2012 Goal Update

finance goalsIt’s not quite the end of the year yet, but I thought I’d take a moment to look back on my goals for 2012 and see how I did. When I started up this blog back in May, I set several goals for myself. They were stretch goals – I would need to be close to perfect with my finances to meet them. But what’s the point in setting goals you know you’re going to reach, anyway? The whole idea of setting goals is to give you something that’s just out of reach to shoot for.

I set four financial goals and one health goal for myself:

finance goals

Down Payment Fund – Reach $10k by the end of the year
Other Taxable Investments – Reach $13k by the end of the year
Dividend Income – Earn $400 over the course of the year across all taxable accounts
Retirement – Max out IRA and invest in a REIT

health goals

Weight Loss – Get my body fat percentage down to 25%

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Understanding Capital Gains Distributions

understanding capital gains distributionsIt’s that time of year when those of you holding mutual funds may see a capital gains distribution. If you’re new to investing, like me, you might be wondering what this distribution is, why you’re receiving it, and what the implications are.

Let’s start out with the most important thing: although it ostensibly looks like you’re receiving money, capital gains distributions generally aren’t good for shareholders. Let’s take a closer look at what’s really happening when you receive a capital gains distribution.

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When There’s Not Enough Money – $100 Cash Giveaway

not enough moneyThis week I am participating in a $100 giveaway hosted by Savings Advice. The theme of this giveaway is “When there isn’t enough money at the end of the month”.

A little while back I wrote about how I’m living paycheck to paycheck (sort of). The gist is that I have automated savings set up, so once my recurring bills are paid and money is automatically transferred into savings and investments, I’m left with a very small amount in my checking account with which to pay my credit card bill. Anyone who’s actually living paycheck to paycheck might wonder why I would voluntarily put so much stress on myself to stay within my budget when my cash flow would support much more spending.

The answer is simple: if you’re not at least a little worried that you won’t have enough money at the end of the month, you’ll end up overspending on things like lunches and dinners at restaurants, shopping, and entertainment. If you’ve never experienced running out of money before the end of the month, you’re probably not saving enough.

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If You’re Broke, Act Like It

empty pocketsI have an acquaintance who is going through some tough financial times right now. She tells me her job doesn’t make her very much money, and her car was recently totaled in an accident. She is, in her words, “broke.” To afford the monthly payment for a new(er) car, she had to move to a considerably cheaper apartment, though apparently her parents are still helping her out with rent and the car payment. I feel for her, but at the same time, I wish I could shake some sense into her. She’s made several financial missteps up to this point, and though she’s slowly getting better, she still has a lot of progress to make.

Despite my advice to the contrary, she bought a late model used car (I believe a 2010 or 2011) rather than a much older model. I was peeved by her insistence on buying such a new car when her finances were in such poor shape, but I saw glimmers of hope when she was willing to relocate to a cheaper apartment and shop around aggressively for the best car insurance rates. But I lost it a little yesterday when I saw her boasting about her frugal ways on Facebook because of her “bargain” purchase of a $300+ dress for 60% off. 60% off is great, don’t get me wrong. But there’s nothing “bargain” about a dress that still costs $120+, plus tax and shipping & handling. She’s making good progress in some areas, but she still doesn’t quite understand the kind of sacrifices you need to make when you’re broke.

There are a lot of different things going on with her situation, so let me try and break it all down into a few actionable items. Unfortunately, it’s too late for her to fix some of her mistakes, but hopefully others can learn from them.

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A Sneak Peek into Your 30s

sneak peekHi, Gen Y Finance Journey Readers! I’m Jana and I run a personal finance blog, Daily Money Shot, where I talk about money (but not the boring parts). I’m also a freelance writer and founder of the blogger mentoring program, Bloggers Helping Bloggers. I’m thrilled to be guest posting here and when you’re done reading what I have to say, come say hi on Twitter or Facebook!

Back in September, a post was published on Gen Y Finance Journey, Six Things I Hope I Know in My Thirties. I loved this post and, since I’m well into my 30s, I figured I could respond to a few of her points and questions with my own experience. So here we go.

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Products for Lazy People

As a society, we have become so used to convenience that we can’t live without it anymore. I’m no different. When my phone runs out of batteries in the middle of the day, I feel like I’m missing a limb. I have completely embraced technology and really have come to rely on it. But even I, with my ADD tendencies typical of my generation, have a line that is not to be crossed. Sometimes I look at a product and say to myself, “if I use this, it will be admitting that I’m a complete wuss who is incapable of doing anything for myself.”

