What I Really Want for Father’s Day

I bought myself a Father’s Day present two months ago.  I ran across a PanDigital digital photo frame for 50% off and decided that’s what I wanted for my desk at work.

What I Really Want
As I loaded up the frame with pictures of my family and friends I realized why I wanted the frame so much.  It’s not like me to spend $60 on a whim on electronics so I knew there was something more to the present for myself.  The pictures I uploaded represented the things I’d rather be doing than sitting at a desk all day long. 

The people in the pictures are the ones I call at the end of the day with bad news, “Sorry, I’ll be home late because something came up at work”.  They’re the ones that have to put up with my grouchy moods and whining because of the latest foobar thing at the office.

What I really want for Father’s Day isn’t a digital picture frame that reminds me of the people I care about, it’s too have more time to spend with the people I love.  It’s to spend less time worrying about work meetings, projects, and documents.  I want to spend more time making memories with family and friends and less time working on and complaining about TPS reports.

How I’m Going To Get It
This posting would be in vain if I simply lamented my situation and ended it there.  Instead, I’m building a plan to get out of my current situation, an exit strategy.  I’m tired of the work that I do but don’t really know what I’d rather do instead so I’m in the scouting phase.  I do know I’m tired of the rules, practices, and hours of working for a corporation so I’m exploring working for myself. 

I’m researching topics that interest me and determining how I can bring enough value in those areas to trade information & experience for financial compensation.  I’m meeting other people that have the same aspirations or already do work for themselves doing something they enjoy.  I’m learning the ins and outs of accounting, taxes, benefits and other topics necessary for a small business.

Sweet Success
I’ve put in many hours so far and will certainly be burning the midnight oil for some time to come but it will be worth it in the end. My hope is that I can set my own hours so that I’ll be able to work more on my family’s schedule instead of an employer’s. Since I’ll be working on things that interest me and I enjoy, I’ll be a happier person.

I know that I’ll get there; just not sure how long it will take yet.  The best part is I’ve made the decision and started working towards the goal so I’m on a roll!  That’s what I really want for Father’s Day.

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Personal Finance Review – First Birthday Edition

We celebrated our son’s first birthday a little early yesterday with a birthday bash.  Although he didn’t really know what was going on I think he had a good time.  He had his own little birthday cake that he dug into; it was fun watching him enjoy the icing while managing to get it all over everything.

One lesson we learned is to go easy on the cake for one year olds.  All the sugar kept him up and hyper long past his bedtime, oh well; you only turn 1 year old once.  Here are some recent money articles I enjoyed.

-Binary Dollar brings up umbrella insurance.  It’s a relatively low cost way to protect yourself from liability suits.

-Free Money Finance has an article any homeowner should read on property taxes.

-The Digerati Life rebalances her investment portfolio.

-Five Cent Nickel lets us in on a little tax arbitrage secret.

-Sun’s Financial Diary covers how your credit score affects your insurance rates.

-Art of Money has a helpful spreadsheet for evaluating money making projects.

-Moneyning talks about budgeting and the cost of wedding happiness.

-Get Rich Slowly has an interesting post on getting more out of life by overcoming your fears.

Happy father’s day to all the dad’s out there!

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Who Actually Reads the Terms & Conditions?

Do you read every word of the terms & conditions when you’re signing up for a new account?  Whether it’s an email account or credit card application they all seem to come with a lengthy terms & conditions.

Who Has Time?
I just signed up for a service online last night and their terms & conditions page was 4369 words long, 9 pages pasted into Microsoft Word at 12 point font.  I had a lot of things to do and didn’t want to take the time to sit down and read through a lengthy document.  One thing that really bugs me is when I signup for a product or service that’s supposed to make my life easier, faster, or more convenient and have to trudge through 10 pages of terms & conditions in legalese.

Who Understands Them?
The main reason for the terms & conditions from the company’s perspective is to lay out exactly what they will & won’t do to protect them from liability.  I’d be willing to bet most companies don’t care whether you read the conditions or not, just as long as you check the box that says “By checking this box I agree I have read & reviewed the Terms & Conditions”.

Since the target audience is more lawyers than customers, the conditions are often written in legal jargon that might still leave you scratching your head even after reading through it a few times.

Who Reads Them?
We have come to expect terms & conditions to be long and confusing so the thought of struggling through them often deters us from reading them at all.  The obvious problem with this is that when you agree to the terms and conditions you may not know what you’ve gotten yourself into until days, months, or years down the road when something unexpected pops up.

