Vanguard Target Retirement Funds
The Semi-Annual Report for Vanguard’s target retirement funds 2030 – 2050 came in the mail today. Our retirement funds aren’t in target accounts but we have some money for our son in the 2030 Fund for when he’s all grown up and ready to take on the world.
I flipped over to the 2045 Retirement Fund to see how our money would be allocated if we were invested with the fund. The assets are 71.7% US Stock Funds, 18% International Stock Funds, 10% Bond Fund, and .03% Other Assets and Liabilities. The specific funds are listed below:
– Total Stock Market Index Fund (72%)
– European Stock Index Fund (10.6%)
– Total Bond Market Index Fund (10%)
– Pacific Stock Index Fund (4.6%)
– Emerging Markets Stock Index Fund (2.8%)
Compared to the 2045 Fund our current allocation is a little more heavily weighted in Europe and less so in the Pacific Rim. We have more exposure to real estate and higher return/higher risk, high-yield corporate bonds.
It seems to me the biggest benefit of putting our money into the target fund would be time saved I wouldn’t have to spend managing the money across separate investments & accounts. I think if we keep on track and avoid these 10 Retirement Pitfalls we should be just fine.
Personal Finance Review – Speeding Ticket Edition
I paid a speeding ticket yesterday; set me back $119.50, ouch! Not only did I have to pay all that money, I was delinquent in paying the ticket so the state had revoked my driver’s license. Now I have to mail in documents proving I paid and request they renew my license, which will cost another $25. Until that is settled I’m driving the speed limit and coming to a complete stop at all stop signs! Here are some money articles of note so far this week.
-Lazy Man gives us another alterative income update, it’s nice to see that it is possible to make money somewhere other than at work!
-Mighty Bargain Hunter talks about renting out your creditworthiness. Sounds crazy to me, you might make a little money but it could cost you a lot in the long run.
-Money, Matter, & More reflects on how the overdraft line of credit from ING Electric Orange is really borrowing power, even though it’s portrayed as spending power.
-Blueprint for Financial Prosperity reminds us of one of the benefits of index funds, they help you enjoy life!
-Sun announces no minimum balance and no fee trades with a Zecco trading account. With no fees to pay, I just might sign up.
Are Real Estate Agents Worth the Money?
Would you pay someone $12,720 to sell your house for you? Based on the current estimated median home price of $212,300 and a 6% realtor fee, that’s what the bill would come out to.
How Much is Too Much?
We’re still living in our first home so I’ve never had to work with a real estate agent to sell a house but it makes me feel ill just thinking about giving up 6% of the highest valued piece of property we own. I know that realtors do provide valuable services to their clients but I haven’t decided whether it’s worth the money or not.
Market Research
A local realtor sends out a periodic newsletter providing a market update for our area. Since we’re in the Mid-West housing prices are a little more reasonable than on the coasts; you pay less and get more space for your money. Her latest numbers for the last 12 months of activity in our area can be helpful to prospective buyers but are they worth over $12K?
- 21 Properties Have Sold
- Highest Sales Price was $330,000
- Average Sales Price was $265,281
- Average # of Days on the Market was 67
Realtor Advantage
The way I see it realtors have three advantages over individuals with homes for sale by owner.
Connections
One of the most important things it seems is the ability to add homes into the Multiple Listing Service to advertise to a wide buyer base. They may also have relationships with appraisers, home inspectors, local officials, banks, lawyers, and other realtors that can streamline many steps in the listing and selling process.
Time
Realtors make their living selling homes so they have time to show houses and return prospect’s phone calls. Many people selling their own home have full time jobs, which makes it more difficult to be available to work with potential buyers.
Information
Due to their connections & years of experience, a real estate agent should have an information advantage over people selling their own property. They know where to look for the necessary pieces of information and can find out what they need to know more quickly. This knowledge should translate into a better selling strategy, which in turn should help you sell your home faster and for more money.
Are Realtors Worth the Money?
