Money Forward

This blog is about money and trying to keep my money from flying out the window.

Thursday, February 22, 2007

Are unions robbing us?

It is well known that unions in Massachusetts have a lot power. Many government officials will back off on plans that unions strongly oppose because of their power. Unfortunately this has lead to a lot of problems, especially financially. (This is related to personal finance, you'll see later on. Also unions can be good things, it just depends.)

In Massachusetts, by law (with the backing of police unions), there has to be a police detail at most construction/repair sites. The other 49 states have civilian flag persons. So if a company is working in a manhole, there must be a police officer. If there is work being done on the highway, there must be a police officer. My parents who live in a small neighborhood on a street that loops onto itself and is not a throughway, once had a police officer in front of their house when a telephone (or some other utility) company was doing work in a manhole. WASTE OF MONEY AND TIME. Most of the time the officers just sit there chatting with the workers, not actually directing traffic or doing anything useful (This is what I've experienced while trying to get around workers by going into on-coming traffic because the officer is too busy chatting to direct traffic.. which is his/her job).

Sure, the company that is doing the work pays for the police detail, and the public money does not directly pay for the detail work right away. But using these police details requires other officers to be taking up the missing work that the individual is missing. Even if it is overtime, the fatigue that must happen from working so much overtime must affect work performance. On top of this, the retirement pension that these officers make looks at their TOTAL salary (usually the last 3 years before retirement), to come up with an average (or percentage of) to calculate the pension. That means if an officer made an extra $40,000 a year in detail work for the past 3 years, that is included in the calculation. So whatever percentage of that they get every month for their pension, we as tax payers have to pay for it, for the rest of their lives.

Think about how much money that is if 5 officers a year retire and live for 30 more years. That money adds up to a lot. And it makes matters worse since our local governments are already adding on more fees and taxes to make up for their budget shortfalls. It may not seem like you are paying for this, but you are. The biggest source of income for local government is property taxes, and everyone pays those. If you rent, it's part of your rent that the landlord uses to pay the property taxes, it's obvious if you own, and money even comes from other taxes (in Massachusetts we have excise tax on cars and boats). Your fees for parking permits and other fees go towards what the government needs to pay. You are paying for these services.

As an example, the MA State Police average salary is between about $49,000 to $68,000. More than 1,000 police officers (out of 2,338) made over $100,000 last year. In Boston, about 41% (1,276) of the police made over $100,000 last year. 25 of them made over $200,000. All the while there were 74 homicides, one less than in 2005 which was at a 10-year high. As of January 1st, according to, only 28 of those homicides have been solved. What have the police been doing? (All data taken from

Any mention of changing the way of calculating pensions or taking away police details will be destroyed by union opposition. So for now we're stuck with this system and we will continue to see our money being squandered. How there is not an outcry about this, I have no idea.

$100 gift card from the Citi Diamond AmEx card

Finally after 2 months of waiting I received my 10,000 bonus points. The free points were one reason I applied for the card in the first place. They first only credited me 5,000 points. I called and asked and it had something to do with an error. Eventually they worked it out. Took a little too long though.

Anyway, I used the points to get a $100 gift card to Target since we do plenty of our shopping there. As I've stated before, I may take $100 and put it into my HSBC account that holds my "not my money", since it is free money and I would be going to Target anyway to spend money. I haven't decided whether or not I'm going to do this yet.

Tuesday, February 20, 2007

Can you job count as charity?

There is a lot of talk about giving to charities and how much we should give. A lot of times, giving can be pretty meaningless. We write a check and it's done with. I'm sure a lot of this money goes to wonderful things, but what about people who live their lives helping others? What about the people that take a huge pay cut to work for a cause they feel strongly about? Does this count as charity?

I was thinking about this since every few months I have the urge to go to law school. The problem is that the type of law I would want to do (environmental) generally does not pay well, and having a $100k+ debt with a low paying jobs just isn't appealing. Some people do this though. So if a lawyer who could be making $90k a year (after taxes let's say), actually works at a non-profit and makes $40k a year, do they really make a $50k a year donation to charity? If a doctor who could make $100k a year works in a clinic and makes only $45k a year, does that doctor make a $55k a year donation?