Today, I bring you some of those products. These are not your standard “crazy products for lazy people” that nobody actually uses which you’ve likely seen before (things like the rotating fork to help you eat spaghetti). These are things I’ve come across that apparently people do actually use.

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Financial Lessons From My Fiancé

Couple MoneyRounding out this series, I thought I’d add some financial lessons I’ve learned from my fiancé. For previous installments, see what I’ve learned from my mother and my father.

My fiancé had a very different upbringing than I did. My father was a salaried professional who recently retired from the job he’d held for my entire life. My mother was a stay-at-home mom for most of my childhood. They’ve been happily married (and living in the same house) for 35 years.

My fiancé’s parents on the other hand had separated a couple times throughout his childhood before finally getting a divorce not too long ago. His father moved his family around the country buying up businesses trying to turn a profit. As my fiancé puts it, it’s not that he was unsuccessful making a profitable business, it’s that he got greedy and would cut corners so he could pocket more money, over-expand the businesses, and turn down offers from buyers because he was holding out for more. He ended up selling most of his businesses for about what he bought them for in the first place, and had to take a loss on a few of them. At one point when his parents were separated, my fiancé lived with his mother on food stamps. This is all to say that my fiancé had a radically different childhood than I had.

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What Would You Do With $10,000?

I received an email yesterday from Ally Bank asking me what I would do with $10,000. I clicked through to find an infographic summarizing the data collected from 1022 people over the age of 18 in the continental United States. What I found was rather interesting, but what truly peaked my interest was the way in which Ally presented the data.

Ally Asks: What Would You Do With $10,000? [INFOGRAPHIC]. Check out this story and more at Straight Talk, the official blog of Ally Bank.

The choices were save, invest, pay off debt, or spend the money. About a third said they would save it, while another fifth said they’d invest it, and yet another fifth said they would use it to pay down debt. I found it pretty surprising that over 50% of respondents said they would either save or invest it. I have to hope that those people don’t have high interest debts they need to pay off, but I’m skeptical that less than half of the respondents have no credit card debt.

Then I looked closer and marveled at the fact that they didn’t list the percentage of people who would spend the money. If you add up the percentages, you’re left with 28% of the respondents saying they’d spend the money. That makes it the second most popular answer, yet it’s swept under the rug, as if Ally is hoping you won’t notice it.

Why? Clearly Ally has an agenda: they want you to save more money and they want you to save it with them. Is the idea that by down-playing the proportion of people who said they’d spend the money and highlighting more responsible choices, they hope you’ll look more favorably on the responsible choices so when you get a windfall at some point you’ll be more likely to save with them? Or are they trying to make you feel guilty by showing you that the majority of people would do something responsible with the money, so you should too?

What do you think?

Financial Lessons From My Father

financial lessons

These people look nothing like my father or me, but we did spend a lot of time at the beach!

Yesterday I talked about all the great financial lessons I learned from my mother. I’ve got to give my father some love too, since a big part of my financial belief system comes from him. If my mother keeps me balanced and reminds me to live a little every now and then, it’s because I’ve been heavily influenced by my father’s hyper frugal ways.

My father is the kind of frugal that you really don’t appreciate when you’re a kid.  The kind who, if you ask him for some money so you can go to the mall with your friends, will hand you a $10 bill. But some of my greatest childhood memories are of time spent with my father doing very primal things, like helping him plant seeds for our garden, going to the horse farm to load up the back of his car with manure for said garden (yes, we really did that), cooking and baking, and going on fishing trips. Looking back, you realize these are the kinds of things that really matter.

Here are a few great lessons I learned from my father.

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Financial Lessons From My Mother

financial advice from mom

This is neither me nor my mother. But we both have brown hair, so close enough!

Our parents have a lot to teach us, if we’d just listen to them. You spend most of your teenage years thinking your parents are the least cool people on the planet, so surely anything they say isn’t worth listening to. Then you go to college and bask in the freedom of not having to hear your parents constantly giving you advice. It’s a great time. Finally you join the real world where you slowly but surely realize that all that advice your parents had been giving you over the years was for your own good. Thankfully, your snotty teenage self did absorb some of the things your parents had told you, even though you ignored it at the time.

Looking back, there are several things I learned from my parents that have proved to be invaluable. Today, I’d like to talk about things I learned from my mother.

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