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Directionless Investing

October 29th, 2013 at 12:47 am

My income has been steady over the past few months, so I have concentrated my efforts on funding my Roth IRA account. My goal is to fully fund the account for the 2013 tax year. I've been working toward that goal to the detriment of paying off my credit cards and building an emergency fund. I have no emergency fund. I feel that I will never get this year back to build up a Roth IRA, so I have to start using my retirement building years productively. In this case, I have to start using them because I have neglected to do so for so long.

So far, I have contributed $1170 in my Roth. I calculated that I can contribute $170 a week minimum to make it to April 15, 2014 for the 2013 tax year. I've actually been contributing more than that $170 threshold in the event that I have a period of unemployment.

I really don't have specific plans for investing. At first, I started putting my money in a S&P 500 Index fund with low fees. In addition to this IRA, I have $8,000 from an old pension and 401K in a rollover account. These investments are in mutual funds. Since the bulk of my small estate is in mutual funds, I decided to dabble in stocks.

I feel that I have a good grasp of financial analysis. I did a lot of work in securities litigation so I'm familiar with the concept of securitization. However buying stock as a small potato investor is difficult. For one thing, I don't really have a lot of money to invest up front, so I buy a few stocks at a time. Plus I am with E-Trade and the commission is $9.99 a transaction for stocks. At the time I created my Roth IRA, I did not think that I would want to buy and sell stocks. At this point, I really don't want to change accounts because I already have my money with them and it's easier to keep track of contributions if you have one account.

I'm not even sure if I should buy stock since I buy stock a little at a time and right now, with the commission costs and market "losses", my stocks are worth "less" than my contribution. My thought is that perhaps mutual funds and stocks are really not great investments for retirement. They can gain a lot of traction, but they also can "lose" as well. I even wonder if my "losses" are really losses. The stock market is so speculative and stock prices increase/decrease on the whims of the buyers and sellers. I guess if a lot of people want to buy a stock, it may say something about a company's value. But is that really the case?

I purchased shared in three companies: Nokia, Ford and Coty. I needed a new cell phone and got so excited when I saw the Lumia at Verizon. I did not buy the Lumia because Verizon wants to phase out the unlimited data plans so I had to buy a phone full price on the market and have them hook it up. I went with an LG Intuition that cost significantly less from an Ebay seller (plus I got it brand new) than the Lumia would have cost from Verizon. However I was sufficiently impressed that I thought that maybe I should get stock in that company because the phone was so sharp. The price was affordable and I bought a few shares. With my next contribution, I wanted to buy more shares of Nokia. I really like the phone that much. It seemed that either a lot of investors really liked the Nokia phones or were just gambling with the stock because the price increased very quickly. I got scared and decided not to acquire more shares.

My next purchase was Coty stock. I was shopping at TJ Maxx and picked up Meow from Katy Perry and JLo's Glo. I knew that Coty made those perfumes and then I decided to see if they had stock. Amazingly enough, Coty was listed and had just had an IPO. Furthermore, the stock was priced a little more than $16 a share. That's less than a bottle of those perfumes I had picked up and only a fifth of what I spent for JLo's Glo back when it came out on the market. Then I looked at Coty's 10K filing and got even more excited. They own Sally Hanson as well! My thought was that I probably had spent at least a few thousand dollars on Coty products in my lifetime and that investing $200 would not be the worse decision in the world. It was confusing, because analyst reports said that Coty’s IPO was "not beautiful" and that it was not for the stockholders but for the current shareholders. They also said that Coty wanted to issue stock so it can make more acquisitions. Now how do I interpret this analyst report? I know what I spend on Coty. The analysts are saying that the shares are not that great and the price is only $16 a share, yet I have a few hundred dollars of its products sitting on my shelf. I went with my gut and bought the stock because my rationale was that the money I spent on Coty products is dead, however at least there was a chance that the stock may pay a dividend or increase a value. It certainly is doing more than just sitting on my shelf.