The advantages I just listed are definitely good arguments in favor of using a real estate agent when selling a house. However, I still find it hard to pay $12,720 to someone, even if they do add the value I just listed. That is such a large chunk of change, I can’t stand to pay that much money, it just goes against my miserly instincts. When we do sell our home, I’ll probably try and sell it myself and see how things go. Maybe I can pay a realtor for a few hours of their time to do some consulting in the areas I’m unfamiliar with. If it doesn’t work out I can always list it with an agent as a last resort. What are your thoughts, are real estate agents worth the money?
Personal Finance Decision Guide – Roth IRA vs. Traditional IRA
What money decision are you trying to make today? Read on, it may be covered in this second edition of the Personal Finance Decision Guide. This is a compilation of money articles from various sites comparing or explaining two sides of money concepts.
In an interesting turn of events, this is the first time there are multiple articles covering the same topic, Roth IRA vs. Traditional IRA so this is the featured decision today.
Roth IRA vs. Traditional IRA
–Free Money Finance (Additional Comments)
–Mad Money Analyst
–My Retirement Blog
Investing
–Technical vs. Fundamental Analysis
–Net Worth vs. Net Investable Assets
–Discount brokers vs. Full Service Brokers
–Buy and Hold vs. Active Trading
Insurance
–Whole Life vs. Term Life Insurance
Saving Money
–Costco Versus Sam’s Club
Real Estate
–30 Year Mortgage vs. 40 Year Mortgage
–Why Building is Better than Buying
–What’s the difference between ROI and CAP Rate?
–Pre-Paying a Mortgage vs. Saving for Retirement
Banking
–Virtual Bank Vs. ING Orange Online Savings Accounts
–Money Market vs. Brokered Money Market
Borrowing
–Home Equity Loan vs. Car Loan
Hopefully you found some useful information today in this edition of the Personal Finance Decision Guide. If you have an article you’d like to share, feel free to submit it for the next edition using this form. Please leave any suggestions for improvments or changes to the guide in the comments. If you don’t want to miss the next edition when it’s published then sign up for daily updates from this site.
Personal Finance Review – Car Seat Edition
Babies cost money! We had to buy a new convertible car seat for our little guy since he outgrew his first car seat. Installing it was a pain; it would be neat if someone had a website where people could upload videos of how they installed their specific brand and model of car seat.
The good news is we bought a convertible seat so it should last for a while and keep us from having to buy another car seat for many years. Here are some money articles I enjoyed this week.
-Binary Dollar reminds us to create a budget that’s easy to keep.
-Blueprint for Financial Prosperity has some tips on paying your way, sharing the costs of fun among the group.
-Money, Matter, & More asks if David Bach’s real estate numbers are misleading.
-Mighty Bargain Hunter discusses eBay shipping charges. eBay is cracking down on people that overcharge but it definitely still happens.
– The Digerati Life has a list I really liked entitled 10 Steps to Becoming a Millionaire. A great list with good advice.
-Consumerism Commentary asks if you should pay your mortgage with a credit card.
– No Credit Needed talks about how to decide which debt to pay off first.
-The Simple Dollar provides six tips on shopping for cell phone service.
Enjoy your summer Sunday!
Online Banking vs. Local Banking, Which is Better?
Online banking with companies such as Bank of America and Wachovia are great for convenience and access but sometimes they can’t offer the service of a local bank.
Banking Trends
Making money from lending and deposits has grown increasingly competitive over the last 10 years and profit margins have narrowed for local and regional banks. In an effort to compete with national banks and purely online banks such as ING Direct local banks are diversifying their revenue streams and working harder to keep their customers.
Banking Service
Other than good interest rates, what would keep you at your current bank? One of the first things that comes to mind is the level of service they provide. I recently experienced that service first hand at our local bank.
Credit Card Assistance
I opened a business account with our bank this year and they worked with me to open a credit card for the company. This was helpful because even though the LLC had no established credit rating my bank granted me credit card with a $1000 limit in order to build up a credit history.
I haven’t used the credit card yet, for reasons I’ll discuss next week, so when the first statement came in the mail I figured I had no balance and it went to the to-file stack. When I finally opened the credit card bill I discovered that they had charged me an annual fee, even worse, the payment for the bill was due 10 days ago.
