My Personal Finance Journey

My Current Asset Allocation and Net Worth Growth – July-October, 2011

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.

I have to apologize slightly in advance for this week being a little heavy in “progress” posts, as it has has been my “catch up” week in evaluating my financial goals (published Tuesday), net worth progress (this post), and blogging goals for 2011 (on the way soon). However, since I haven’t reported on these points in about 3 months, there’s definitely much to discuss! So, let’s get started.


As I’ve mentioned before, the goal of this running net worth progress series is twofold– 1) to share how I (as a fairly normal non-financial professional) approach various financial issues that come at me throughout life so that you can use my learnings to assist you in your financial decision making and 2) to make me more accountable in sticking to my various financial goals that I set forth by periodically evaluating my status and making adjustments. As always, if you have any questions, please ask!


Overall, the 2nd half of 2011 has started off sufficiently (not tremendously – I’ll explain why below).

I spent the majority of the summer months getting started and learning how to do research in preventing the protein aggregation that is believed to be a cause of Alzheimer’s disease. I was able (surprisingly and with some luck) to successfully pass my PhD Qualifying Exam in early September. I am definitely glad that is over with and that I don’t have to retake the exam, as I spent many a late night preparing the research paper that was required! Overall, I have been very satisfied with my professional progress the past few months (both in my scientific research and growing the My Personal Finance Journey community, with your help of course).


As far as the overall stock market goes, things have been fairly disappointing (hence why I mentioned above that the start of the 2nd half of the year has not been spectacular by any stretch of the imagination) since the last net worth update in late June. However, since I am a passive investor and do not try to fool around with market timing, I try not to let this bother me and focus on things I can control. 

With all of the up and down that has occurred, let’s take a look and see how it affected my net worth progress…shall we?


Liquid Net Worth Growth (not including condo AND NOW, not including blog income tax savings)

Recently, I had to make a fairly significant change in how I calculate my net worth and asset allocation percentages each month. The change pertained to the cash I have been saving up throughout 2011 in a high interest online savings account (Dollar Savings Direct) in order to pre-pay self-employed income tax to the government, either in the form of a quarterly tax payment or next April (depending on what levels of blog income I was realizing). What was happening was that the balance in this tax savings account (which was being counted in to the cash portion of my asset allocation) was becoming too large, and it started to skew my asset allocation calculations. 


To remedy this, this month, I’ve started a system of calculating my liquid net worth, which includes all of my various equity and fixed income holdings but excludes 1) my equity and debt related to my condo and 2) the amount of savings I accumulated so far earmarked to pay the tax man.


Keeping this important change in mind, let’s continue…

From 23-June-2011 (when the last portfolio update was published – see link below for more information) to 19-October-2011, the S&P 500 index went down another 6%. Yikes! That means that the market has now decreased 12.5% since the end of April this year. If this downward run continues and gets to a 20% decrease, I may be changing my tactic to using excess money during the rest of 2011 to buy additional equity index fund shares instead of focusing on repaying my condo home loan!

My Personal Finance Journey – May-June, 2011 Portfolio and Net Worth

During that time period, my liquid net worth (excluding condo ownership, and now excluding blog income tax savings) decreased by 5.5%. 


However, overall, I am pretty satisfied with this result. First, it is slightly better than the market’s loss during the same time period, which is always a promising sign. Additionally, this is not a terrible result since the bulk of my excess funds over the past few months have been funneled in to paying off my condo home loan and saving for taxes (both of which are not reflected in this figure).

Condo Equity Growth

I am very proud to share that I now currently have 16.3% home ownership in my condo (up from 11.4% only 3 months ago), with this accounting for 34% of my real net worth (so net worth subtracting the condo loan – this is different from the net worth above).

Update on Financial Goals for 2011

I have now achieved the following financial goals in 2011. I have done quite well I think – thanks to everyone’s help for keeping me motivated and accountable!

  • Have contributed the maximum allowed by law for 2011 to my Vanguard Roth IRA ($5000).
  • Am maintaining my target of 6-9 months of expenses in a cash reserve fund in my Dollar Savings Direct high yield online savings account.
  • Have rebalanced my mutual fund portfolio to maintain my asset allocation target %’s (75% equity, 25% fixed income overall) 
  • Have donated $1,300 to Multiple Sclerosis Foundation in 2011 (5% of income) and passed my target fundraising amount of $5000 for my MS 150 ride that took place June 11-12, 2011. I will most likely be shooting for raising $7500 for 2012. Rock n’ Roll!
  • Have saved 30% of self-employment income from my blog in order to pay taxes for the 2011 year.
  • Have accumulated 1% of my condo value for home maintenance repair expenses that randomly pop up. I read a post a while back discussing that 1% is probably not the best ultimate goal to save for, but it is a start for me to feel pretty secure in being able to fix things that go awry. 

    For a detailed list of my short term, mid term, and long term financial goals, click on the link below:

    My Personal Finance Journey – Financial Goals


    Review of Current Asset Allocation (excludes condo and blog income tax savings)

    • Overall Fixed Income / Equity Allocation
      • Currently, 27% of my net worth is invested in fixed income instruments (cash or bond funds), and 73% is invested in equity.
      • This is only 2% off from my targets for these categories of 25% (fixed income) and 75% (equity) and well within my +/- 5% allowable band limits. So, all looks good here!
    • Equity Allocation
      • In the equity portion of my portfolio, 72% is invested in US Domestic Equities with the remaining 28% being held in international equities. 
      • This is almost perfectly aligned with my equity breakdown targets of 71% and 29%, respectively, for US Domestic and international holdings.


    While the overall percentages for these categories look fairly good, a detailed look (table below) at the allocation breakdown reveals the real story and provides for better analysis of the current state.

    Remember: in order to maximize the likelihood of increasing your net worth, a red flag goes off if your current % allocation in a category is greater than +/- 5% off of the target allocation. This is my trigger that I need to rebalance that aspect of my portfolio.

    % Cash (money market target 5%) 9%
    % non-inflat. Bond Funds (target 15%) 15%
    % TIPS Bonds (target 5%) 4%
    % International Equity (Target 11%) 10%
    % International Emerging Markets (Target 11%) 10%
    % Domestic Large Cap (Target 8%) 8%
    % Domestic Small Cap (Target 8%) 9%
    % Domestic Small Cap Value (Target 14%) 14%
    % Domestic Large Cap Value (Target 13%) 13%
    % REIT (target 10%) 9%

    Analyzing my current asset allocation percentages, it appears that my current asset allocation is aligned with my target levels within the +/- 5% band limits.


    Because of this, no action needs to be taken at this time, as this will correct itself as we move forward in the summer and I naturally spend more money.


    Note: Even though no action was required today, I did have to do some rebalancing at the end of September (not explicitly covered by a net worth update) to account for the ~6% downturn in the market in recent months. 

    • At that time, I invested ~$400 of new money in my taxable Vanguard mutual fund account, buying more shares of the Vanguard Small-Cap Value Index Fund. 
    • Additionally, in my tax sheltered IRA account, I sold approximately 1% of my net worth held in a short-term bond index fund and exchanged the money to buy more shares of an equity index fund. The goal of this was to maintain my asset allocation targets despite the decrease in the market.
    • See how rebalancing forces you to buy equity when the market is undervalued? This is why I am a big supporter of this strategy.