My most recent purchase is Ford. My family has a lot of experience with Ford cars. I have owned two Ford Tauruses that were acquired used and two Lincolns that were passed down from my father. I gave the Taurus cars away when I got my Lincoln and one Lincoln went to 350,000 miles and the other was over 400,000 miles before Sandy destroyed it. My father routinely gets 300K+ on his Lincolns and he takes very good care of the cars. So Ford is priced well now and I guess everyone is buying it because it posted good earnings. With the government bailout of GM, Ford’s stock took a beating. This is the issue I have with stocks and stock prices because they fluctuate so much even if the company is good and makes a great product. So is Ford intrinsically better now than it was 4 years ago? Or does opinion play too much of a factor in stock pricing?
The hardest part about a Roth IRA is that unless the contributions are in a bond or CD, or just sit in the account, the money fluctuates. A $5,500 contribution may be worth more, or it could be worth much less depending on the market. Even mutual funds are not immune from these fluctuations. They always recommend that people have to take risk and buy stocks or stock based investments however there are no real guarantees that the stocks will be valued at what you paid for them. It just seems that timing plays so much of a role in whether your investment will make money or not.

I'm not really sure what is really the best investment strategy is. I guess all I can do is take a chance and hope it all works out.

Catching up with Current Events

August 21st, 2013 at 07:05 pm

Currently I am at my parents' place recuperating and availing myself of their premium cable television. In a way, I feel as if I am catching up on current events. So often my colleagues would discuss television shows and movies that I had no inkling of. Magazines are my only link to television. Yesterday, I watched a bit of the series "Girls" on HBO. I tuned in out of curiosity since its creator has received so many accolades from magazines on her courageousness of exposing her unconventional body and the realness of her show. After being visually assailed by one of the most graphic, unflattering scenes that I had ever witnessed on a television show, I want to voice my opinion that there is nothing courageous about a woman showing something that millions of women do without special lighting and positioning.

I was probably hallucinating on the painkillers, but I found myself oddly transfixed by "Rock of Ages." It was the eyeball bleaching I needed after watching "Girls." In this day of reality, it was such so pleasant to watch a movie with two idealistic, squeaky clean leads in a debauched world. Even the debauchery was cleaned up with Tom Cruise's character getting it on with a Rolling Stone reporter who was wearing stylized granny underwear under her miniskirt. Watching this cleaned up version of the 80's metal scene made me reflect on how people were less materialistic then than they are today. I think a huge factor in people worrying about money is the rising cost of living. Back then, interest rates on student loans were double digits, but people graduated with loans that were equivalent or less than a credit card today.

People worry so much about survival that they make their choices based on safety, like moving back home or remaining on their parents' health insurance. I'm not big on political debate but I think it is nuts that our society is stepping backwards to allot for people remaining reliant on their parents at a time that they should strike out on their own.

Anyway, watching these kids move to the Strip to take crappy jobs and pursue their dreams of making it big in the music industry made me misty eyed and nostalgic. Now it seems, the pursuit of dreams is something only kids from wealthy families are permitted to do. Kids from middle class to poor families need to major in something practical if they want to be employed. Only rich kids or those who attend Ivy League schools are allowed to major in Medieval Studies or Music. Only kids who have parents with deep pockets can move to NYC and take on a low paid or free magazine internship and build the creative career of their dreams, unsaddled by student loans, rent worries, and covered by their parents' health insurance.

In my way, I have tried to make my life similar to the life I should have led when I was in my 20's. Throughout my 20's and mid 30's, I always had my own place. I also had a job that provided health insurance and a 401(k). Now I stay with my boyfriend and pay the equivalent of early 90's rent to live in the heart of the West Village, in an apartment that has not been renovated since the early 90's. A 20 year old would think it the ideal situation. Unfortunately, no older person lives with the freedom that a 20 year lives with. Maybe it's a Zen workout for the mind, but the hardest thing in this situation has been letting go. My boyfriend is an older man. He doesn't have much debt, but he makes a moderate income in a city that demands a high income for basic needs. He also lives in an area of the city that is dotted with expensive restaurants and boutiques; a walk around his block forces him to acknowledge that he can't afford an $11.00 juice or $20 yoga classes. An environment in which one constantly sees what one cannot have breeds dissatisfaction. It is hard to maintain a positive disposition when you are constantly confronted with what you lack.

