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Archive for February, 2008

Earlier today I had a large amount of downtime (which is actually unusual for my host) so I apologize to the apparently many people that have been following links in today….that being said, here we go: 

The next question coming in from google search:

“Can I take my money out of my roth ira if I leave the country?”
“can i withdraw money from my roth ira to pay off a credit card?”

The answer to this one is fairly straightforward: any contributions can be removed from your Roth at any time tax and penalty free.

There was a new carnival of frugality today, so I figured in honor of super fat tuesday Id post some super phat links for the day to stuff that I use all the time. Super fat tuesday results links

First the blogs I read every day: I will teach you to be rich, Mrs Micah, Get rich slowly, John Chow, No Credit Needed

Next some useful links: Credit Card Ratings, MSN Money, EOpinions, Adult Facebook errr LinkedIn, Google Finance

And finally a bunch of financial links:

AUTO

CarBuyingTips.com, www.carbuyingtips.com
-Free information on buying new and used cars, leasing, and avoiding auto scams.
CarFax, www.carfax.com
-See the history of the car you are considering
Edmund’s Publications, www.edmunds.com
-Consumer information experts. Easily run comparisons on new and used vehicles.
Fighting Chance, www.fightingchance.com
-For $34.95, you receive complete pricing data on the vehicle you’re considering, plus its record in the market place, available cash incentives, negotiating tips, and access to a “live” purchasing coach.
J.D. Power & Associates, www.jdpower.com
-Automotive marketing research
Kelley Blue Book, www.kbb.com
-New and Used vehicle pricing reports
LeaseSource, www.leasesource.com
-Automotive research with calculator to lease or buy a car

EDUCATION

Finaid, www.finaid.com
-A comprehensive site that covers all aspects of financial aid.
National Center for Education Statistics, www.nces.ed.gov/ipeds/cool/search.asp
-Information on past three years of college/university costs
Salliemae, www.salliemae.com
-Calculators for estimating college costs, savings needs, and student loan payments as well as a great deal of financial aid and scholarship information.

INCOME TAX

IRS Website, www.irs.ustreas.gov
-The IRS Website, information on forms, publications, and frequently asked questions.

INVESTMENTS – Discount Brokers

ShareBuilder, www.sharebuilder.com
-Discount broker with auto building plan. I really like this one.
TD Ameritrade, www.tdameritrade.com Updated!
-View account balances, market news, and other services offered by the discount broker.

INVESTMENTS – Financial News & Quotes

Bloomberg, www.bloomberg.com
-Financial market news and stock/mutual fund quotes
CBS MarketWatch, www.cbs.marketwatch.com
-Financial market news and stock/mutual fund quotes
CNN Financial News, www.cnnfn.com
-Financial market news and stock/mutual fund quotes
Google Finance, finance.google.com/finance
-Everything you need
Money Central, www.moneycentral.msn.com
-Financial market news and stock/mutual fund quotes
Yahoo, finance.yahoo.com
-Keep track of your overall portfolio and get detailed charts on your individual stocks and funds
Welp, lunch break is over, back to real work. Enjoy.

As I have previously mentioned in my article Top 5 tips to land a good job one of the most important skills you can have is to be able to interview well. You can have the best resume in a huge pool of people and it won’t make a bit of difference if you get out interviewed. On the flipside of that, if you have an average resume but killer interview skills, you will pass the entire field ahead of you. So, its about that time in the post where you are probably saying to yourself “Wheres the beef?” Well, heres a nice step by step process that will work well for you 99.99% of the time including THE MOST underutilized interviewing skill that quite frankly can take EVERYTHING else out of the equation that I really think has the most to do with 100% interview record. Yeah, that big time.

1) Do your research on the company
The very first thing you need to do is study up on the company that you will be interviewing with. The very first thing you want to do is figure out what their “style” as a company is. It may be somewhat difficult just using outside information but it is good to at least try. Every company is different and sometimes the differences have a very strong influence on who they will hire. For example, are they more concerned with only your specific skills or are they the kind of company that wants to “get the right people on the bus” ala Good to Great. More on this later.

2) Think ahead of time what kinds of questions they will ask you
If you are interviewing for a technical job, think about what kind of questions they will ask you about technical details. For example they might ask a programmer about inheritance, or they might ask a crane operator about procedures. Whatever your particular field is, think hard about what kinds of tough questions they might come up with.

