See Me Get Rich

Buying a House, or "Twilight of the Idols"

2012-01-14T11:54:00.000-08:00

Well, it's official, I have placed an offer on two houses in my hometown of Vacaville, CA. In preparation, I have begun selling off some possessions for the sake of padding my bank account balance for the closing costs, down payment, deposit, and so on.

Purchasing a house forces you to think long-term and to have clear priorities. For example, I am selling my prized DVD boxed set of Star Trek: The Next Generation, which I would never have considered selling a year ago. Of course, since then, the various incarnations of Star Trek have become available for instant streaming on Netflix, so the DVDs are not as necessary as they have been in the past. But it is possible to think of the Star Trek DVDs as a symbol, an idol of sorts, a testament to the priorities of a younger and more frivolous former self.

Granted, I will probably purchase the soon-to-be-released Blu-Ray edition of Star Trek: The Next Generation, but the short-term tradeoff of my beloved Star Trek collection for the sake of long-term stability and owning my own house is a wise financial decision.

Besides, owning my own house will allow me to focus on some of my other interests and passions in life, such as vegetable gardening and raising backyard chickens. So perhaps it is not the Twilight of the Idols after all, for new idols and priorities ebb and flow with the seasons and years in the course of a human lifetime.

Modus Ponens - How to Invest Like a Logician

2011-10-29T18:57:00.000-07:00

Modus ponens is arguably the simplest, most well-known inference rule in formal logic. Modus ponens states that, if some proposition p implies another proposition q, and if proposition p is true, then proposition q must be true also.

Here is modus ponens stated more formally:

Premise 1: p → q
Premise 2: p
Conclusion: q

Or, if you prefer, here is modus ponens in ordinary language:

Premise 1: If p is true, then q is true.
Premise 2: p is true.
Therefore,
Conclusion: q is true.

Of course, the ins and outs of investing are more complicated than a simple two-premise argument makes them out to be. However, the fact remains that, if you take some simple, preliminary financial steps, then you will be better off financially in the future.

For example, are you contributing aggressively to your company's 401(k) plan? Have you opened a Roth IRA? Do you have an emergency cash fund? These are extremely simple steps you can take to become financially well-off in the future.

Investing is not difficult, or even time-consuming. Just pick a target-date retirement mutual fund, or a broad-market index fund (such as the iShares S&P 500 Index ETF, AMEX:IVV), and start investing a portion of your income regularly. Diversification is the key, and many funds are already adequately diversified for you.

Premise 1: If you do these these things (p), you will become financially secure later in life (q). The real challenge to making our modus ponens comparison hold is premise 2 (p). It is up to you to take these simple steps toward your own financial future; no one will take these steps for you. But if you do take these steps, and if you persist in following through with investing for the long term, you will truly be investing like a logician, with the principle of modus ponens on your side.

Three Sample Roth IRA ETF Portfolios for Various Investment Time Frames

2011-10-25T11:13:00.000-07:00

In general, if you have a long investment time frame, then a greater percentage of your investment portfolio should be in aggressive, higher-risk investments such as stocks. As your investment time frame gets shorter, a greater percentage of your portfolio should be in more conservative, lower-risk investments such as bonds.

Below are three very simple Roth IRA portfolios using ETFs (exchange traded funds) for various investment time frames that you can use as-is or customize according to your own investment philosophy and goals:

Short-Term ETF Portfolio (0 to 5 years):

40% Bonds (BND or AGG)
60% Stocks (IVV or SSO)

Intermediate-Term ETF Portfolio (6 to 10 years):

20% Bonds (BND or AGG)
80% Stocks (IVV or SSO)

Long-Term ETF Portfolio (11 or more years):

100% Stocks (IVV or SSO)

To keep these sample portfolios as simple as possible, I used S&P 500 Index ETFs for the stock portion of the portfolios: the iShares S&P 500 Index ETF (AMEX:IVV) or the ProShares Ultra S&P 500 Index ETF (NYSE:SSO).

If you would like to be even more aggressive, especially for the long-term portfolio, you could use a growth or value ETF (such as IVW or IVE) for the stock portfion of the portfolio, or you could use a mix of small-cap and mid-cap Index ETFs (such as IWM or IJH).

Key lessons:

If you are investing for more than 10 years, your entire portfolio should be in stocks or stock funds.
To keep a portfolio simple and diversified, use a single broad-market index fund ETF or a balanced mix of different types of index fund ETFs.
As you get closer to needing the money from your investments (that is, as your investment time frame gets shorter), a greater percentage of your portfolio should be dedicated to more conservative investments such as bonds or bond funds. Again, to keep the portfolio simple, use a broad-market bond fund ETF.
To keep the trading fees low, purchase only one investment at a time, perhaps by alternating which investment you purchase each month.
Rebalance your portfolio once per year to bring the ratios between investments back into proportion, or when your investment time frame has changed.
If you are absolutely new to investing, I still recommend that you open an account with Sharebuilder (through ING Direct) because Sharebuilder makes it easy for a new investor to set up an automatic investment plan. Just click over to Sharebuilder, open a Roth IRA account, and follow the prompts to set up an automatic investment plan.
Investing for the long-term is much simpler than you think! Just do it! Later in life, you will thank your younger self!

Recommended reading about ETF investing:

Amazon.com Widgets

Dress for the Job You Want, Not the Job You Have

2011-10-08T18:42:00.000-07:00

In a perfect world, substance would win over style every time. However, the truth of the matter is that you must look the part if you want to get ahead. In other words, you must dress for success, to use another oft-quoted phrase. This is not new advice. But if you have not yet woven these sayings into the fabric of your mind, please do so right now.

Repeat after me:

"Dress for the job you want, not the job you have."

