emergency fund

this week has been a real killer at work. i've been getting online at about 7 each morning and doing an hour or so of work before heading into the office. i've been arriving to work at about 9 and work until 7 and then get back online at 9 and work til 12. hopefully, i'll just lock down the computer and not touch it this weekend, but it's never that easy for me.

look, i'm in IT and am used to some crunch time hours, but this time around, there's to big release or anything of that nature. just getting hit with a few requests late in the day or trying to catch up or just getting caught up in something or another. it's easy for me to fall into this routine.

so, today my boss rattled one of my direct reports. he expects that we essentially produce defect-free code. now, i certainly strive for that, but there are some things that just don't happen and i just don't know how to straighten the guy out. anyway, that led to drama with my employee about how he doesn't need to be treated like that -- and you know what? he doesn't -- and him trying to decide what to do with his future with my company. you know, it's 90% good and 10% bad here, and one day the 10% will just be bad enough to chase some folks out of here. we get this all the time -- my boss just doesn't react well to mistakes -- and one day it's going to be the day that my report walks. and then one day it'll be my turn.

and, that'll be the day that i'll walk out with no worries because i've got a well funded emergency fund. or, what i refer to on some days as a "go to hell" fund. now, you talk to 10 people about an emergency fund and you'll get 10 answers as to how much you need to keep. for me, right now, it's real easy for me to keep about a years salary in my emergency fund. why? well, where else am i going to put it? my 2% in savings and cd's is totally outperforming anything else right now.

financial advisor

i never thought that i would meet with any type of financial advisor or planner, but i caught up with a buddy of mine who just happens to be in that line of work today. so, over coffee and numbers out of my head, we talked about my plan in the 3-5 year timeframe, 10 year timeframe, and beyond.

i have to say that it all seemed pretty worthwhile. not only was i exchanging ideas with someone supposedly in the know, but he's in the no-fee business, which means that he gets paid by the people he refers me to. now, i know what you're thinking, he's no more than a headhunter for insurance, mutual fund, retirement, etc. companies.

well, that may be so, but i'm willing to listen. there's a couple of reasons that i believe this guy. one, my wife has known him for more than ten years and if he decides to simply make money by passing us around, we'll call his parents. two, for him to be successful, and i again believe that he is, he should be building long term relationships. there's no point in selling me something this year for a few hundred bucks profit if i'm just going to kick you to the door next year. you see, time is on his side -- if he's got clients in their 20s and 30s, chances are that he has 30-40+ years to make a little money from us year after year.

anyway, after our first meeting, he's going to build a report for us to consider where we have holes and what we can do to fill them. stay tuned.

more p2p lending

so, i just signed up on the trading platform that lending club offers. this allows you to trade debt. instead of being a lender, you turn into a trader and can buy and sell debt (at discounted rates) and thereby instantly monetize your investment.

p2p lending

i had been experimenting with prosper for some time, but they've been essentially closed to new funding due to some sec quiet period, so i've just signed up with lending club. the two are fundamentally the same, but here's an interesting thing to note with lending club -- you can fund your loans via credit card! that's just amazing if you ask me.

anyway, if you are interested in signing up and want to take advantage of a $25 bonus, click here.

end of the year tax moves

it's time to say goodbye to 2008 and time to make some last minute moves to help soften any tax burdens for the year. there are a few easy things that i'm going to do this year . . .

take some investment losses. i got into some financials at the beginning of the year that looked good and were paying a good dividend (c, aig). these stocks are at historic lows, now unfortunately. by realizing these loses, i can take that right out of my bottom line and pay less in taxes. now, i don't generally suggest spending a dollar to save twenty-five cents, but in this case, there is a key advantage to selling now. if i believe that these stocks are going to come back, i can sell now and get back in after a 30 day wait (wash rule), if i think the stock is poised to go back up. that way, i can take the losses and benefit from a longer term holding strategy.

make donations. i've got hundreds of dollars of baby gear that my kid has outgrown. a few trips to the local goodwill will take those right off my bottom line.

ira contributions. you've actually have some more time to make these contributions (until the april tax filing deadline), but nonetheless, making an ira contribution reduces your taxable income by the amount of your contribution (with certain income and contibution limits). so, if you're stashing away money for retirement, you might as well plunk it down in your ira.

well, that should do it. that'll take a few grand off my taxable income without any real measurable effect to my real holdings.

mortgage rates at historic lows

now that rates are at all-time lows (well, at least -- to borrow a sports term -- in the modern era -- since 1971), i decided to pull the trigger on a refi at 4.75%. we were at a pretty attractive rate of 6% before, but by getting a 1.25% discount, we will be saving a good deal of money in both the short and long term. a number of online calculators indicated that it would take less than 6 months for us to break even, our monthly payments would be a couple hundred bucks lower, and we'd end up saving tens of thousands in interest payments.

it was a no brainer!

now, the only question is, what do we do with the extra cash? spend it? invest it? save it? put it back into the mortgage?

things you don't want to buy on credit

for me, there are very few things that i don't buy on credit because i pay off my balance every month, no matter how painful it is (some months, like january after christmas purchases are more painful than others).

my understanding is that this is not the norm. here are the things that i would hate to go into debt to buy:

1. food. unless you really are in extremely dire straits, i'd say buying food is probably a very bad use of credit, but it's something that i'd guess happens pretty often. i've personally observed a lot of my friends that dine out every day, morning, noon, and night. for the most part, these folks are buying meals that they aren't going to remember after a few hours, but they'll be paying for them for a lot longer. you think that $1 value meal is a good deal? what about after your revolving debt, late fees, and interest turns it into $25? you could have had a gourmet meal!

2. entertainment. this is the same story as above. it's already way too expensive to go watch a movie, but to put it on a credit card that you are only making minimum payments for? i hope the dark knight is worth $25.

3. gas. paying for gas at the pump is really convenient. but with gas at $4 a gallon, it costs me about $50 to fill up. how about twice that amount if you just making minimum payments?

now, i'm exaggerating a bit, but a good rule of thumb on revolving debt is that making just the minimum payments is going to end up costing you at least twice the amount of your original purchase. that's just the high level, though. think about the opportunity cost -- you could have put those fees to work for you, instead of paying someone else!