Archive for September, 2008
Time to Remember What Money Can’t Buy
September 29, 2008 4:16 amIn this time of financial worry, maybe it’s worth remembering some of the joys money can’t buy. Here are mine.
What simple pleasures help to ground you when the news is totally crazy?
Saw this one coming: WaMu (my bank) goes down in flames
September 28, 2008 4:55 amLess than five years since opening my accounts with WaMu, the bank is no more. Here’s the message I got when I visited WaMu today:
WaMu Customers, Welcome to JPMorgan Chase!
We’re proud to welcome you to one of the nation’s largest banks; as of September 25, 2008, JPMorgan Chase & Co. has acquired the deposits, loans, and branches of Washington Mutual. Your deposits remain insured by the FDIC and are now also backed by the strength and security of JPMorgan Chase. Our combined company will offer superior banking convenience - over 5,400 branches and 14,000 ATMs in 23 states.
You can read the rest of the “Welcome to Chase” statement here.
Who knows if this is a good thing for the WaMu customers or a bad thing. I really liked banking with WaMu and always thought they had good customer service. When I heard that things weren’t looking good (several months ago), I kept my money in WaMu because I use EFT and direct deposit for the vast majority of my bills, and am basically too busy/lazy to go through the hassle of canceling and changing all my account information.
So now we’ll see what happens. I took out cash last week after Lehman Bros. collapsed, not a ton, just enough for a week, because I figured that WaMu would be sold soon and I wanted to make sure I had some funds to get me through any transfer period. I wonder if I’ll have to buy all new checks, get hit with new fees, etc.
The good news is that all my money at WaMu was FDIC insured, so I still have what little I keep in my checking and emergency funds.
Just another day on the financial roller coaster, I guess…
My thoughts on the economic mess
September 27, 2008 5:33 amThanks for sharing your thoughts on the economic situation. Here are a few of mine. I’m weary to share because I really feel like I’m wading in dangerous waters here, but I think dialog is really important, too. Here it goes…
INFORMATION GAP: From what I understand, bad mortgages and foreclosures are at the heart of the current financial crisis. I read yesterday’s explanation of the $700 billion bailout in the Wall Street Journal and found one vague paragraph saying the package would extend to housing. If bad mortgages are to blame, why does it sound like the package is so light on homeowner help? Even if the lending companies get money to stay afloat, won’t there still be millions of people who can’t afford their mortgages? If you have a link with the answer, share it here.
ONE MORE QUESTION: On the other hand, if we give the homeowners money to keep their houses, won’t housing prices stay inflated? Isn’t that bad for the economy, too? The next generation of people will just have to borrow more to buy homes, and what happens when government support runs out? More foreclosures?
TALES FROM THE FRONT: My cousin was in the midst of selling her house - the movers were supposed to come this weekend - when the buyer’s financing fell apart. Because they couldn’t afford to pay two mortgages, she and her family couldn’t get their new home in Texas (she lives in Illinois now), where her husband’s new job is located. I guess that’s what they mean when they say the Wall Street Crisis can directly affect Main Street.
CONFUSION, FEAR… How credible are all the politicians who are warning of imminent economic failure if we don’t act now? The general impression from Washington, based on Sec. Paulson and Chairman Bernake’s congressional appeal, and Bush’s speech, is that if we don’t pass the bill, OMG WE WILL ALL LOSE OUR JOBS TOMORROW AND THE US WILL GO DOWN IN FLAMES!!! Is that really where we are? Cuz I just heard some billionaire on 20/20 complaining that “the hardest thing he ever had to do” was give up his private jet due to the crisis. Come on guys, give it to us straight. Are we all about to lose our jobs and homes, or are a few billionaires about to lose their personal jets and one piece of property? I’m getting mixed messages. One politician says the entire economy is on the brink and that no cash is flowing, and the next minute Warren Buffet’s throwing millions of dollars into investments as a sign of faith.
I HAVE TO ASK: Investments in the US are all about risk and reward, right? I mean, that’s why people risk SO MUCH — because the rewards are so great. Investment profiles and 401ks are based on “risk tolerance” or “risk aversion.” Anybody who visits Vegas knows you can’t win big unless you bet big. But now, essentially what we’re saying is, “Go ahead, take huge risks. Bet ALL your money on red! If it doesn’t work out, we’ll still help you!” How do I get a sweet piece of that deal? …Stupid me! I could have been betting big this whole time!
Seriously, though, shouldn’t companies be allowed to fail because they made bad bets? I know, I know… these companies can’t fail because too many people are invested in them and then we’d all lose our jobs.
