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Showing posts with label free money finance. Show all posts
Showing posts with label free money finance. Show all posts

Monday, August 26, 2013

Free Money Finance - Invitation to reader profile and get free advice

Here is an invitation from readers to seek financial advice from the Free Money Finance site.  As was mentioned earlier, the contributions help many readers identify with the problem and learn quickly.

The other reader comments may help


 

 

Free Money Finance


Posted: 14 Aug 2013 11:32 AM PDT
The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.

Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit.

Next in the series is FMF reader VA. She answered my questions (in red below) as follows:

Please tell us a bit about yourself.

I am a 29 yr old female. I currently live in New York, NY and have lived here for six years. This city is expensive! My situation has improved a lot over the last two years, due to a higher salary and better managing of my finances. But I know I still have a long way to go. I am single.

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.)

Income: $3200 take home pay/mo, post-deductions (health insurance ($100), subway card ($112), 401k ($420) are monthly expenses deducted pre-tax.)
  • Total After Tax Expenses: $2382
  • Rent: $1285 (soon to be $758)
  • Utilities (electric and gas): $60
  • Student loan: $170
  • Newspaper: $15
  • Food (groceries, restaurants and bars): $430
  • Travel: $222
  • Other: $200
This leaves savings of about $800/mo. I also receive an employer match to my 401k of about $200/mo. My employer pays for my cell phone, and I do not have internet or cable service at home.

Assets:
  • Emergency Fund: $5000
  • Investments: $5000
  • 401K: $10,500
Debts:
  • Student Loan: $5000
I've decided after two years of living alone that I can no longer afford it. Next month I will be getting a roommate -- savings of $500/mo!

What are the current financial issues you're facing (saving, paying off debt, etc.)?

By getting a roommate and increasing my cashflow by $500, I need to decide where to allocate the extra money. I feel that I'm behind on retirement saving and will likely increase my contribution by 2%. (Current is 8% with a 4.5% match). Next, should I pay off my student loan or put more into my emergency fund and investments?

What are your plans for the future (retire early, build your career, etc.)?

I plan to continue to "catch up" and aggressively save. It would be great to develop some side income as well. As far as the living situation, I don't know how long the roommate arrangement will last. I would like to move in with my boyfriend eventually. However that worries me as he has a large amount of law school debt, over $100k. I also worry about my long-term prospects in this city, as entering the real-estate market seems impossible. I do love it here and enjoy my job, perhaps it's worth the sky high rents. My overall goal is to save as much as possible to give me more options.

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

General philosophy is to spend where it counts. I love traveling and occasional restaurant indulgences. However my lifestyle is simple, free of gadgets and "stuff". I learned some financial lessons a little late in the game, and I wish I had saved more in my early 20s. Save early!

Free Money Finance - reader profile

The free money finance has ran a series on reader profiles and has so far published 110 posts.  These posts give us a realistic example on the examples and problems that are unique to each reader so that we may learn from these.  These examples are the best teacher on how we can manage our personal finances better.

Majorem Lending



Free Money Finance


Posted: 06 Dec 2012 12:28 PM PST
The Reader Profiles series has been pretty popular around here. So far we've done over 110 posts and, while I still have a few in the hopper, I wanted to let you all know that I NEED MORE of them to keep the series going.

So if you're willing all you have to do is email me the answers to the following questions (it's all anonymous -- don't worry about your name getting out, I use initials to hide real personalities):
  • Please tell us a bit about yourself.

  • Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

  • What are the current financial issues you're facing (saving, paying off debt, etc.)?

  • What are your plans for the future (retire early, build your career, etc.)?

  • What's your best piece(s) of financial advice and/or your general philosophy on personal finances?
Take as much time/space as you like answering them, but don't be too short or people won't get the "meat" of your situation. If you want to see what others have done, all the posts can be found here.

Thanks!
Posted: 14 Aug 2013 11:48 AM PDT
I recently received a card in the mail from Vanguard. It read (in part):
Happy anniversary! You've been a client-owner of Vanguard for 20 years.
It went on to thank me for my loyalty, congratulate me on "reaching this milestone," and so forth.

Overall, I think it was a nice touch from them.

I have been with them a long time and IMO they are a great company. I'm hoping for another 20 years (at least!) together.

For those of you interested, here are the three funds I use the most at Vanguard.

I almost went through the exercise of calculating how much I've saved/earned with Vanguard in 20 years simply because my expense ratios have been almost nil compared to an industry average of over 1%. As we all know, 1% compounded over 20 years adds up to some BIG MONEY!

Free Money Finance - win a box of books


Free Money Finance


Posted: 11 Aug 2013 10:09 AM PDT
Here's a chance for you to win a (small) box of personal finance books. The books included are the following:
Here's how it will work:
1. All you need to do to enter is to leave any comment on this post. Be sure to leave your email address (no one else will be able to see it) when you leave the comment.
2. In a week or so, I'll select the winner at random and announce the winner on this post.
3. I will email the winner, get their contact information, and arrange for them to receive their prize.
As always, the standard rules apply.

Good luck! Post a comment below for your chance to win!

Saturday, August 3, 2013

Free Money Finance - July 28, 2013


Free Money Finance


Posted: 28 Jul 2013 10:59 AM PDT
Here's a chance for you to win a (small) box of personal finance books. The books included are the following:
Here's how it will work:

    1. All you need to do to enter is to leave any comment on this post. Be sure to leave your email address (no one else will be able to see it) when you leave the comment.

    2. In a week or so, I'll select the winner at random and announce the winner on this post.

    3. I will email the winner, get their contact information, and arrange for them to receive their prize.

As always, the standard rules apply.

Good luck! Post a comment below for your chance to win!