    My next moves for the October-November, 2011 time frame will be to do the following:

    • Now that I have fully funded my Roth IRA, any extra money I have will go towards paying off my condo loan and obtaining even more equity in that investment. The only other option I would have is to invest in my individual mutual fund (taxable) account. But, I feel that it would be a more efficient use of my time to build up more equity in my condo. What do you all think?
    • Additionally, as I indicated the other day in my financial goals update, I am also going to slightly increase my monthly savings for a vacation I am wanting to take to the Grand Canyon and for installing a washer/dryer in my condo.
    • Continue investing $41.67 each month in microloans to help the working poor and support sustainability Latin America.  This is part of my 2011 goal of having $500 in microloans. I am currently more than half way there!
    • Save 30% of any income from blogging for 2011 tax payments next year at tax time. I will also need to execute on a quarterly payment very soon.


    Wish List 

    • At some point, purchase the Vanguard Total Stock Mkt Idx (MUTF:VTSMX) to replace S&P 500 index fund. This gives better, broader diversification to the US stock market.
    • Install a stacked washer/dryer combination unit in to my condominium. This one will be a long shot, but it just may be possible! More than likely, this will be something that I will do in 2012-2013.

    How about you all? How did you progress with your net worth in July-October 2011? What are your thoughts about the strength of the market right now? Do you think it will rebound? Have you had to rebalance your portfolio recently (buying more equity shares) to account for the market downturn?


    Share your experiences by commenting below!

      ***Photo courtesy of http://s0.geograph.org.uk/geophotos/01/47/83/1478338_1968fd81.jpg

      Fixed Rate Mortgages vs. Adjustable Rate Mortgages – Which are Better for You?

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.

      The following is a guest post. Enjoy!

      Home ownership is one of the cornerstones of America, if not the cornerstone of American life. There is no other symbol that defines what it means to fully capture the American dream than that of home ownership.

      The primary way that people chase their dream of home ownership is by means of a mortgage loan. A mortgage is a loan taken out from a bank based upon a person’s credit history and their level of income. There have been times when it has been very easy for a person to get a mortgage, and other times when it has been virtually impossible for the average person to get a mortgage to buy their dream home.

      Mortgage Selection Tools

      One of the best tools a person can have when it comes to buying a mortgage is a reliable, handy mortgage calculator. A mortgage calculator is one of the few tools a person can use to help them prepare for the process of attaining a mortgage. When taking on any new challenge, such as buying a home or purchasing any type of real estate, it is always worth it to do proper research and use due diligence when approaching the situation. There are many different types of mortgages, some more risky than other, but they all get the job done.

      The Fixed Rate Mortgage

      The fixed rate mortgage is the simple mortgage that many of us grew up knowing about. The fixed-rate mortgage can be very easily explained as a simple loan with a fixed, stable interest rate that determines what our monthly payment will be. The beauty of this type of mortgage is that for the entire life of the loan, you have the same mortgage payment, and it becomes a game of how many payments do you have left on your mortgage before you pay it off, rather than a game of what exactly will my mortgage payment be this month, as it is with many other types of mortgages. The fixed-rate mortgage usually has a life of 30 years or 15 years, and is pretty flexible for you to pay it off early.

      The Adjustable Rate Mortgage

      Adjustable rate mortgages are one of the more flexible mortgage options in good financial times. The adjustable rate fluctuates with the economy (more specifically, with the prime interest rate set by the Fed), and often leaves the homeowner in a financial situation they did not plan for.

      The adjustable rate is both a beauty and a beast, all at the same time. In good times, the rate is often low, which in turns allows the person mortgage payment to be low and very bearable. But, in bad economic times, this rate often rises unexpectedly and puts the person who has the mortgage in a bad financial position. Adjustable rate mortgages are good for people who do not have any other option, but they should use a mortgage calculator before they sign the documents to make sure they are getting the best deal they can. It would also be a smart move to later move to a fixed-rate mortgage if possible for the security it provides.

      How about you all? What strategies or tools do you use to obtain a mortgage that best suits your needs? Do you prefer fixed rate or adjustable rate mortgages? 


      Share your experiences by commenting below!

      Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

      • @ Deciding between fixed and adjustable rate mortgages – 
        • Deciding between the two types of mortgages (fixed and adjustable rate) can be a fairly difficult proposition. 
        • On one hand, it’s a little frightening to think about being “locked” in to a set mortgage for such a long period of time (30 years) with a fixed rate mortgage. 
        • On the other hand, it’s also very tempting to get an adjustable rate mortgage since the rate is set enticingly low in the first few years of the loan.
        • However, I believe that as a general rule of thumb, the majority of home buyers should be using a fixed rate mortgage. The primary reason for this is that it forces a home buyer to truly get their finances in order before committing to buying a house. In other words, a fixed rate mortgage makes sure he or she (the home buyer) truly has enough money to afford the true cost of the house, and not just some temporary low rate set forth by the adjustable rate mortgage.
        • Even though I believe that most people can benefit more greatly from a fixed rate mortgage (this is what I would choose in buying a home as well), there are some times when I do believe that adjustable rate mortgages are beneficial. These are listed below:
          • When you only plan on living in a house for 5 years – Since you’ll only be living in the house for a relatively short period of time before selling, you’ll likely only be paying mortgage payments during the low, introductory interest rate period. Thus, you don’t need to worry about the interest rate adjusting to something that you cannot afford. 
            • A word of caution though with this tact – if you do not plan on living in a house for a minimum of 5 years, you would actually be better off renting instead of buying. 
          • When the terms of the adjustable rate mortgage are such that it prevents huge jumps in interest rate over the life of the loan – In some special cases with adjustable rate mortgages, the amount that the interest rate on your loan can fluctuate is capped both at a per year and per-loan-lifetime basis. If current market fixed rate mortgages carry a 5% interest rate and your adjustable rate mortgage interest rate increase is capped at 2% for the lifetime of the loan (but starts at 3% interest), it will ultimately be cheaper to go with the adjustable mortgage. It’s all about reading the fine details VERY CAREFULLY though! 

      ***Photo courtesy of http://s0.geograph.org.uk/geophotos/01/86/72/1867282_cf82253b.jpg

      October 2011 Financial Goals Update – Short Term, Mid-term, and Long Term

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.

      Back in January of this year, I laid out my short term, mid-term, and long term goals for the 2011 year. I do this once every year as part of my goal to create what author David Bach calls a Purpose Focused Financial Plan. The goal of this system is to employ money in your life in a way that matches your life values and dreams.

      You can read more about my journey to create this system at the following links – Creating a Purpose Focused Financial Plan & My Personal Finance Journey’s Investment Strategy.

      As part of making this system work, I wanted to give an update on how I’m doing so far this year with the goals I established. Overall, I’ve been very lucky in the regard that my progress to date has far exceeded the expectations I originally laid out at the beginning of the year. 


      However, I’ve gotten pretty behind on these updates since the end of the summer with the PhD Qualifying Exam I had to take. As such, this post/update will serve to reflect new progress that has been made in the July 2011-October 2011 timeframe. Enjoy! I look forward to hearing your comments, thoughts, and progress on your own goals. 
       

      Short Term (< 1 year) Goals:

      • Contribute $5000 (or $420 per month) to my Roth IRA with Vanguard this year (maximum allowed) – Complete. Have now contributed $5,000 so far this year. 
        • Because my graduate school employment doesn’t include the perk of a 401k, my tax-deferred investing options for 2011 are now exhausted. Because of this, I have begun pouring any extra money at the end of each month towards my condo home loan and washer/dryer installation savings. Nice! 

