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Archive for April, 2007

Career Tip #1 – Dress Well

Friday, April 20th, 2007

Though this is primary a personal finance blog, the source of your income is as big a factor as anything else.  After all, its much easier to save when you have more disposable income.  So in this series I would like to focus on small tips to help your career along.

I figured I would start out with something that I am historically not that great at.  The truth is, when I worked at HP, I almost never had any sort of interaction that wasn’t over the phone.  Not only did I not dress up at all, but really, I hardly bothered to get dressed at all.  Old scragly tshirts with adidas flip flops and some old shorts.  Now, this was great for being alone sitting in a cubicle all day.  As I have gotten older I have phased in and out of dressing well, but I am starting to settle into being routine about dressing well.  This is thanks in no small part to my girlfriend, who is bothered to the point of wanting to physically harm me when she sees me wear thin old tshirts…which is good because I need a good kick in the pants to go out and buy some nice stuff once in a while.  But I digress….

Lets have a look at the phases of work:

Interview – Dressing up for an interview shows several things.
1) I care about this job
2) I want to distinguish myself from the other candidates
3) I am professional

Beginning work – This is where you are just starting to meet people and get comfortable in your job.  Most people want to make good impressions on people, and dressing up a bit does help tell people “Hey this guy/girl has his/her stuff together.”

Routine work – For most people (myself included) this is where the dress code starts to slip, especially for engineers.  I would say that this is where the lifestyle change happens.  You aren’t in college any more, right?  So STOP dressing like a college kid….or at least only a few times a week.   This will help keep everyone viewing you in a professional manner as well as generally make you feel better about yourself.

I’m not suggesting you have to go out and buy super expensive clothing.  I am saying that a few pairs of nice well-fitting jeans, maybe some slacks, and some decent shirts to supplant the “Girls Gone Wild 2002!” tshirt and the jeans that look like they survived world war 2.

Joe Graduate Entry #2 (March)

Wednesday, April 18th, 2007

<—Joe Graduate #1

No, I haven’t forgotten about Joe. One month was plenty of time to give him to settle into his new job. First lets take a look at those debts and savings.

Since Joe has a nasty high percentage rate on his car loan (10.37 percent) he payed:
Car Prinicpal: $179.04
Car Interest: $120.96
He now has $13820.96 remaining on his car loan.
On his credit card he had a $5000.00 balance at 20% interest rate. His minimum payment was $125.00 however, he decided to pay $200 this month toward his card so it came out to be:
Credit Card Principal: $116.67
Credit Card Interest: $83.34
He now has $4883.34 remaining on his credit card.

Luckily he is only 2 months out of school so he still doesn’t have to pay on his school loan (6 month grace period) which is a good thing because he didn’t budget his expenses all that well this month, as we will look at below in a minute.

Now for the good news.

Joe’s contributions to his 401(k) were $200.00 per paycheck including company match ($125 + $75) for a total of $400 for the month.

After debts and savings this month, Joe had $1980.00. However that extra $200 he put toward his credit card dropped him down to $1780.00

Starting money $1780.00

Gas for the month: $180.00
Camera Radar speeding ticket: $60.00
New jeans and shoes: $126.00
Groceries: $382.00
Restaurants/Eating out: $869.00
Entertainment: $150.00

Total: $1767.00

$1780.00-$1767.00 = $13.00

Here is a graph of how it looked for the month:

Joe Finance March

Not a TON of movement on the bars, but its a progressive thing. On the flip side, notice the nice blue blip of retirement savings after only 1 month. I really can’t repeat enough…if you haven’t started a 401k, do it TODAY. And read my article on 401ks. And then read more.

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Why do you want to be rich personal story

Monday, April 16th, 2007

When I wrote about having enough money to support your family a few weeks ago, little did I realize how much of an immediate example I would have in my life.  Several weeks ago my grandma who has had cancer for quite a while now fell ill again and had to go to the hospital.  After a few days in the hospital the results came back: the cancer had spread to her bones and there was nothing realistically that could be done anymore.

For the last few weeks of her life she was able to be home surrounded by family until she died on April 4.  This was made possible by paying for hospice.  I hesitated to post on this, but the simple fact is, I want to have enough money to pay for the best medical care, or if it comes down to it in the end, home care, possible for my family. 