There are kids all over the West Village partaking in the expensive goodies. I used to be one of those kids years ago when I was in college and my parents were giving me spending money. I remind my man that the kids look happy because they are young and don't necessarily think about consequences. Many of them are just charging those dinners and drinks. A few of them may have rich parents or decent paying jobs, but most of them just charge the fancy clothes and outings. It's very important to keep appearances in perspective when you are NYC.

Watching the television has been reassuring. When you live in a bubble, it's difficult to see what your life really looks like. I can step back and see that my life mirrors television, and in many ways it is a lot better.

The Illusion of Having One's Act Together

August 20th, 2013 at 09:43 pm

Yesterday I was tooling around on LinkedIn when I saw an old article on the new way women curse. This article discussed a January Glamour magazine cover in which one of the featured titles was "12 Ways to Get Your Sh*t Together." The LinkedIn article was about the decreasing shock value of expletives. I was more interested in finding out what the article said. Unfortunately Glamour didn't put the content online, however from my Google search, I found many other websites concerning one getting one's "sh*t" together, including an actual website called http://getyourshittogether.org/ which provides guidance on life and death planning that most people neglect when they are healthy but can leave a huge mess for their descendants.

There were a number of other sites that discussed ways in which one can get his or her act together. It was very amusing and somewhat affirming that according to many of these sites, I actually have my act together as I am not on drugs, have a planner and a work bag (!).

As I reflected upon that, I realize that having one's act together is entirely perception. I know many people here may not feel that I have my act together because I buy lunch out. Yet when I chop my fruit in the morning and put it together my brought from home items of whole grain cereal and cottage cheese, many of my colleagues comment on how healthy my breakfast looks.

Also keeping with the "illusion" of having my act together is my planner. I don't have a formal budget but I spend the same on a weekly basis for transportation, food and gym. My expenses decrease when I am not working. In my planner I record all my outstanding debt, when my payments are due and my weekly take home pay. As I make my payments, I subtract the money accordingly from my available money and keep a running tally of what I have left to live on until the next paycheck. I also keep a running tally of my total outstanding debt as well. Since these are all in writing, I can see my progress or lack of progress. Some credit cards have increased while other have decreased. Overall I am $4,000 less in debt than I was the previous year.

In my case, the mere act of writing down my debts and looking at them makes them less scary and manageable. I've been a temp for over five years. Many of my colleagues have put their student loans in forbearance and have watched their loan balances swell. Mine are decreasing and it comforts me that I have been able to make payments on the student loans, and all my other bills, in spite of working as an independent contractor.

Hit the wall

August 18th, 2013 at 05:24 pm

I've been thinking about money long before I've chosen to blog about my money issues. Working as a temp changes the way a person thinks about money. At least it did for me. Back in the day when I had a permanent job, I could count on a certain amount of compensation on an annual basis and was compensated for vacation and sick time. Even though my income is arguably steady, I've never thought of it as something that could be relied upon. It changes so much from project to project. However my fixed costs are such that they require steady compensation. It's difficult looking at a minimum of $1500 a month in expenses, including $900 for my student loan.

Recently I had surgery and I was fortunate that my project wrapped up two days before my scheduled surgery. I'm in recovery and the doctor recommended that I take 2 weeks off, but I can't see myself having no income for 2 weeks. Since I am in between projects, I have some time to recover, yet I am looking for work as well.

Many times I feel as if I "hit a wall." I start out with the best intentions that I will save money and not use my credit cards and then life gets in the way. The combination of unsteady income and high fixed expenses and life circumstances can derail the best of intentions. Sometimes the only thing a person can do is stay positive and ride it the lean times and try to make up for it when times are flush.

