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Monthly Archives: July 2007

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Ask for More Money

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I posted the other day on asking for to reduce costs as a way to get ahead. The second way to help your bottom line is to ask for more money from your job.

We’ve all gone through it before, you finally get the job offer and you freeze, wondering whether you should ask for more money. I’d advocate that even when the job offer is better than what you had expected, it is always worth your while to ask for more money.

Even if your boss doesn’t have the funds to give you more money, if done correctly, you will gain respect by at least asking for more. Another option that has been successful for me in the past has been to ask for a six month salary review with an increase for high performance. This helps in that your employer might not be able to offer you as much now, but they might be able to do an increase further done the road. This must be in writing in your hire letter.

I just recently tried this one out myself. I was offered a new job, and even though it is more money, I still had the guts to ask for more. Just for asking, I got another 3% increase.

The big news for us DINKs is what the job entails. I will be headed to Afghanistan in late September, working on a Higher Education Project. This project is revamping Afghanistan’s entire University system, including 16 Universities. I will be leading the International Training component and will lead University staff to training activities throughout Asia, traveling 50% of the year. Currently trainings are scheduled in Dubai, Delhi, and Kuala Lumpur.

This means that James and I will be making some sacrifices now for future gains in career, relationship, and finances. We will have four R&Rs to meet each other, totally seven weeks. While we will certainly miss our day to day connection, for us DINKs this is good timing and a great opportunity. I’ll post more details about the job and so forth as the time gets closer for me to take off.

Cheers,

Miel

Asking Saves Money

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Acquiring wealth is pretty simple. You can think of it as a balanced financial diet, you basically need more money coming in than going out.

What can you do about this? Ask. Always Ask.

This works on both fronts, both reducing costs and increasing income. Here are some ideas to help negotiate a better deal for yourself.

Reducing Costs:
1) Ask to waive fees – any that come up (this includes credit card and bank fees especially)
2) Ask for discounts at stores – you’ll be surprised how often this works
3) Ask for the employee price when you go shopping
4) Ask for reduced interest rates on credit cards – if you have them
5) Ask “what’s the best deal you can give me?” sometimes you get more than you would ask for
6) Telephone – find a better deal or you could cancel service
7) Cell phone – keep going back to find out the best deal
8) Internet – ask for the best promotional rate, then ask for this again when it expires
9) TV – Like us you could get rid of this too, or you could scale back on services
10) Power bill – This takes more action from your side to reduce your energy use
11) Health Club – Stay on top of getting the best price available
12) Frequent Customer – Use this to your advantage to ask for a better price
13) Travel for less – search around for better prices
14) Get frequent flyer miles to reduce costs on trips
15) Coupons – find and use them when you can
16) Online promotional offer – look up codes to get free shipping, discounts, and other goods

While we’ve proven all of the above to work, but here is a recent example of how this works. I got my Comcast bill for internet in the mail the other day and noticed that it was suddenly $42.95 a month rather than $34.99. I called up to ask what the deal is. They told me that I had been on a promotional rate and that it had expired. I then asked for the next best promotional rate they could give me. She came back with letting me know that my bill would now be $19.99 for the next months. She warned that I’d have to wait another six months to get another promotional offer.

What she doesn’t know is that I’ve been on Comcast’s promotional rate for the last five years. See my post last year when they jacked the price to $57.95 and I talked my way down to $34.99. Even if I do have to go back to the regular rate for six months after, I will still have ended up saving

Some people might look at this and say, well, it is only 8 bucks, why bother.? Yet had I not made the call it would have cost me $95 over the course of the next year, and by calling I saved $42 in addition to dodging the bullet of the extra fees. Net result is a savings of $137 by making a five minute call to customer service.

I’ll cover the issue of asking for more to increase your income in the next posting. Stay tuned.

Happy Weekend!

Miel

Why Elections Matter For Your Wallet

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Today is Thursday July 26th. As many of you know, the presidential election season is starting to ramp up to full steam. Many folks don’t realize it, but elections are hugely important for individual personal finance. The party that takes power wields a titanic amount of influence in Washington, this inevitably impacts your pocketbook.

Management changes in government impact your bucks in at least three ways.

The first is tax policy. The impact of tax policy on consumers is obvious. When income tax rate are higher, you pay more. As many state income tax policies are built around IRS policies, federal income taxes can impact your state obligations as well. Thus, when presidents or congresses change, the amount you gotta fork over can change too.