It is very easy to let your wardrobe slip into a state of disrepair. Before you know it, your work clothes are tattered, too small, or, worse yet, out of style. The sad fact is that people will indeed judge you by your clothes. At the risk of sounding like a bumper-sticker advertisement for a clothing company, "the clothes make the man." (quote from Mark Twain) If you want to advance in the workplace, to be promoted, or to tackle that dream-job interview with confidence, then do your homework and look the part.

What can you do if your wardrobe needs refreshing? Men should purchase quality basics such as chinos or khakis, quality dress shirts and ties that actually match, polo shirts, semi-casual buttoned shirts for casual days, a jacket or sports coat, and new-looking shoes to complete the order. (Sorry, ladies, I am nowhere near an expert on women's workplace fashion. I wont even try.) When you are purchasing basic foundations of a workplace wardrobe, it is worthwhile to spend extra for quality. Do not skimp on work clothes. Repeat: "Do not skimp on work clothes." Although quality work clothes can be expensive, not only will quality clothes last much longer, but they will also make a better first impression.

Be forewarned that there is no need to over-impress when dressing for success. Study other people in your industry, and people who already have the position you are aiming for. What are the hallmarks of their style and confidence? How do they establish the power relationships in a room before they even say a word? I guarantee that it has something to do with their attire, which is second only to their nonverbal demeanor. How do the clothes help establish authority and trust? And, if you are thinking of someone who lacks these qualities, why is that? Are the clothes helping or hurting? Try noticing the attire of every coworker, both those above your position and those below your position? You'll be surprised what you can learn about getting ahead from opening your eyes to the nonverbal, visual clues in the attire surrounding you every day.

More reading on how to dress for success:

Amazon.com Widgets

New Direct Loan Servicing Web Site - Outage and New Address

2011-10-08T13:44:00.000-07:00

I am a creature of habit. Every other pay period, I make a student loan payment on the morning my paycheck is deposited into my checking account via direct deposit. Yesterday, however, I was unable to make my usual student loan payment because the Direct Loan Servicing website is undergoing a three-day outage while Direct Loan Servicing transitions to a new web site address.

Fortunately, my payment is not in danger of being late, since I will still have a couple of days to spare when the new Direct Loan Servicing site is unveiled on Monday. But I am ever so slightly annoyed that I was forced to deviate from my usual payment routine to accommodate the transition to the new site.

Surely it must have been possible to prepare the new site for launch without taking down the current Direct Loan Servicing site. In any case, rather than having all my bills paid up promptly after receiving my paycheck, I must now remember to make my payment on Monday morning.

If you are reading this post and searching for the new Direct Loan Servicing web site address, here are links to the original site and the new site:

New Direct Loan Servicing web site: www.myedaccount.com (opens Monday, 10/10/2011)
Old Direct Loan Servicing web site: www.dl.ed.gov

And here is some recommended reading on getting out from under student loan debt:

Amazon.com Widgets

Double-Down on Stocks While the Market is Low

2011-10-01T18:27:00.000-07:00

When the market is low, fear is the natural instinct. Many investors either stop investing in stocks or sell their current holdings if they have dropped in value. However, as long as you have a sound long-term investment strategy, pulling your money out of stocks is seldom a good idea. In fact, when stock prices fall, it can be a good time to purchase more shares and "double down" on your usual contributions.

Even if aggregate stock prices fall in the short-term, stock prices will likely rise in the long term at a fairly predictable rate. If you purchase additional stock shares while prices are low, you will end up with even more shares when the market rebounds and prices rise again. When there is a dip in the stock market, you should think of stocks as being "on sale."

Of course, individual stocks are inherently more risky than index funds, which is why I recommend index investing (either through mutual funds or ETFs) if your aim is to achieve moderate and predictable long-term gains from your investments. While the market is low, double down on your Roth IRA or 401(k) contributions, and consider purchasing additional shares of your long-term stock investments.

Controlling your fear can be difficult, especially in a turbulent economy. But overcoming this fear to double-down on your investments while stock prices are low can be a savvy way to get ahead while others are panicking and selling off their under-priced investments.

Do you keep your credit cards in your wallet/purse?

2011-09-26T19:51:00.000-07:00

A common piece of personal-finance advice is to remove your credit cards from your wallet or purse. While you may not need to go as far as to literally freeze your credit cards in ice, removing your credit cards from your wallet or purse can prevent you from succumbing to the temptation of purchasing on credit.

A good use of credit (insofar as there are any good uses of credit) is to get you through a personal financial emergency. While an emergency fund is the best way to get you through a financial emergency, reserving your credit card use for times of emergency is also very wise. Therefore, if you are relatively immune to spending temptation (that is, if you have retrained your spending habits and are able to live within your means), then it may be a good idea to leave yourself a single major credit card (Visa, Mastercard, Discover, or American Express), in case of emergency.

Even if you decide to keep a major credit card in your wallet or purse, you should probably avoid carrying your high-interest store credit cards around with you. Store credit cards can be a good way to obtain special promotions, such as a no-interest, same-as-cash promotion. However, a retail credit card for your favorite retailer can be especially tempting to use, and the high interest rate can make it very difficult to pay off a retail credit card. Do yourself a favor and keep your retail credit cards at home.

How many credit cards do you carry in your purse or wallet? Which type of credit cards, and why? If you carry them with you, how do you avoid the temptation to use them? Share your own advice in the comments section below.

Got the Payday Blues?

2011-09-24T18:36:00.001-07:00

Do you remember when getting paid was fun? Now it more like "get paid, pay bills, be broke." Of course, I am exaggerating. But I do sometimes miss those carefree days with no bills and no responsibilities, when getting paid meant asking "So what are we doing this weekend?"

When I was a teenager, on any given day off from work, you could have found me driving anywhere within a 150 mile radius of Vacaville, my hometown. I used to drive up to Lake Berryessa, to San Francisco, to Napa and Sonoma for wine tasting, Old Sacramento, even as far as Reno or Lake Tahoe if I was feeling extra adventurous. But with gas so expensive nowadays, I, like many people, am much more hesitant to spend a hard-earned dollar on a six-cylinder joyride.