Eat at home, buy a yacht

Monday, April 16th, 2007

One of my main struggles is my penchant for eating out way way too much.  In fact, if there was one thing I could do to cut costs it would be to cut back on the amount that I eat out.  At one point I had a “thousand dollar month” of eating out.  This actually is fairly common for people who eat out a lot.  

 My favorite restaurant by far is the Melting Pot.  Now, unfortunately its also one of the most expensive places in town, and the thing I like there, is the most expensive dish.  Lobster tail is quite frankly one of the best foods on earth, ever.  In any case I did a price comparison comparing the last time I ate there, versus how much the same meal would have cost to make at home.  It goes a little something like this

Melting Pot Personal Finance Savings

Does that mean I am going to stop going there?  Quite frankly, no.  There are a lot of intangibles about going there….the atmosphere, all the different sauces they give you, and how my girlfriend eats the chicken and I get the lobster tail mmmm.  But the point is that it is a LOT cheaper to eat the same foods if you cook it yourself…and you can save a ton of money that way. Plus then I can skip the whole salad step, which in my opinion is a perfectly good waste of space that I could be filling up with delicious meat.

 I also did a bit of a survey around my friends and figured that most of them could save almost $400 a month and still eat well and drink mostly to their hearts content.  So lets say we take that $400/month and put it toward say, a yacht.  Now I figure 40 is a sweet age to own a yacht.  So if I invested that $400/month 10% in an index fund and then pull it out when Im 40, I could hop in my money truck, drive down to a dealer and get myself one of these:

The Penny Saved 

 This particular yacht was on sale for $156,000.00….what a steal!  Though you have to find your own women/men to sunbathe on the front.

Top 5 basic personal finance mistakes

Saturday, April 14th, 2007

Top 5 in a semi ordered fashion:

#1 – Lack of a Budget
Most people do not have a monthly budget.  Infact its staggering how little idea most people have of where their money is going.  When I was first looking into organizing my finances, I realized that I had been spending over $800 a month on eating out.  $800!  A friend of mine that was also organizing their finances figured out that they had spent over $100 a week on CDs and DVDs on average.  This is the absolute first thing to do when you want to clean up your finances.  Check out my budget calculator on the downloads page.

#2 – Missing Bill Payments
How often do you rent a movie, then forget to take it back until it is 3 days overdue?  How about that cable bill that you put off paying?  Small charges for late fees add up.  Lets say in one month you have 2 overdue movies, 1 late bill payment, and 1 late credit card payment.  You could be paying over $50 in fees that are absolutely unncessary.

#3 – Not maxing out your companies match on 401k
This one is simple.  If your company matches, say, 3%, you should be putting at LEAST 3% in every month.  This is FREE money.  FREE!

#4 – Racking Up Credit Card Debt – and then paying the minimum
Spending more than you bring is is a bad idea(suprised?).  Not paying it off quickly is even worse.  This goes along with not having a budget set.  Lets take for example someone I worked with a few years ago.  He bought a brand new TV on his credit card.  He was excited because it was ‘only’ costing him $80 a month.  By the time he was done paying it off, his $2100 plasma TV cost almost $3000. 

#5 – Buying a New Car
This one is near and dear to my heart.  Why?  I am guilty of it.  A new car is one of the absolute worst investments you can make.  Ive seen more people spend too much on a new car than I have seen frat boys passed out on a saturday night (almost) “But Jesse I just started this new job and Im getting paid well….”  then put aside the money you would spend on the new car until you have enough to buy a late model used car. 

Five common post college misconceptions

Friday, April 13th, 2007

#1 – I am going to come out of school and be a project manager

If I had a dime for every person I’ve known that has come out of a school with a BS in business that thought they were going to be a project manager straight out of school, I would have the money truck parked out in front of my mansion in laguna beach.  The truth is that the vast majority of people will be in any given industry for quite a while before they will move into a project management role.  Just because you have learned some pm techniques in classes doesn’t mean you are ready to come into a business and coordinate projects. 

#2 – I am going to come out of school and be a CEO/Top management/etc

This is less common than #1 but even more ridiculous. 