      • Reach net worth target for this year (not displayed here) – Ongoing – the equity markets don’t seem to want to cooperate in allowing me to achieve this goal, as it requires an ~30% increase in net worth. This may not be possible to obtain, but will attempt.
      • Maintain target 6-9 months of expenses in cash reserve fund in Dollar Savings Direct account – Complete – currently carrying 9 months worth of expenses in cash in my emergency fund account.
      • Rebalance mutual fund portfolio to meet asset allocation target %’s (75% equity, 25% fixed income overall) – Correct for now, but ongoing.
      • Obtain 15% ownership / equity in condominium – Complete – currently, I have 15.79% equity in my condo. I will be increasing this goal to 20% for the remainder of 2011.
      • Put together a will and have it reviewed by a lawyer – Will completed. Not yet reviewed by lawyer.
      • Continue to save money for trip to Grand Canyon – Ongoing – need to continue to evaluate when to take this. 
        • Currently, I have $340 saved up for this trip. My gut feeling tells me that this won’t quite yet be enough (probably needs to be in the neighborhood of $1200-$1500). To verify this, I just looked up the prices for flights going to Las Vegas (a nearby airport to the Grand Canyon), and they are currently priced at around $700 round trip. 
        • I am currently saving only $20 per month for this trip (and the associated life value that is assigned to it). I think I’m going to increase the monthly savings to $50 for the remainder of 2011 in order to slightly accelerate things. It would be nice to try to take this vacation in the late Spring time frame of 2012.
      • Upgrade condominium with investment in stacked washer/dryer combo – $1000 for unit, $1000 for labor/installation – Currently saving $87.50 per month for home maintenance and upgrades – Ongoing, but on track. 
        • As of September, I will have now officially accumulated 1% of my home value in my home maintenance savings account. From now on, I will be able to begin accumulating the $2000 that it will cost to get the washer/dryer in my condo. I’ve decided that since I have already maxed out my Roth IRA for the year and have no 401k available, I’m going to increase my monthly washer/dryer investment/savings to $200 per month to see if I can speed up the savings process for this. 
      • Invest $500 in Microloans for Latin America in 2011 ($41.67 per month) –Ongoing – Have invested a total of $417 this year so far to a working poor fund in Peru and Nicaragua and a fund that supports environmental sustainability in Latin America. Both of these funds come with a pretty nice 3.5% interest rate per year for three years. 
        • Note: I use Microplace.com to invest this money. It seems to work well and be dependable (my principal for some of my 2010 investments were paid back in September). I just logged in to my account, and it says that my money has been used to help 55 people down there! Pretty cool stuff if you ask me!
      • Donate $1,300 to Multiple Sclerosis Foundation in 2011 (5% of income) – Done. In the 2011 Tour de Vine event, I raised approximately $5625 to support finding a cure for this disease (with the help of company matches). My bike ride happened on June 11-12 of this year and was a huge success. I’m definitely planning to do it again next year (I’ve already signed up, in fact!) 
        • The other big donation thrust I’ll be doing for the remainder of 2011 and beyond is giving away 10% of my blog income each month, with 5% going to readers and another 5% going to charities that the readers select. If you’re interested in signing up for a chance to win, click here.
      • Save 3% of take home pay each month (after taxes) for Dream Account. On target – Have an automatic transfer each month from my Bank of America checking account to my ING Direct high yield savings account.
      • Save ~30% of blogging income (if any) in a high yield online savings account in preparation for 2010 taxes. I had been very bad at doing this until late this summer, but I finally have begun to put aside significant amounts of money for taxes. 
        • The next step on my radar is to send quarterly tax payments in the government so that I don’t owe huge amounts in April 2012 and get penalized. 
        • I will need to make sure to update my net worth calculation Excel spreadsheet so that these tax savings don’t get counted in my asset allocation percentages, thus skewing the numbers.
      • Implement dollar value averaging for my 2012 Roth IRA contributions. This will be done in the beginning of 2012.


      Mid-Term (3-5 years out) Goals:

      • Continue contributing $5000 to Roth IRA each year and using dollar value averaging.

      • Reach intermediate net worth target (not displayed here, but is 2X my current net worth)
      • Own a rental property by 2016.


      Long-Term (>5 years out) Goals:

      • Obtain a net worth of $1,000,000
      • Own a home free of mortgage payments
      • Own a vacation home in the mountains somewhere remote
      • Accumulate enough funds not have to work, but will probably anyways because I would get bored. 

      How about you all? How have the months of July through October (thus far) been for achieving your goals? What are your next milestones? 

      Share your experiences by commenting below!

        ***Photo courtesy of http://farm1.static.flickr.com/230/503335275_6150e07aed.jpg

        Five Common Life Insurance Mistakes and How to Avoid Them

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.

        The following is a guest post by Philip J. Reed. Enjoy!

        Five Common Life Insurance Mistakes and How to Avoid Them
        Many people look at life insurance as a necessary evil that’s expensive and hard to understand. Others view this purchase as a bad omen that could doom them to an early end. Neither view is particularly helpful, but they do highlight the overall lack of understanding insurance faces in the world today.

        The truth is that if you take a few minutes to review the various types of policies and obtain several life insurance quotes to compare prices, this valuable safety net isn’t nearly as complicated or intimidating as it sounds. To help you make the best choice, and to help you to better understand the many ways life insurance can benefit your family, here are five common life insurance mistakes, and how you can avoid them:

        1. Thinking It’s Too Expensive


        The economy is tough right now, and most families are watching every penny. However, this is not an area you should completely eliminate from your budget. Without this financial safety net, what would your family do if they lost the primary breadwinner? The fact of the matter is that, without life insurance, your family could be left adrift in very uncertain financial waters.  You don’t want that to happen to them, so you need to plan today.  Policies may indeed get expensive, but to find a policy you can afford, review several         life insurance quotes.

        2. Believing It Can Wait


         If you’re young and healthy, it’s easy to just avoid this issue altogether. After all, nothing could happen to you, right? Wrong. Tragedies happen every day, and because we can’t predict them, the only thing we can do is prepare ahead of time. Even if you’re single and without children, you should have enough life insurance to pay your burial expenses. Of course, your responsibilities and your level of coverage need to significantly increase with a marriage or children. Make sure your coverage will provide for them.

        3. Underestimating Your Needs


         Many people underestimate how much life insurance they really need. They may see a policy that adds up to a year or two’s salary and think that must be enough. To choose the right amount of coverage, factor in your current debts, and also the living expenses for your family for a number of years, and college tuition for your children.  


        Providing for your family after you’re gone might not be the way you imagined things going, but if it comes down to that, you need to make sure they will be well taken care of.  Insurance can give you that peace of mind, and it can give your family some much needed financial security at a time when they will need it the most.

        4. Assuming You’ll Be Able to Afford Bigger Payments in the Future


         Some companies offer “teaser” rates that balloon over time. Many policy holders allow their coverage to lapse when the premiums escalate, leaving them without that precious coverage. Try to choose a policy with fixed rates, so that you don’t end up spending more on insurance than your family can afford, which will have the opposite of life insurance’s intended effect of keeping you financially afloat!

        5. Ignoring the Details


         Never buy a life insurance policy without understanding the details. Some have tight restrictions on when and how they will pay. This is especially true with cash-value policies that usually include complicated payment and return structures. We understand that details can get confusing.  That’s why it’s important to work with an agent that you trust, and one that will have the patience and understanding to help you make an informed decision.