Therefore, I have decided to buy a bicycle and start riding that around town instead. It may not be as adventurous as a wanderlust-fueled drive through the country, but I will get my adventure fix and burn some calories, to boot.

Do you also find yourself with the payday blues? What did you used to do right after payday when you were younger? What are you doing now to live a meaningful life when money is tight? Please share your thoughts and stories in the comments section below.

Bank of America's Asinine Cashier's Check Security Policy

2011-09-24T13:09:00.000-07:00

*begin sarcasm tag*

I seldom write negative posts or reviews, but I simply cannot help myself this time.

Several months ago, Bank of America adopted a new security procedure for customers requesting a cashier's check. Normally, I would applaud Bank of America for its attempt to keep their customers' accounts and deposits secure. However, this particular security procedure is laughable and borderline insulting.

After a customer requests a cashier's check, the teller reviews the customer's account looking for the last time the customer used a traditional check (what are those, right?). Of course, if you are anything like me, you have absolutely no idea when was the last time you wrote an actual check. I pay my rent with a cashier's check because I don't like waiting for a check to clear or waiting for the payment to be mailed if I were to use online banking.

So today I went to the Bank of America branch at the Valley Fair Mall in San Jose and endured the monthly gauntlet of third-degree questioning earning me the privilege to get a cashier's check drawn from my own money. (I wouldn't call out a particular branch on purpose or be that sarcastic, would I?) Apparently, it doesn't actually matter whether or not you remember when you wrote your last check; the teller merely has to ask the question as a formality to the screening process. Even though I didn't remember when I wrote my last check (causing the teller to give me a skeptical, accusatory look), I apparently passed the first round of screening.

After passing the first gauntlet ("When did you write your last check?"), the teller begins to process the cashier's check. Once you have signed the teller withdrawal slip, the teller must then compare your signature with your signature on file. Of course, you had better watch out if your signature doesn't match exactly. Since I was in a hurry, I signed my name with my first initial and last name, "Z. Fruhling" instead of "Zachary Fruhling." Of course, this deviance was unacceptable from the teller's standpoint, who promptly called the branch manager over to approve my cashier's check. (Can you picture my eyes rolling as you read this?)

What is ironic about this rigamarole is that, in an attempt to treat their customers accounts and security with respect, Bank of America tellers, in fact, do nothing but treat their customers in an insulting and accusatory manner. Aside from the fact that this new security process is insulting to the integrity and intelligence of the customer, it is laughable and ineffective. I passed the first round of screening without ever answering the security question asked, and (however annoying this is), I apparently just had to sign my name in the proper format to get my cashier's check. Mind you, this is already after I swiped my debit card and entered my secure pin number into the touch pad mounted at the teller's window.

The manager, for what it's worth, sensed my frustration at this nonsense and tried to apologize, reiterating the party line that this is all for the benefit of my own security. Of course, the very attempt to reiterate the value of this asinine security procedure did nothing but make my blood boil further. I basically replied, "Look, I know you have a job to do and a process that you MUST follow, but I am sick and tired of this third-degree every month when I come in for my innocuous and fraud-free cashier's check. I have been thinking about finding another bank for quite a while, and I may do just that in order to find another bank that treats me with better respect when I need a simple cashier's check." *stern, disapproving teacher voice*

To this, the branch manager tried to tell me that it is my choice to get a cashier's check and I could use online banking instead. Needless to say, I had to bite my tongue at that reply. Who is the branch manager to tell me what I need to do with my own money and how to handle my personal finances???

Well, to make a long story short, I did eventually receive my cashier's check, after the Bank of America gods apparently deemed me worthy to use my own money to pay my rent. Has anyone else had recent trouble getting a cashier's check from Bank of America? Someone really needs to sit down with the Bank of America executives and read them the riot act about how to treat customers with respect and trust. In case any of them end up reading this post, trust in your customers and your customers' security are not mutually exclusive. Process for its own sake is ineffective, insulting, and an enormous waste of your customers' time.

*end sarcasm tag*

San Jose versus Santa Cruz - Pros and Cons

2011-08-28T17:46:00.000-07:00

I am writing this post at Cafe Pergolesi in Santa Cruz, CA. Santa Cruz was my home for seven years while I pursued grad school at UC Santa Cruz. However, two years ago, my wife and I moved over the hill to San Jose (specifically, Campbell) in order to be closer to my workplace and because of the relatively more affordable rent prices. Now, surprisingly enough, we are considering moving back down to Santa Cruz.

With an impending (but unhurried) decision about whether to continue living in San Jose or to move back to Santa Cruz, I figured I would write up a quick list of pros and cons about San Jose versus Santa Cruz:

San Jose pros:

San Jose is closer to my work than Santa Cruz (by about half an hour).
My good friend and cigar buddy, Mike, lives just a few blocks away.
Rent is more affordable in San Jose than in Santa Cruz (by about $400 or so).
Downtown Campbell has a very nice farmer's market on Sundays, which I frequently enjoy.
Campbell also has music in the park on Thursday summer nights, which has a quaint small-town feel (for a big city).
As a result of my recent jury duty service, I have made several new friends in the area, which has helped make San Jose feel more like home than it would otherwise.

San Jose cons:

San Jose is extremely crowded (urban sprawl at its worst).
Traffic in San Jose is horrendous. It can take at least half an hour to get anywhere.
San Jose gets hot, muggy, and smoggy in the summertime.
Grocery stores are crowded and unfriendly in San Jose.
There is very little nature or wilderness in San Jose.
We seldom get out to do things around town (dinners, walks, movies, and so on), which is good for the pocketbook but too isolating for me.