Free Money Finance July 27, 2013


Free Money Finance


Posted: 27 Jun 2013 12:55 PM PDT
Here's an email I recently received from a reader:
I'm a 28 year old female, married with two children (ages 3 and 1). I work for a state government agency. Upon hiring, I was set up in the state retirement system to deposit 6.5% of my income into a retirement account (401a). From what I understand, my agency deposits a match of 6% of my salary into a state accumulation account. As of today, I have $12,869.03 in my state retirement account - this account currently earns 5% interest each year. I was also enrolled in a 401K and 457 when I was hired. I have a total of $11,695.52 between both of these accounts. I have my money set up in various investment funds within these two accounts, most of it going to a 2050 Target Fund (any advice here?).

Before being employed with the state, I was in the military and I signed up for a Thrift Savings Plan account and have left the money in there. I currently have a total of $5,556,47 in TSP. This is also distributed among various investment accounts.

Here's, a little backstory for you. Growing up, my parents never really taught me anything about finances. We lived paycheck to paycheck and often struggled to make ends meet. They were pretty bad with money and as a result, I sort of followed in their footsteps (my husband had a similar experience throughout his life). When I joined the military, a lot of my peers advised me to start saving for retirement and so I did. However, I never really learned much about investing. As I've gotten older, I've started to gain interest in finances and investments though I have much more to learn. I'm glad that I did at least start saving for retirement early, but I'm really at a loss about what steps I should take next. I'm thinking of finally rolling over my TSP account into one of the other investment accounts but I'm not sure which - the 401a (I'm not sure if I can even roll funds into this account), 401k, 457, or start a new investment account with it? Any advice?

Regarding the rest of my financial situation, I am currently in debt. We purchased a house in 2010 but the local market hasn't really driven the price up much so we're upside down on our mortgage (~$154,000). We also have a car note for about $13,000. And, we are in credit card debt - owing about $14,000 to several creditors. I earn about $3,000 a month from my job. Since my husband and I are both prior military, we both received a GI Bill that pays for our education. He goes to school full time and earns about $1,350 - $1,400 monthly in stipends. I also go to school online and receive about $650 monthly in stipends. We have no student loans and alternate our schedules (he goes to school in the evenings) so we don't currently have any day care expenses. We have put together a budget and with it, we believe we can pay off all of our credit card debt within the next two years (hopefully sooner). We've made getting out of credit card debt our first priority. Afterwards, we will really focus on building up our savings and paying off the car. Does this sound like a good plan? I know we've made mistakes especially with getting ourselves into so much debt so early in life, but we are working hard towards digging ourselves out of the hole.

I hope you can offer some insight into my situation and hopefully guide me in the right direction. Thank you in advance for any suggestions you can provide.
What's your advice for her?

Saturday, July 27, 2013

Free Money Finance Reader Profile KP


Free Money Finance


Posted: 03 Jun 2013 09:08 AM PDT
The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.

Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit.

Next in the series is FMF reader KP. He answered my questions (in red below) as follows:

Please tell us a bit about yourself.

I am a 29 year old single man living in the southern midwest region. I was very fortunate to have a good paying job right out of college in a city with a very low cost of living. I attended a public university where my four years on campus cost my parents and I a combined $25,000 (my parents paid $21,000 and I paid $4,000 with loans). This low cost was enabled through a combination scholarships and some federal/state grants. Through summer jobs I was able to graduate college with no debt.

My gross pay each year is $110,000. We do not have a 401K match, but do receive a profit sharing contribution each year (company stock; should be ~$10,000 this year for me).

If I stayed at my current company until age 55, I would be able to retire with a very nice net worth. However I am currently debating transitioning to a lower stress job in a different city.

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

Income
  • $9,200 a month gross pay
Expenses
  • $1,900 a month for mortgage + property tax + home insurance
  • $100 a month for gas / car maintenance (benefit of driving a hybrid)
  • $200 a month for food
  • $200 a month for going out with friends
  • $500 a month for charitable donations
  • $150 a month for utilities
  • $100 a month for employer health and disability insurance
  • $60 a month for internet (no cable)
  • $100 a month for home improvement projects (typically done by myself)
  • $50 a month for clothing (I have a minimalist closet)
  • $100 a month for hobbies
  • $300 a month for travel (like to take trips to see family/friends)
  • $200 a month miscellaneous (estimate)
  • $450 a month for Roth IRA
Assets
  • Home ($203,000) purchased in 2009 for 192,000 (including first time home buyers credit)
  • 401k ($130,000) mixture of three ETF's
  • Profit Sharing ($56,000) all company stock - will increase by $10,000 in July
  • Roth IRA ($54,000) - Index Funds + a few individual stocks
  • Cash ($40,000) - current checking ($15,000) + slush fund ($25,000)
Liabilities
  • Mortgage ($102,000, 4.25% - 15 years)
  • No credit card debt - paid in full each month
  • No car loans - paid in cash for a new car in 2011
Net Worth
  • $381,000
What are the current financial issues you're facing (saving, paying off debt, etc.)?
This may sound ridiculous, but with interest rates so low, my biggest issue is knowing where to park excess cash. My 401k is maxed each year as is my Roth IRA contribution. One reason my mortgage balance is so slow for only having lived in the house 4 years, is a do bi weekly payments and also made a one time $20,000 payment a few weeks ago. I am somewhat risk adverse, so I do not like to have too much money in the stock market. I do plan on doing about $5000 in home repairs this summer (new paint + driveway) which is why the checking balance is a bit high.

What are your plans for the future (retire early, build your career, etc.)?

Longer-term I do not plan on staying in my current job until I hit 55. I am worried I would get burnt out and not be happy looking back. Over the past few years I have dabbled in side startups but nothing has worked out (part of my hobby budget). Ideally I would love to start a business and run it full time. I do wish to have a family in the future and be able to take future kids on trips (not just Disney but also international) as well as pay a portion of their college costs (maybe 3 years or something). When the family does start, I will front load the 529 plans as much as possible.