CONFLICTED? YES!… If you’re watching the news, you’ve no doubt heard the contradiction, “Bailouts are bad … people made bad decisions and they have to pay!” “Bailouts are good … companies made bad decisions and they need help or else we’re all going down!” Huh?
MY 401K… I have not looked at it in two weeks. Thank god I don’t need it for a while.
Something tells me I’m out of my league here, so I’m going to leave the economic discussions to the economists and resort to just reading about it. I’m swimming in the deep end without water wings, so now it’s time for me to go back to the kiddie pool, into safer, more familiar territory: budgeting and saving. I think a lot more people may be looking for real-world advice on those topics soon!
Common Cents Contest Winners!
September 26, 2008 6:13 amThanks to all my girls who entered the book giveaway. You guys are talented, insightful and inspiring women. And readers Michelle, Rachel (aka Little Miss Moneybags) and Kimberly are receiving free copies of “Common Cents: How the Economy Really Works” by economist Nancy Kimelman. Congratulations!
Here are the winning entries:
Michelle
I’m a budgeting babe because I am proof that people can change!! In college, I was so bad at managing my money that my checking account balance was often negative. My most apprehensive moments were not final exams or paper presentations - they were standing in line at the supermarket checkout, urgently hoping, willing, praying that my debit card wouldn’t be rejected due to insufficient funds. Getting a job and a steady flow of income after college didn’t change my money management habits - in two months, I blew a $5,000 signing bonus on clothes and restaurants. Then, when I was 23 I read a book* about personal finance and had an epiphany: I needed to take charge of my finances or I would never be able to get what I wanted out of life! Now, I can happily say that I home-owning, 401(K) contributing, Roth-max-outing, spending less than I’m making, credit card debt free… BUDGETING BABE!
Rachel
I am a budgeting babe because there’s no other way to be! A budget gives me the freedom to live life for today AND tomorrow. Rather than wondering where my money goes, I can tell it what to do. I’m not worried in today’s economy, because I already know that I’m living in a way I can afford–and there’s no vacation like a cash vacation, baby!
And the runner-up
Kimberly
I am a budgeting babe because that is the only way I have any control in my life. I may not always be on target but I think half the battle is being flexible for what life throws at you…… And it always does. I am a 40-year-old woman with a part time job and a full time 15-year-old daughter and back at school to get my degree and change my life. So that makes me a babe who is budgeting time, money, energy, patience, and peace…… hopefully at some point I can add in some romance. My girl has the desire and imagination to go to medical school and as her support team (me) I need a better grasp on what’s happening in the world, economy at home, and how to keep food in the fridge.
Feel free to read the rest of the excellent entries, too.
Erin
I’m a budgeting babe because I love to find new and better ways to wring more value out of fewer dollars! I live by myself and pay my own expenses (including rent), but my frugal tendencies make room in my $1,000 monthly budget for nights out on the town, movies, date night and more.
Jennifer
I am a budgeting babe because I have to be. I live in New York City , one of the most expensive places to be. I’m not married and have no help. I’m not an investment banker and am not rich. I’m tired of being forever in debt and living paycheck to paycheck. I get a thrill out of saving, finding a bargain or getting a discount. The more I can cut back and not be wasteful without drastically altering my lifestyle, the more satisfied I feel with myself and existence.
Simika
I am a budgeting babe because …. I am an expert at resisting iPhones, Jimmy Choo shoes, Longchamp bags and Chanel dresses. It helps that I don’t earn insane amounts of money (but hey, I’m still optimistic!). In the meantime, I spend most of my time figuring out how to reconcile my expensive tastes/lifestyle choices with my financial goals and after-tax earnings. I’m an economist by training,and I value companies for a living, so you wouldn’t think it would be so hard. But while I am excellent at dissuading others from making rash financial decisions, and at discussing ad nauseum how the rural-urban income disparity gap varies across regions, my inner Diva struggles on a daily basis to maintain that same level of objectivity when it comes to my own life 
I can rationalize almost every financial decision! The good news is I am credit card debt free, I do well on most shopping expeditions and am well on my way to live the lifestyle I want without having to beg, borrow and steal to do it! Now, that makes me one awesome Budgeting Babe 
Crystal
I am a budgeting babe because about a year ago I took a good hard look at myself and realized that I was a Closet Debt-Drowner, feeling overwhelmed and ashamed by my financial situation which consisted of a huge negative net worth due to massive college debt (student loans/credit cards) that never seemed to get any better. I’m in my late 20’s now and I decided that it was time to turn that all around so I made a plan and, in sticking to it, I will be free of credit card debt by the end of the year and have a fully funded 6 month emergency fund by April 2009. Eventually I want to free myself from all debt, build a substantial savings and retire when I’m 45 to a cattle ranch in Montana with my fiancé (soon to be husband) and never answer to anyone else again; be they boss, coworker, credit card company, or debt collector.
