My Pocket Change

If you thought the Fed rate cuts were all good news, think again. I received an email today that HSBC would be dropping their online savings account rate to 3.8% APY.  To be honest, I don’t know what it was before (I don’t use that account much), but I also noticed my Emigrant Direct account dropped also.  It looks like rates dropped from 4.7% APY to 4.3% APY.  Don’t get me wrong — if this saves the US economy and makes buying a house more affordable for me, I’m all for it! But we should appreciate that the economy is a very complex system, and Fed rate drops will have some unexpected and undesirable impacts (the biggest of which is the possibility of high inflation).  Fingers crossed!

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As I mentioned a few posts ago, one of my “goals” of 2008 is to seriously consider and explore buying a house. This doesn’t necessarily mean purchase a place, though that would be ideal. There are a lot of reasons why I think buying soon would be good, but there are other reasons why I think it’s not good. Here I’ll talk about my “pre-buy” plan of attack — research-oriented steps that should set me up right for eventually buying a home. Continue Reading »

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In a roller coaster week on the stock market, the market rebound was centered about Tuesday’s announcement that Federal Reserve would cut key interest rates by 3/4 a point. Unless you live under a rock, you know this. What you might not know is what those different rates really mean and their history. Continue Reading »

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Being financially organized is critical to being financially responsible. In order to improve you financial situation, you must first have a good understanding and perspective on it. That’s exactly what organizing gets you. As humans, we live in the present. For example, we consciously understand that a $7 lunch at Chipotle won’t break the bank, but what we might not appreciate is that doing that 5 days a week ends up costing around $150 a month. Financial organization would give us that perspective.

I see three critical pieces to the financial organization puzzle: net worth, budgeting, and retirement planning (not necessarily in that order). Here, I’ll talk about how I plan on tracking my net worth.

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I guess I don’t really need to write an “I’m back!” post since I never wrote an “I’m going away for a while post,” but it should be pretty obvious by the post dates that I haven’t exactly been maintaining my blog for the last ~8 months. Continue Reading »

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Personal financers universally agree that budgeting is critical to cutting down unnecessary expenses.  A few years ago, I saw the wisdom in this and proceeded to create “the ultimate” financial spreadsheet.  The spreadsheet did it all — tracked my net worth, verified each line item on every credit card statement and bank statement, categorized my expenses, updated my investment performance, etc.  I could tell you where every penny I had went.  But then about a year ago, I basically stopped using my wonderful spreadsheet.  Why?     Continue Reading »

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The beginning of 2008.  That’s when it all starts to fall apart!  Well, okay, enough being over dramatic.  Just what exactly am I talking about?  

When the crazy housing market was at the peak of its fury, there was one thought that popped into my mind: the perfect time to buy will be in a few years because all these exotic loans will reset, and everyone will be looking to flip their house.  It’s commonly accepted these days that one of the biggest drivers for the housing boom was the subprime lending and all the interest-only, 110% ARM this-and-that loans that were approved.  The idea behind these non-traditional loans is that they offer reduced mortgages early on, but higher prices later after the loan resets (like the length of the ARM on ARM mortgages).  The common thought for investors is that you simply flip the house before that loan resets for a huge profit.  And while the housing boom was roaring, these quick flips seemed like a sure thing since housing was appreciating double digits annually!     Continue Reading »

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If you’re like me, you think pensions went extinct with the dinosaurs eons ago.  All we hear about in the news is how thousands of employees and retirees have been loosing their pensions as one big company after another fails to adapt to changing economic environments.  In today’s world, having a pension almost seems more like a liability than a benefit…

But as it turns out, my employer offers one in addition to a 401K savings program.  Perhaps because of the negative press about pensions in previous years, I hadn’t actually looked into exactly how my pension plan works.  I knew there was nothing for me to pick or set (unlike a 401K where we choose funds, percent contributions, etc.), so I was never motivated to figure it out. 

But recently, I have been trying to figure out exactly how I need to contribute towards my retirement each month.  So now how my pension works has become quite relevant.  So here we go…   Continue Reading »

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I wonder what percentage of people out there owe taxes and what percentage get a refund.  Well, regardless, I owe money this year.  My taxes are very straight forward.  I don’t own a house. I don’t itemize.  My taxes take me only about an hour. 

Last year I got a pretty decent return of about $650.  But this year, I changed my exemptions to maximize my pay check.  Unfortunately, that is at the expense of a refund.     Continue Reading »

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I’d say about half my friends here in Baltimore own property.  Some in the ‘burbs, but most in the city (where I rent).  And I’ve spent many evenings hearing them talk about how much their houses have gone up in value (and don’t get me wrong, I’m very happy for them).  But it wasn’t until recently that I saw the ugly face of the quick declines that have happened in the last year.  In this post, I will give you some very sobering real data highlighting this.

The housing market has been cooling off or bursting (depending on who you ask) since the Summer of ‘06.  And we’ve all seen the numbers on CNN.com showing declines of this or that.  But it all means a little more when you see the effects up-close and personal.  This is exactly what I saw when running through some sales numbers the other week.  It all becomes much more real when places you’ve been inside drop over $100k in 7 months.  This is exactly what has happened to the McHenry Pointe townhome development in Locust Point, Baltimore, MD.     Continue Reading »

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