I have worked since I was 13 (my parents owned a small business and I was paid $1 an hour until age 16!!) and consider myself to be financially savvy.

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

Best advice: In college I read John Bogle's (Vanguard founder) book on index funds. The vast majority of investors should follow his advice and keep costs low by investing in index funds. Also never but a load fund; only no load funds.

My personal philosophy is money is nice to have but it won't make you happy. I'd rather have a middle income/net worth life with a happy loving relationships (family & friends) versus a high income / networth life without them.

Free Money Finance - about resumes


Free Money Finance


Posted: 18 Jul 2013 01:29 AM PDT
The following is an excerpt from the book Cut the Crap, Get a Job! a New Job Search Process for a New Era. I will be running a series of excerpts from this book over the next couple weeks.

Lots of good tips and thoughts in this installment. I don't agree with all of it (like the over-emphasis on the cover letter), but generally think this is good advice.

Never ever, ever, ever, ever apply with just a résumé, unless you have to. A standalone résumé doesn't help the hiring manager and doesn't help you. It is an important backup document and a basic requirement for job applications. You must have an excellent one with accurate information, too. But a résumé alone is not going to get you a job. It used to. Now, with hundreds of applicants per position, screening being outsourced or automated, and email overload, you need to change your game for today's new era.

This chapter will summarize what an excellent résumé needs to have, and the next chapter will share a BRAND NEW WAY of applying to jobs.

First, there are three main scenarios where a résumé is used for job search.

1 Networking with résumés: Jonathan received an email from Matthew, a friend. Matthew said, "I'm attaching the résumé of a wonderfully talented woman who just moved to Seattle and is looking for work. I thought you might have thoughts." Jonathan wrote back, "I'm sorry, Matthew. I would like to help but I cannot with just a résumé. It doesn't tell me what she wants to do, what types of companies she wants to work for, what research she has done, etc. A cover letter explaining all of that is needed to engage, thank you." Jonathan was spot on with this response. Job seekers, it is your job to "help me help you." If you want friends, family, your network, LinkedIn connections, or career counselors to help you, then give them what they need. A résumé simply lists facts of what you have done and what you have accomplished in the past. The reader is not responsible for translating that into your next ideal job definition or where you would be a good fit. Even if you are sending your résumé to Uncle Bob and asking him to forward to an executive in his company, you should give Uncle Bob a cover letter, explaining what you are looking for, when you are available to start, why you are an accomplished worker, and how they can contact you.

To be perfectly clear: Do NOT send résumés to people asking "Where would I fit within <Microsoft> or <GE>?" Stop. You are abdicating your responsibility for your career to them! Even if you are not actively job searching and just doing research, you need to assess your next career move. If you just don't know, go back to Chapter 3 and set a goal.

Social media sites, such as LinkedIn, are an electronic form of networking. Therefore, your LinkedIn Background Summary in your profile is the section that behaves like a cover letter. Naturally, for those of you job searching while employed, this is tricky, but there are many online articles about how to job search secretly while employed.

2 Applying to specific jobs with résumés: Some companies and websites require you to only retype the facts from your résumé. They replicate the fields or draw keywords from your submittal. Other websites state very clearly that you may only attach one document. Option A: If they say that one document must only be a résumé, then you need to do that. Option B: If they do not specify, but only allow one FILE, then see the next chapter about a NEW application called the "Cut the Crap (CTC) Candidate Packet." That should be your one file.

3 Posting on job boards: In this scenario, the only recourse you have is to post your résumé. For this reason, the résumé needs to be excellent. Let's get right into the definition of "résumé excellence."

Solution: An Excellent Résumé

Excellence can be defined by 3 major principles:
1. Search-ability: Key word search is optimized so you are found
2. Easy to read: Well-formatted for both online and print
3. Quantitative: Numeric proof of your brilliance
1 Résumé Excellence #1—Search-ability: You, the applicant, could be the best person for the job, but if your résumé is not found in a search, the probability that you will even considered is quite low. A searchable résumé is key so you can be found in various technology engines such as:
a. Job board résumé databases
b. Employer applicant tracking systems
c. Employer email systems
d. Social media (LinkedIn, Facebook, Twitter, etc.)
e. Web search engines
What are "keywords?" They are the words used for searching and finding appropriate candidates. In today's new job search era, recruiters, screeners, employers, and others are fluent in the symbols and tricks for searching for candidates using keyword searches.

For example, if an employer is filling a Marketing Communications position, the keywords are the words associated with the requirements of the job:
  • Skills (communications, writing, advertising, presentation, collaboration, teamwork, project management, etc.)
  • Tools (Microsoft Office—Word, Excel, PowerPoint, Publisher)
  • Education (MBA, BA, BS, AA, AS, high school, etc.)
  • Location (State, city, even if willing to relocate)
Where should your keywords be? Everywhere.
  • Filename of your résumé or profile (for those that are emailed)
  • Title of your résumé or profile (for those in systems that use entry titles, like LinkedIn and craigslist)
  • Body of your résumé or profile
  • Body of your LinkedIn profile
  • Twitter bio
  • Facebook page
How can I make my keywords more powerful?

A. Customize the keywords on your résumé if you have more than one kind of job goal: Your keywords can be customized for the position being sought. If you are looking for more than one kind of job (more than one target job title), the résumé used for each job should be directly related to the keywords appropriate for that job.

