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13 April 2009 @ 01:02 pm
Happy Atheist Grownups Get Candy On Sale Day!!!! :)  
I kinda forgot about easter this year until it was practically already over. I had to go around to five(!) different stores yesterday evening and today, but i finally found one that still had some peeps left! (Only four boxes though =/) In the process i also picked up way too many Reeses Peanut Butter Eggs. And ate way too many of them last night. Reward for filing my taxes i guess? :)

Anyways, after thinking i really ought to get around to it for a long time, i finally stopped by Fidelity on the way into work today and opened up a Roth IRA. I was only able to deposit $2000 because apparently you can't deposit to an IRA from a credit card :) Of course that means that i'll be a little delayed in paying off the current debt on my credit card. Hopefully the financial goodness of having an IRA balances out the financial badness of credit card debt? :) Of course now that i've got an IRA i need to figure out what to actually _do_ with it =P

Also, tonight is Wumpskate! Yay!!! Perhaps i can burn off some of the way too much easter candy i've been eating :)
Current Mood: bouncybouncy
rowrrowr on April 13th, 2009 08:23 pm (UTC)
I went to the grocery store and RiteAid but they were both cleaned out :'(. I wanted to get some Cadbury Mini Eggs...
Iyindoiyindo on April 14th, 2009 01:58 am (UTC)
Wow... what a truly fabulous LJ entry title!

I'm not down on the peeps, but I certainly got my fill of Cadbury mini-eggs!
DonAithnendonaithnen on April 14th, 2009 07:35 pm (UTC)
Hee, thanks, though i can't really take credit for it :)
Beth Leonardbeth_leonard on April 14th, 2009 04:34 am (UTC)
Of course now that i've got an IRA i need to figure out what to actually _do_ with it

I'm happy to talk finance. ROTH IRA == THE GOOD. If Jon and I ever start feeling differently, I'll certainly blog about it. (There's always the chance that the government will seize it by making a new law that your IRA money is only allowed to be invested in non-inflation protected treasuries, and then they'll print money causing your investment to become nearly worthless. We don't think this will happen, but it's a scenario we've considered and we're looking for such that we can get out in time.)

As for what to do with it, what we have personally done is invest basically all of our investable money in the market in the last year (we used to keep about 10% in cash.) This says we believe the market is at or near the bottom. If we go to the mall, it's hard to find parking. If we go out to eat, the restaurant is slow because it's nearly full for the number of staff currently employed there.

That says to us that the US economy is still running. It is possible (but not guarenteed) that it has hit bottom. The easiest thing for you to do is to call up Fidelity (they likely gave you a number for this, have your new account number ready) and ask to invest in a "S & P 500 index Fund." Ask them what funds are available and what fees are charged. There should be no fee up front (or at most a very small transaction fee of under $25) and no fee at the back end (or again a very small transaction fee). This is called a no-load fund. (no front load, no back load). Next ask the person on the phone what the expense ratio is of the fund they tell you you can buy. The expense ratio of an S&P 500 index fund should be under 0.50. If you're lucky it will even be below 0.25 or 0.18. Usually you have to have at least $10K, $50K, or $75k to invest in funds with ratios much lower than that.

If the ratio is under 0.50, ask the person on the phone to put $1800 to $2000 into that fund for you (you decide how much you want to keep out of the market). Sometimes places charge an extra fee for a telephone assisted transaction. Decide how much it's worth it to you to figure out what to do on-line to do the same thing (They should be able to give you a ticker symbol over the phone with the name of the fund for free, write down all the letters correctly.)

Then just let it sit there until next April and do the same thing again. This is called dollar-cost-averaging. You put the same amount into the market at regular intervals as it goes up and down. Usually it's done monthly, but unless they have a transaction-fee-free fund with a low expense ratio, it's not worth it for only $2000/year. The theory is that you don't try to time the market exactly.

On that point however, the market has recently had it's best 30 days since 1937, and it's possible that right now is a very very good time to get back in. I don't recommend delaying long on making that phone call.

It's hard to give financial advice to friends, because the market has it's ups and downs. In the long run however, if you want a fire-and-forget strategy, this is a good one to last you over the next 34 years. (ok, as you approach retirement, it's a good idea to put more money into bonds instead of stocks, but you can think about that 30 years from now.)

Do NOT let them talk you into buying into a "target retirement date" fund. Those charge you higher fees (a higher expense ratio, like 0.75, or even something larger than 1) and likely won't beat the market in most years. In fact, over the past year, some of them have done worse, even though supposedly they were allocating assets to weather a bad year like 2008.