Santa Cruz pros:

Living by the ocean; enough said!
Santa Cruz has more temperate weather than San Jose.
Quirkier, more unpretentious people on the street
Santa Cruz has a much better selection of restaurants and shops.
Santa Cruz is significantly less crowded than San Jose; it is quiet enough to hear yourself think.
It is easier to have a healthy and balanced lifestyle in Santa Cruz (nature, health awareness, spas, an so on).
Santa Cruz has cleaner air; in San Jose I am being poisoned one breath at a time.
Generally I was happier living in Santa Cruz than I have been in San Jose; the importance of this cannot be overstated!

Santa Cruz cons:

Sometimes the Santa Cruz local mindset is just too much to handle.
Moving to Santa Cruz entails that I must commute to work over Highway 17 (that is, a deathtrap) three days per week. My commute would be at least an hour each way.
With gas prices so high, the commute could also be costly.
Santa Cruz is farther from my hometown (Vacaville), and from my family and friends who still live there.
Santa Cruz is much more expensive (probably $400 per month more in rent). It would probably be much more difficult to purchase a home in Santa Cruz.

The choice between Santa Cruz and San Jose seems to break down into a fundamental choice between comfort and convenience, between really living and merely subsisting, between nature and steel/concrete. For too long I have sacrificed quality of life for convenience, so it is time to get back to living in a place where I can be myself and have a good time. (Spoken like a true existentialist!)

So what do you think? San Jose or Santa Cruz? For what reasons (financial, lifestyle, climate, and so on)? What would you do?

Fresh & Easy Neighborhood Market Review

2011-08-25T13:40:00.000-07:00

Why am I blogging about a grocery store chain on See Me Get Rich? The obvious answer is that grocery prices are always rising, and I like to save money on everyday items like groceries. Although I have traditionally shopped at large grocery store chains such as Safeway, I have recently become impressed with Fresh & Easy Neighborhood Market. Fresh & Easy is a simple, affordable alternative to the busyness and costliness of bigger-box supermarkets.

My wife and I visited Fresh & Easy for the first time this week, at the Saratoga & Payne location in San Jose, CA. We decided to visit Fresh & Easy, knowing that Fresh & Easy has a reputation for affordable groceries and a minimalist shopping experience. The mainstream grocery stores here in San Jose are overcrowded and chaotic, to say the least, and the quality of shopping experience is at least as important to us as the price of the groceries.

Fresh & Easy maintains its low prices by offering a stripped-down shopping experience, by offering a large percentage of its own Fresh & Easy generic brand food items, and by utilizing what are claimed to be environmentally-friendly, more-sustainable stores and warehouses. Self-checkout stations and facilities that are easier to clean (such as concrete floors) also help reduce costs, and these features add to the minimalist impression you receive upon entering a Fresh & Easy store.

The prices at Fresh & Easy are quite good, as long as you stick to the Fresh & Easy branded items. In addition, I noticed that a great many items were close to (but not beyond) the sell-by date on the packaging. This tells me that the company is not wasteful with their food items, although it may give some customers reason to question the term "fresh" in "Fresh & Easy."

At our first visit to Fresh & Easy, we spent just over $100 for groceries. It is safe to say that our $100 went much further at Fresh & Easy than it usually does at Safeway or other mainstream grocery stores (almost double the amount of food!). The minimalist approach certainly appeared to translate into genuine savings on ordinary food-staple items. The lack of fancy advertising and store displays, along with reduced labor costs, allows Fresh & Easy to offer significantly lower prices. I would estimate that Fresh & Easy has prices approximately 50% to 60% of mainstream grocery prices, on most of their store-brand items.

Fresh & Easy carries a limited number of brands in order to keep costs low. Unlike a supermarket, in which you will find 15 brands of ranch salad dressing, Fresh & Easy tends to carry two to three brands of any given item, at most, including its own brand. Although this does not give you much option in terms of new varieties or brands, the reduction in brand selection is perfectly fine for my shopping habits and for food staples.

Although I have characterized Fresh & Easy as a minimalist experience, I was pleasantly surprised to discover a number of interesting, unique items that I decided to try. Interesting flavor varieties, tempting and healthy prepackaged meals, an interesting selection of international food items (particularly British foods), and a gluten-free section for people who have special dietary requirements.

If you are used to shopping in more traditional grocery stores, then you may be disappointed by Fresh & Easy. But if you are nostalgic for a smaller-town, almost vintage, 1970s but with a modern twist, quieter grocery store experience, then you will almost certainly enjoy your visit to Fresh & Easy. And, besides, who doesn't like to save money on groceries? Keep your expectations in check, and you will love Fresh & Easy. Fresh & Easy is not Trader Joe's, it is not Safeway, it is not Whole Foods; Fresh & Easy is its own category with its own reason for being. I already love Fresh & Easy for what it is, and my wallet agrees.

Visit the Fresh & Easy Neighborhood Market website here: http://www.freshandeasy.com/

What percentage of your portfolio should be dedicated to stocks? The 120 rule is too conservative.

2011-08-20T14:38:00.000-07:00

What percentage of your portfolio should be dedicated to stocks? This question is one of the most common questions asked by new investors. The percentage of your portfolio dedicated to stocks is a function of two main factors: your investing time frame and your level of risk tolerance.

If you do not need the money in your investment account for five to ten years, then my personal view is that 100 percent of your portfolio should be dedicated to stocks. This is because stocks generally have potential for greater investment returns than other investment types such as bonds and cash funds. However, stocks also carry a greater degree of risk, especially in the short term due to market conditions and fluctuations.

As you get closer to needing money in your investment account, it is best to dedicate an increasing percentage of your investment portfolio to more conservative investments such as bonds, bond funds, cash, or cash equivalent funds. This is because you do no not want to risk losing your investment capital due to short-term market fluctuations as you grow closer to needing the money (whether for your retirement or for some other purpose such as your child's college education).