B. Add more nouns: Nouns? But we were all taught to use "power verbs," such as "developed, collaborated, designed, and led." But the "what" that you performed, the action, is just as important. In the following examples, the bold nouns are the keywords that relate to the action indicated by the verbs:
  • Led global cross-functional teams for plan review and sign-off.
  • Designed and executed online marketing campaigns and events.
  • Managed advertising agencies, $1M+ budgets, and cost analysis.
  • Functioned in lead project management role.
  • Oversaw editorial calendar, content distribution, and competitive analysis
There are many good articles about keywords for résumés online, so please spend more time in mastering this critical NEW job search criteria. The simplest way to learn what the best keywords are for your job target is to read job descriptions! Example: Seeking experienced Accounts Receivables Manager to oversee accounts, manage billing and collections, train accounting and clerical staff, develop status reports for management, and prepare monthly balance sheets. BA degree or AA degree with minimum of 2 years' experience required. Your résumé should have these keywords.

2 Résumé Excellence #2—Easy to Read:

The content of your résumé is by far the most important factor. But design is important, too, for a couple of reasons:
  • Your résumé must be easy to read, and good design makes that possible. Design calls attention to key sections of your résumé, such as work experience and education.
  • A well-designed résumé reflects positively on your skills. Sloppy or careless design may give a negative impression, even if you're well-qualified.
There are several techniques you can use to create a highly readable and attractive résumé. The table below lists some of the most important.
  • White space - Lots of white space makes text easier to read. Text that's too dense may discourage time-pressed readers from reading further.
  • Bullets - Bulleted text allows you to break down complex information into readable chunks and also highlight key points.
  • Easy-to-scan headings - Your reader should be able to quickly locate key areas on your résumé, such as education, without extensive searching.
  • Limited number of fonts - Use no more than two fonts styles—one for headings and the other for body text. More than that is distracting.
  • Selective use of bold - Use bold carefully and consistently. For example, if you bold the name of one company you've worked for, do it in all cases.
  • No underlining (except links) - Reserve underlined text for web links. If you need to emphasize something, use bold.
  • Consistent spacing - Use the same amount of space before and after headings, between bullets, etc. This gives your résumé a uniform look.
There are thousands of great examples on the web. Add this to your job search schedule as an area to spend time on. For those of you really stuck, invest in a résumé writing service.

Creating a plain-text résumé

Although most companies will be able to handle your résumé in Word or PDF format, you may need to have a plain-text résumé that's been stripped of formatting. To create one, follow these steps:
  • Copy your résumé into a plain text editor like Notepad, which should be available as an accessory on your computer. Most of the formatting should be gone.
  • Change any remaining bullets to asterisks, and space once after the asterisk.
  • For your main section headings, such as Work Experience, change to all caps so the headings stand out.
  • Add spacing between sections as necessary for readability.
3 Résumé Excellence #3—Quantitative

Hiring managers, recruiters, and HR managers are so tired of "world-class marketing person" or "exceeded targets in…" or "best in class performance." You need to prove your results right in your résumé. Job candidates tell me they will wait until the interview to share them or say, "My successes cannot be quantified." Cut the Crap, Get a Job!

Not many job types, such as sales, can claim "exceeded budget by 12% or $3 million dollars" or "ran a team with a quota of $800,000." However, there are a number of other qualitative results that you can display proudly on your résumé.

You could have been 1 selected out of 500 to represent your team at a meeting. You delivered a major project on time and under budget by X%. You won some awards or have been promoted in a certain amount of months, X, well above the company average of Y. Do this: Think about your soft skills (the ability to meet deadlines, work in a team or independently, communicate complex ideas, placate customers). Relate an occasion where those skills made a difference to your company. Many of you have been assigned to a critical project, included in client or executive meetings, recommended for special training, or asked to make a presentation.

Here is a final example to help you out:
Before: Maintained accounts receivables and accounts payables.

After: Managed over 2,500 accounts receivables and accounts payables, working directly with the Chief Financial Officer.
In summary, when you rewrite your résumé to compete in today's era of job search, look for opportunities to quantify, without sharing confidential information, of course. Think of power verbs, (like reduced, saved, made, grew, etc.) and combine them with metrics, such as time (number of months, days, or years, dollars, growth percentages, comparison to market averages, comparisons to company or peer averages.)

Tricks

1 If you are a Jimmy, don't put James on your résumé or cover letter. When recruiters, screeners, or hiring managers want to call you, they want to address you and get to know you by the name you want to be called. This saves embarrassment later, too. Same goes for your business card, email signature, and everything. The old days of "James" being used when, in fact, you want to be called "Jimmy" are over.

2 You can have a few versions of résumés, based on 1) more than one job goal (e.g. marketing versus sales) or 2) multiple cities you are targeting. However, do not alter your résumé per job. A hiring manager can spot when you are simply plugging in their company name or their job title in your objective at the top.

3 In the date column, put the month and the year so the reader can tell how long you have been with a company. Example: 2011-2012 can be as little as 2 months (December to January) or as long as 24 months.

Mistakes

Mistake #1: The Acronym Abyss. Follow the main rule of acronyms: For the first use, always write it out, then put the acronym in parenthesis following. If you are communicating that you were an SE for five years, then you need to write out "Systems Engineer (SE)" for the reader. Best is to avoid industry-specific or company-specific acronyms.

Mistake #2: Use of the present tense in all jobs on the résumé.

Mistake #3: Writing the résumé or cover letter in the third person.

Mistake #4: Grammar and spelling mistakes—red and green squiggles throughout.

Mistake #5: Use of tiny, tiny fonts (10 pt. or less) so as to cram as much information into the résumé as possible.

Mistake #6: Photos on résumés.

Mistake #7: Using a résumé that is password protected (without sending the password).

Mistake #8: Using a table format and keeping all of the lines for rows and columns.

Mistake #9: Having no contact information on the résumé or including a phone number that is no longer valid.

Mistake #10: Education written so vaguely that it is unclear if you secured a degree.

Mistake #11: Going back too far in your experience. I recommend 15 years maximum, then a high level summary of the prior work.

Mistake #12: Submitting the wrong format. If the employer or recruiter has stipulated that your résumé or form has to be submitted in a certain format, make sure that you adhere to that. Don't send it as a PDF if they have specifically requested a Microsoft Word document.