Unlike many of my colleagues, I have not put my student loans in forbearance or defaulted on my credit cards. I have been able to keep up with my expenses in spite of short times.

I do get frustrated at the thought of limitations. Worrying about small things like lunches, transportation or little indulgences is frustrating to me because I do make good money even though it disappears quickly.

Trying to stay positive for now. I just finished paying my monthly bills and I am happy that I have paid everything for August and the beginning of September.

Back where I began...

August 1st, 2013 at 06:40 pm

When I was in my 20s and starting out, it was pretty common to exist with $10 in my bank account and wait for pay day. After years of having credit card access and having developed the habit of making purchases on credit cards if I didn't have the cash, I have forgotten what it was like to have to wait for pay day.

So I'm in that position now. I am not making as much money on this project as I had for other projects and I only have $5 left in my checking account until this week's check gets deposited. This week I had $70 to live on. Sounds like a princely sum until you factor in a lunch with my colleague at a place that was deceptively pricey. Maybe I should have requested a cheaper place to eat, but I hadn't seen him in a while.

I made a vow not to charge groceries and transportation on my credit cards so I live on the money I allot for my weekly budget and not a penny more. It has been frustrating though because I worked on lucrative projects in the past and it feels wonderful to have enough money left over after paying bills and daily living expenses to put away and not feel deprived.

My colleagues and I were commiserating about our financial situations. Many are relying on their credit cards to see them through the lean times. I am happy that I am not using my credit cards as a crutch, but it is very difficult at this time.

$394 Acne cream!

July 27th, 2013 at 11:43 pm

One of the "benefits" of giving up my apartment is that I am finally able to afford health insurance. I don't believe that a person should have to make this kind of choice. Unfortunately, NY is the most expensive state to retain coverage and there are thousands of temporary workers who forgo coverage.

I had gone for years without coverage. Occasionally I went to doctors for check ups and paid hundreds of dollars for diagnostic tests and exam fees. My health care has gotten much better with coverage that it was without. For one thing, before, doctors would not order follow ups, since they knew most likely I would not be able to afford it. Now they order follow ups and the standard of care is much better. There may be skeptics out there who think that the doctors are just ordering more exams because of insurance coverage, however I can attest that I have a condition that necessitates follow up, and this follow up did not happen when I was not covered.

I had been plagued by acne for a while now, and tried every over the counter remedy to no avail. My internist recommended that I see a dermatologist for my acne. Years ago, my general physician wrote out my acne prescriptions, now it seems that doctors want you to see another doctor.

So I went to the dermatologist and she gave me a few samples of Ziana. Ziana is a combination clindamycin phosphate 1.2% and tretinoin 0.025% gel. She told me to try it out and if it worked to ask the office for a prescription. I used it for a month and saw improvement in acne reduction and skin tone and subsequently requested a prescription. After the request, I received a call from the pharmacy asking if I wanted to fill the prescription, because the total would be $394 and I did not have Rx coverage. I told them not to fill it and contacted the office for a generic prescription. They changed my prescription to two creams: one tretinoin and the other clindamycin. These two creams totaled about $90 at my pharmacy.

$90 is a lot, but it is a lot better than $394. However I would like to know what insurance company would even cover a $394 acne cream? This drug is not some new breakthrough; it's a combination of two products that have been on the market for years. It just irks me when I think about how expensive insurance coverage is, and how many of these topical creams are found overseas for $10 a tube...

I still have an unopened sample tube of Ziana, which should last a week and a half. If any of you know of a decent online pharmacy, let me know. I've never purchased drugs online except through my insurance company.

My Kindle is the Biggest Money Burner!

July 25th, 2013 at 08:43 pm

For years I've wanted a Kindle but I put off buying one because of fear that a newer model would come out. I am a huge Amazon customer and purchased about 20 used books a year. I also like going to the library and taking out books as well.

Anyway, I asked my boyfriend to buy me a Kindle Paperwhite for my birthday and he did! Now I spend way too much money on books that I would have taken out of the library before. Not to mention that one click purchasing makes it easy to spend lots of money within a few seconds.