A common rule of thumb, the 120 rule, tells you that you can determine the percentage of your portfolio that should be dedicated to stocks by subtracting your age from 120. For example, I am 33 years old, which means that I (theoretically) should dedicate 87 percent of my portfolio to stocks (120 – 33 = 87 percent). However, I find that the 120 rule of thumbs is far too conservative for my purposes. Given that I do not plan to retire for at least another 25 to 30 years, it is wiser for me to keep 100 percent of my portfolio invested in stocks, in order to take maximum advantage of the growth of the anticipated growth of the market over the next several decades.

Of course, you may have specific reasons for needing to be more conservative with your investments. For example, you may be saving money to purchase a home within the next two to three years, or you may be saving for your children's college educations within the next few years. If you need your money in the short-to-mid term, you should dedicate a much greater percentage of your portfolio to bonds or bond funds so you preserve as much of your money as possible.

But if you are investing solely for the long-term, and if you do not need your investment capital for at least five to ten years, then the wisest choice is to allocate 100 percent of your portfolio to stocks, despite the 120 rule of thumb.

Investment Metaphor #16: Pencil Holders

2011-08-14T23:40:00.000-07:00

If you were asked to make a pencil holder for your desk, what kind of pencil holder would you make? What materials would you use? What construction method would you employ? How would you decorate the pencil holder?

For most tasks, there is more than one way to accomplish the same goal. With a pencil holder, the goal is to hold your pens and pencils so that they do not roll around on your desk. You could accomplish this same goal with a wooden pencil holder, a pencil holder made from old floppy disks, or from LEGO bricks.

I recently made my own pencil holder for my desk at work out of LEGO bricks, and I was intrigued by my boss's statement that my pencil holder matched my personality; he also indicated that he would have made a complete different style of pencil holder if he were asked to make one. Clearly there is a subjective and interpretive element to the artistic and problem-solving process.

As human beings, we are not content merely to accomplish a task; we almost always strive to put our own unique stamp on a project. Investing is no different. Two different portfolios can accomplish the same investment goals, for example, by having the same target asset allocation. However the individual investments within the two portfolios may vary greatly based on the particular interests and knowledge of each investor.

When you are assembling your investment portfolio, do not be afraid to select investments that bring a touch of your own individual interests and investing style into your portfolio. While you should always ensure that your investments are consistent with your financial goals and your investment philosophy, you can often achieve those goals with any number of different portfolios and investments.

Just like a homemade pencil holder, or a priceless work of art, an investment portfolio should reflect the personality of its creator. Just be sure not to let your own subjective judgments or interests interfere with the careful and objective evaluation of your investment choices to ensure that they are good investment options to help you meet your financial goals.

Investment Metaphors by Zachary Fruhling:

Investment Metaphor #16: Pencil Holders
Investment Metaphor #15: Composting
Investment Metaphor #14: Fattoush Salad
Investment Metaphor #13: Small-Ball Baseball
Investment Metaphor #12: Ancient Greek
Investment Metaphor #11: D-Day
Investment Metaphor #10: Trout Fishing
Investment Metaphor #9: Truthiness
Investment Metaphor #8: World of Warcraft
Investment Metaphor #7: Commuters
Investment Metaphor #6: Live 24/7 Webcasting
Investment Metaphor #5: Johann Sebastian Bach
Investment Metaphor #4: Investment Blogging
Investment Metaphor #3: Potatoes Revisited
Investment Metaphor #2: Fractals
Investment Metaphor #1: Cane Toads

Net Worth Update - 6/23/2011

2011-06-23T09:34:00.000-07:00

It has been about six months since I posted the last update on my net worth. On December 19, 2010 I calculated my net worth to be negative $61,759.19. At that time, I was within $500 of paying off my remaining credit card debt. Unfortunately, this past tax season, I had a much larger income tax bill than I had anticipated. Consequently, I had to charge my tax bill of $3,000 onto one of my credit cards.

Since then, I have been aggressively trying to eliminate my credit card debt, and I am pleased to report that I have now completely paid off all of my credit card debt. I am soon to be 33 years old, but this is the first time since I was 19 years old that I have zero credit card debt. Of course, I still have my student loan and my auto loan remaining. But now that my credit card debt is paid off I will be able to concentrate on paying down my auto loan and on increasing my 401(k) contribution once again.

Without further ado, here is my net worth update for 6/23/2011:

Assets:

Retirement Accounts: $11,916.67

Debts:

Credit Card Debt: $0
Student Loan: $64,327.86
Auto Loan: $7,153.58

Total Net Worth: $-59,564.77 (up from $-61,759.19 in December 2010)

A net worth increase of $2,194 over the past six months is not bad, considering that I had to charge a $3,000 tax bill and pay it off within that same time period. I have increased my income tax withholding this year to make sure that I do not end up in the same situation next year. So for now, I am pressing on, and my finances are headed in the right direction!

Shipping Costs Inflate iPad 2 Prices

2011-05-15T13:04:00.000-07:00

Two weeks ago, I ordered an iPad 2 from the Apple store online. The iPad was back ordered for two weeks, and it finally shipped last Friday. Since the iPad shipped, I have been tracking the progress of the shipment via FedEx. The iPad shipped from China and arrived in Alaska, after which the package was sent from Alaska to Oakland, CA, a mere 30 minutes from my house. However, from Oakland the package was then sent to a distribution center in TENNESSEE, after which it will be sent BACK to California for delivery this Wednesday.