Mistake #13: File name of your résumé is "Résumé". Or "432987.pdf." Correct that to "JohnSmith_Position 14254_Boeing" or "JohnSmithRésumé."

Free Money Finance - Jun 14, paying off low interest loans


Free Money Finance


Posted: 14 Jun 2013 06:29 AM PDT
Here's an email I recently received from a reader:
Is paying off low-interest debt always the best choice?

I am very fortunate in that I only have one source of debt: a car loan. No student loans, nothing on my credit cards, nada. My interest rate for my car is about 2.8% over 5 years (I'm 1.5 years into it).

My plan had been, once I got to July 2013, to switch my emergency fund savings to paying double on my car payment, to kill the debt faster. I thought that was a good idea, and everything I read seemed to suggest it was. But then I read an alternate view in a book sample I downloaded for my Kindle. That author suggested that if your interest rate is less than 3%, you are better off investing your extra money rather than putting it toward your debt. (I'm sorry I can't remember the book, the title had to do with finances in your 20s and 30s; I deleted the sample as I didn't find it very helpful, but the above idea stuck in my head.)

What do your readers think? Should I double up on my payments to destroy the car debt? Or should I funnel the money into my IRA? Right now I'm not quite yet at the point of making regular payments to my IRA: I am saving up for two more mutual funds (a bond fund and an international stock fund; right now everything is in domestic stocks, and I know I need to diversify). If I diverted that extra $220 to the IRA, I could reach my investment goals a lot faster, and I know time is money (as a reminder, I'm 26). But of course, debt is slavery, and I'd love to get rid of that car debt sooner, plus save on interest.

I'd love to hear your opinions!
What's your advice on this subject?

Free Money Finance - A case study from a reader; what is your advice


Free Money Finance


Posted: 10 Jun 2013 06:50 AM PDT
The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.

Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit.

Next in the series is FMF reader TW. He answered my questions (in red below) as follows:

Please tell us a bit about yourself.

My wife and I are in our early/mid-thirties and have been married 11 years as of June 29th.  I am the father of 2.75 kids...that means we have one due in about a month.  The oldest is 4.5 y/o while the second one is 20 months.  I currently work as a Business Analyst for a very good company and have been here almost 8 years (1.5 years in my current position).  My  undergraduate education is in General Agriculture and obtained an MBA in 2008...how I went from farming to tech is a long story but I wouldn't mind getting back to my roots some day.  My wife holds a Ph.D. from the University of Michigan and currently teaches Chemistry 4 nights a week at the community college.

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

I am the main breadwinner working full-time while my wife works part-time anywhere from 2-4 nights per week.  Since she stays at home during the day this opposite work schedule means we don't have daycare costs which in our area is quite expensive.  However it does mean we effectively single parent most of the week since we are rarely together with the kids.  After annual bonus I gross ~$65,000 while my wife average gross wages are $12,000

We are also accidental landlords in that we moved 3 years ago due to neighborhood crime and are unable to sell the house since we are underwater (from $175K at the high to a current of ~$94K).  We effectively break even on the rent but have a special situation since we bought from a builder running a special to guarantee rent whether or not the tenant pays.  They have followed through since the first tenant they placed in the house didn't pay and was evicted after 6 months.  We have 3 years left in this agreement at which time we're hoping to sell because the numbers don't make a good rental.

I get a 100% match on my 401K up to 4% of my salary and contribute 4% getting an overall 8% after the match.  My wife is required to contribute 3% to a state pension that we will never get since she is a part-time employee but we'll at least get our contributions/earnings back at some point.  Aside from this we also contribute to an HSA and have a ROTH and a Traditional IRA from when we were childless and both working full-time.  Here is a look into our financials, noted items are savings for future expenses:

AVG TAKE HOME
  • Salary $4,947.26/mo
  • Rental $950/mo
AVG MONTHLY EXPENSE
  • Expense $4,552.07/mo
EXPENSE DETAILS
  • Tithe, World Vision $654.43
  • First Mortgage $1,573.02 (includes HOA dues $51.50 & is high because refinancing snafu cleared escrow so we're replacing funds)
  • Second Mortgage $950.38 (includes $40/mo to a maintenance/repair fund)
  • Home Repairs/Maint. Fee $25.00
  • Gas/ Electricity, Water, Mobile, Internet $371
  • Grocery $550.00
  • Gas, Insurance $354.16
  • Car Repairs, Tags $45 (savings)   
  • Clothing - Adults/ Children $20.00 (savings)
  • Vet $20.00 (savings)
  • Life Insurance, Long Term Care $143
  • Hair Care $10.00 (savings)
  • Subscriptions (Mozy) $7.00
  • Gifts $20.00 (savings)
  • Blow $125.00 (A buffer in the budget not actually spent every month)
  • Entertainment $73.00
  • Student Loan $109.58
ASSETS
  • Honda CR-V $4,250
  • KIA Sedona $17,300
  • Primary House $192,500
  • Rental House $94,000
  • Household Items, Jewelry $10,700
SAVINGS/CHECKING
  • Emergency $5947.49
  • Lump Sum Savings $1,396.02 (highlighted categories above)
  • Checking $3,474.63
  • HSA $627.91
  • 529 $2,282.06
RETIREMENT
  • 401K $52,021.03
  • ROTH $1,332.50
  • Traditional $2,369.21
  • Pension $2,302.53
DEBT
  • Primary Mortgage $170,825.26
  • Secondary Mortgage $120,142.10
  • Student Loans $26,912.44
What are the current financial issues you're facing (saving, paying off debt, etc.)?

