While Blogger is a great platform for me to be able to share my thoughts with you, I’d like for you all to be able to share investing tips, money advice, articles, blogs, sales and great financial professionals with each other. So to that end, I just created a group on Facebook for all my Budgeting Babes out there. You can access the group here, but you need a Facebook account to do so.

I hope you’ll join my latest experiment!

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Random reader question time!

Today’s super fab question comes from fellow Chicagoan Aideen, who asks:

“I love you website! I am 26 and a former NYer who moved to the windy city. I try to budget and am doing an okay job of it. Do you have any posts on the best ways to save for buying a condo or house. Is socking away money in a savings account the best way or should I invest the money. i’d love to know what other people do.”

That’s a great question, Aideen. And since I am in the same boat as you, I’m probably not the best person to answer your question. But I am totally curious, so I asked someone who’s a little more credentialed on finance - Eric Brotman, CFP, CLU, MSFS, and president of Brotman Financial Group, Inc. - to help us out. Here’s what he said:

A: “Where to save for a first home is largely dependant on the amount of time it will take someone to put together the amount needed for a down payment and closing costs.

Normally, the best option is in a money market account, as they tend to pay a higher rate of interest than a traditional savings account. There are several good online options, including ING Direct and HSBC. (Budgeting Babe note: This is what I’m doing, and I’m at Emigrant Direct.)

Another option is a certificate of deposit, with one caveat. The CD must either have no penalty for accessing the funds before maturity, or a maturity date must be selected which is in advance of the anticipated home purchase.

Investing the money for a first home is only a reasonable idea if the time-horizon is at least two years out, and if that is the case, a moderate allocation portfolio with low transaction expenses would make the most sense. First-time home buyers can also access their Roth IRA for up to $10,000 towards the purchase. Checking with a CPA or tax advisor to see if someone is eligible for a Roth IRA is a good first step. It will provide tax-favored growth while the savings/investments are being accumulated, but not everyone is eligible.”

Eric Brotman is President of Brotman Financial Group, Inc., an independent financial planning firm specializing in wealth creation, preservation, and distribution. Mr. Brotman began his financial planning practice in Baltimore in 1994, and founded Brotman Financial Group in 2003. He provides investment, retirement, estate, insurance, and business planning for professionals, executives, and business owners. Mr. Brotman’s clients benefit from his technical expertise, extraordinary client service, and a knowledgeable team of insurance and investment specialists.
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As a side note, Aideen, I was tracking with Eric’s answer until he threw out the term “moderate allocation portfolio.” I looked online and determined he means that if you choose to invest in a mutual fund or group of stocks, pick one that’s not too high risk. You don’t want to lose your downpayment fund when you’re three years away from buying a house! (If you like this moderate risk option, a lot of people on my site have said that Vanguard is a good place to start investing because it has really low transaction fees.)

I got kind of lost during the Roth IRA part, so I appreciated that he mentioned seeing a professional. I heard that borrowing against yourself is pretty common, but I wasn’t sure it was recommended by financial professionals. I’m sure peeps will write in the comments about it. If you have an answer, let us know! I’ll also go back to Eric and ask him if that’s risky or recommended if you’re eligible.

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Would you do this? Watch the video, then take the poll. I think it’s really interesting, but doesn’t seem very credible.

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Complete this sentence:

In ten years, I want to be _____________________.

Did you dream big?

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Last night, at a family party, my sister-in-law, cousins and brothers discussed dreams and aspirations. All in their 20’s, they wrestled with unknown futures.

“I want to do PR, cosmetology, personal training and event planning,” my 20-year old cousin lamented. “Isn’t there anything that lets you do all that?” She’s trying to pick a major, and is majorly stressed about narrowing the possibilities.

“I have no idea what I want to do,” my 26-year-old sister-in-law sighed. She has a fashion merchandising degree, but yearns to do something more. Trouble is, she doesn’t know exactly what that might be.

My 22-year-old brother joined the club, “I’m in film school, but I don’t know what to focus on. Part of me still wants to do animation.”

As I started reflecting on my career aspirations, they interrupted me. “You’ll never have this problem,” they said, “you always know what you want.” We laughed and I insisted I could relate. After all, I noted, there’s still so much I want to do with my life. But ultimately they excluded me from the club; I can articulate my goals.