        Conclusions


        According to one of the top insurance research firms, LIMRA, life-insurance ownership has dropped to the lowest point in 50 years. This means that 35 million Americans, or 30 percent of the population, have no coverage at all. Don’t let your family go unprotected in these hard economic times. Compare         life insurance quotes, and find the correct policy for you and for your family.  After all, ignoring life insurance totally can easily turn out to be mistake #6.

        How about you all? Do you currently have life insurance? If so, how did you go about figuring out how much coverage to obtain? If not, why do you feel it is unnecessary? 


        Share your experiences by commenting below!

        Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

        • Personally, I have not yet in life had to deal too much with the considerations involved in obtaining a life insurance policy. This is due to the fact that I am not yet married, have no children, and I am confident that while my relatives are not rich by any means, they could no doubt pay to have me buried if the need arose. Because of these considerations, I do not feel that I need life insurance currently.
        • In my first job out of undergrad, there was a default, no-charge-per-month life insurance policy that was equivalent to one year’s salary (likely to cover burial expenses) that I had while working there, but that’s the extent of my experience (sorry to say). 
        • @ The question of if you actually need life insurance?
          • While I think that all of the mistakes and corresponding considerations listed above are very logical and well thought out, I would first encourage readers to take a good hard look at their situation PRIOR to jumping quickly in to buying life insurance. You should ask yourself very seriously, “Is life insurance something I need?”
          • If your situation is similar to mine, despite how low-cost a policy would be, I simply don’t think that I need to have life insurance until I have children. 
          • I explored this topic of if I should buy life insurance earlier than required in life at the following link, if you’re interested in reading – Should I Buy Life Insurance Even Though I Don’t Need It?

        ***Photo courtesy of http://www.flickr.com/photos/dullhunk/4406032433/sizes/o/in/photostream/

        Easy Like Sunday Morning Weekly Roundup – # 2 – October 16th, 2011

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.

        Each week, the purpose of the Easy Like Sunday Morning Weekly Roundup is the same – for me to be able to connect with you, the readers, on a more personal (non personal finance informational transmission only) level, encourage community, and also to give back to the other bloggers around the blogosphere who have mentioned My Personal Finance Journey throughout the past week.

        As far as the theme goes, the title of the roundup gives it away. The roundup theme is named after the Lionel Richie song, Easy Like Sunday Morning (which I play once a week while putting this together), to remind us of the importance of slowing down at least once a week to take appreciation for that which transpired over the past few days.

        So, without further ado, let’s get started with this week’s roundup!

        Weekly Updates from Jacob’s Personal Finance Journey and Life

        • The big news for My Personal Finance Journey over the past week has been the announcement that I will begin giving away 10% of my monthly blog income each month, with 5% going to giveaway winners (blog readers) and the other 5% going to the charity that the monthly Grand Prize winner selects. I’d encourage everyone to sign up if they haven’t yet done so already by clicking the link in this paragraph.
          • This initiative, along with the annual July Tour de Personal Finance, represent the two most significant, involved, and perhaps even a little crazy (?) thrusts that my blog has done to date. 
          • However, as I experienced in the Tour de Personal Finance this year, it was very fun and fulfilling (despite the effort involved), and I’m sure this will be the same. 
          • I feel very passionate about this monthly 10% giveaway because it essentially creates a virtuous circle of giving and receiving, where essentially all parties, including the community at large, can benefit. 
          • One of my hopes is that doing this might set an example for other blogs to offer something similar (giving a % of their income to readers and giveaways).
        • As far as my personal finances go, this past week has been pretty routine, with no huge expenditures occurring. 
          • However, I did purchase a $250 season pass to the Snowshoe, West Virginia ski resort for this coming ski season. In running the calculations, I only have to go skiing 3 days to recoup my money, so it’s a very good deal! 
          • The main thing I am planning for right now is to save $700 for a trip to New York City in November to accompany my girlfriend (who runs a wine blog called The Academic Wino, which I’d recommend checking out) when she does the New York City Marathon on November 6th. We are also getting close to our 1 year anniversary of being together, so I am beginning to scope out some meaningful, nice, but still economically justified (of course, I don’t want to let any of you down!) gifts.
        • As far as my life in general, this past week, I have been continuing my graduate school research in Alzheimer’s disease in my lab. However, since my adviser is out of town this coming week at a conference, I will be teaching the sophomore undergraduate Intro to Biotechnology class that he normally teaches. This will be my first time teaching an entire class period to undergrads. Should be quite interesting!   
          • Additionally, I got out yesterday to enjoy the beautiful fall colors here in Virginia and did a 10 mile hike to visit Herbert Hoover’s summer retreat/home. Quite modest for a President of the United States, but I guess what else would you expect from the President during the Great Recession?!

        Herbert Hoover’s Summer Retreat/Home Experienced During a Recent Hiking Trip

        My Favorite 10 Posts of the Past Week

        I read quite a few interesting posts throughout the madness that sometimes is the work week. Listed below were 10 of my favorites, listed in random order. Enjoy!

        1. Financial Samurai posted about Who are the Top 1% Income Earners, enumerating some names and categories of jobs that earn over $380,000 per year. This post is interesting, especially with all of the Occupy Wall Street protests happening lately.
        2. Christian PF posted about How To Attend College Debt Free! College can be a stressful time, but you don’t have to add the burden of a strained financial life to the picture. You can be healthy – financially – and still graduate on time with good grades.
        3. Barbara Friedberg Personal Finance posted about How to Get Rid of Debt Start Here. Debt reduction starts in your mind. First, decide on the things that you are willing to give up and then go from there.
        4. Free from Broke posted about What are Credit Unions and Why are They Good for You?     Membership requirements of a credit union are not as strict as before. Read the benefits of opening an account with credit unions over big banks. 
        5. I Will Teach You to Be Rich posted about The Money Diaries: The 20-something freelance writer who spends his summers relaxing at a resort
        6. Moolanomy posted about 3 Main Types of Deposit Accounts: Which One Should You Choose?  There are three main types of deposit accounts you can use to save money for your financial goals. Know which one best fits you.
        7. Wealth Pilgrim posted about 7 Good Ways To Make More Money That Work Fast. Just like the title implies, here are 7 good alternatives to make more money.
        8. Cash Money Life posted about Home Repairs You Shouldn’t Skimp On. There are repairs for the house that we should not skimp on. Know what they are. 
        9. One Money Design posted about Free Fun Things To Do. There are a lot of things that we can do and still have fun without spending a lot.
        10. Being Frugal posted about Bargaining 101: How to get lower prices on everything. Learn the rules in bargaining, where to bargain, and the do’s and dont’s of bargaining. 

        If you’re interested in submitting an article for consideration/inclusion to this roundup, just email me by clicking here. Since I’m only 1 guy without a time-machine to give me unlimited time each day, sometimes I miss some really good articles in the blogosphere, and it’s good to be notified of them directly.

        Guest Posts from Personal Finance Bloggers on My Personal Finance Journey

        Over the past week, we had two great guest posts here at My Personal Finance Journey. They are listed below:

        If you’re an individual PF blogger (not a company that has a blog) and would like to guest post on my site, please click here to read more details about how to kick off the guest posting process. I’d love to hear from you!

