Friday, December 29, 2006

I Am Not A Complete Financial F*ck-Up! I Am Not!

Money is my Achilles' Heel. I feel like a complete idiot when it comes to money. Even as I have made HUGE strides in handling my bills better and getting rid of debt, I still think I'm a schmuck.

I KNOW I am not a tool...*she says more to convince herself*...I mean, by the end of January, I will have gotten rid of about five thousand dollars of credit card debt by setting up automatic withdrawals; I will have paid absolutely no interest on my first new credit card in years by paying off the full balance for three months. I will have not had any previous balances on my monthly bills for at least six months...the exception being cable and Internet. I think I resent how expensive that sh*t is, so I resist paying the bill. I still pay it, though. Granted, the "Law & Order" payment helped, but I was still the one who managed that money. For many people, this isn't a big deal. This may sound like a father declaring, "I take care of my kids!" as if he was doing something special. But Americans are billions of dollars in debt, so I know I am not alone.

I have a long way to go, that is for sure. But whenever I feel down on myself, I go online and look at my TIAA-CREF retirement account. I don't have tons of different accounts that have my money making money, but I do have my job's 403-b. From my first day at work, I had them deduct money out of my paycheck...pre-taxed, of course...and did research into which mutual funds to best place it for my age and whatnot. Once I was working a year, my job started to contribute to the fund as well. The result: I've got five figures in my retirement account and I've contributed about half that amount. The rest comes from my job and the money the account has made. The best part about it is that I'm fully vested in all of it! So I get to roll ALL of that money over when I leave.

This makes me very proud of myself. It gives me the confidence to know that if I can get a handle on some parts of my money, even after 32 years, I can get a handle on all of it.

I haven't come up with my New Year's Theme yet, but I do know it will incorporate budgeting every month, building up my emergency fund, and helping Ella socialize better with other dogs in 2007.

8 comments:

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Anonymous said...

Congratulations on your success with TIAA-CREF's 403b; you're hooked up with a great company.
Two suggestions from someone who retired after almost 45 years as an investment professional with TIAA-CREF:
First, assuming that you are are relatively young -- say under 35 -- and are investing for retirement: be sure to stay heavily in equities (stocks). Don't try to "play safe" with money market or bond investments. Long-term investors should be in stocks. Think about bonds when you are 50.
Second, be sure to diversify within your stock portfolio -- put a third to a half of your portfolio in non-US stocks, using, for example, an international stock fund. Global diversification will help insulate you against heavy declines in the US market. No matter how many great US stock funds you own, you're not getting the benefits of diversification without substantial investments in foreign stocks.

Angela said...

All good advice anonymous. I'll have to take it also.

I am such a money fu** up. You have no idea. Just trying to get better one say at a time.

The Rover said...

Nice job! It's not akin to "taking care of the kids" because so many people DO NOT take care of their money. So you deserve major kudos.

L. Britt said...

Thanks for all your supportive words. Anon, I have indeed put the majority of my portfolio in equities. I have heard that advice many times...since I am indeed under 35, my retirement money has plenty of time to weather the storm of the market and come out ahead.

The international investing is new to me, but I will check it out. I have a percentage of my portfolio in a real estate fund, and I was thinking of moving some/all of it into something else. Perhaps international is a place to go...

L. Britt said...

Oh, and Angela, if you want a budgeting buddy or a partner in turning your financial life around, I know I could use all the help I could get. The more, the merrier!

Anonymous said...

From the original "anonymous":
Since you're actually reading these comments, I'll offer you some additional thoughts:

First, outguessing the market is exceedingly difficult, even for people with instantaneous access to the best information. After all, professional investment managers underperform market indices much of the time; therefore: stay clear of individual stocks; invest in no-load low-expense mutual funds and exchange-traded funds that operate in broad sectors of the market. Avoid narrow sector and country funds, which are inherently volatile.

Second: If you're not already doing it, do some basic research on the fund investments that you are considering. Two good sources that you might consider are www.morningstar.com (the premium version) and the website of the American Association of Individual Investors (www.aaii.com).

Third, gird yourself against the temptation to be an active trader and stockpicker. Life is too short for that, and, besides, you don't own the requisite crystal ball. What's more, nobody does. To help you stay focused, read David F. Swensen's book, "Unconventional Success: A Fundamental Approach to Personal Investment," a wonderful presentation the the bedrock principles that should guide your investment decisonmaking.

m. said...

L. Britt -- I think we're of similar minds when it comes to our financial situations. I too am always working to pay off my debt, figuring out how to cut corners, and made at least one wise decision: making automatic contributions to my TIAA-CREF retirement fund. (If I'm down on myself about other financial matters, I can look at that account and feel a little better about my situation!)

I don't do the max -- will do so when the debt is paid off.

I attended a little TIAA-CREF seminar, and I recall a little nugget of good advice:
when deciding how much money one contributes monthly to the T-C fund, one should do so by a percentrage, rather than a dollar amount. In this way, with each yearly increase, your contribution also increases, with little notice to you.

(It's time for me to take that advice! I decided my contributions by a dollar amount. KEEP MEANING TO CHANGE THAT TO A PERCENTAGE!)

Happy New Year!