The second is fiscal policy. The impact of federal fiscal policy is less clear, but its all about budgets, so it matters. Over the past thirty years, the federal government has spent more than it earns. This not a question of spin, rather a matter of cold hard finance.

Well, what happens when an individual spends more than he or she earns? Its obvious, this person usually has to borrow and pay interest on the debt. It’s no different with the feds, we spend nearly a billion dollars in interest on the federal debt. Ultimately this affects you because borrowing means that programs which impact you can’t be funded. That billion dollars a day means its harder to get your kids head start or pay your grandparents their social security checks.

The third is monetary policy. By this, I’m taking about interest rates. Rates are actually set by the Fed, which is the nations quasi independent national bank. Although the fed is largely removed from direct political pressure, most of the major Fed honchos are political appointees.

So, why should you care about monetary policy? The answer is interest rates. Interest rates are your cost to borrow money. Right, if interest rates change from 6 to 7%, it costs 1% more to get say, a home mortgage or a car loan. This also matters if you have a small business and need a loan to cover operating expenses or something similar. In short, you should be very concerned about who is in charge of running the Fed.

In short, the presidential contest is still in the preseason, but you should be paying attention because whoever is elected will have a lot of say over tax, fiscal and monetary policy. All of these have a BIG impact on your bottom line.

 

Steven Levitt: the Freakonomics of Inner-City Gangs

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Good morning all! This is an excellent 20 minute video by Steven Levitt. Levitt is the author of Freakonomics, a book on the economics of interesting social problems such as abortion and crime. This video is interesting to watch and pertains to finance because Levitt outlines the pecuniary structure of a Chicago street gang he studied. While you probably should NOT assume that his study applies to all street gangs, it is nevertheless an interesting view on an otherwise hidden and exotic world.

Check it out if you’ve got a spare moment.

Best,

James

Net worth – How often should you calculate this?

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We recently received a very good question about how often it is advised to update your net worth. There are a couple of perspectives on how often to update.

Option #1 – Update every three to six months.

  • Not updating as often makes it so you are less likely to be flustered by changes in the market
  • This approach is the sit back and let it ride method

Option #2 – Update monthly

  • The advantage of updating monthly is that you can stay on top of your goals
  • If you are ahead it feels good, we won’t talk about if you are not doing so good :-(

In my personal opinion, I think there are reasons for both, but I certainly advocate for knowing your net worth (even if you don’t think it is much). I started measuring my net worth when it was in the negative, so it feels pretty good to see where it is today. At first when James suggested that I consider calculating my net worth it seemed a bit futile imagining the numbers that would arise. In the end it has been an inspiration to see how far I have come.

I’ve also felt that James & I have been able to reach our goals most when we were continually paying attention to them. For our house and wedding savings we tracked our contributions on a bi-weekly basis. This really challenged us and kept us thinking about it. I think it helps to hold us accountable to our financial well-being.

No matter how often you calculate you net worth, don’t let it make you change your investment strategies just because of a down month in the market.

We’d love to hear your thoughts on how often you think is best to update your net worth.

Miel

Happy Birthday Harry Potter

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We’d like to take a moment to wish Daniel Radcliffe, better known as Harry Potter, a Happy Birthday! This 18th Birthday is particularly special for Daniel, as he has now gained access to his $19 million dollar investment fund – which he’s socked away in a company jointly held with his parents. Daniel’s current net worth is $23 million, with more to come as the series reaches its finale.

One of the richest teens in the world, Harry doesn’t seem intent on going out to blow his money. According to Daniel, “ “Even when I was very young and before any of this had happened, I remember being repulsed by ostentatious displays of wealth. People who have car collections – I never understood that. I always thought that was unnecessary. It’s not beautiful, its not creative. Its just showing how much money you’ve got.”

On growing up Harry says, “It’s not so much that they don’t want me to grow up. It’s that they’re annoyed that I’m growing up adjusted. They’d much rather I was growing up and going wild and crashing cars.”

Perhaps Daniel is on to something. He plans to stay in London and continue to act. He’ll likely be much more balanced there than joining in with the rest of the gen Y Hollywood crowd who haven’t learned how to handle wealth.

Not only has Radcliffe done well for himself, but he has helped to create more wealth than many small nations. Thus far the Harry Potter series has been calculated to create an economy in excess of $15 billion. The author of the famous series, J.K. Rowling, is worth more than a billion. His fellow wizards are also making out pretty good on the deal.

It will be interesting to see how Daniel continues to grow up and manage his wealth.