Or can I? At 28, do I know what I want to be in 10 years?

Ten years ago, at 18, my answer was something like this: “I want to be a successful communications professional.” (I was still picking a major.) Four years later, during my senior year of college, my answer had evolved to “I want to own my own PR firm by the time I’m 30.”

But today, when I ask myself that question, my internal answer comes back a little differently than in years past: “In ten years, I want to be happy, loved, adventurous and healthy.”

When did my dreaming become so vague? What does it signify? Is this a problem?

I pushed myself to do a little more thinking. Truthfully, I haven’t thought about 10-year-goals in some time. My goals lately have been much more short-term: save money, buy a house, become a vice-president at my firm, get married. That’s probably the five-year plan. But what happens after that?

(Crickets chirp.)

Apparently my ten-year-goals are a little non-existent. Or, just a little ambiguous… as in, “be happy, loved, adventurous and healthy.”

So tonight, I’m going to dedicate a bit of time to envisioning myself at 38. After some thought, here’s what I see.

I am… a mom. A career woman. A published author. A homeowner. An investor. A runner. A traveler. A mentor to the underprivileged.

Wow, it actually feels kind of scary to put it down in writing. What if I fail? That’s a lot to do in ten years.

I wonder if we become more afraid of failure as we age. At 13, I was unafraid to write that I’d be a physical therapist or a marine biologist by 23. (And clearly neither of those paths worked out.) At my college graduation party I didn’t flinch to tell people my plan to own a PR firm by age 30 (yet another one that didn’t work out). And frankly, I’ve never been one to hold back my financial goals on this Web site (which for now seem to be working just fine).

But suddenly I’m scared to state the goals above. Maybe they feel more real. (They certainly don’t seem out of the realm of possibility.) And yet, from this vantage point, I now know how much determination they require. How much focus. How much energy. Do I have it in me to keep going once I reach a good position within my company, have my own place and am enjoying life? At what point do I kick back, relax and enjoy who I’ve become?

I have no answer for that question. But I do know that once I’ve set things right for myself, I believe I have more to accomplish in this world. Though I’ve certainly been very focused on building a life for myself throughout my 20’s, I never intended to stop there. So it would be a betrayal to myself to stop dreaming now, to stop setting big goals, to stop pushing for the next level. Ultimately, my life has never been about creating what’s best for me. I hope that I can create a great life for children of my own in the future, and that I can give back to the communities and people that gave so much to get me where I am today.

So there, you see. I do have long-term goals for the future (phew!), they were just a little buried, bogged down by the short-term craziness. Maybe when we’re younger, we aren’t less afraid – we’re just more practiced at dreaming, at imagining the possibilities for the future. Turns out I just needed a reminder to keep dreaming big.

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Today’s concerning news round-up for 20-somethings follows…

Student lenders can’t offer loans right now (crap). The Wall Street Journal says, “The wave of student lenders backing out of giving federally backed student loans is growing.”

The Journal also notes that “Woes in condo market build as new supply floods cities,” and that “Chicago Fed data suggests a recession.” (Hmm… should we consult the hemlines on this one? My skirt is below the knee this morning, for what it’s worth.)

For what it’s worth, there is some good news… the NY Times reports that exisiting home sales rose slightly in February, prompted by rate changes. (Though prices have fallen.)

The Times also cautions the regular folks not to freak out about all the financial drama in the news lately … apparently we shouldn’t do anything impulsive because our collective decisions will only get worse if prompted by what we see on the news. Instead, the author is urging a thoughtful review of our spending and saving habits. (That’s never a bad thing.)

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If you’re anything like my friends, many of you are closet “The Hills” fans. While I’m always intrigued by the girly drama on the show (who doesn’t love a good LC/Heidi “confrontation”), I can’t help but wonder sometimes who these girls actually are and where their money comes from. Most 20-somethings I know can barely afford their rent. I think it’s safe to say that for some viewers, the show is a type of escapism… the chance to spend 30 minutes in the lives of beautiful people who are blissfully unburdened by finances and don’t mind living off mom and dad.


But an article in today’s Wall Street Journal profiles LC and claims her life isn’t as effortless as it looks. There apparently is actual work involved in selling Lauren as a brand beyond the MTV market. While she may have several advantages to propel her above 99.5 percent of 20-somethings, turns out she’s just another gal trying to make a name for herself.