When I’m dealing with a financial contract such as a loan or credit card application I make sure to read the whole document but if it’s for something such as a merchant or a service I have an abbreviated method I use.

How I Scan Terms & Conditions
Most terms & conditions are separated into multiple sections, each marked by a header in large bold text.  What I typically do for non-financial documents is to scan through the headings to see which sections I really care about. 

I always look for the Privacy Policy section to see how they’ll handle my personal data.  I scan for headings on Arbitration, Governing Law, Jurisdiction, or Forum for Disputes that lay out how any disputes with the company will be settled. 

Another section I look for is something about Changes in Terms & Conditions or Changes in Products & Services that details how the company will interact and inform customers when modifying their terms or their products/services.  Lastly, I check for any mention of additional fees.

Did I miss any key parts of the Terms & Conditions you should look for?  Do you think people can get a good feel for the important aspects of a terms and conditions document by just scanning it or do we really need to read the whole thing? 

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Chase Says Credit Limit Increase Is An Opportunity!

A credit card limit increase may be an opportunity, but for whom?

Unsolicited Credit Limit Increase
I received a letter in the mail today from Chase announcing they had increased the limit on my credit card.  I had to laugh at the first two sentences of the letter:

“You deserve the opportunities that come with a larger credit line. Your increased credit line of $13,000 gives you more flexibility to enjoy the opportunities in life with less worry.”

I didn’t ask for this increase, so why was it granted?  Chase proudly claims it’s for more opportunity.  I now have greater purchasing power, however, what they don’t mention is that their opportunity for making money increased right along with my spending power.

Credit Card Prestige?
I continued to chuckle as the letter went on:

“Use your Chase credit card for all of your every day needs, as well as for the larger purchases you’ve been waiting to make. So take pride in the prestige of using your Chase credit card and enjoy the potential of your credit line. Its our way of saying thanks to you.”

They remind me that my new credit line will allow me to buy the things I’ve always wanted but couldn’t and will make me feel more prestigious.  Wow, I never knew a credit card could get me what I wanted and make me feel better about myself.

They wanted to offer me these benefits to say thank you for using their credit card. Well that’s certainly one way to spin it.  Another way to put it is they want me to feel good about spending more money in hopes I’ll stop paying off my balance in full each month and start paying finance charges.

Sorry Chase, not going to happen.  Thanks for the credit limit increase, but I already have enough “opportunities” to spend money in my life, I don’t need any more.

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Personal Finance Review – Job Review Edition

As a manager of a group at work, I’ve been tasked with doing mid-year reviews for my team.  I find it a bit frustrating that I have to spend hours of my time putting together documents that don’t really add any value in our company.  Everyone gets a 2.5 – 3.5% raise at the end of the year and no one gets fired, it doesn’t really matter what it says in your review.  If you’re doing poorly enough to get canned, which no one is, it’s blatantly obvious and no one needs a review to establish that. 

If the company actually based merit increases on our reviews and made them a sizable amount then I would gladly spend the time putting them together.  Until then, I grudgingly create them at the last possible minute. Here are some interesting articles so far this week:

-Generation X Finance offers tips on how to deal with car salesman.

-Mighty Bargain Hunter gives some tips for people looking to make extra money from direct sales parties.

-Lazy Man talks about inflating your eBay rating.  In my experience, eBay users aren’t dummies.  It only takes one click to check your past sales to see what types of things you’ve been selling.

-Money, Matter, & More wonders when lifestyle inflation becomes a problem.

-Blueprint for Financial Prosperity talks about donating stock to charity and is also looking for your votes to help him win a free trip to California!

-The Simple Dollar has a detailed guide to becoming self-employed.

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Colleges Sell Alumni Data for Extra Cash

Does your college have a privacy policy?  I never worried whether mine did or not until I started getting credit card and line of credit applications in the mail bearing the name of my school!

Alumni Credit Card
It appears my alma mater has decided its okay to sell my name and address to Bank of America so I decided to look into their practices.  I started off by looking for a privacy policy on the school’s website but didn’t have any luck finding one. When I visited the Alumni page I ran across an ad, asking people to sign up for the WorldPoints Platinum Plus MasterCard Credit Card.  This is probably the same one that I saw the first credit application for several months back.

“Show your support with every purchase you make! For every new account that is opened and every purchase made with the card, Bank of America will make a contribution to the organization – at no additional cost to you!”