#3 – I got my degree in <insert major> so I have to get a job doing <insert job related to major>

Many places are much more concerned with your experience and your interests than they are about what your degree is in.  In fact, in my office there was a guy that had his degree in philosophy but was doing computer science type work.  The vase majority of people being disqualified from jobs are disqualified by themselves and not the employer.

#4 – GPA matters a lot

The simple fact is that, straight out of college, GPA might considered, but any further than that no one cares.  If two candidates are applying for a job and one has a 3.2 GPA and the other has a 4.0 GPA, if they both get interviews, if the 3.2 interviews better than the 4.0, 99% of employers will hire the lower GPA graduate.  Experience weighs even MORE heavily into the equation.  Simply put, don’t get too hung up on your GPA.  I had a friend who was a smart guy, but just hated going to class.  He had a GPA of 2.8.  He applied for a job that “required” a 3.5 GPA at Hewlett Packard.  Guess what?  He never put it on his resume and they never asked….and he got the job.

#5 – I need to grow up and buy <insert expensive item>

Just because you have graduated doesn’t mean you need to grow up and buy any expensive items such as a car/house/etc.  There are situations where it makes sense and others where it doesn’t, but everyone seems to think it’s some sort of right of passage into adulthood.  On the contrary, it can just as easily put you on the wrong financial path.  One example of a situation that it was a good idea is that my girlfriend is selling her condo for a good profit, and under contract for a house.  In her case, it is the right fincancial move for her.  On the other hand, I have a friend who bought a house right after graduation that he is now trying to sell, and he is minus 15k in equity on it due to the housing market and a home equity loan he took out.

Life isn’t fair… And thats GREAT news

Sunday, April 1st, 2007

This is something that a very large portion of the population just doesn’t understand. Years ago a cousin of mine was hooked on David Deangelo, a behavioral psychologist, and we were driving on a po-dunk road in canada listening to his CD when I heard something that really caught my attention. He said:

“Life isnt fair…and thats great news. We are each born with our own lot and others have their own biases and prejudices. This is good news because it also means you can turn things in your favor…if everything was fair you would just have to accept your place in life. You would have nothing you could do about it…Things are not fair, but thats the best news that there could possibly be, because that means you can turn things in your favor.”

There was a speech Bill Gates gave where he named 11 rules of life and guess what #1 was? Thats right: Life isnt fair – Get used to it!

So on to why it’s great news. Its great news because it means that you can take a poor financial situation and make it a good one. It means that you can come from poverty and be rich. There was a great story a while back that I read about a man who was slightly developmentally disabled. He lived in a very tiny apartment and worked at a local fast food restaurant, as well as a night job doing some sort of cleaning. There was something else about this man that no one knew. He had an obsession with the stock market and investing. As it turns out he supposedly managed accumulate several hundred thousand dollars. Another great example is Bill Gates himself. He went from a typical nerd to the richest man in the world.

The bottom line is in every part of life you can improve a situation. I don’t care what the situation is, you may (and in most cases) not get the IDEAL situation but you can always improve a situation.

Lets find an example. Oh, how about myself. I had an awesome family life growing up but we were solidly middle class and didn’t have a ton of extra money. When my dad brought home a computer I did everything I could to learn about it. I dove into every subject possible about computers. I went to the library (which reminds me of something from the movie Dave Chapelles Block Party where Wyclef Jean tells a group of kids not to blame anyone for not succeeding, “they have librarys in the ‘hood.”) . When I was in high school I landed a job with Hewlett Packard…not because I had any connections there, but because I had extra skills on top of what they were asking for (for an intern position). I managed to move up the ladder there and what was supposed to be a one year internship turned into working there for 6 years.

Want to decrease debt? Do what it takes to spend less. Eat like a college student again, find the cheapest happy hour, and don’t buy things you don’t absolutely need.

Want to save? Find a way to put aside a little money each paycheck.

Want a better job? Search them out, apply for them. There are jobs everywhere. Just because you didn’t get a degree in a particular field, doesn’t mean you can’t learn what it takes to get a job in that field.

When you come on hard times, instead of complaining about how unfair life is, think how you can use it to your advantage. If things are going well, make sure to figure out your goals and then do what it takes to achieve them. For instance, my current goal is to go to bed. I will now get into bed.