After a quick phone call to the head of our local branch my bank agreed to pay the fee for me. They contacted the credit division to ensure nothing negative would be reported to the credit reporting agencies for the late payment, and are trying to get my annual fee waived.
The best part was the bank did all of this without me even asking. I called up, explained my problem, and they were on it. The service not only met my expectations, but exceeded them, which is a great way to keep me as a customer.
Go Online and Stay Local
We use both online banking and our local bank for our financial needs. We have our emergency fund with ING Direct to earn better interest rates. Our personal and business checking accounts are with our local bank so we can count on personal service.
We still have the convenience of accessing balances & making transfers online because our bank offers web interface into our accounts. Setting up our ING Direct account so we can transfer money to and from our local checking accounts gives us the flexibility we need.
Using a combination of online and local banking gives us the best of both worlds, good interest rates and great service. What local and online banks have you had good luck or bad experiences with?
What Would You Do With a Financial Windfall?
Lazy Man and Money recently asked me and several others what we would do with a $50,000 windfall. My first thought was to pay down our mortgage since it’s our biggest expense and will cost us many thousands of dollars over the life of the loan.
Startup Capital
However, I got to thinking how 50 grand would be a nice cash infusion for a new enterprise and realized what I’d really like to do is use the money to start a business. I give a little background on my business idea over at Lazy Man’s site but here are the high level details from my response:
“If I had $50K fall in my lap I’d rent a warehouse with a storefront, buy some trucks, hire some drivers, and market our services. I’d charge people and businesses money to come pick up their junk and then I’d sell it off through eBay, craigslist, the storefront, and any other appropriate sales channel I could find.
There are already companies that do similar things such as 1-800-GOT-JUNK but their franchise fees are over $50K. If I had $100K I might consider buying a GOT JUNK franchise, there just happens to be one available in my area. So if I happen upon a windfall, I’d likely use it to turn trash into cash!”
Turning Trash into Cash
Of course I didn’t put a great deal of research into the idea but I like it because it seems to be a win/win for the environment and for me. “Recycling” people’s junk for money would keep stuff out of the landfills and would provide the business with a never ending and relatively cheap supply of inventory.
After reading my answer over again several days later, it seems as though I may have blown my $50K. Some adjustments I’d need to make to come in under budget are probably buying used trucks and not having a storefront.
Since I don’t forsee any $50,000 windfalls in the near future, I’m instead working on some ventures that don’t require much up-front capital. Who knows maybe someday they’ll grow to the point where I’ll have the money to launch a business like this.
Personal Finance Review – School’s Out Edition
The day has arrived. The school year is over and my wife is officially a stay at home mom! She’s been waiting on this day for many months and we’re very excited to have the little guy hanging out with mom all day. Her last paycheck arrives in July. We’re not looking forward to that day but we’ll make it work and know we’ve made the right choice having her stay at home. Here are some interesting money articles so far this week.
-Sun opened a Zecco account to get free stock trades.
-Free Money Finance continues his debate on traditional vs Roth IRAs. He also concluded his You Need a Budget contest in which I was a runner up, woo-hoo!
-Lazy Man has a Prosper Update. I opened a Prosper account to lend money when it first started up but could never pull the trigger. If I do jump in I’ll be sure to review his Prosper keys to success.
-Five Cent Nickel has a tip for saving money on life insurance. I’ll have to remember this as I look into our life insurance options.
-Generation X says don’t let your auto mechanic talk you into a pre-mature oil change.
-If you sell on eBay or Amazon, Beacon Financial reminds you of the ecommerce taxes that they’ll likely begin enforcing if the government gets their way.
-As gas prices continue to climb, Get Rich Slowly has 23 valuable tips for getting better gas mileage.
How to Get Your QuickBooks Questions Answered
A profitable business is nice; an organized and profitable venture is even nicer. My margins are high, expenses are low, and my income is becoming more regular but now I want to get a better overview of the big financial picture.
QuickBooks Professional
I purchased QuickBooks Pro for a great deal on eBay back in January but I haven’t been using its full potential. I tried to transfer all the income & expenses I’ve been tracking in Microsoft Excel into QuickBooks one day last weekend so I can have Profit/Loss, Cash Flow, and Balance Sheet reports at my fingertips. Unfortunately after almost a day of data entry and research I ended up with more questions than progress.