Aside from wanting to pay down student loans we are about to make a huge change that could significantly impact our financials.  We currently live in Michigan but all our family is in Oregon.  My dad passed away recently, my brother had his first baby, my brother in-law will have his first baby soon, and my father/mother in-law have failing health so we've made the decision to sell and move to Oregon.  We are doing FSBO and are currently under contract with closing set for Aug 29th.  With a baby due in June and two small kids moving/selling is real a challenge.  We are selling most all our stuff (furniture, clothing, second car, etc) to save on moving costs and will get some used items from my in-laws once in Oregon.  Even with this moving is looking to run us ~$5K.  While I am lucky enough to keep my job and work remote my wife is not so we lose her income which is significant.  We will also lose some ground to cost of living (COL) since Portland Oregon is estimated to be 15% higher. 

Another burden is our rental which has become an albatross.  We never wanted to become landlords this way but are stuck for now.  Our rent is guaranteed until 4/2016 (see above) but barely break even since we pay a management fee of 1 month's rent every two years effectively negating any net gain.  All we can do is wait in hopes of a recovery in the local market.  We currently owe ~$120K with estimated market value of ~$94K.  The mortgage is an ARM which has worked well for the past 10 years but rates won't stay this low (currently 3.25%).  We can't refinance since we are underwater and are not eligible for HARP/HAMP since we are not backed by Freddie/Fannie.  At best in 3 years we'll owe $109K but would need $117 to break even after realtor's fees and taxes.

What are your plans for the future (retire early, build your career, etc.)?

I plan to build my career for now and have made steady jumps over the last few years to position myself to do so.  I've considered making a move to programming and have taken some into work via Coursera, Udacity and Code Academy.  It's slow going working full-time and caring for the kids.  With the move to Oregon it might be a good time to test the market to see if I can get another bump in pay/responsibility.

My wife and I have talked about getting back to my roots and starting a niche market farm venture.  Of course this requires time/money and space all of which are limited right now.  However, as we settle permanently in Oregon this will be a driving factor in where we live and how we structure our time/money.

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

Do it while you're young and childless.  Life before kids is much easier to control your time and your money...not saying kids are bad they just change the dynamic and you no longer have the flexibility of working odd hours or picking up side jobs at a moment's notice.  Work like mad before so you don't have to after.

Hone your focus and don't try to do everything at once.  We only have so much time and energy (both physically and mentally) so think about whether it makes sense focusing time/energy on not buying a $3 latte or is it better to make more money allowing you to enjoy that $3 latte.

Free Money Finance: How to prepare for a job interview?


Free Money Finance


Posted: 25 Jul 2013 01:29 AM PDT
The following is an excerpt from the book Cut the Crap, Get a Job! a New Job Search Process for a New Era. I will be running a series of excerpts from this book over the next couple weeks.

Once you get an interview, it's time to sell, sell, sell. Here are some thoughts on how to do that and separate yourself from the pack.

In Chapter 9, I coached you how to "pre-prepare" for every interview, even before you apply to your first job opportunity. Now, I want to help you WIN the job as a result of a job-specific interview. So we have fast-forwarded through time. You are prepared, you have been applying using brand new techniques, and you earned an interview. Congratulations! Regardless if the interview medium is phone, web video, or face to face, an interview requires an intense focus on how you sound, how you look, how you behave, non-verbal gestures, and so much more.

Learning how to interview reminds me of learning how to swing a golf club. There are so many things to learn and practice, ranging from my grip to the way I take the club back, pivot, swing, and follow through. Any slight error in one step can cause that little 1.7-inch-diameter white ball to go anywhere but straight. Interviewing is the same.

There are thousands of websites and guidance on "how to interview for a job." Instead of repeating all of that here, my goal is to highlight how to be THE BEST in today's new era of job search. The hiring and recruiting process has changed since the last time you interviewed, and my goal is to help you increase your odds of winning the job as a result of your great interview. A "good" interview is no longer good enough.

4 Principles of Job Interviews. Once you embrace these, you are on your way to success.

1. The Interviewer has an agenda. Know their agenda. During the interview process, there are three main questions that need to be answered to help the HR person, hiring manager, or interviewer determine if you're the right fit for the job:
  • Can this person do the job?
  • Will he/she do the job?
  • Will he/she fit in with the company culture?
2. The interview is all about THEM, the company, the hiring manager, the interviewer. News flash: It's not about YOU sharing all you can about YOU. Everything you say and do must be relevant and meaningful to THEM. Be very careful.

3. The interview is your performance of a lifetime. You are being watched with every step you take, every move you make, including how you look. Think about it. From a company perspective, this is your BEST day. You have your best outfit on, you have been able to prepare with research, you can say amazing things about yourself and even brag a little. Once the company hires you, it's potentially downhill from your best day. The point is that if you can't be a great listener or communicator on this day, OR if you make huge errors such as bad-mouthing a prior boss, then you probably won't win this job.

Don't be fooled by venue, either. In this new era of job search, you may be meeting in a Starbucks café or on a web conference. Or the meeting might be called an "informational" or information-gathering meeting, which is an interview in disguise. Alternatively, the meeting might be with a friend of a friend who might have the job you are looking for. Safest bet: If there is a job in the midst, put that interview guard UP (avoiding mistakes) and keep it UP.

4. You can't over-prepare for an interview. In my 30+ years of hiring, interviewing, and recruiting for other teams and coaching, I have NEVER heard a hiring manager say, "Wow, that candidate was too prepared for my interview," or, "No way, she was too organized and had answers to every question I asked." So I'm going to assume you have read Chapter 9 prior to reading on with this chapter. I won't be repeating that guidance here.