        Blasts From the Past

        For the first 6 months after I started this blog, I pretty much “blogged in a cave.” What I mean by this is that I cranked out over 200 very good blog articles in this time period, but since I didn’t know any better, I didn’t reach out to other bloggers, get involved with the online community through commenting on other sites, or do any kind of site promotion at all. As you can imagine, some of the articles written during this time period didn’t get the attention that I think they deserved corresponding to the content contained.

        The Blast from the Past section will feature one old My Personal Finance Journey article each week that I feel is high quality, but was published prior to my blog having any sort of real readership. This week’s article is listed below:

        A Detailed Look at Homeowner’s Insurance – Pretty much everything you ever needed or wanted to know about homeowner’s insurance, written since I had to learn about this beast prior to buying a condo in August of last year.

        Personal Finance “Mad Props” of the Week Award

        Every once in a while, when I’m reading an article or site in the personal finance blogosphere, I’ll be so impressed in hearing about what a person did or wrote about, that all I can say to myself is WOW! This section of the roundup will serve as a running “home” for recognizing outstanding achievement. 

        The winner this week is Phil from PT Money for his work in spearheading the organization of the Financial Blogger Conference. According to what I’ve read, some of the longer-running (since ~2006) personal finance blog owners had been talking for years about having an official meetup/conference. However, it hadn’t happened because of the no doubt enormous amount of work that would be involved in organizing it. But, this did not deter Phil from coming through with a great conference at the beginning of this month! Nice work Phil!

        If you know of someone in the PF blogging world that is really doing amazing things, feel free to send me an email for consideration in future roundups.

        Giveaways

        Listed below are the giveaways I’ve come across in my journey through the personal finance blogosphere this week (along with the links so that you can head over and enter!). There were a TON of them this week. It’s great to see everyone giving back to their readers through these promotions. 
        • Accountant By Day is giving away over $200 is cash prizes during the entire month of October.
        • The Penny Hoarder is giving away a Nintendo Wii Bundle with Mario Kart through October 30th.
        • The Thousandaire is giving away close to the $700 in prizes through October 15th. I’m sponsoring one of the prizes too! 
        • Free Money Finance is giving away free tickets for a dinner and fundraising show where you can meet him.    
        • Buck Inspire and Retire by 40 have teamed up to give away a Kindle Fire and a Mango Passport Bundle to celebrate their 1 year blogging anniversary (both of them started on the same day) until November 7th. 
        • I’m giving away $105 to blog readers and another $100 to the charity that the Grand Prize winner selects.
        • Frugal Beautiful is giving away a copy of A Memoir of Male Breast Cancer until October 21st.
        • Couple Money is giving away an Android 2.0 Tablet until November 1st.
        • Money is the Root is giving away a $25 Amazon Gift Card until October 23rd.
        • Invest it Wisely is giving away a copy of the book, In Defense of Food, until October 22nd.
        • Maximizing Money is giving away 50 free customize-able pens until October 31st.
        • Investorz Blog is having a stock picking contest until October 21st. The first place prize is a $50 Amazon Gift Card, and the second place prize is a $25 Amazon Gift Card.

        If you’re hosting a giveaway and it’s not listed above, please send me an email to let me know, and I’ll get it included in next week’s roundup! 

        Blog Carnivals Featuring My Personal Finance Journey Articles

        ·         Boomer and Echo hosted the Carnival of Personal Finance and included The Benefits of Finding the Right Loan.
        ·         KNS Financial hosted the Yakezie Carnival and included Contents and Building Insurance – Are These Coverage Types Necessary and What Do They Include?.
        ·         Arbor Asset Allocation Model Portfolio (AAAMP) Blog hosted the Self-Directed Investing for Retirement Carnival and included Dollar Cost Averaging vs. Dollar Value Averaging – Which is Better?.
        ·         Budgets are Sexy hosted the Weekly Roundup: Time, Technology, and Boot Camp and included $205 Giveaway – Community and Charity 10% Monthly Blog Income Give Back #1.
        ·         The Skilled Investor hosted the Best from This Week from Personal Finance Blogs and included Professional Liability Insurance – Is It Something You Really Need?.
        ·         My University Money hosted the Carnival of Financial Camaraderie and included What are the Best and Worst Jobs in the World? 

        If you are hosting a carnival that includes (or included) My Personal Finance Journey and I missed listing it here (I don’t get trackbacks since I’m not on WordPress, so I have to rely on direct email and Google Alert notifications), please email me so I can include it in my roundup. Thanks!

        Top 10 Referring Sites to My Personal Finance Journey This Past Week

        1. Kath Eats
        2. Life Hacker (included a burst of 700 visits in one afternoon)
        3. Yakezie
        4. Free Money Finance
        5. Arbor Investment Planner Blog
        6. Your Finances Simplified
        7. Tight Fisted Miser
        8. Totally Money
        9. Boomer and Echo
        10. Doomer in Canada

        Top 5 My Personal Finance Journey Commenters From the Past Week

        1. Krantcents (who I’m STILL convinced is the most prolific blog commenter in the world – anyone care to 2nd this?! Every post I go to he’s already commented on!).
        2. Accountant By Day.
        3. Cash Flow Mantra
        4. Ken @ Arbor Investment Planner
        5. Miss T @ Prairie Eco Thrifter.

        Best Reader Submitted Question From the Past Week

        This section will serve as a running location for any very insightful, high quality questions submitted by readers throughout the week.
        There were no questions submitted this week. However, if you are wondering something about personal finance, please feel free to email me and ask!

        My Other Sites

        Currently, my only other site besides this one is The Carnival of Passive Investing, which runs monthly editions. If you have any passive investing posts you’ve written recently, you can submit them to be included in the carnival. We have a very special occasion in the next edition of the carnival, as author Jerry Tweddell (wrote the book, Winning with Index Mutual Funds) will be helping to select the best articles.  

        However, I have several other domain names purchased, and I am currently learning WordPress Self-Hosted to get these sites live as soon as time allows! I’ll be sure to keep you all updated on progress.

        Well, that wraps up this week! If you have any suggestions or recommendations for things you’d like to see in this weekly roundup, just let me know by sending me an email!

        As always, thanks to all the readers for creating such a great community here at My Personal Finance Journey. Your interaction is what keeps me going on this blog!

        Until next time – Jacob

        Yakezie Blog Swap # 12 – Best and Worst Jobs in the World Edition Roundup and My Favorite Pick

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.

        Happy Saturday morning everyone!

        Yesterday, I had the privilege of being the host/organizer of the 12th official Yakezie Blog Swap. 


        “What’s this strange sounding event?” you may be asking. Well, what transpires is that different members and challengers of the Yakezie Blog Network pair up and exchange posts on a common topic about once a month. And, we call it a blog swap! Sounds simple enough, right?!

        As the host, I chose our topic/question to answer this month as: “What would be the best and worst jobs in the world and why?” Listed below is a compilation of the various posts that were part of the swap along with my favorite article that was written. Enjoy and thanks to everyone for participating and getting their posts live on time!

        My Favorite Post


        The College Investor posted about the worst job in the world being a slippery salesperson selling financial products with only the highest commissions stockbroker and the best job in the world being a fee-based financial planner at Money for College Project.


        Being a passive investor and someone that is not a big fan of stockbrokers, The College Investor’s post got my attention and vote for favorite of this blog swap!


        My Swap


        I posted about my pick for the best job in the world being a travel guidebook writer and the worst job in the world being a US Airways ticketing agent at Family Money Values.

        Briana from 20 and Engaged posted on this site about the various characteristics she looks for in the best and worst jobs in the world.