In my opinion, they do. They may not be contributing money, but a non-profit or other organization can not survive without staff members. Someone needs to do the work. Maybe it's their job, but is a job always considered non-charity because you get paid for it? I think that's unfair to those workers.

Of course the doctor and lawyer can not take a $50k or $55k deduction on their taxes or anything, but does that make them worse than the people who make a deduction every year and get to deduct that from their taxes?

I think a lot of professionals get the short end of the stick, and we rarely, if ever, find the time to really think where our world would be without them.

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Thursday, February 15, 2007

Lessons learned on the stock market

As I mentioned in my post about my money game, I put $5000 into a brokerage account and bought stocks. So far I've learned some lessons, although I'm not sure how good they are.

If you buy a stock and you believe in it, be patient. You can't let a dropping price change your mind, and if it seems high, it doesn't mean it is. Do your research and stick by your picks, unless you have reason to change your mind. I bought one stock at a higher price than I should have, and felt bad that I did this as it dropped several percentage points. Right now it is up over 28% since I bought it on January 31st. I was not patient with another stock. I thought it was trading too high and I bought it too high, so I sold it thinking it would drop and I could get it cheaper. Since then, the lowest price has been my payment price, and right now it is up about $0.46 cents a share (or 8.3%) from the price I originally paid and sold it for. I should have just kept it. Oh well, it was my own mistake.

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What's your risk level?

A lot of people give advice about how much money you should have in stocks and what is smart investments considering your age and everything. This is generally good advice, but it will nto fit everyone. YOU need to be comfortable with your strategy, no one else. A good example is my father. He has a very high risk level. He's almost 60, and up until a week ago, he had 100% of his retirement in stocks. Seriously. Part of this was because he lost so much when the market fell a few years ago, and so he had a lot of making up to do. This is also his risk level. He doesn't mind the risk so much because he prefers the gains, and knows that over time he will come out ahead. He also does not plan on retiring any time soon, it just doesn't interest him that much.

Recently, as I said, he moved some money out of stocks. He thinks the market is going to drop soon. He wants to at least protect some of his money. This is a good move, and whether he's right or not, we'll have to see. But it shows that even he is becoming a little bit more careful, even if he only moved 15% of his money.

In my own strategy, I am more on his boat than others. I prefer to have as much in stocks as possible, and right now that's about 98% of my retirement money. I know I have a lot of time to let it sit, and there is potential for larger gains, so why not? It is all about being patient.

So what's the point? Listen to whomever you want, but go with what is comfortable for you. If a professional says you should have 90% of your money in stocks but you feel more comfortable with 75%, then go with 75%. Just know the consequences, which would be to make potentially less money over time. But also, if a professional says to put 50% in stocks and you want to do 75%, go for it. It's your money, but take responsibility if things go badly. For me, that means a lot of stocks for a long time. After all, it's all a big game, just remember what happens if you lose while you mainly think about winning.

Wednesday, February 07, 2007

Money can bring happiness

While reading comments on a post at Money, Matter, and More Musings, I thought of an article I read a few months back. There is a common thought that money can not buy happiness. Money itself will not buy your happiness, but do you really think that money isn't part of the equation? Without money, you can not do many of the things you want to do, or have things that will help with your happiness. Golfing may make you happy, but if you don't have the money to buy the clubs and pay the course fees, then you miss out on one thing that makes you happy.

This article on CNN Money (from Money Magazine) makes it pretty clear that money has an affect on happiness. There is not a correlation between the amount of money and your happiness, but rather there is a threshold that if you're on one side you're more happy than if you're on the other. This makes sense to me. At some point, no matter how much money you have, you won't be more happy. If you have just the right amount to do what you want and not worry about money and finances, then it's great.

"...going from earning less than $20,000 a year to making more than $50,000 makes you twice as likely to be happy, yet the payoff for then surpassing $90,000 is slight."

If you have just the right amount to do what you want and not worry about money and finances, then you have more of an ability to be happy.

The rich are borrowing more than everyone else

This article from the WSJ through Yahoo!Finance talks about hwo the rich are actually more in debt than everyone else, except they use it for different reasons. What is most interesting is that they're going into debt so that they can make more money with the money they have. Basically playing the arbitrage game.. with a lot more money.