Solution
Bring the Right Stuff: Save this as a checklist before every interview. I guarantee that the day you don't check your checklist, you will forget something important.
  • Portfolio or pad holder with plenty of paper and two pens
  • Multiple copies of your résumé
  • A copy of the job description with any notes on it that you want to ask about
  • Multiple copies of your complete CTC Candidate Packet with your cover letter, CTC JD Profile, and résumé, all stapled together (Chapter 15)
  • Multiple copies of your list of references (although this is rarely requested during an interview)
  • Work samples (if relevant). This should never be proprietary information, so check with your prior employer.
  • Breath mints (before you enter the building and in between interviews)
  • Small bottle of water, protein bar, or snack
  • Briefcase to hold all of the above. For ladies, it can be a larger purse. Avoid walking in with your arms full, unable to shake hands, or looking disorganized.
What not to bring to an interview:
  • Cellphone
  • Music player
  • Gum
  • Cigarettes
  • Candy
  • Soda or coffee
  • Laptop or tablet, not even to take notes with, unless it is requested
Look and Sound the Part:

Interview Attire. Dressing formally and appropriately sends a signal to the interviewer that you cared enough to want to make a good first impression. Inversely, not being dressed appropriately will hurt you.

Job search is all about first impressions. You want your appearance to convey a confident, respectful, professional, and prepared job seeker. Remember, you are "on stage"... and this interview day is your BEST day. Obviously, you want the interviewer to concentrate on your skills, qualifications, and fit with their job description specifications.

However, if you look disheveled or too casual, you may be remembered for the wrong reasons. Interviewers know that what you wear is not your normal day-to-day attire, and it may not even be the everyday style of their office.

Be sure you understand the product or service of the company. Applying for a position with a law firm requires a different "attitude" in dressing than for an internet company or manufacturing facility. However, during my 30 years as a hiring manager and candidate, I have never heard an interviewer complain that "they came in dressed too nicely."

The following are 13 mistakes that may derail your ability to make a professional first impression and may undermine your ability to WIN that job.

For Men:

Men's Suits
  • Mistake #1: Wearing a suit with bold colors, large prints, stripes, plaids, or funky patterns. Correction: Wear a jacket in a dark, solid color, such as navy or charcoal/gray.
  • Mistake #2: Wearing a suit jacket with pants that don't match. Correction: If you wear a two-piece suit, be sure it matches or wear a blazer and slacks—no jeans!
  • Mistake #3: Wearing a suit made of an exotic fabric, such as suede, leather, or velvet. Correction: Wear a jacket of neutral fibers (depending on the season), like wool, a wool blend, cotton, or linen.
  • Mistake #4: Wearing a garment that doesn't fit. Correction: Anything too large or too small is a dead giveaway that it is not yours! Invest in ONE "interview" outfit; it's worth it!
Men's Socks and Footwear:
  • Mistake #5: Wearing no socks, short socks, or socks with large prints, patterns, or bright colors. Correction: Wear socks mid-calf-length so no skin is visible when you sit down. Generally, your socks should match the bottom of your slacks.
  • Mistake #6: Wearing dress boots, athletic shoes, deck shoes, crocs, sandals, or flip flops. Correction: Wear leather shoes with or without laces; dressy loafers are okay for a casual facility— shinier materials, such as patent leather, are too dressy.
  • Mistake #7: Wearing a short-sleeve shirt, collarless shirt, ill-fitting shirt, rolled up sleeves, or wrinkled shirt. Correction: Wear a well-pressed, long-sleeve, button-down-the-front shirt with a collar. The shirt should fit your neck perfectly (if it is too tight, it will look strained, and if neckline is too large, your tie will drag the collar shirt down). Here's the trick: Hang your shirt in or around a steamy shower for about 5 minutes to get the wrinkles out.
  • Mistake #8: Wearing bold shirts in flashy colors or prints. Correction: Choose a solid or conservatively striped shirt.
Men's Ties:
  • Mistake #9: Wearing a flashy tie, a tie with religious, political, or sports symbols, or with cartoon characters. Correction: Wear a tie with neat repeating patterns or a traditionally striped tie. When in doubt, be on the conservative side.
Men's Jewelry:
  • Mistake #10: Wearing excessive amounts of jewelry or body jewelry (ear, eyebrow, nose rings, etc.). Correction: Limit yourself to a watch and one ring per hand.
For Women: While many of the mistakes and appropriate recommendations above apply to women as well, there are a couple of additional points for women:
  • Suit: Wear a pant suit or a knee-length skirt suit.
  • Hosiery: When wearing a skirt suit, wear neutral or flesh-tone stockings. In spite of the no-hosiery trend, this interview needs to be your BEST day, so err on the formal side.
  • Shoes: Wear a low-heel shoe versus flats or four-or-more-inch high heels. No sandals, tennis shoes, or flip flops. Depending on the season, boots are okay too.
  • Necklines: Too low a neckline can give the interviewer the wrong impression. Button up your blouses. Do not show any undergarment shoulder straps.
  • Hemlines: Wear a suit that reaches the middle of the knee or 1-2 inches below the knee. When legs are crossed, the interviewer may be given the wrong impression.
  • Perfumes: Do not wear any. Some interviewers may be allergic and you don't want to leave an impression of your perfume in their office all day. Additionally, aromas are very subjective; the interviewer may just not like your scent...ever.
All Genders: Briefcase/Portfolio/Pen:
  • Mistake #11: Not having anything with you to take notes with. Not having copies of your résumé. Correction: Bring in a portfolio or briefcase with a clean pad and pens (have backup!), multiple copies of your résumé, notes you have taken to prepare for the interview, including questions you will ask them, and a copy of the job description. Toss in a bottle of water and a nutritional bar in case you are waiting or are given a short break.
All Genders: Cellphone:
  • Mistake #12: Talking or texting on your way into the interview area—or worse yet, taking a call during the interview. Your cellphone should be off once you are on the premises. Correction: Turn off your cellphone as soon as you step out of your vehicle or transportation. Trick: Put a big yellow sticky note on your portfolio to remember.
All Genders: Hats or Sunglasses:
  • Mistake #13: Wearing a hat or sunglasses in the building for your meeting. Correction: Do not wear a hat and remove sunglasses immediately upon entering the building. (No sunglasses up on top of your head—remove them completely.)
These recommendations are for the traditional, conservative industries. If you are pursuing a position in the creative or artistic field, you may need to adjust these recommendations. However, always err on the conservative side of the industry unless you feel you simply could not be happy working in a somewhat conservative environment.