Now I know that there must be some sort of twisted logic behind this Alaska-California-Tennessee-California shipping route. But I shudder to think how much this wacky shipping route has inflated the price of the iPad 2. Even more so, I wonder what crazy route that the package containing my iPad would have taken had I not opted for the expedited shipping option. I would even have been willing to drive to Oakland to pick up my iPad if it meant not having to wait three additional days to get my iPad back from Tennessee! But like a dutiful slave to the Apple corporate machinery, I await the arrival of my iPad despite the evidence of corporate wastefulness and price inflation shown in the FedEx shipping log below:

Investment Metaphor #15: Composting

2011-04-30T13:50:00.000-07:00

Composting and investing are similar in many ways:

The purpose of composting is to reinsert organic material into the ecosystem and biosphere. Likewise, one purpose of investing, besides the benefits to the individual investor, is to reinsert investment capital back into the economy as a whole. Organic material that we cultivate for food has effectively been removed from the ecosystem, which is part of the reason that farmers must use fertilization and crop-rotation method to ensure the long-term viability of their farmland. Similarly, invested money helps to ensure the long-term grown and stability of our economy by ensuring that capital is available and circulating to various industries and businesses.
Composting takes the right mix of ingredients. Efficient composting requires an ideal carbon-to-nitrogen (C:N) ratio of 25-30 parts carbon to 1 part nitrogen. If this ratio is not maintained, you will either get slowed decomposition and/or a stinky compost pile! Once you have the proper ratio of brown/green compostables in your compost pile, all you need is water and time to allow decomposition to take place and to have a nutrient-rich pile of compost ready to insert back into the ecosystem. Similarly, your investment portfolio requires the right mix of ingredients (stocks, bonds, cash) diversified in various ways. Just as you can selectively add ingredients to your compost pile to ensure the proper carbon-nitrogen ratio, you should rebalance your portfolio regularly to ensure that your portfolio contains the proper proportion of investments, depending on your investment strategy.
Composting and investing both take time. It takes time for organic matter to decompose into usable compost. Likewise, it takes time for your investments to produce a positive rate of return from the combination of compounding, growth, and income.
Just as you should keep adding new material into a compost pile (as you consume more organic material and as you remove compost for use in your garden) you should invest often by making regular contributions to your retirement investment accounts (for example, a Roth IRA or a 401k plan). Regular investing helps your portfolio to grow, just as regular additions to your compost pile help ensure a steady supply of ready-to-use compost over time.
Investing and composting are both activities that you can do from home. There is no need to buy fertilizer from a nursery or garden-supply store if you are producing your own compost. Likewise, if you are active in maintaining your own investment accounts (whether through portfolio rebalancing or through the establishment of an automatic investing plan), you do not need to shop or pay for financial services such as financial planning or broker services. Your investment plan can be as self-sustainable as your nutrient-rich garden!

Tax Paperwork Collected

2011-02-05T08:56:00.000-08:00

I have finally received all of my tax paperwork necessary to file my 2010 income taxes. I am fairly certain that tax season will go okay for me this year. Although my income rose slightly, I contributed more to my 401(k) than I did the previous year. In addition, I began paying back my student loans last year, which means that I have student loan interest payments that are tax deductible.

For my 2009 taxes last year, I received about $600 back from the IRS but had to pay about the same amount for my California state taxes. I am curious whether I will again break even this year, whether I will receive a net tax refund, or owe a net tax balance.

I am still relatively new to being in a higher tax bracket than I was in while I was teaching, so tax season is still somewhat stressful for me as I work to reach a balance between taxes owed and taxes withheld from my pay. I plan to file my 2010 taxes this weekend, so I will update this post with the full report later this weekend.

Investing in a Professional Baseball Team

2011-01-30T20:22:00.000-08:00

I have a confession to make: I would like to invest in, and become a part-owner of, a professional baseball team.

Major League Baseball teams are usually owned either by a single person or by a limited partnership. For example, the world champion San Francisco Giants (By the way, Let's Go Giants!) are owned by the San Francisco Baseball Associates, L.P. (limited partnership). Because Major League Baseball teams, in general, are not publicly traded or open to the average investor, investing in a Major League Baseball team is probably out of the question.

With investing in a big-league team as a non-starter, that leaves the possibility of investing in a minor league baseball team. After a little bit of research, I discovered that the cost of purchasing a minor league baseball team usually ranges from around half a million dollars for a rookie team to upwards of ten million dollars for a Triple-A team. Of course, it goes without saying that I cannot afford to buy minor league team. But I would absolutely love to invest in a minor league team as a very-minor partner in an ownership group. The problem is that I have no idea how to locate an investment group for a minor league team willing to accept a small investment from an average investor like me. (If any of you readers have any information about how to invest in a minor league baseball team, please comment below with the information!)

Let me be clear that I am not looking to replace my long-term investment strategy with grandiose plans of becoming a big-time baseball owner. I would be content to own a few shares of a minor league team as a splurge investment, just for the fun of partially owning a baseball team. If you are looking for a real long-term investing strategy, roll over to my series on investing for the absolute beginner. But with the 2011 baseball season right around the corner, my imagination (for investing or otherwise) is preoccupied with the smell of the grass, the sound of the crack of a bat, and the roar of the crowd rooting for the home team. Investing in a professional baseball team would be icing on the cake for a baseball fan like me!

Frugal Living Tip: Do Your Own Household Chores on a Rainy Day

2011-01-30T10:35:00.000-08:00

What can you do on a rainy day? Household chores! I work at my job Monday through Friday, and I am working on my dissertation on Saturdays. This leaves Sundays for recreation and household chores.

It so happens that it is currently a rainy Sunday morning in the Bay Area, which means that I can dedicate a few hours to housework (doing dishes, doing laundry, and cleaning the cat litter box).

Although I would much rather have a lazy Sunday afternoon full of guilty pleasures such as watching Star Trek, playing with model trains, having a cigar, or visiting a museum (such as the Computer History Museum), I am embracing the rainy day filled with housework. A rainy day for housework costs no money, other than the usual expenses of dish soap, laundry detergent, and cat litter.

At one point I had thought of hiring a housekeeper or a personal assistant for these mundane chores. But it occurs to me that this is lazy and wasteful when I have my own two hands and a day free of other commitments. And the opportunity costs of doing my own housework (Star Trek, model trains, cigars, etc.) do not justify the added expense.