        The Best of the Rest


        Bucksome Boomer posted about the traits she looks for in the best and worst jobs in the world at Pinch That Penny.

        Pinch that Penny posted about his picks for the best and worst jobs in the world in 1) an insightful way, 2) a sarcastic way, and 3) a day-dreamy way at Bucksome Boomer.

        Money for College Project posted about the worst job in the world being a shark safety suit tester at The College Investor.

        Family Money Values posted about the characteristics of good and bad jobs and relates this back to jobs she’s experienced in her lifetime at 20 and Engaged.

        You Have More Than You Think posted about the President of the USA being the worst job in the world because of limited power and HUGE responsibility at Smart Family Finance.

        Smart Family Finance posted about his choice for the best job in the world being a flexible job where he can make people happy and have a chance to excel at You Have More Than You Think.

        How about you all? Which post of the ones listed was your favorite? Share your opinion by commenting below!

          ***Photo courtesy of http://www.flickr.com/photos/speakerpelosi/3333412448/sizes/o/in/photostream/

          What are the Best and Worst Jobs in the World?

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          Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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          Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.

          The following is a guest post from Briana at 20 and Engaged.

          This post was written as part of a “Yakezie blog swap” where members of the Yakezie Personal Finance Blogging Network pair up and exchange guest postings on a common topic. The topic of this blog swap was to discuss what each of us thinks would be the best AND worst jobs in the world. You can view my guest post live today over at Family Money Values’ site .

          Before the days of high unemployment and scarce job openings, you didn’t hear too much about people complaining about their jobs. Sure, you would hear someone say they didn’t like the hours, were annoyed by coworkers, and had a bad experience with customers and clients every now and then, but actually hearing someone loathe their career or job was pretty rare. That’s because if you hated your job, everyone’s suggestion was the same: get a new job. If you had experience, good references, and a legible resume, you could leave your job and find another one pretty quickly. You also heard of people being with their company for 25 years, getting a nice party and maybe even a plaque or pen to take home and show their kids and grandkids what hard work gets you (besides a pension, 3 weeks of vacation, and benefits!). 


          We’re living in different times now. If we were still in those times, I could probably list a few professions I would consider the worst jobs ever. Those might include jobs that keep you away from your family for 80 hours out of the week. It would definitely include a list of professions that involved rude customers, lazy supervisors, and anything that went near rodents or fecal matter. The best jobs would of course be the highest paying, the best benefit packages, the longest vacations, flexible start times, and a full stocked kitchen. While this still qualifies as a great job, it also falls into the category of rare jobs you can only get with a Masters and 10 years of relevant, managerial experience. So, it’s time to change the standards a bit.


          Worst Jobs in the World


          Low paying jobs: Let’s be honest; if money wasn’t a factor, a lot of us would be doing something completely different. However, when desperate times call for desperate measures, you may take on a job that pays crap but somehow contributes to paying the bills. When you’re doing work that calls for double what you’re actually seeing on your paycheck, you don’t have a good job. Minimum wage does not automatically fall into this category either; if you’re working a minimum wage job and getting paid as such, then that’s not a bad job. If you have numerous responsibilities that essentially keep a company afloat, and you’re getting paid like a paper boy, there’s a problem.


          Doing something you hate: You would think this has been eliminated, but it’s not. There are still people out there doing a job they absolutely hate. There are sales people out there who have to deal with people one on one, and they’re antisocial. There are kindergarten teachers out there who can’t stand kids. We have aspiring hair dressers styling poodles instead of people. And these misplaced people are miserable because everyday when they get up for work, they would rather sleep on a bed of rusty nails than go in for work. It may be a good job for the right person, but for these people, it’s the worst job in the world.


          The bored and overqualified: Some people may say “be happy you even have a job,” and I can agree. But, for the bored and overqualified, it’s like they’re getting paid to do absolutely nothing. Sounds good in theory, but I’ve been in this position before, and it’s annoying. You either get your work done too quick, or you simply have nothing to do. Being bored at work, no matter how much it pays, can truly affect how you feel. You rather call in sick than have to do the same, boring, repetitive work over and over. You rather do something out of the ordinary, but you can’t, and that’s the worst.


          Best Jobs in the World


          Pays the bills and some: Money isn’t everything, but like I mentioned before, it’s a factor. A job that pays your bills and leaves you with some spending, saving, or investing money afterwards can be considered one of the best jobs in the world. I’m not saying the highest paying jobs are the best in the world, but when you can pay your bills, it’s one less thing for you to worry about. Even if you don’t particularly like your job (note, I didn’t say you hate it), you have money that you can use toward something you do enjoy.


          You’re allowed to travel: I love to travel, and a lot more people would if given the opportunity. How amazing would it be to visit a foreign country on the company’s dime? You won’t be in meetings all day, so being able to travel to a new place thanks to your job is a huge perk.


          You love what you do: You ask some people why they stay at their job despite low pay or non-existent benefit packages and you’ll hear them say “I love my job”, and nothing’s better than that. Opposite of the people who choose nails over their job, people who love their job look forward to work everyday, complete their tasks with a smile on their face, and can’t wait for what’s in store for them. When you’re passionate about your job and what you do, you can’t beat that.


          So, while there’s some positions I probably would scream, cry, and have a tantrum before I do (extermination, trash pickup, selling knives door to door), I wouldn’t call them the worst job ever unless it wasn’t worth the money, I was bored everyday, or I absolutely hated it (although I think the three I named would fall under the hate category). Doctors, lawyers, and advertising executives don’t automatically go into the “best” category either. It’s all about perspective.

          How about you all? What do you feel would be the best and worst jobs in the world? What characteristics of those jobs are most important in deciding if they would be good or bad for you? 


          Share your experiences by commenting below!

          Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

          • Great post here Briana! Thanks for participating in the blog swap. I especially like how you took the approach of describing the traits you’d look for in the best and worst jobs in the world, instead of just focusing on describing one specific job. 
          • For me personally, I think that one of the important traits in the best job in the world would be to have enough flexibility to suggest new ideas or ways of doing things. In other words, I’d like to feel like I could apply some of my own flavor/creativity to the job. In addition, it’d also be important for me to not feel too rushed all of the time that I feel like I can barely do a good job. 
          • @ High paying jobs with tons of hours –
            • You make a great point with your description of how a high-paying job might not be the best job in the world, especially if earning that high income involves working 80-100 hours a week. The work schedule definitely must be taken in to consideration. 
          • @ People being bored and overqualified for their job –
            • Unfortunately, I saw the “being bored” aspect of this all to often when I worked for 2 years after my undergraduate studies. 
            • Quite often, new college graduates would get hired in to the company, be paid a very comfortable salary for a young professional, but then would have very little to do day-to-day in their job. And, when they were given tasks, they would get them done in a very short period of time. Of course, this work arrangement made these young professionals feel fairly not very useful (not the best situation for anyone to be in). 
            • I especially saw this boredom/not-enough-work situation happening with internships of college students working over the summer at the company. Quite often, these students would have to resort to playing around on Facebook and the instant messenger all day, since they weren’t given any work to do. 
          • @ How good or bad a job is all depends on perspective – 
            • I definitely agree with this statement, as one job that would seem ideal to one person (such as being a doctor or lawyer with good pay, etc) can be hated by another person that is already doing that role. It all comes down to perspective. 
            • I am also certain that having different perspectives on what constitutes a good and bad job is absolutely critical for the world to work effectively. For example, I may think that being an engineer would be an interesting job and being a salesperson would be terrible, but the truth is that we need both roles to make the world go round!
            • Because of this, I’m personally grateful that everyone has different opinions and is not the same!

