Posted on: May 14, 2009 by Matt
A lot of people writing about personal finance seem to have quite a bit to say about investing and investment strategy. However – I do not invest much at all. The total of my investments is the roll over IRA I have from a 401K plan I had with an old employer. Why do I not invest? Do I not understand the importance? Well – mostly because I am trying to eliminate my debt prior to putting money away for retirement. I do plan to invest in the long run but right now it does not fit all that well into my budget.
That said - I still do have the one IRA account that I normally do not pay much attention to. When my statement came in the mail earlier this week I noticed that it still had an old address on it (since we moved) and figured I should open it up and give them a call to update the address. I had not checked the balance on the account since transferring it over to a new institution (I moved it to a local firm with somebody that I know from high school). So I was pleased this month when I discovered a 10% increase in the plan value.
I know these numbers go up and down frequently but was still rather impressed given the current economic state. When I spoke with my financial advisor he noted that he has been seeing some action lately that makes him hopeful we are on the way to recovery. He also believes that people who stayed in through the economic downturn or are just buying in now should see some pretty good results if the trends continue.
I for one have had enough with the crazy econcomic news and am looking forward to a positive change. I hope that my advisor is correct and we do start to see a turn around!
Posted on: April 28, 2009 by Matt
Originally uploaded by Gnerk
Shortly after my 18th birthday my mother passed away. I had plans to head off to college about a month later and intended to go just to get away from all the old memories lingering around where I grew up. I had very little in my bank account and all of it was probably going to be needed for books and other expenses related to college.
Later that semester I received notification that I was due to inherit my share from my mother’s estate which amounted to about $11,000. To date this was easily the largest sum of money I have received in one lump sum. I had no idea what to do with the money and was still grief stricken and in shock from the loss of my mother (I really had trouble coping with her death). I did what most college boys probably would have done: deposited the money in my checking account and spent frivolously. Of course the nice lady at the bank attempted to give me some advise but I wanted nothing to do with saving money or planning long term. I more or less told her to just give me the money and shut up.
For the most part I do not remember what I spent the money on. From what I can recollect now I can recall buying:
- Lots and lots of booze on a regular basis: I developed an even bigger drinking problem in college that I carried with me until a little over a year ago. At this point in my life I have come to realize and accept that I am an alcoholic and can not drink. I have been sober now for about 16 months.
- A PlayStation2 that I had to have: I was a guy and in college – of course I needed the newest video game console.
- A beat up car from my girlfriend’s (at the time) brother: This was my first car. I did not get my license until I was 19. It was a little beat up but ran well and I managed to get quite a bit of mileage out of it.
Needless to say – I spent every last dime within a year or so. I do not regret spending it but do think that I made some poor choices. I suppose that if I had to start all over again today I would probably look to start out by:
- Learning how to manage money: Not just large sums but also general personal finance. I was fairly clueless, nobody had taught me anything about money management and I had not taken the initiative to learn on my own.
- Parking the money in a CD where it is locked for 3 to 6 months: Actually – I probably would have opened a few of them that would mature at different lengths of time. Maybe break it into quarters and put 25% in each 3, 6, 9 and 12 months. I was in no emotional state to make any financial decisions and knew little to nothing about handling money.
- If I needed money, get a job: I had limited to no income the first three years of college. I cited having to focus on my studies as the reason for not working but the real reason was I was too busy drinking and generally slacking off. I could have easily worked a part time job.
I do not regret spending the money or wish to change the past but do try to learn from my mistakes. In this case I learned that having a large sum of money float into your life requires that you press a pause button and do some planning and possibly some healing. When the inheritance arrived in my hand I was still grieving (at a point where I maybe should have put college off a semester or two) and was not clear headed. Parking the money and forgetting it existed would have given me some time to work on healing myself. Once I was in a better place emotionally I could have moved forward with learning how to manage money and planning. My lesson did not have to be learned the hard way – I could have listened to the nice folks at the bank but I chose not to. So I guess there is also a general life lesson here as well: Listen to the advise of people who specialize in a field you know little or nothing about.
Tags: Banking, Budget, Budgeting, Cash, Family, Financial Team, Frugal Friday, Future, Health, Personal Economy, Personal Finance, Planning, Relationships, Savings, Spending Filed Under: Banking, Budget, Health, Lessons Learned The Hard Way, Planning, Savings
Posted on: October 23, 2008 by Matt
In working on developing my personal finance team I have been trying to roll my old 401K into a new plan with my new financial adviser. Earlier this week I got an email from Jake (my new adviser, who also happens to be an old friend from high school) that he has run into a snag getting a distribution form from Great West Retirement Services (the company that held my 401K). He let me know that he had called them but they refused to help him over the phone and that they did say that they would mail me the forms. Jake asked me if I had seen the forms in the past couple weeks and asked that I call GWRS since I had not.
While on the phone with the GWRS representative I was given a brief history of my account which stirred up a few old memories. He noted that the employer that the 401K plan was under appears to have gone out of business and that they had moved the money into a rollover IRA. The IRA was currently an I-2 and he would be sending me the forms to move it to an I-1 as well as the distribution form to move my account. The concept sounded fairly straight forward and Jake has offered to handle the paperwork for me once I receive it so I think that I am in the clear. Hopefully I can get the funds transferred over in the next month or so (this is one of my small short term goals that I did not list as I thought it was completed).