Of course, if I were to dedicate my one free day per week to philanthropy, entrepreneurship, academic pursuits, or some other important venture, then the cost of a housekeeper would be worthwhile. But because I fill the majority of my time throughout the week on grander pursuits, a day at home filled with household chores, and whatever Star Trek episodes I can squeeze in between them, is just fine with me for the moment.

The beauty of doing your own housework and household chores is that it very easily results in a productive and zero-cost weekend. If you are tempted to brave the rain to go out on the town or to the mall and spend money on a rainy day, do yourself and your finances a favor and just do some laundry or dishes instead. The chores will be done, and you can have some quality family time at home doing chores together.

How to Plan Ahead for Tax Day 2011

2011-01-23T16:09:00.000-08:00

Tax day 2011 has been moved to April 18, 2011 because of a holiday (Emancipation Day) in Washington D.C. This leaves 84 days from now until tax day, the annual tax filing deadline. As tax day approaches, here are a few things to keep in mind as you prepare to file your taxes:

Start collecting your tax forms now. As your tax forms start to arrive (for example, W-2 forms, 1099 forms, and so on), start collecting them together into a single place. By keeping your tax forms organized now, you won't have to search for them later.
Make a last-minute 2010 contribution to your Roth IRA. Remember that the tax filing deadline is also the deadline for Roth IRA contributions for the previous year. Single tax filers with an adjusted gross income (AGI) of up to $105,000 are allowed a maximum contribution of up to $5,000 for the 2010 tax year. And people who are married filing jointly with an adjusted gross income of up to $167,000 can also make the maximum contribution. (If you do not have a Roth IRA, starting one is your first action item for this tax season! Try Sharebuilder Roth IRA, which is what I use. Here is a sample Roth IRA portfolio using ETFs.)
Consider a tax-deductible charitable donation. Charitable donations are generally tax deductible. If you are expecting a tax bill and have some cash to spare, consider a charitable donation to help lower your 2010 taxes. Charity navigator can help you search for eligible charities.

Waiting until the last minute to start working on your taxes is a recipe for being caught unprepared. Missing tax forms, or a larger-than-expected tax bill, can put a damper on your springtime and your other financial plans. Planning ahead for tax day will help you to avoid being surprised on April 18th.

How to Negotiate for Lower Comcast Service Fees

2011-01-17T16:18:00.000-08:00

Are you tired of paying so much for your Comcast cable or internet service? Have your promotional rates just ended, or have your Comcast rates been on the rise? If so, it is fairly easy to negotiate with Comcast for better service rates if you keep a few negotiation tactics in mind.

The first thing to keep in mind when negotiating with Comcast is that they will strive to keep you as a customer at all costs. It costs Comcast more money to recruit a new customer than it does to offer you discounted services. This doesn't mean that you should automatically threaten to cancel your Comcast service, but it does give you a sense of why Comcast is usually willing to negotiate with you.

The second thing to keep in mind is that you should avoid "yes or no" questions. If you ask a simple question such as "Can you give me a discount on my service?" it is too easy for the Comcast customer service representative to reply with a "no." (Although Comcast is usually willing to negotiate, the representative is not going to make it that easy for you!)

Instead, ask open-ended, leading questions such as "How can you work with me to bring my rate plan down to an acceptable level?" or "What promotional rates are currently available for my level of service?" Asking these open-ended, leading questions makes it much more difficult for the Comcast representative to decline your request without appearing to offer poor customer service.

It usually helps to be somewhat saccharine in your request, indicating how happy you have been with the service and how much you want to remain with Comcast due to their excellent customer service. If worse comes to worse, you could threaten to leave Comcast and take your business elsewhere. But this should be a last resort when negotiating with Comcast, and you will likely find that the Comcast representative will crumble very easily and be happy to find you a better rate plan. If you have not yet called Comcast to negotiate your service fees, I would put money on the fact that you are overpaying for your service.

The discount you receive may not be much. For example, I recently negotiated my Comcast Triple Play service fees down to $204 per month from $230 per month. It doesn't sound like much, but I was happy with the level of service and simply wanted the current promotional rate instead of having to pay full price. A five-minute conversation later, and I received the promotional rate, no questions asked.

Recommended reading on how to lower your cable bill:

Amazon.com Widgets

Long-Term Projects vs. Short-Term Projects: The Opportunity Cost of Writing a Dissertation

2011-01-15T21:38:00.000-08:00

The opportunity cost of a choice or action is the cost of not having the time resources for other mutually-exclusive choices or actions. For several years, I have been procrastinating by not working on my doctoral dissertation. My weekends were precious commodities reserved for unwinding and indulging in my hobby or interest of the week. The opportunity cost of this relaxing, enjoyable way to spend a weekend was not having the time, energy, or desire to work on my dissertation. But because my dissertation has the potential for greater rewards than the smaller, more mundane activities, I was not making good use of my time in terms of the opportunity cost associated with not working on my dissertation.

In recent weeks I have had a change of heart and attitude about my dissertation. I have decided to use the concept of opportunity cost to put my dissertation in its proper perspective. The opportunity cost of hedonistic weekends is getting behind on my dissertation, so much so that my funding and enrollment were put into jeopardy. In this case, the benefits I received from not working on my dissertation clearly did not outweigh the opportunity cost of procrastination.

Therefore, I have decided to dedicate one or more weekend days to working steadily on my dissertation to make real progress toward completion of my degree. Of course, there is an opportunity cost to working on the dissertation more regularly. For example, I will not be spending as much money out on the town, I may not be able to watch as much Star Trek as I would like (This sounds small, but it is serious opportunity cost for me!), I must set aside several hobbies for which I care deeply (for example, amateur radio and model railroading, and so on), and I may not be able to see friends or family as much as I would like to see them.

However, despite the opportunity cost of working on my dissertation, the benefits clearly seem to outweigh the costs. I will have renewed peace of mind that I am working as steadily and hard on the dissertation as I am able given my commitment to my employer, I am working toward completing a major project that has potential to positively impact my career options and earning potential, and I am regaining the respect of my graduate school advisors who have been more than patient with my ten-year grad school plan. Working on my dissertation again has allowed me to say sincerely that I am working to the best of my ability in every single area of my professional and academic life.