Shannon
As my younger brother put it, ‘For as much money as I think she makes, why does she watch her money so closely?’ And this to me, is a question that, in these times, shouldn’t be asked. One, I have a mortgage and I am the only source of support; two, I have a car payment; three, what’s the harm in clipping coupons and walking to work, if it saves me money to eventually get to go on a simple vacation someday; and four, while on the surface it may look like I take home a decent paycheck, I actually immediately deposit at least 10% into my two IRAs.
Especially with the economic times we, as Americans, are in right now, it’s almost silly not to be frugal. The big worry that hangs over my head is, what do all of the bailouts in Washington mean to me? A girl who doesn’t have even close to 100,000+ in a bank (I’m lucky if I get to $500), a girl who is trying to save like mad, but sees the shares that she’s bought decrease immensely in value. Should I worry or relax. Share a bottle of wine at home or go out on the town? Help!
Jen
I am a budgeting babe because I am a gardener in Canada (aka seasonal labourer), but I still travelled to London, Paris and New York this year. I didn’t go into debt to travel, and I still have a healthy emergency and retirement fund on the go. I’m only three paycheques away from being consumer debt free forever. I’m 29 years old, and I have wasted so much money in my life that I don’t even like to think about it, but over the last year I have worked hard to learn about personal finance and develop goals. It took a lot of time, error and effort, but now I am now earning, spending, and saving my money on my own terms. It is such a liberating feeling
Wall Street Meets Main Street… Huh?
September 25, 2008 6:54 amThanks for sharing your thoughts on the economic situation. Here are a few of mine. I’m weary to share because I really feel like I’m wading in dangerous waters here, but I think dialog is really important, too. Here it goes…
INFORMATION GAP: From what I understand, bad mortgages and foreclosures are at the heart of the current financial crisis. I read yesterday’s explanation of the $700 billion bailout in the Wall Street Journal and found one vague paragraph saying the package would extend to housing. If bad mortgages are to blame, why does it sound like the package is so light on homeowner help? Even if the lending companies get money to stay afloat, won’t there still be millions of people who can’t afford their mortgages? If you have a link with the answer, share it here.
ONE MORE QUESTION: On the other hand, if we give the homeowners money to keep their houses, won’t housing prices stay inflated? Isn’t that bad for the economy, too? The next generation of people will just have to borrow more to buy homes, and what happens when government support runs out? More foreclosures?
TALES FROM THE FRONT: My cousin was in the midst of selling her house - the movers were supposed to come this weekend - when the buyer’s financing fell apart. Because they couldn’t afford to pay two mortgages, she and her family couldn’t get their new home in Texas (she lives in Illinois now), where her husband’s new job is located. I guess that’s what they mean when they say the Wall Street Crisis can directly affect Main Street.
CONFUSION, FEAR… How credible are all the politicians who are warning of imminent economic failure if we don’t act now? The general impression from Washington, based on Sec. Paulson and Chairman Bernake’s congressional appeal, and Bush’s speech, is that if we don’t pass the bill, OMG WE WILL ALL LOSE OUR JOBS TOMORROW AND THE US WILL GO DOWN IN FLAMES!!! Is that really where we are? Cuz I just heard some billionaire on 20/20 complaining that “the hardest thing he ever had to do” was give up his private jet due to the crisis. Come on guys, give it to us straight. Are we all about to lose our jobs and homes, or are a few billionaires about to lose their personal jets and one piece of property? I’m getting mixed messages. One politician says the entire economy is on the brink and that no cash is flowing, and the next minute Warren Buffet’s throwing millions of dollars into investments as a sign of faith.
I HAVE TO ASK: Investments in the US are all about risk and reward, right? I mean, that’s why people risk SO MUCH — because the rewards are so great. Investment profiles and 401ks are based on “risk tolerance” or “risk aversion.” Anybody who visits Vegas knows you can’t win big unless you bet big. But now, essentially what we’re saying is, “Go ahead, take huge risks. Bet ALL your money on red! If it doesn’t work out, we’ll still help you!” How do I get a sweet piece of that deal? …Stupid me! I could have been betting big this whole time!