Happy Birthday Daniel, we are routing for you to prove the tabloids wrong.

Miel & James

How do you stack up?

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How do DINKs stack up in the personal finance world?

Given our recent financial goal, to reach $400k by the end of the year, I was curious to see where we stack up against others.

Call me naive, but I never imagined that the median net worth would be as low as it is. The good news is that median net worth is on the rise, but the bad news is that the chart at the left is an improvement from where the nation was in 1998.

I also came across an interesting tidbit from the 2000 US census showing that married couples had a much higher net worth than singles of the same age. Married couples had a median net worth of $91,218, whereas single males had $24,659 and single female households had $23,028. I know that for James and I that there has definitely been a spike in what we can accomplish together rather than apart.

More applicable, I was able to find this chart on the overall nest egg savings of American households. Keep in mind that it says home equity is not included in these numbers. Thus it is a bit harder to figure out where we fit in the scale of things.

One way or another, we certainly have a passing grade. That feels like a pretty good reward for our efforts to provide ourselves with a solid financial base.

Enjoy your weekend!

Miel

Don’t Get Scammed!

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So we are all know to run the other way when we get a message from Nigeria claiming that there are millions just waiting for us to lay claim to. It is also important to keep in mind that you can get scammed closer to home.

I met a guy the other night who got scammed by someone on Craigs List. The scammer got this guy to cash a (bogus) check for more than the value of what he was buying ($3,500). He was selling weights for $300 and was supposedly having a friend pick up the weights and ship them across the country, thus needing him to wire the extra $3,200 to his friend. Of course the guy’s friend never showed up and the guy who got scammed got suspicious. This guy I met checked his account to find that the check had bounced and he now has -$200 to his name.

While I know this seems far-fetched for someone to fall for, it happens all the time. I’m still a huge fan of Craigs List, but totally advocate for cold hard cash. I’ve sold several items that were expensive ($3,000) and did so with cold hard cash in my hand. I also made sure that someone else was there when I sold the items.

Other tips to consider when buying on Craigs List or the like:

  • Meet in a neutral place if possible (metro stations are great in DC)
  • If you must have someone come into your place, aka furniture, make sure you aren’t alone
  • Put pictures online and ask questions before you buy something so you don’t waste your time
  • Never fall for taking installment payments or post dated checks
  • Never wire someone you don’t know money
  • Keep your guard up with making transactions with others
  • Only take cash…did I say…only take cash!

Follow these tips, use your common sense, and don’t get scammed!

Miel

6 More Ways to Save Money

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In honor of the continual search to find more ways to save money, here are a few more tips on saving money.

Bring your lunch and snacks – I agree with one of our readers that bringing your lunch to work is a great way to save money. If you aren’t one for making sandwiches in the morning, plan your dinners so you have leftovers for lunch. If you still prefer to eat out for lunch, consider bringing healthy snacks. Starting your week with a pile of fresh fruit, nuts and snacks will save you from spending more at the vending machine for a less healthy snack. If you drink sodas at the office you might want to consider buying a case and bringing it to the office. Chances are you’ll be paying a lot less per can.

Plan your shopping for sale time – We all know that sales are out there just to make you buy more stuff. At the same time, there are times in life when we need that stuff. Plan ahead and consider what your needs might be and buy items when they are on sale. This might mean waiting to buy sheets until an annual white sale, or saving shopping on clothes until a back to school day with no tax if you are lucky. Your money will be able to spread further, but make sure you bring a budget and don’t buy it just because it is on sale.

Buy a smaller size – Before you order something, consider what you really need. For example, at Starbucks switch from grande to tall, you’ll be saving a mint and consuming less calories. Chances are you could go without the 64 oz soda as well. Just because it is marginally more for the large doesn’t mean you should super size it. Both your pocket book and your waistline will thank you.

Skip the extras – Along the same lines as above, at dinner consider if you really need an appetizer and dessert. You can shave off a lot by opting out on the extras. Chances are you could be spending nearly as much on extras as you are on the main meal.

Google for discounts – It is easier than you think to find good coupons online. If I’m buying something online I always google to try to find a promotional code. Sometimes I’ve found 20% for first time buyers and often free shipping.

Compare Prices – I know it takes a bit more of your precious time, but shopping around can make a significant difference. When doing so, think about what your options are, and what how you might be able to get more from less. For instance, check travel dates that a flexible if you can manage it. Check around for sales or something you might like better, you never know.

Happy saving!

Miel

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