I understand the concept of encouraging alumni to sign up for the card; it’s not a bad fund raising idea. Anyone that wants to support the school can use a branded credit card whose rewards go to the college.  However, I don’t like the fact that the school is selling or giving my personal data to credit card companies without my consent.  Asking me to sign up for the card on their website is one thing, handing my information over without my consent is another.

Line of Credit
The latest piece of mail I received wasn’t even touting an alumni card; it was an application for an unsecured line of credit.  My alma mater’s name showed through the envelope window so that I wouldn’t throw it away as junk mail. 

“How much do you need?  Request up to $25,000 to pay off your high-interest credit card balances right away!”

In this case there was no attempt to spin the application as supporting the college; it appears to be simply a money grab.  I don’t know for sure that the school is being paid for my information or if they get a commission for each person that opens a line of credit but why else would they be working that closely with Bank of America?

Student Privacy
I don’t know what the school’s privacy policy is but I don’t appreciate them selling or giving my information away without my consent.  If they’re willing to give up my name and address what other information about me might they sell?  Have you had a similar experience with your alma mater?

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Why You Should Work Smart, Not Hard

How much harder would you have to work to earn an extra $50 a day? How about $100 or $500 more? Why is this an important question to ask? Because there are only 24 hours in a day and we don’t want to spend them all working!

Your Precious Time
Your time is valuable. Once it’s used up, you’ll never get it back. In today’s world, we spend a lot of time working to provide for ourselves and our families. If we can find ways to earn more money in smaller amounts of time then we can have more time to live. We can often accomplish the same end result with much less work if we work smart instead of working hard.

Smart Questions
Working smart is often the result of asking yourself the appropriate questions.

Should I be working on this in the first place?
What value do you get from the task you’re working on? If you’re working your fingers to the bone for a measly outcome, should you even be spending your time on it? What are your other options? If you decide you’re not working smart then make some changes.

Is there a better way to do it?
Could you change the process you use for the things you’re working on? What takes the longest or is the most frustrating about your task? What is one thing you could change to make it go more quickly, easily, or profitably?

How are other people doing the same thing?
Find people that are doing the same type of thing faster and better. Do they use a whole different strategy? What about their approach is “smart”? What allows them to get the same thing done with higher quality in less time?

Hard Work is Good For You
Hard work is not a bad thing. Most successful people work very hard for their achievements. Hard work is the driving force behind most success and helps you appreciate that success when it comes. However, if you have the option of working hard or smart, which would you rather do?

Hard Work as a Substitute
I am a hard worker. I often fall asleep at the keyboard in the middle of the night because there is always one more thing I want to do. This work ethic has gotten me far in life but I wonder if it has also held me back.

Often times I find myself working hard because I don’t know exactly what I’m doing, the best way to do it, or what I’m trying to accomplish. I throw myself into something head first and after enough work, success comes out the other end. Although I get positive results, I find myself working most of the time with this approach. So I ask myself, am working hard because I’m not working smart? If I was smart about my decisions, could I accomplish the same result with less work?

Smart Resources
Here are some books that can help us examine why and how we work. These books look at ways to become more strategic about how we select work and more efficient in getting things done:

– 7 Habits of Highly Effective People by Stephen Covey [Audio]

– Getting Things Done by David Allen [Audio]

– 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Timothy Ferriss [Audio]

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Business Credit Card Benefits – Credit vs. Cash Back

Which is a better move, earning cash back or building credit history? I have a personal credit card I use only for business purposes that earns me cash back and a business credit card that could help me build credit history if I used it.

Why a Business Credit Card?
When I setup a business account at my local bank I applied for a business credit card for several reasons. This article on Effective Small Business Credit Card Management does a good job covering the benefits of using a separate card for business. Here are three key points from the article; I currently accomplish the first two with my personal card.

Avoid Co-mingling Funds
Keeping my personal and business charges separate avoids any confusion about which account to pay the bills from. In addition, this separation shows the IRS I am operating like a business, not a hobby.

Easy Itemization
I pay my reoccurring fees such as internet access, domain hosting, phone bills, and eBay fees on a credit card. I also use a card to buy all the inventory I purchase for re-sale. It’s great putting all of these expenses on my card because I get an itemized list at the end of the month.

Build Business Credit
Just like personal loans, a business needs to have some form of credit history in order for lenders to consider them for a loan. Using a credit card in the business name and paying it off on time can help build business credit.

No Card Rewards
Another benefit of a business credit card the article lists are “Special Rewards”. Unfortunately, my bank does not offer any type of rewards for business cards and this is why I’ve been using a separate personal credit card instead. As you can see from my business spending below, I spent $4376 in the first 5 months of this year.