          ***Photo courtesy of http://farm3.static.flickr.com/2120/2144933705_20517bedab.jpg

          I’m Staying With Bank of America…"Are You Crazy?"

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          Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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          Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.

          Recently, I mentioned to my girlfriend that I was going to stay put with using Bank of America for my checking account, despite their recent BRILLIANT, customer satisfaction-driven (yeah right!) decision to start charging $5 per month for the use of a Bank of America debit card.

          To my brilliant statement mentioned in the title of this post, she then asked if I had a screw loose. Truthfully, her comment has merit because man, oh man, have Bank of America and Netflix made some moves recently that have upset their customers beyond belief, or what?!

          As such, the goal of today’s post is to explore the various factors that went in to my decision to stay with Bank of America (for now at least). And, by doing so, I hope that it will help you to make your decision as well, if you are one of their customers.

          Drivers for the $5 Fee

          As much as I hate to say this, I understand why Bank of America is going to start charging this fee. It all comes down to the finances, as you might imagine.

          To get a grasp for their motivations, we must first dig in to the inner-workings of how debit card transactions are processed after you “swipe” the debit card at the store. For example, let’s say that you’re at a grocery store buying a $3 bottle of wine for a dinner party on Friday night (since you’re a My Personal Finance Journey reader, and that’s how we roll with $3 bottles of wine). You approach the cash register and take out your Bank of America Visa debit card to swipe. After swiping, the card machine then asks you whether you’d like to process it as “debit” or “credit.”

          Choosing between these two options has huge financial ramifications for the store from which you’re purchasing the wine.

          • If you choose “credit,” the store will be charged 2-3% of the purchase cost in credit card fees to be paid to Bank of America (payday for them!) and Visa (for providing the infrastructure). 
          • If you choose “debit,” the store will only be charged a few cents.

          If you are Bank of America, let’s think about it – which one would you prefer? Would you (as Bank of America) prefer paying the infrastructure fees to Visa, or would you like the merchant to send those to you along with some extra for a profit?! Obviously, this is a no brainer!

          Details of the $5 Fee

          So, as we saw in the previous section, even though I may not like Bank of America’s decision to start charging fees, I do understand it.

          Furthermore, it is important to understand (my girlfriend was slightly confused about this) that the $5 per month debit card fee will not be charged for simply having a debit card. Rather, you must actually use it to buy something at a store in order to be charged this fee. ATM usage remains free (thank goodness!).

          Why I’m Sticking with Bank of America

          Now that we’ve gotten the important background information out of the way, we can now explore my reasoning for why I’m committed currently to staying with Bank of America (despite these debit card fees), and YOU can determine for yourself if you think I’m crazy/out of line!

          These considerations are listed below:

          • I only use my debit card for ATM purposes.
            • The only time I ever use my debit card is to deposit cash or checks or make withdrawals at the ATM. Therefore, I won’t be charged the $5 monthly fee.
            • For my finances, using a debit card makes zero sense because I get 1-3% cash back when I make purchases on my Chase Freedom Visa credit card. I am very attentive to paying off my credit card once a week so that I don’t accumulate a month-to-month balance.
          • I haven’t found any banks yet that can match what Bank of America offers for my needs. 
            • One of the only reasons that I’m still using Bank of America is that they are truly everywhere in the United States. They are in Arkansas where my parents live, they are on the East Coast where my sister and I live – they are everywhere. 
            • And, the fact that Bank of America is everywhere has made it very easy on me over the past few years since I have moved three times.
            • Often, I have considered moving my checking account to an online bank since they offer much better interest rates and other features. 
              • However, there is something to be said about having a physical bank if I need a certified cashier’s check (I just checked, and online banks such as ING Direct’s does not offer certified checks) to buy a house or pay a moving company. Additionally, I question the security of mailing a check through the Postal Service in order to make a deposit…

          Conclusions

          Overall, the bottom line is that I will continue using Bank of America for my checking account as long at they aren’t charging me a fee. When/if they do, I’m out of there very quickly!

          One thing that is important to note is that if you are a person that uses a debit card frequently for debt avoidance reasons (because you are afraid of racking up large amounts of credit card debt if you use a credit card), now might be a good time to explore changing banks from Bank of America. In my opinion, there simply is no reason for ANYONE in today’s competitive banking environment to be paying a fee for a regular checking account/debit card (unless of course you receive benefits that total more than the fee).

          It would probably be beneficial if in a future post, I explore the hypothetical case of what bank I would select if I were to choose another besides Bank of America. In fact, as I think about this question right now, I’m really not sure what bank I would go for! That would indeed make for an interesting discussion! Be on the lookout for that post in the not-too-distant future.

          How about you all? Do you think I’m crazy for staying with Bank of America? If you are a Bank of America customer, are you currently looking to leave due to the debit card fee change? Why or why not? 


          Can you provide any suggestions on a good bank that would be suitable for me if I were to change from Bank of America? Should I go with a local or national chain? Regular bank or credit union?


          Share your experiences by commenting below!

            ***Photo courtesy of http://www.flickr.com/photos/moneyblognewz/5264722308/sizes/m/in/photostream/

            Is Social Security a Ponzi Scheme?

            The following is a guest post from YFS from YourFinancesSimplified.com. Enjoy!

            Yes, this might be a bit drastic, but people have asked this question before.

            Most recently, Rick Perry, the governor of Texas claimed that this is indeed the case at the Republican Debate.  Is there some grain of truth to this controversial claim, or was Perry simply gunning for attention by being controversial? We’ll try to obtain an answer to this question in today’s post.

            What is a Ponzi Scheme?

            By definition, a Ponzi scheme is a form of fraud. People are brought into a Ponzi scheme with the promise of high returns as a result of small investments. These schemes have to have a lot of people to work, and the head of the scheme works to recruit many people. In the end, the group or organization running the scheme is not profiting from actually doing anything, and they use the payments from new investors to pay earlier investors.

            Often, the later investors never actually receive money; they simply receive payment records that detail how much they are supposedly earning. Eventually, these schemes always collapse because eventually, investors pull out or the amount needed to pay earlier investors is higher than the amounts being newly invested. Sometimes, the person or group in charge of the scheme simply disappears with all the money.

            Perry’s Claim of Social Security Being a Ponzi Scheme

            Perry is relating the government to the person in charge of the scheme who is simply going to “take the money and run,” like Bernie Madoff.

            However, Social Security was never designed to be a form of fraud, and that is one of the main differences between the two systems. Everyone knows exactly what they are paying into. When you pay Social Security taxes, you expect to be able to draw on that money when you are eligible, and you expect that other able workers will pay into it like you did.

            Social Security is a pay-as-you-go system.  You pay money now to get money later.  The fact that Ponzi schemes and pay-as-you-go programs (like Social Security) both utilize money from later participants to pay the benefits to earlier participants is the reason why many people compare Social Security to a Ponzi scheme.  But, that is where the similarity ends.

            The State of Social Security

            The strain on the system now is the massive efflux of Baby boomer retirees and the high unemployment rate. This means that there are a lot of people drawing on Social Security’s reserves, but there are not enough people paying into the system. Currently, the government is paying out everyone’s benefits. There are fears that in the near future, about 25 years from now, that the government will not be able to pay every retired individual who is eligible for Social Security benefits. The fact that people are living longer lives is also putting a strain on the system.