What really struck me about the conversation with the GWRS agent was not the process to get the funds transferred but the gut wrenching feelings I had at the mention of my former employer. The company went out of business a bit over two years ago now and I have not given it much thought. However when he mentioned the name of the company my stomach tensed from remembering the old feelings of going through being laid off. My last employer was the only company I have worked for and been laid off; I hope to continue on that trend.
I hope in the somewhat near future to put together a post on watching the company sink and going through the lay offs. I learned a lot through the experience (in hindsight anyway) and would like to share a few of my thoughts.
Posted on: October 16, 2008 by Matt
Since moving back home to Vermont I have continued using my bank from Colorado. As I mentioned earlier I believe that having a local bank is an important aspect of building my personal finance team. My bank in Colorado has so far been very accommodating (reimbursed ATM fees, sent me postage paid envelopes and deposit slips) but I like the security of being able to walk into a physical location when I have a problem.
I decided to head down to a home town bank that my entire family currently banks at (well all that are still in Vermont that is) and one of my sisters even works at. I had an old account still standing left over from college with $1.76 left and a check for $40.95 from my CashCrate payment. The minimum balance to open a new account is only $25 so I opted to close my old account, transfer the $1.76 into a new checking and deposit the CashCrate check.
When the teller began to explain my checking account options to me I expected the standard pitch but was nearly blown away by the package she described. With the “Reward Checking” program offered by the bank my account would:
- Not have yearly maintenance fees: Pretty standard but
- Include a debit card: Ok, so this is pretty standard these days.
- Reimburse competitor ATM fees: Up to $5.00 for ATM fees per transaction. My bank in Colorado only offered this after discovering I was moving out of state.
- Offer a 3.98 interest rate (4.05 APY) on my funds: I heard her say it and immediately thought – well maybe with a minimum balance of like $10,000 or something. This was not the case – the interest rate applies to any balance between $0 and $25,000. Over $25,000 it drops to 1.05%.
Of course there had to be a catch on getting an interest rate that high on a checking account. I asked the teller and she let out a mild laugh and responded that the catches are:
- I have to use internet banking: Basically, I have to create a logon to access my account online and view it once a month.
- I have to have at least one direct deposit or ACH transaction per month: My company requires direct deposit, should not be an issue. She also noted that writing a check at the local Price Chopper qualifies.
- I have to receive my statements electronically: This is fine with me – I have done this for a couple of years now and prefer not to waste the paper unless I need to print it out for some reason.
- I must make ten debit card transactions per month: I am pretty sure that I use my current card more than ten times in a month – this requirement should not be an issue.
All said and done – I was pleasantly surprised and really look forward to moving all of my regular banking to my home town bank. I already have a relationship started with them from growing up here and my family using the bank extensively. I hope that someday I can cultivate the relationship with the bank to a point that I can work with them for all of my financial needs.
Posted on: September 11, 2008 by Matt
In my journey to get out of debt and regain control of my finances I have finally come to a conclusion: I can not do it all alone. I mean reducing debt, increasing savings, budgeting, balancing your checkbook, interest rates, stocks, bonds, mutual funds – there are enough aspects to keep you busy full time.
Naturally I will be primarily responsible for my own finances but I believe that I can increase my chances for success by building a strong team of people that I trust. By having such a team in place I should be able to start building a form of personal economy where I am not the only resource for my financial plan. The basic concept is to build up a group of trusted advisers to turn to when various decisions need to be made. By having the advice by professionals in the field and hearing all angles of a proposed financial venture I believe that a much better final decision can be reached.
The old fashioned, traditional part of me wants to try and build my personal finance team by finding individuals that I can sit down with face to face and discuss my situation when the occasion warrants. While the face to face approach may work for members of a personal finance team it may not always be practical or cost effective. Therefore I plan on working through a combination of individuals I can trust, local branches of financial institutions and online companies to round out my team. So far I have located and am working with:
- A credit and debt management consultant: I have only met with him once and it cost me $50 but it was well worth the meeting. He gave me a wealth of information on how to work on my loans in collections and provided insight to venues that I had not considered before.
- A financial advisor: I had a 401K from a company that no longer exists that was sitting in a money market account that I had no control over. I let it sit there but recently decided that I would rather have this money managed by someone I could meet with face to face. I happened to know an advisor at the local Wachovia Securities office and scheduled a meeting. So far this has been working out well.
- A bank(er): I am still working on building a relationship with a local bank. Where I currently live is rural enough that small financial institutions value your business and the level of customer service is unparalleled. My current bank is in Denver where I lived for the past six years before moving home. It works but it makes meeting in person difficult.
- A CPA / tax accountant: I currently do not have anyone to help me with my taxes. I hope that as time goes by that I will have a better reason to actively seek out a good CPA. Right now my finances are not all that complicated so I am still able to file my own taxes.
- An insurance agent: So far I have health insurance through my company (I have contact information for our agent for questions) and car insurance through Geico. This is currently my one area that I have looked online to pursue in depth.
I hope to dive a little deeper into each of these roles down the line and am sure that I will define new roles that will need to be filled. I also hope to keep everyone updated as I work to build up my team to help ensure my success with reovering my financial well being.