You can enjoy the article here.

And props once again to the Wall Street Journal online, which continues to entice young women to become financially savvy by luring us in with stories about our favorite subjects. It may be a transparent tactic, but I really like that the Journal is showing interest in the younger generation. And it’s a welcome respite from reading about LC in UsWeekly and on Perez!

PS - Chicago is MISERABLE today. There is actually snow on the ground. It’s wet, cold and dark here. At least we’re all saving money during this LOOOOOOOONG winter. Everyone’s too groggy, crabby and down on the weather to go out.

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I got this e-mail today and it made me all nostalgic for simpler times, when I was desperate to just stop spending money and somehow plug the holes in my budget. Also made me miss my friend who moved away from Chicago far too soon after we met. I’m super impressed and kind of flattered that she remembers my financial goal of saving $3k when I first started the site.

Enjoy my personal e-mail chain…I’m sure many of you can relate! We’ve all come a long way!
(Ignore my response. I thought it added personality to the overall post, but then I realized that I just didn’t know how to cut myself off. I guess that’s the benefit of an editor.)

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From Natalia, 12:58pm Mar 16th
i just read your blog again and i remember when you set your goal to put 3k into your savings account (thats what i just made my goal, this yEAR!)- now your goal is 30K? you are RICH. congrats on how well you’re doing. you are an inspiration and a true role model (and i thought role models were all supposed to be oldeR?!) … thought i would say hi. hi. holla back when you have a sec.
xox -me

From Nicole, 8:00am Mar 18th
Ahhh… those were the days. I am seriously the farthest thing from a role model, though. Half the time I feel like I can’t even get myself together, let alone help other people do their thing, LOL! (That’s true!) What are you doing now? Who do you work for? Have you been doing any drawings or art lately? …And most importantly, when are you coming back to Chi-town? Maybe this time we can actually get our schedules together for drinks!

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Hello from Houston! This plane ticket was seriously the best $250 I ever spent. It’s 85 degrees, sunny and I’m hanging by the saltwater pool. My cousins introduce me to gorgeous Houston spring weather and poolside margaritas, I introduce them to homemade Irish car bombs (Guiness + Baily’s - the most politically incorrect shot you can buy) in honor of St. Patty’s day.

Though I miss my annual pub crawl in coordinated kelly green, I’m loving my little Houston getaway. I should definitely do this more often…

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In response to my last post, I received the following question:
“How are you putting away $1,000 per month?”

The answer? I work really f’ing hard at it (f-bomb for emphasis). Here’s how.

1) Low rent. The single most important factor. My rent is only 12 percent of my monthly income after taxes. This is no accident. I could easily be paying twice or three times that. When I chose not to live in the “trendy” city neighborhoods in my early 20’s, a lot of colleagues and friends thought I might as well fall off the planet. But I could not, would not justify paying a rent that was at at the time roughly 50 percent of my monthly income.

My apartment, in its own sleepy, funky suburbia, isn’t the most glamorous. It wasn’t the nicest one we saw. It doesn’t even really have a kitchen, the appliances are old and I have a Barbie-pink bathroom (really). But it does boast an AMAZING location, just one block away from the Metra and the el, and is walking distance to our downtown (restaurants, bars, shopping, gym, banking, etc.). It has two huge bedrooms, two bathrooms and free parking. So what if my “chandelier” is bright turquoise with fake candles and a plastic chain? Or if my carpets are ugly?

I knew when we started renting here that we had a savings goal in mind. I knew the place was small and the layout was cramped. But for the money, it was just what I needed at the time. No more. No less. The trick for me was understanding that I can’t have everything I want all the time, at least not right away. And lucky for me, my rent hasn’t been raised in four years.

(Sorry New Yorkers, this lesson probably doesn’t apply to you

2) Staying power. I’ve been working at the same job for seven years. And I put everything into it. The first couple years were really tough; I made hardly anything. But after five years with the same company, I started to make some nice headway with my salary. I’ve said before that while it’s popular to spend your 20’s extending your education, “finding yourself” or floating from job to job, there’s a lot of opportunity to be had by staying loyal to one place. It’s an old-school idea, but some of the most successful folks I know under 30 have been working at the same company for a number of years.