            Without change, Social Security will collapse. In this way, it is exactly like a Ponzi scheme. It has become so large that it is untenable. However, this can be remedied, though that does not mean that we are going to like it. There are a few ways to make Social Security work. First, payroll taxes could be increased, and with that, more money will go into Social Security. Additionally, the amount of benefits that seniors currently receive might be decreased, and the age at which they can receive them will certainly increase.

            Returning to Perry’s statement, it is likely that he was being controversial for attention. Social Security will not collapse like a Ponzi scheme, and it is not a fraud. Social Security will change, and whoever receives the added burden will complain, but once we reach 67 or 70 or whatever the required age ends up being, we will all be glad to receive our Social Security benefits.

            How about you all? What are your thoughts on Social Security?  Do you agree or disagree with Rick Perry’s view of Social Security being a Ponzi Scheme? How much longer do you think Social Security will be around?
            Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

            • Thanks so much for sharing this guest post, YFS! I’m always happy to have a fellow Yakezie participant do a guest post, especially one on a topic as important as Social Security!
            • Personally, I think that calling Social Security a full-blow Ponzi scheme is not quite fair and a little bit of stretch. After all, Ponzi schemes are illegal (fraud) and Social Security is not, as you mentioned above.
            • However, I won’t deny that Social Security does have some of the same characteristics, or flavor if you will, of a Ponzi scheme/pyramid scam.
              • It would actually be quite interesting to hear some of the considerations and debates in Congress when Social Security was just being formed. I wonder if they really knew what they were getting in to committing for years to come to a huge government program like this.
            • Regardless of what we label Social Security, the fact of the matter is that the United States government and people are stuck with it, as many people rely on this today for supplemented living (a few of my relatives in fact).
            • As such, the more important questions I ask are 1) how can we improve Social Security, if at all? and 2) will it be around when future generations (mine, for example) retire? Or, will the funds be totally depleted? Let’s take a look at these questions one at a time.
              • Regarding ways to improve Social Security, I have not analyzed this nor do I know enough about the workings of the program to offer suggestions. However, I did read a post this past summer from Ashley @ Money Talks that discussed an interesting idea of privatizing Social Security. It’s quite an idea, and definitely worth the read!
              • Regarding the second question about whether or not Social Security will still be around when future generations retire, I believe that it will be in some limited form. However, I would strongly encourage against depending on Social Security money for retirement living needs. Instead, invest regularly in a Roth IRA and 401k.
            • Another common question that I wonder is this – Are the ever-popular “network marketing” (often called Multi-Level Marketing, or MLM) programs Ponzi schemes and/or pyramid scams? 
              • Some of these common programs include Empowerism, 4Life, Avon, and Amway.
              • Truthfully, it’s somewhat of a legal masterpiece the way these opportunities are set up. The way it works is listed below:
                • The business offers products for sale (makeup, skin cream, vitamins, etc).
                •  The company does not have to pay any full time sales reps, but instead offers the product sales “business opportunity” to individuals looking to earn a part time salary.
                • However, on top of selling the normal company products, the part-time sales people can recruit others to work in their “network” or “team.” The existing sales person earns money whenever new people enter in to their network. So, new money is funding the people already in the organization, similar to a Ponzi scheme.
              • To me, the way these programs are set up seems a little “hairy.” However, they have time and time again been proven 100% legal by the court system, since the sales reps also offer real products for sale.
              • What’s my problem with this, though? The problem I have is that in my experience (I’ve tried Empowerism and 4Life back when I was younger and nieve) and from what I’ve heard from others who have used network marketing, it’s nearly impossible to sell the actual products through these programs. Instead, most people make money on the programs through promoting the business opportunity.
              • So, I ask you all – do you think network marketing programs are pyramid scams? I’ll let you make up your own minds.

            $205 Giveaway – Community and Charity 10% Monthly Blog Income Give Back # 1 – October 2011

             

            This past weekend, I did some “soul searching” about what this blog means to me and where I see it growing and evolving in the future.

            To make a long story short, I decided that since I have a day-job (I’m a chemical engineering PhD graduate student who does Alzheimer’s disease research if you didn’t know) and do not depend on income from blogging as my sole-source of making a living, any income made from this blog would have more significance to me at a personal life values level if I knew that a portion were being given back to the following places:

            • 1) The readers – Obviously, without you here to read my articles and interact with my ideas, there would be no blog in the first place (let alone blog income). As such, it is only fitting that you receive a portion of any blog income.
            • 2) Charitable organizations – If you’ve read my blog before, you know that I’m a big believer in donating a portion of my money to charity. Each year, I donate between 5-10% of my income to the National Multiple Sclerosis Society as part of the Bike for MS fundraiser that I do. Beyond the good that is done by donating your money, getting used to contributing to charity is also a good practice to emulate the actions of affluent individuals (T. Harv Eker discusses this in his book, Secrets of the Millionaire Mind).
            Because of these considerations, I’ve decided that each month going forward, I’m going to give away 10% of my net blogging income to My Personal Finance Journey readers (5%) and to charity (5%). Listed below is how the process will work:
            • After each calendar month passes, I’ll tally up my net blog income and determine what Dollar value correlates to 10%.
            • I’ll post the giveaway (similar to this post you’re reading now), and you’ll have 3 weeks to enter.
            • Once the giveaway is over, a grand prize winner will be announced, and that winner will then select what charity they’d like to have 5% of my blog income sent to. Pretty cool idea, right?! I’m excited just thinking about it! I hope you are too.
            So, that’s the overall flow of things. Let’s get in to the specific details for this month’s (October) giveaway.
            Details of October 2011 10% Blog Income Giveaway
            • $205 total blog income to give away – $105 to My Personal Finance Journey readers and $100 to the charity selected by the giveaway grand prize winner.
            • $105 in prizes available to two readers is broken down in the following way –
              • 1) Grand Prize = $75 Amazon Gift Card or $75 cash via PayPal (since I just found out that international readers cannot buy much on Amazon).
              • 2) 2nd place prize = $30 Amazon Gift Card or $30 cash via PayPal.
            • This month’s giveaway is also to celebrate the launch of the monthly free My Personal Finance Journey Intelligent Financiers Newsletter. The purpose of the newsletter will be to give out exclusive personal finance, intelligent investing, and frugal living tips beyond what’s shown on the main site and conduct newsletter-subscriber only giveaways.


            How to Enter the Giveaway – Deadline to Enter is Midnight, October 31st, 2011

            I decided to give the new RaffleCopter giveaway management tool a try to handle sign-up facilitation for this giveaway, so simply go through the steps listed in the widget below to enter the running for the prizes. Since this month marks the launch of the new My Personal Finance Journey Newsletter, I’d like to get as many people signed up as possible, so spread the word! 

            There is no limit to the amount of points you can earn. If you refer 10 subscribers – your name will have accumulated 50 points! You can also retweet the giveaway once per day. In the event of a tie, I will be using a random number generator to select the winner.

            Important instructions: After you complete an entry method, make sure to click and fill out the “I Did This” button in the widget so that I have a record of your points.

             

            Remember, the deadline for entries will end at midnight on October 31st, 2011 (3 weeks from today). Good luck to you all! Please contact me if you have any questions. After the deadline for entries passes, the winners will be contacted via email.

            ***Photo courtesy of http://www.flickr.com/photos/newsbiepix/3832702141/sizes/o/in/photostream/

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