Remember, this is your BEST day and you want to be remembered for your "total package," including the presentation of your skills and capabilities. Yes, dressing for success is important. As Shakespeare said, "All the world is a stage and we are merely players." The interview is your "stage."
  • Be clean, odor-free. If you come to an interview smelling of cigarette smoke or bad breath, you will already have one strike against you. Too much perfume or not enough deodorant are common mistakes.
  • Grooming is important, as well, so invest in a haircut and manicure (men and women!). Shine those shoes while you're at it.
  • Handshake. Your handshake should be firm—not sticky or wimpy. To avoid sweaty palms, visit the restroom, wash your hands, and then run them under cool water prior to the interview. Dry your hands well, as nobody wants to shake a wet hand, even if it's water. Keep your palms open rather than clenched in a fist and keep a tissue you in your pocket to (surreptitiously) wipe them.
  • Sound professional: Be polite and keep an even tone to your speech. Don't be too loud or too quiet. Remember your manners and thank the interviewer for taking the time to meet with you. Don't use slang. Speak clearly and confidently. Be humble as well.
Non-Verbal Success: The evaluation of your non-verbal communication will start as soon as you walk into the company's lobby and continue until the interview is finished. If your non-verbal communication skills aren't up to par, it won't matter how well you answer the questions.
  • Be happy: Hiring managers want to hire happy people. Only say positive things, even if you have a less-thanpositive experience in the past. Keep your emotions to yourself and do not show anger or frown. Smile!
  • Be present: Sit up, give a solid handshake, and make eye contact. Leaning back in your seat with your legs crossed at the knee sends a message you are too relaxed for an interview setting.
  • Be energetic: Lean forward a little towards the interviewer so you appear interested and engaged. However, keep your feet on the floor and your lower back against the back of the chair so you don't look like you are lunging forward.
  • Listen Attentively. When you sit down, put your portfolio on their desk to take notes, yet don't take up too much of their space. Open up to a blank page with a pen ready. Don't interrupt. Ever. Let them finish their full thought then pause another few seconds. Don't jump on their last word with your message.
  • Be calm: Yeah, right. You're as nervous as a cat in a room filled with rocking chairs and you need to relax? Try. Breathe. Smile. Not sure what to do with your hands? Hold a pen and your notepad or rest an arm on the chair or on your lap so you look comfortable. Don't let your arms fly around the room when you're making a point. Light hand gestures are good.
Know the Job:
  • Most candidates do not study the job description. The hiring manager took time to describe, as best as possible, what the job description (JD) is. While it will never answer all questions you have and some JDs are better written than others, it is the best tool you have to be successful in an interview. Peel it apart, line by line, and research what the terms mean if you don't know.
  • Develop a Job Description Profile for each opportunity. Compare your skills and background to the job description. See Chapter 15 for the template on how to do this well, called the "Cut the Crap (CTC) JD Profile."
Know Yourself:
  • Beyond standard strengths and weaknesses, are you well-versed and have written notes about YOU? Do you know the day-to-day duties where you are very skilled and skills you need to develop?
  • Do you know why you want this particular position? What are you interested in this particular industry? Why are you interested in this company?
  • What have other managers or peers said about your work style, leadership style, or management style in the past? Have you reviewed prior reviews or feedback tools? Have you taken any work style assessments such as the Myers-Briggs Type Indicator?
Ask for the Job at the End: Managers want to hire people who really want the position. Most candidates don't say that. Say it in writing and at the interview. "Joanne, I want to share how passionate I am for this position and there are three main reasons: It's fast-paced, I have experience with these partners in the past, and I can learn so much from you and others."

Another good close is, "What is the next step?" or, "When do you plan to make a decision?"

Finally, ask them for their email address so you can follow up with a thank you note.

Tricks

1 See the tricks in Chapter 9. (The previous FMF post on Interview Preparation -- In Advance)

2 Day before the interview: Prepare for the interview logistics. Lay out your clothing, set your alarm clock, be sure you know where you are going, check your car for gas, make copies of documents, organize your portfolio and briefcase or purse, etc.

3 Day before the interview: Prepare for the interview questions. Even if you have been to interviews in the past month, re-read your 3 bullet points per interview question. Review the questions you will be asking them as well.

4 Night before the interview: Go back to the company's website and read their latest announcements, press releases, speeches, and people changes.

5 "The Law of 3s:" For every question, both during your preparation AND during your interview, state no more than 3 things then stop talking. A full stop, not just a pause for breath. If the interviewer wants more, she will ask. If the silence becomes too awkward, you can ask, "Would you like more information?"

6 You will have a pen and paper open on the table during a face-to-face interview. In the far right or left margin, you can have some short clues to some key interview questions and answers that you are nervous about remembering.

7 When a question is asked, feel free to write some words about the question down so you can peek at it and stay on track.

8 Pause after the question is asked and think. Feel free to scribble 3 words down that will be your 3 points.

9 Smile and breathe. Feel free to take a sip of water.

10 Humility is treasured. Find an opportunity to say, "I have not developed that skill, but I'm very eager to learn," or, "It's a new skill for me, so I consider myself a novice and I'm excited to get to the advanced level." Another great way to show humility is to ask them a question back, either instead of answering or right after you answer. Let's say they ask you if know the NMFP Organization. "No, I have not learned that industry term or I don't know that organization. Can you tell me about it?"

11 Phone interviews: Wear a nice top in case the interviewer wants to do a video interview using Skype or some other technology.