. In this case, the CharBroil 4-burner that for 3 times the cost of the cheapest product provided better form than the $49 grill while for 33 times less, provides all the functionality I need, with nothing I don't.