QuickBooks Help
The first place I looked was QuickBooks Help, just hit the F1 key and up pops a searchable help screen. One thing I wanted to learn about was 
tracking inventory for my eBay sales inside of QuickBooks.
QuickBooks Help showed me how to turn on inventory tracking and set up Inventory Asset, Sales Income, and Cost of Goods Sold accounts. My main reason for wanting to enter inventory was so I could keep track of the cost of goods sold every time I made a sale.
I used both the Index and the Search tab in the help window. It seems the main difference is that the Index tab gives you only specific references to the word or term you enter but the Search tab will return topics specific to your keyword in addition to related topics.
QuickBooks Resources Online
Another question I had was the best way to keep track of the sales tax I paid when purchasing items for resale. I turned to trusty Google and ran across two websites full of information on QuickBooks matters.
The forum on QuickBooks Community helped me out with several questions. Forum users are knowledge because it’s frequented by Intuit employees and by Certified ProAdvisors.
According to Intuit, a Certified QuickBooks ProAdvisor is someone who has “taken a 3-part QuickBooks Certification course and successfully completed comprehensive testing” so they typically know what they’re talking about.
The second site is Accountant.Intuit.com. The site title of “online resource for Accounting and QuickBooks Practitioners” is appropriate. It seems to be setup more as a reference for accountants using QuickBooks for other people’s taxes but I did find some useful QuickBook tips there.
Hire a QuickBooks Pro
If all else fails hire a professional. At the end of the day last weekend I had a somewhat functioning QuickBooks account but I knew it wasn’t setup “right” and still had unanswered questions. I was referred to a local QuickBooks ProAdvisor and talked to her on the phone today about a consultation next week.
She’s not cheap, $125 an hour with a two hour minimum but she is an expert that has trained hundreds of people on QuickBooks. After meeting with her I’ll have my questions answered, I’ll know that my account is setup correctly and I’ll know the best way to use it.
I see it kind of like learning to play golf. If you teach yourself you’ll pick up some quirky problems with your game that stick with you forever. If you learn from a pro you can hopefully avoid those mistakes in the first place and build off of a solid base instead of a swing with a nasty slice. Hopefully the consultation will be a hole in one. Has anyone else had experience with using a QuickBooks ProAdvisor?
How to Talk Your Way into Debt
Some people go into debt by buying too much house. Others spend too much on their credit cards. I met a guy today at the UPS store who managed to go into debt by simply talking too much.
Cell Phone Debt
He signed up with Verizon for cell phone service then two cell phones, hundreds of overage minutes, and three months later he was staring at a cell phone bill of almost $1,000! The guy told Verizon he didn’t have the money and offered to pay $200 every month. Verizon countered they wanted $250 every other week or it was off to the collections agent.
Debt Collector
The broke chatterbox thought Verizon was bluffing and held his ground. Several weeks later a letter came in the mail, his account had been turned over to a collections agent and they wanted their money NOW.
Ridiculous Car Loan
Of course while this was going on, the poor guy wrecks his car and needs a new one to drive to work. Unfortunately, his credit is ruined due to his battle with the collections agency and the best interest rate he could get on a car was 20%!
Financial Priorities
This poor guy is a money black hole. Working at UPS for $8 an hour and paying chunks of it to car loans and cell phone debt is definitely not the optimal way to manage your finances. He does have a plan to pay off the cell phone debt and re-finance his car loan but he figures it will take him almost a year.
In my opinion, he just doesn’t have his financial priorities straight. What phone conversation could be worth a $1000 bill and a 20% interest loan? I’d like to help the poor guy out. I think next time I’m in the UPS store I’ll bring it up again. What advice can I give him that might sink in? How can I approach the subject without sounding like a nosy know it all?
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I'm Ben Edwards and I've been addicted to personal finance since I was 12 years old.
That passion for money has paid off for my family - so in 2006 I founded Money Smart Life to help you afford the life that you want. Read My Story...