Bonus: a lot of companies do variations on a test that my company calls the “who” test. These kinds of questions are open ended questions designed to try and figure out what kind of person you are. They might have to do with integrity or ethical situations. An example might be “Describe a time when you thought something a manager was doing was unethical and what you did about it.” They are not meant to be “trick” questions with a right or wrong answer, but rather a way of probing personalities.
How to dress for an interview

3) Dress nicely/appropriately
As tempting as it might be to show up in jean shorts, tshirt and sandals it really isn’t a good idea. Well, its a good idea if you want to be laughed at after you leave, or maybe not even let in…but otherwise not so much. It might sound like a no brainer but for my most recent position apparently one of the interview candidates actually did show up in sandals. Showing up naked also not advised…stick to business attire. If you don’t have any nice clothes go buy some.

4) Arrive early for your interview
This is somewhat obvious but there are other reasons aside from just looking good. When I went into an interview for HP I showed up at the building (actually it was one of the mods onsite) and there was no front door. Thats right, a corporation and the place I was supposed to meet at had no front door. Not only that but EVERY DOOR WAS LOCKED. Luckily I was about 30 minutes early and after about 15 minutes someone saw me standing outside. If I had been running late I might not have ever had that interview…and that job for six years.

Crocodile Dundee5) Stay calm and confident
You want to show you are poised, relaxed and overall a badass that is up for tackling everything. They want someone ready for challenges? Bring it on. They want a team player? You’re their man(or woman). They need someone who wrestles alligators? You make crocodile dundee look like a wuss.

6) Establish Rapport and then turn the interview around
Here is your secret weapon. This is your fourth ace when theres a flush on the table. Every other sucker in the interview room is being interviewed, you are interviewing. Here is what I mean. Several years ago my friend, roommate and former coworker was interviewing for a job. He came home and I of course asked him “Howd it go?” – “Great” – “What did they ask you about” …….. “I don’t really remember but I know the hiring manager’s life story. I start next week.” Even the most seasoned hiring professionals are susceptible to this. Why? People love having things in common with other people and people love talking about their company and then themselves. In a group interview environment this is much harder but still has an opening. Ask about the company and their group. You surrender information about yourself gracefully and answer technical questions to the best of your ability, but when it comes discussion time, pour it on. You can BOMB the technical part of the interview and save yourself here. I had an interview with Dell (that I didn’t end up taking the job) and they never even got around to asking me more than two questions, and (no joke) ended with the senior interviewer telling me “well, we will have to have a beer at <a pub in houston that has belgian ales> when you get down here”Crocodile Wrestler

7) Most interviewers ask about your weaknesses. Answer with Strengths.
Here are two different examples that I have used before:

“Name a weakness that you have in your day to day working environment”
-”Well I would say my main weakness is that I do sometimes get frustrated with people that do not pull their full weight and put in 100% effort.”

“Name a personal weakness”
“Sometimes I drive myself too hard. I am a perfectionist and so I tend to be hard on myself at times.”

Two things you should never say:
“I don’t really have an weaknesses” -It comes off as an arrogant lie.
“I am not really sure” -The employer point of view is: you mean you don’t know yourself?

8] Follow Up
This is HUGE. I have had one job where I did not think I got it, only to be surprised when I followed up with a phone call. “Oh yes, we haven’t been able to send out the formal offer yet, but we are extending one to you.” Always always always follow up. Always.

I am trying out a new feature. In my tracking I am going to take queries from google that have led people to this site and answer them in these short bits. First up:

“I just got $20,000.00 can I invest it in an IRA?”

Assuming you have not maxed out your individual contribution for the year, yes SOME (or all, see below) of it. The max contribution is currently $5000.00 per year ($6000.00 if you are above age 50). Depending on your income, to maximize the amount you are putting in, you could put the after-tax five grand in a roth IRA. As for the rest, a high yield savings until the next year is one option, or invest it, or perhaps get a bond. Remember, saving for retirement doesn’t have to be limited to tax-advantaged retirement accounts.

Now heres an entirely different and more creative approach:
Assuming you are working, for the rest of the year increase your income contribution to your 401k (assuming you have one) substantially and use the windfall as your supplemental income. Depending on your income, combining this with an IRA contribution would allow you to invest all 20k into retirement accounts in a year.