PS. On the credit cards -- save as much money as possible by not spending it and pay those off as quickly as possible. The fees they charge are CRAZY!! If you think of buying that foot-long sub at Subway for $20 instead of the $10 it shows in your receipt, maybe it's easier to buy a loaf of bread and some lunch meats and make your own to take to work (costing you $10 ==> $20 for the week instead of for the day).
Kirinkirinn on April 14th, 2009 03:43 pm (UTC)
Beth has done way more research on details of various interesting financial options that I have lately, but if you just want to invest in the whole market, I'll still plug Vanguard. They have a variety of dead simple whole market or sector-based mutual funds with very low fees that are easy to set up. Also, I believe the Vanguard's target retirement accounts (don't know anything about Fidelity's) are simply the same market funds, but shifting into bonds as you age, still with very low fees, so they seem ok to me. Beth, if you know differently, please chime in again.
Beth Leonardbeth_leonard on April 14th, 2009 08:43 pm (UTC)
For the most part, an S&P 500 fund is an S&P 500 fund, the only difference is the expense ratio and the transaction fees to get into it. I don't know how much Fidelity will charge him to get into one of Vanguard's funds. Usually that amount is a fixed fee, and on an investment of only $2000 the fee is likely to be larger than any potential difference in expense ratios. I know Schwab doesn't charge anything to get into their own S&P 500 fund, but if I want Vanguard's I could pay a $50 fee to get into it. I haven't looked at Fidelity's fee structure. $50 is 2.5% of $2000. That's too large a percent for my taste.

For the target retirement accounts, I based my statement on a wall street journal article I read a few weeks ago. Where he's at and where the market is at now, the extra fees aren't worth it, an S&P 500 fund will do just as well.

DonAithnendonaithnen on April 14th, 2009 07:32 pm (UTC)
"save as much money as possible by not spending it and pay those off as quickly as possible."

Yeah, that's what i've been doing. It's where the $2000 came from actually. It would have been a significant fraction of the remaining credit card bills but i figured the IRA was better long term.

Clearly you missed my post on analyzing food costs though. On a per meal basis, going to Subway and getting a footlong for $5 is only about twice as expensive as making peanut butter and nutella sandwiches, and actually cheaper than cooking tofu and making a salad. A (work) week of peanut butter and nutella sandwiches would be about $11.60, and a week of subway sandwiches is $25, and i probably get better nutrition with the subway sandwiches. A week of all tofu and salad would be $30!
Beth Leonardbeth_leonard on April 14th, 2009 08:35 pm (UTC)
Yeah, I'm not sure what your actual financial situation is and either I missed the other post or clearly remembered it wrong -- perhaps use "drinking folgers" vs. a $1 Red Bull daily as your comparison (now I don't remember if you drank cheap diet soda or not. Ack -- I can remember generalities, but not specifics).

If you're just making minimum payments on the cc it's very different from most of the time paying it off and occasionally letting it go a month or two. My point is that if you're not paying off your credit card bill, the subway is actually costing you $50/week (not $25 ) vs. $23 (on 11.60 in charges) for the peanut butter. Your nutrition is also important though. Looking at your bills and finding the biggest places to cut is important because if you're not paying off your credit card you are paying far more in fees for the items/trips than you realize.


DonAithnendonaithnen on April 15th, 2009 03:51 pm (UTC)
I've been making the maximum amount i have in my checking account every month (less known upcoming expenses and a little leeway to make sure no checks bounce.)

And i fully realize how much i'm paying in interest on it. Each month i check both credit cards and devote most of that month's cash to whichever one has the biggest fees for the last month. (I don't know exactly what percentage each one is charging me, and i don't know offhand at exactly what point the access the fees which makes it hard to calculate, so i figured that was the easiest way to handle it.)

The biggest places to cut are the ones where i've already made the cuts. 100% of video games, 100% of DVDs, 90% of books, 90% of pop (it was 100% till i got seduced into getting some diet cherry coke to compare against the diet black cherry hansans that shelleycat has =) any fast food on a week days that costs more than $2.50 per meal (ie, everywhere but SubWay) and 50-75% of nights out clubbing.

That leaves my big expenses as about $40 a week for food (could cut it down to $20-$30, but that would play hell with my nutrition) dinner and/or lunch and the occasional movie on the weekends with shelleycat (my time off from worrying about both finances and diet) gas, rent, and utilities (currently looking into cutting some stuff from the cable bill.) And for this week only, on-sale easter candy :)