Seriously, though, shouldn’t companies be allowed to fail because they made bad bets? I know, I know… these companies can’t fail because too many people are invested in them and then we’d all lose our jobs.
CONFLICTED? YES!… If you’re watching the news, you’ve no doubt heard the contradiction, “Bailouts are bad … people made bad decisions and they have to pay!” “Bailouts are good … companies made bad decisions and they need help or else we’re all going down!” Huh?
MY 401K… I have not looked at it in two weeks. Thank god I don’t need it for a while.
Something tells me I’m out of my league here, so I’m going to leave the economic discussions to the economists and resort to just reading about it. I’m swimming in the deep end without water wings, so now it’s time for me to go back to the kiddie pool, into safer, more familiar territory: budgeting and saving. I think a lot more people may be looking for real-world advice on those topics soon!
Question of the Day
September 24, 2008 7:33 amHow are you guys feeling about the economy? Scared? Confused? Confident?
Do you feel like you know enough to keep up with what’s going on? I’m interested in your opinions, o’ faithful readers.
I hit the wall… literally.
September 21, 2008 9:31 am
Well, it had to happen: I had my first car accident. Almost. It wasn’t with another car or anything. More like me vs. the wall. You see, our apartment’s parking lot is tight…really tight. I was creeping around a corner, foot on the break, maneuvering to avoid several parked cars and some garbage cans, when… POW!… the passenger side door hit the corner of the building and SCRRRAAAAPE!… the sound of bricks scraping paint off the door filled the air.
It happened last night, and it’s B’s car, so I feel terrible! There are dents in the door and a few 8-inch wide scratches (deep ones) in the paint. He cares for the car pretty meticulously, and although he said, “It’s OK, accidents happen,” when we talked about it, I’m still upset. I insist on fixing the door, but B says it will cost more than it’s worth… he estimates it will cost between $800-$1,500 to fix …on a 10-year-old Mitsubishi Eclipse. He says there are better things to spend my money on.
From my perspective, yes, it’s a lot of money, but you don’t ruin someone else’s car and then just leave it that way. Sure, it could have happened in a parking lot or parked on the street, but the point is that I did it. No amount of fresh paint can cover up that guilty feeling.
Free Book Giveaway for the Best Budgeting Babe (or Boy)!
September 18, 2008 8:29 am
As my Facebook friends can tell, I read tons of books. But besides my Econ 101 text book and “Freakonomics,” I haven’t indulged in much written by economists. This may explain why the latest financial news makes me want to hide in my closet. Truth be told, like many of you, I don’t fully understand how America’s complex economy works. I’m beyond, “Why don’t they just print more money?” but can’t quite grasp, “Oh, don’t worry about that; the market will correct itself.”
Now, just as my lack of understanding is hampering my ability to read today’s newspapers, an economist (Nancy Kimelman, Ph.D.) has offered me a copy of her book, “Common Cents: How the Economy Really Works, from the Global Market to the Supermarket,” to review. The back cover reads, “Ever feel adrift in a stormy sea of economic uncertainty?” Um, yes. And from what I can tell at first glance, the book provides a pretty straightforward and snappy explanation that’s much easier to digest than my Econ 101 book. How cool.
Even cooler: As I’m absorbing her nifty knowledge, I’ve got two free copies to give away to some loyal Budgeting Babe readers…. read on to learn how to enter to win!
…
RULES/ENTRIES
To enter the contest, just send an e-mail to budgetingbabe@yahoo.com with your name, return e-mail address and answer to the question below no later than 6:00 p.m. CDT on Sunday, Sept. 21, 2008. There are 2 winners, and I will not accept late entries.
Here’s the entry question:
“I am a budgeting babe/boy because ____________________________________.”
Answers should be one paragraph or less.
JUDGING
The best answer, judged by my own completely subjective opinion, wins. I’ll be looking for originality, ability to inspire and Budgeting Babe values.
WINNER NOTIFICATION
I’ll send you an e-mail back asking for your mailing address if you win. Also, if you don’t win, I can’t answer why you didn’t. Why? It’s just how I roll. (Don’t enter if you don’t like the rules.)
I can’t wait to see what y’all come up with.
Wow. Money crisis rocks the news… And totally spooks me
September 15, 2008 10:27 amWe need to be serious tonight. Though we are budgeting babes and boys, the years have largely been good to us. We have built a solid financial foundation via paying down debt and funneling money into savings, and we have managed to enjoy the last few years thanks to our blossoming social circles, job promotions and higher net worth. Despite a few setbacks, our financial plans have been right on track.