I lost almost all of my books in hurricane Sandy. In a way, it was good that G_d downsized my possessions because my basic expenses decreased after I lost my car (no insurance or gas.) I still miss my books and it seems that there are hardly any e-books in the public library that are available for me to take out.

So today I was replenishing my Hermann Hesse library and within 4 clicks I racked up over $40 on my credit card. Good news is that when I went to my credit card's site, I saw that I had points and that I could use them for my purchases!

So I'm pretty happy and the lesson is that if you have points sitting on your credit card, to learn about how to use them to your advantage.

Also any suggestions about places where a person can borrow books on their Kindle would help. I didn't choose Amazon prime because my Kindle is fairly basic and you can only borrow one book per month.

Overall my Kindle is great! E-books cost less than regular books and there are many free classic titles.

Retirement Choices

July 24th, 2013 at 10:28 pm

Temporary employees lack the savings resources available to permanent employees such as 401(k) programs and company sponsored medical plans. This year, I was fortunate enough to have worked enough for an employer to participate in its 401(k) plan [no matching contribution]. Within a few weeks, I had painlessly contributed $2,000 in pretax earnings to the plan before the project ended. Now I am back to square one in establishing enough working hours to become eligible for an agency's 401(k) plan.

Watching that little bit of money accumulate had encouraged me to start contributing to a plan of my own. Many advisors insist that all credit card debt needs to be paid off before saving for retirement. My stance is that it could take years to pay off debt, yet there are only a finite number of years that someone has to save for retirement and money needs time to grow.

I view my debt as a long term situation and the best way for me to deal with it and take control of it is to learn how to live with and manage it. I feel more in control when I acknowledge my debt and continue living my life.

I decided to open an account with an online brokerage (E-Trade) and made small weekly post tax contributions to it. Choosing between a Roth IRA and a regular IRA was difficult and I decided to go with the Roth IRA. At this point in time, I am eligible to contribute to a Roth. I am optimistic that one day I will make enough money that I will not be eligible to contribute to a Roth IRA, and I imagined my rich self would look at my poor self in consternation over the decision to forgo complete ownership of the proceeds of a Roth IRA for a tax deduction that would result in a $100-200 more return from the Federal government.

I chose an index fund that permitted an initial IRA investment of $250. This was a no load, no fee fund with a 0.19 expense ratio (SVSPX- SSGA S&P 500 Index). I felt that it would be better that I get my small contributions working for me as soon as possible. Most of the Vanguard and Fidelity funds require $3,000 initial investment or $1,500 initial IRA investment. Maybe some people here can advise whether it would have been better to wait longer to accumulate more money and invest in a Vanguard/Fidelity fund.

I still have credit card debt and student loans that I am very slowly chipping away at. Maybe I should have contributed to my credit cards/loans as opposed to retirement, however I feel a little more secure and happier when I look at my little account.It's a step towards a brighter future.

---Edited to add fund and online brokerage specifics--- Thanks Petunia


July 24th, 2013 at 08:18 pm

I am new to blogging and am still playing around with the format. I ran numerous searches online and was unable to find positive financial resources for temporary employees. There are many of us out there who have huge student loans and face a job market that offers very little in way of stability. I hope to provide and elicit support and suggestions from those in similar situations on how to save for retirement and deal with medical expenses without the support of a permanent employer.

There are many blogs that depict the horrors of document review and burdens of student loans. I prefer to take a positive view of my situation and try to better myself within the constraints of my circumstances. Complaining will not make life easier or lighten my load.

My law loans came out to a little over $127,000 when I graduated 7 years ago. They are currently at $101,000. Medical bills for my pets and myself, and periods of unemployment have swelled my credit cards to $22,000.

Last year I made a decision to give up my apartment and make a serious attempt to get my finances in order. My goal is to pay off my credit cards and to start putting money away for retirement. Eventually I would like to pay off the private portion of my student loans so I can have more options in my career. Document review is lucrative enough that it pays my bills however there is very little career growth.