There is a clear lesson from this brief look at the opportunity cost of working or not working on your thesis or dissertation. In general, it is usually better to set aside smaller, short-term projects for the sake of completing a larger, longer-term project. This is because the benefits of completing the larger project often outweigh the opportunity cost of not completing the larger project. If you complete the larger project, then you have lost only the small returns that you get from the smaller projects and endeavors. But if you decide to pursue the smaller projects instead of the larger project, then you run the risk of losing out on the potential for great rewards that can come from completing a single, sustained project.

So if you are reading this and you are putting off following through on a long-term project with potentially great rewards, get off your butt, set aside all the little, unimportant tasks sucking up your time, and focus your efforts on the projects with the greatest possible rewards. Get in the habit of considering the opportunity cost of the various activities you engage in, and the choices you make. Weighing opportunity costs can be an effective way to maximize your potential rewards and achieve your fullest potential.

Doing the Impossible: Finishing My Dissertation

2011-01-02T18:21:00.000-08:00

I have been a graduate student at the University of California at Santa Cruz since 2002. In 2004 I received my M.A. degree in philosophy. In 2006 I advanced to PhD candidacy. During all of these milestones I was teaching and working on my own graduate work, somehow managing to keep my sanity.

In 2008 I accepted a job at a publishing company and have made little to no progress on my dissertation since then. Because I am rapidly approaching the ten-year time limit on completing the doctorate degree (1.5 years to go), I have decided to make a concerted effort to complete my dissertation, come Hell or high water.

Over the next few months, I will be devoting one or both weekend days to completing my dissertation while setting aside all other extracurricular activities and enterprises. While I will post updates here periodically, my main focus will be to complete my dissertation. Pass or fail, the dissertation has taken its toll on my mind and soul for too many years, and I need to finish it.

For all the discussion of investing as a way of ensuring long-term financial stability, higher education is still a great help to ensuring continued earning power. Although I will still be contributing to my 401(k) while I finish my dissertation, it is time for me to focus on my investments in my own education.

What I need from you, my readers, is understanding and support. My dissertation has been a drain on my sense of self-worth for several years, and I must now muster up all the mental energy and spirit that I can find. Any words of encouragement or support, no matter how trivial, are greatly appreciated. Leave a comment, send me an email. If you don's receive an immediate response, trust that I have received your message and I appreciate your encouragement just the same. I really need a cheering squad and for my blog-peeps to have my back on this one.

On that note I am off to get my mind back in dissertation mode and to review my notes, drafts, articles, and other materials. Success is 99% perspiration. I will succeed!

See Me Get Rich Kindle Edition, Now Available

2010-12-29T17:54:00.000-08:00

The See Me Get Rich Kindle edition is now available through Amazon.com. Of course, See Me Get Rich will continue to be available at SeeMeGetRich.com. However, if you would like to read See Me Get Rich on the Kindle e-reader, a monthly subscription costs just $1.99/month.

I myself am a proud owner of a Kindle 3, as reading books and magazines on the Kindle saves me a great deal of money compared to reading print publications. Needless to say, I am thrilled to make See Me Get Rich available for Kindle users. If you are a reader and have not yet purchased a Kindle, you would be doing yourself a huge favor by getting a Kindle.

My wife bought her Kindle long before I bought mine, and I held out for quite a long time before buying a Kindle for myself. Using the Kindle has made reading fun again for me, and it allows me to read more books at a fraction of the cost. And I can buy and download a new book wherever and whenever I want.

And if you are already reading this post on a Kindle, welcome to the See Me Get Rich kindle edition! If there are any changes to See Me Get Rich that would make for a better experience on your Kindle, please don't be shy. Just drop me an email or a comment below to introduce yourself.

I love to hear from my readers with any questions or comments. See Me Get Rich was originally designed to help me stay on track with my personal finances and investing goals, but it now exists primarily for my readers to spread basic knowledge about investing and personal finance. If I can be helpful to you, the reader, in any way, just let me know!

New Credit Card: Amtrak Guest Rewards MasterCard

2010-12-28T18:36:00.000-08:00

If you know me, then you know I have a passion for all things related to trains. I am a railfan and a model railroader. My current town of San Jose, CA is one terminus of the Amtrak California "Capitol Corridor" route. As luck would have it, my hometown of Vacaville is right along the same route, as is my sister's home base of Sacramento, CA.

As such, I find myself taking Amtrak quite a bit. Amtrak costs only slightly more than gasoline for the same trip, and it is much more pleasant. On a recent visit to Amtrak.com (to buy Amtrak tickets to Sacramento) I noticed that Amtrak offers a rewards card through Chase.

Although I have been making a concerted effort to pay off credit card debt, I decided to apply for the Amtrak Guest Rewards MasterCard anyways (not an affiliate link). Now that my finances are getting to be more stable, I should be in a position to use a credit card for day-to-day purchases knowing that I will have the ability to pay off the balance each month in full.

The price of a one-way Amtrak ticket to my destinations of choice is usually in the neighborhood of $25-35. Using the rewards points to pay for these tickets could save me quite a bit of money (that I would spend anyways) in the long run. In addition, I can accumulate points toward the cost of a vacation or rail excursion to avoid looming travel expenses.

Credit cards can be used wisely, especially if the card offers a rewards program that adds a genuine benefit to your life in some way. I love trains. I like to take trains whenever possible. I will pay for train tickets anyway. The Amtrak Guest Rewards MasterCard will save me money if I use it responsibly (always the big "if"). Therefore, applying for the Amtrak rewards card is the right thing for me to do.

To sum up, I am not anti-credit but pro-responsible-credit. Learning to use credit wisely is part of financial maturity. Hopefully there will be even more rail trips in my future as a result!