January – $688
February – $106
March – $450
April – $973
May – $2159

My cash back personal credit card has paid out $50 so far this year and I’m a little over half-way to another $50. It’s hard to turn this money down by instead charging on my business card but I am missing out on the opportunity to build credit for the business by not using it.

Short Term vs. Long Term Benefits
Using the personal card instead of the business card has been a short-sighted approach. It does help a little with cash flow, which is important to all small businesses, but doesn’t help with the long-term goal of building credit history.

Since the business card only has a $1,000 limit, I plan on maxing it out, then putting the remainder of what I spend each month on the personal card designated just for business. Hopefully after 6 months or a year the company will have a credit history and I’ll be able to apply for a business credit card that does offer cash back rewards.

Can you recommend any business cards that offer cash back? I’m partial to American Express Blue Cash for our personal cash back card but have to use a Visa card for business expenses because my main supplier doesn’t accept American Express. I’m open to any card for business, American Express, Visa, Mastercard; whichever provides the most cash back.

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Personal Finance Review – Summer Vacation Edition

I’m counting down the days until our summer vacation! Our big event last summer was having a baby so it will be our first vacation in a while. We’re headed to a warm sandy beach where I won’t have to think about work for a second. I can’t wait!

I’m looking for people who are interested in writing a guest post here on Money Smart Life to be published while I’m away. If you have some financial wisdom you’d like to share here on this site just let me know. Today’s money review is a heavy dose of real estate and investing articles.

-Binary Dollar talks about using 529 plans to save for college.

-Five Cent Nickel answers the question, “Who gets to keep the earnest money a real estate deal falls through“.

– The Digerati Life gives her take on investing in real estate. Right now I’m going with the fourth option, investing in a REIT.

-Free Money Finance tells us how we can invest using only ETFs.

-Generation X Finance explains the change in the NASD reporting requirements for expense ratios. He is also giving away a free book to three lucky winners.

– Get Rich Slowly has a good article on how to start an IRA.

Lastly, I ran across this article on 50 Ways to Improve Your Life in 2007. Enjoy!

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How Oakmark International Helped Me Turn $6500 into $10000

Oakmark International Fund (OAKIX) has been good to me over the last 4 years. A $500 investment, followed by $125 monthly additions, is now worth $10,000 and I’m wondering if it’s time to take some profits.

Getting Rich Slowly
Okay, so I’m not rich (yet) but I have more now than when I started. The minimum initial investment in any Oakmark fund is $1000, unless you sign up for their automatic investment plan, then its $500. In July of 2003 I mailed in $500 to buy shares in the Oakmark International Fund and signed up for their automatic investment plan.

Every month since then Oakmark has invested $125 a month for me right out of my checking account. This regular investment coupled with a 3 year average annual return of 23.90% by fund manager David Herro turned my $500 into a little over $10,000 so far. Thanks David!

Time to Take Some Profits?
As they say in the mutual fund industry, “past performance is no guarantee of future results”. International investments have been on a tear the last few years and all good things must (eventually) come to an end. Hopefully growth in the international economy will remain strong and Herro will continue to work his magic but only time will tell. I’m thinking about selling some shares to cash out some of my gains. I don’t want to sell it all because I think it’s a quality fund so the first question is how much to sell.

Tax Implications
I’d want to make sure I sold shares that I’ve held longer than one year so that the income is taxed as a long-term capital gain rather than short term. Since my investing transactions over the last 7 years have consisted almost entirely of buying I’m not sure how to specify which shares to sell, so the next question is how to designate which shares are sold.

What To Do With The Money?
Of course the final question is what would I do with the gains. I could reinvest them in another mutual fund or stock but the market has been going up for several years now. It seems like the stock of many companies have grown “expensive” with all the growth and it would be harder to find a good value investment. Of course, if I do put it back into the market, I’ll have to look at my overall portfolio allocation and see how the new investment would fit in.

My other option is to invest the money into my business. I’ve been able to make a pretty good return on my investment so far and with additional capital I’ll have more opportunity for growth. The main question is can I be consistent enough with my earnings to match and preferably surpass the returns I can find in the stock market?

Decisions, Decisions
Looks like I have some research to do:

• How Many Shares to Sell?
• How to Sell Only “Old” Shares?
• Where to Put The Money?

• Stock Market – Which Investments?
• Business – Expected Rate of Return?

I’d love to hear your comments and suggestions.

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