But tonight, as I’m reading the Wall Street Journal and the New York Times, watching CNBC, I’m not so sure about those financial plans. Earlier today I was riding my bike around Chicago’s flooded suburbs, making mental notes about which homes I thought I could afford to buy … it seemed so many of them were for sale. I thought the fact that so many homes are on the market would work well for me, a potential first-time buyer with cash, and I vowed to sign up for a first-time home buyers’ seminar in hopes that my current rental lease, up in April, would be my last.
It was a happy, carefree plan, but doubts lingered about my timing. And now, after reading the latest financial news - and if you haven’t yet, you should really get your a$$ over to the financial pages - I’m thinking it’s probably better for me to have cash in the bank for a while longer instead of dumping all my cash into real estate at the first available moment.
Why? Well, the idea behind buying when the market’s down is that you hope it will pick back up soon. But with major banks and lenders closing their doors and huge corporations asking for bailouts, where are the signs that the market will pick back up? All I’m hearing from those billion-dollar men, those who created the models that run the financial systems and those that regulate them, is “we don’t know.” And that totally scares me.
“What’s the big deal?” you might be asking. Am I trying to flip a house? No. But given the industries in which B and I work, right about now, neither one of those jobs is as secure as, say, a nurse’s or fire fighter’s job might be. So picking up a 30-year mortgage probably isn’t the best way to go. Yes, interest rates are low (and according to tv analysts, may be lowered again soon), but it wouldn’t be wise to sign up for 30 years of payments if you’re not totally sure of your ability to pay them.
Are the TV analysts the only reason I’ve started thinking this way? No. While the front-page stories haven’t yet really affected me directly (as in, my day-to-day life hasn’t changed), it seems a lot of other people are affected. Several of my young, capable friends are out of jobs. I know a lot of young couples hoping to “trade up” who can’t sell their condos. Gas is still crazy expensive (really high today due to Ike), and credit is harder to come by. For those nearing retirement, 401Ks are a nightmare right now. Is America in for a major lifestyle change?
Well, if you’ve been living below your means for a while now, and you have a good savings cushion, I suspect that you’ll have an easier time dealing with all this. I can’t tell you whether we’re in for a major change - that’s what the big news outlets are for. I’ll just say that on the ground, things are looking very scary right now.
Good luck to everybody on Monday; I hope we all come out top. … Hopefully this was an overly panicked post, and come tomorrow morning I’ll be laughing about how I was so spooked over nothing. But if not, be cautious, be smart and read the signs … and the paper.
Pet problems: Cat diagnosis
September 13, 2008 11:46 amOwning a pet can do a lot of great things for a gal. There’s the fabulous companionship, the rewarding feeling that you’re actually, you know, taking care of something that’s alive and well, and all the doggie ladies know that a cool dog can serve as the perfect conversation piece. But there’s a downside to pet ownership that’s more significant than just cleaning the litterbox or having to go home early for a late-night walk: the cost it takes to actually have a pet.
Those of you who read often know that I currently have two pets: a cat, Nala, and a turtle, Betsy (after designer Betsy Johnson… I was really into pink clothes for a while). I sort of inherited the beast of a turtle while in college, but sweet Nala’s all mine. She sleeps with me at night, wakes me up for work in the morning and always lets me know she’s around - whether with a loud, comical purr or a loud, significantly less comical MEOW. A beautiful little calico, Nala was a shelter cat when we got her; we’ve had her for five great years (she’s 10 now).
Recently I started noticing Nala was drinking way more, using her litterbox way more and just acting out of sorts. We took her to the vet on Saturday. On Monday, after more than $250 worth of testing, the vet dropped the bomb: Nala has diabetes.
$60 more to confirm the prognosis, and here we are. It’s Friday night, and B and I are at home, staring at prescriptions for insulin and syringes, talking about expensive special food and testing equipment, and our schedules. How will we manage to give her two shots per day, 12 hours apart? How much will this cost? How did ths happen? Where do we go from here?
Pet ownership is a challenge, and one that’s easy to categorize as fun or a test of responsibility for future parents. Celebrities often tote pets around red carpets in handbags, like the latest accessory (see Britney, Paris). But the reality is, these are living things that need care and require time and commitment. Nala’s diagnosis is good reminder of that.
We’re going to try to regulate the diabetes, but I’m pretty sure it will not be fun. Luckily for me there are a host of free resources online to help navigate the process. If only the treatment was free, too.