If the rich can do it, so can I.

Tuesday, February 06, 2007

Networth Update and Money Game update

I finally got around to somewhat doing my networth. Some of my numbers are estimates, btu they're close enough. Part of the problem is I have no idea of the mileage on my wife's car, and so that has some affect. My company's 401k is also being moved to a different company and not all of the money has come over yet, and I can't access the old account so I have to guess how much money I have there. Also I skipped December's networth. I did this for two reasons (1) I was going on my honeymoon and things were crazy and I just didn't have time (2) we received money as gifts from our wedding, but I knew most of this was going to my tuition this semester and I didn't want to see the rollercoaster ride in my networth.

As you can see, my networth has dropped a bit. Part of this is my lower savings. Part of this is because we spent more than I wanted to on our honeymoon. It didn't drop THAT much though. Also, my depreciation on our cars went down a lot, but I think I may have used the private seller option before, and this time I did the trade-in option. I will try to be consistant and use the trade-in value from now on.

On the other hand, our investments went up (except for my private stocks...). After our tax return our savings will also go up a bit, even though this money will all go towards my summer tuition.

The Money Experiment
I have finally gotten this started, as mentioned in an earlier post. In HSBC I have $6,983 gaining 6.0 APY interest (until April 30th). Since I'm being experimental, I also put $5000 into a brokerage account. That balance has changed a bit, but I'm going to ignore it for another month or so. I'm now just waiting for $9000 more from Discover, which is taking ridiculously long to be transferred onto another credit card. That money will also go into HSBC. My goal by January 1st is to have made $1000 from this experiment. This of course requires me to make mroe than 5% off of the money.

As a side note, I understand that I should just put all of the money in a savings account rather than risk it in a brokerage account. I'm doing this as an experiment, though, am using a certain amount of money that I know I can cover if a problem occurs, and I'm taking risks because I'm partly impatient and partly I want the ability to get more than what a savings account can provide. I may make mistakes (as I have easily done with my lucky timing at picking stocks), but it's a learning experience.

Friday, February 02, 2007

Dropping Capital One

I originally got a Capital One card because the rewards seemed decent enough and it was accepted everywhere I needed to use it (especially for my tuition). Although the travel rewards aren't too bad, they aren't as good as other places I've seen. Since I mostly wanted this for those rewards, I don't see why I should stick with a program that isn't maximizing my benefit. For example, USAA offers around an 100 point:$1 reward conversion for airlines (and less points per dollar further up the scale), with various levels of redeem-ment, even around the $250 mark, which is a key area where most plane tickets I want fall into. Not only that, but if I buy a ticket through their program that costs $220, they give me a credit of $30 on my account to make sure I get the full 100 points:$1. That's a good deal. Capital One's program allows me to get a ticket that is under $150 for 15,000 points, and a ticket between $150-$350 for 35,000 points, and they don't give you back the difference. Shody deal. And to get cash it's 20,000 points for $100. RIDICULOUS.

To avoid all of this trouble, I'm dealing with my AAdvantage stuff, and I got a new credit card that gives 3% for gas, groceries, and that stuff, and 1% for everything else. I know I can probably do better than that, but generally it is with AmEx which does me no good since I can't pay my tuition with it, or there are more strict limits than this card. So I'm sticking with this and the money will just go into a separate savings account for travel. I figure it's the best way for now.

Thursday, February 01, 2007

Why I should have more money

Sadly, it was probably about the partying. It's not like I was too crazy, I was practically the only one out of my friends that had a major that required studying and a lot of extra work. Plus I had a job, which most of my friends did not, or if they did it was a joke job that they rarely went to. But I tended to always put in the little extra to cover people when it came to partying. I have no idea why though. Most of my friends were useless with money and shouldn't have been given that type of free way out, or they had everything paid for them. I probably wasted a few thousand dollars over the years.

I almost always had enough for what I really needed and for occasional wants. I did always save up enough to get what I needed during the summers, a computer, car, etc. But I should have saved a lot more. This all lasted through my first job. I did make enough to put a chunk in savings, but for some reason I wasted it all on fast food and other crap. Now I'm living in an apartment with crappy, loud neighbors thinking about how close I could be to owning a home of my own. At least I had a good time partying up.