I know, first thing you are wondering is FREE Iphone? WHERE CAN I GET IT!? Well, just hold on a few and read through. I was talking to one of my friends from work about viking death metal (no joke) and rock band (pretty much the best video game ever) and somehow the conversation drifted toward the 401k plan at our company. He said he had been dabbling in a few of the funds offered and seemed surprised when I said I was dumping 90% of mine (and my girlfriends) into our one index fund. So of course he asked me why? Well, its very very simple. Nearly every mutual fund available in our plan has an expense ratio greater than one.

Mutual Fund fees ruin returns

What the hell is an expense ratio and why do I care?

The expense ratio is the percent of total assets that the investor is charged just to be in the fund. This is supposed to cover the costs of running the mutual fund…but honestly it really is how mutual fund houses and managers steal your money to make themselves multimillionaires. Here is the simple version:

The Penny Saved IphoneMutual fund from your 401k you are in:

BIG MUTUAL FUND: expense ratio: 1.50%

Lets say youve been working for a few years so you have 20k in your 401k. Lets say you get a return this year of 10%. Wow sweet an extra $2000! But wait a minute, your mutual fund that are in has an expense ration of 1.50 so they keep 15% of that. You only get $1700 and they keep that other $300.

Lets say you were instead investing in the index fund with an expense ratio of .10 (actual number for mine). Instead of the fund keeping $300, they would be keeping $10. That extra money, why, thats your free iphone right there. Ok so maybe you can’t actually pull that $300 out and buy an iphone (though you could if it was a Roth IRA) but you get the point.

But dont mutual funds make more money than index funds?
No, 85% of mutual funds fail to beat the market average.

Other types of expenses that mutual funds might charge:

Front-end load
This is basically a fee paid when shares are purchased. It is also known as a “front-end load,” and this fee goes to the brokers that sell the fund’s shares. Front-end loads reduce the amount of your investment. A good example is if you have $1,000 and want to invest it in a mutual fund with a 5% front-end load. The $50 you pay comes off the top, and so only $950 will be invested in the fund.

Back-end load
This is where the brokers take their cut when you decide to sell shares. This is even worse because they take part of your capital gains as well. Some mutual funds let you out of these if you stay with them long enough but its just one more robbery trick.

Level load / Low load
The only difference between level loads and low loads as opposed to back-end loads, is that this time frame where charges are levied is shorter.
Load of Crap
Most of the above fees.

I recently read an article on Advanced Personal Finance and though I have been reading him for quite a while and I like a lot of his articles, I wanted to pull my hair our when I read his article on Phantom Capital Gains. For a quick background on what he was talking about I will paste his first paragraph as he does a good job of explaining it:

Phantom capital gains
The term ‘phantom capital gains’ refers to the fact that when you sell appreciated assets (e.g. stocks), you pay capital gains tax based on your basis (the price you paid for them whenever you bought them). Since then inflation has likely eroded the buying power of the dollar. So now that you’re selling them, the cash proceeds you receive are worth less in ‘real’ terms. You must pay taxes on any gains, regardless of that gain’s real buying power. With me so far?

Rudy Giuliani and other anti-tax advocates think people should not be taxed on the full nominal amount of those capital gains. In Giuliani’s plan, the capital gains that are subject to taxation would be indexed for inflation.

Great explanation, I love it and I actually did not know that was part of Giuliana’s plan. So I read on.

…So who would benefit from an indexing of capital gains to inflation? Drum roll please. Not surprisingly, the wealthy will be the overwhelming winners if a plan like Giuliani’s becomes law. Doing something like this is the opposite of progress, to me. It increases rather than decreases wealth inequality.”

Uh oh. Though I find it admirable that APF personally wants to help people with less invested in the market than himself, I find it immoral to take more away from people who are planning for the future and have taken control of their financial life.

Capital Gains taxes drag the economy down

More and more people are realizing that social security is not something to bank on and are investing in their future themselves. Aside from that, one of the great things about America is that generating wealth is available to anyone, its not just the rich investing in the stock market anymore. Though you can debate the morality of the top 1% holding so much wealth, it makes no sense to do something just to punish them that might also hurt the middle class. Those that take the time to manage their finances WILL come out ahead. And if you are reading this right now, that is YOU. Remember there is nothing immoral about increasing your wealth, eliminating your debt, and taking advantage of the country you live in.

The long short of it is: capital gains is your enemy here…and not just for those reasons.

Reducing Capital Gains taxes would bolster the economy by encouraging invest­ment in promising enterprises and by making div­idend payments to stockholders more attractive to companies. Dividend payouts allow companies to reward shareholders in a way other than just trying to focus on increasing the stock price.

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