3) Cap your spending. I don’t buy anything, really. I’ve had the same TV for 10 years and the same computer for five years. I have the same god-awful table and chairs that I had in college, and I bought all the rest of my furniture at discount stores. I got my bed at Sam’s Club in 1999 and most of my current apartment decorations came from Ikea. I’m very careful about my discretionary income. Although my monthly income has steadily risen, my lifestyle has not. I don’t go to fancy restaurants, and I limit my spending at bars and clubs. Instead of raising my monthly expenses, I just keep raising the amount that goes in my savings and my 401k. That way, I never notice that my lifestyle lags far behind my income.

4) Go without. I don’t have a car, and I don’t drive. I walk or take the train and the bus everywhere. I’m trying to learn how to drive now, so I’ll probably eventually need to purchase some insurance. But B and I have one car between us, and right now we only drive it about once per week. I hitch rides and sometimes chip in for gas. I hitch rides a LOT with people who do drive. But other times, I’m stuck waiting in the snow, the rain, the wind, the cold … it’s just no big deal to me because I don’t really know anything else.

Another BIG without… I don’t have any kids yet. This isn’t something everyone can control, or would want to, for that matter. And it’s definitely something that’s difficult for me to explain to others sometimes, while other times it’s difficult for myself to deal with. It just hasn’t happened yet. But I can guarantee you that if I had kids I wouldn’t be saving as much, if anything at all.

5) Live for experiences. (Picture at right is me and B ocean kayaking in Monterey Bay on vacation in 2006)…

When I do splurge, I’ve learned that I’m much more satisfied spending on experiences than I am on things. So I’ll drop a lot on a vacation (a budget vacation, of course, that uses free miles and credit card points) that allows me to spend time planning and prepping throughout the year … and that lives on in my mind forever when it’s over. Some people like to spend on big entertainment systems or name brand clothes or house decorations or whatever. I don’t. For me, it’s much more about the memories in my mind than the art on my wall. Make sense?

So that’s really it. Those are my big secrets. Who knows if they’re right or wrong, and who knows if they’ll help you at all. I’m just a girl trying to save some money and having a good time doing it.

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It’s March. How are you lovelies doing on your 2008 goals?

These were mine:

• Increase my house savings account to $30k, or buy a place of my own; whichever comes first (I don’t want to be restrictive if something perfect comes up!).
• Decrease my loans to $2,500. Actually I’d like to pay them off completely this year, but I want my goal to be realistic and attainable, so I’m sticking with this number.
• Run a half marathon.
• Spend more time focusing on my happiness and my personal needs.

My savings account is coming along. I have an online bank account, and in January I goofed. Instead of making my monthly deposit I actually moved the money FROM my savings TO my checking. Luckily I caught it before I spent any of it. It’s a really easy mistake to make when you’re banking online, so be sure to watch out for that.

But in terms of my New Year’s goal, I need to save a total of $10k into the downpayment account in 2008. I put about $1,500 in in Jan and Feb., and I’m planning to put $1,000 in every month moving forward. It’s a lot of my monthly income, but I’ve got to do it.

For goal #2, I’m doing pretty good on my student loan payments. I have paid $700 so far this year, so I should be down to about $4,200-ish now (I never know how that crazy interest works). I’m in my seventh year of repayment, and I should be able to pay it off completely in year eight if not before.

For goal #3, I haven’t started half marathon training yet, but I am registered to run a four-mile race on March 30 (my first Shamrock, fellow Chicagoans! meet me at the finish line with green beer!) and I’m planning to run a 10k in May. I think my actual half marathon will be in the fall, Sept. or Oct., so I’ve got time before my training starts.

My final goal, #4, is a little more problematic. I’m finding it very difficult to spend any real time on my own happiness. I’ve been working a lot and my weekends are all kind of a blur. My January ski trip was a good start, but since then I’ve only managed to get to the gym once per week, I haven’t read any books and I haven’t really spent much time with friends. The only “me time” I’ve spent was a sick weekend earlier in February. I just looked at my calendar and realized I’m completely booked every weekend through April 5. Slowing down is something I definitely need to work on.

That’s me… now tell me about yourselves!

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