The World of Wealth

I'm Single, Not Picky or High Maintenance

noreply@blogger.com (MEG) — Wed, 29 Feb 2012 05:42:00 +0000

When women lament their single status or worry about the trends which point to ever fewer desirable men available in the dating pool, they are often imagined to be too picky - otherwise they are probably fat or "high maintenance," whatever that means. (Does that mean I am over hanging out in dive bars drinking dollar beers being hit on by unemployed guys who use pick up lines like "wussup?" Or that I now own more heels than flip flops and like to eat out and travel? Well damn, then color me high maintenance I guess).

In my last post I touched on some gender-based financial issues such as that nearly half of all working wives bring home more bacon than their husbands, and that single women under 33 are out-earning their male counterparts.

These factors and others are affecting the courtship and marriage dance in complicated ways. The end result though is that more women are staying single and those who do marry are doing it later and later. With both sexes earning plenty of money and remaining unattached - while crafting their own fun instant gratification lifestyles - well into their 20s and 30s, there is less pressure to wed all around.

Living Almost Large had some very interesting comments to my last post (linked above). I decided to put my response here because it got much too long:

I definitely agree that many women are too picky, and/or too shallow in their preferences when it comes to men. And it does get harder the longer you're single as you develop an identity, a lifestyle, a career, and all kind of other preferences. It seems much easier to couple up young and build/create a life together; merging complicated lives as older individuals is hard, even if the love IS there.

And you're right - most successful men want to feel successful and they work hard enough at their jobs to try to manage a complicated relationship after hours. So many of them DO prefer to date younger, more "flexible" women who are eager to be at their beck and call rather than dealing with an intelligent professional equal who - gasp! - might have an opinion or a desire or two of their own. That doesn't help matters either for those of us who weren't lucky enough to snag one of these guys when we were all young and stupid.

But that successful woman - the one with a career and retirement savings and even with designer clothes - might actually not be a demanding "high maintenance" bitch. She might even be shy or wounded. Or maybe she is content or preoccupied and not trying to land a man thank-you-very-much.

As for me, sure I have preferences: who wouldn't want a guy who earns as much as she does and has similar tastes and education? But honestly the only thing I'm looking for right now is chemistry. I have money, a home, a career, friends, a social calendar. I don't need a guy to give me any of those things. Attraction always mattered most to me, almost to a fault. I dated a hippie musician with zero ambition and a controlling drug addict before I figured out that maybe I should care about a little bit more about other things than passion. And then I loved a great guy who I thought I'd marry but the timing didn't work out on that one. After that I started focusing on everything else but finding love - career, rental properties, this blog, getting my CFP, even my dogs.

I'm not ridiculously picky, but I am busy and opinionated and...well, tired of trying to land a man - or at least of feeling like that SHOULD be the #1 thing on my to do list. In the last couple of years I've dated smart guys, rich guys, good looking guys, and even a couple that were all three, but I just wasn't into it. Sure I could have gone with the flow and batted my eyes and turned some of those into long term relationships. But I don't NEED to - I don't need security or companionship or children. I don't know if I'm bitter and jaded or if I have too many way-too-honest guy friends to trust a man or if I'm not meeting the right men or if I get enough chit chat with people I barely know over restaurant meals in my job...but if the chemistry isn't there and I don't really care whether he calls again, then I'd rather just continue to be single, make my money, travel with my girlfriends, and watch movies with my dogs. Life's too short to fake a connection just because I should be trying to get married at my age.

The problem is that when I'm 35 or so and still doing all this, alone, I worry I'm going to regret having wasted my 20s not finding a husband. And then I probably will want to or have to settle for somebody who I respect but don't adore. And I hate that I already have to dread getting "old" when I truly don't give a damn.

Nearly Half of Working Wives are Primary Breadwinners

noreply@blogger.com (MEG) — Tue, 28 Feb 2012 03:54:00 +0000

A shocking new statistic is taking center stage in the ongoing battle of the sexes: 40% of working wives now earn more than their husbands. This is according to 2009 Bureau of Labor statistics, so the figure may actually now be higher (since the recession has killed more jobs in male dominated fields such as banking and construction).

Here are a few more interesting stats from this article:

In most American cities, single, childless women ages 22 to 30 are making more than their male peers, based on census data.

By 2050, based on current trends and predictions, there will be 140 college-educated women in the U.S. for every 100 similar men.

Nine out of the 10 U.S. job categories expected to grow most in the next decade-including nursing, accounting, postsecondary teaching-are female dominated.

Women are increasingly preferring to remain unmarried rather than settle for men who aren't their intellectual and professional equals. The marriage rate is widely expected to continue to decline.

While 74 percent of men told surveyors in 1977 that men should bring home the bacon and women raise the kids, only 40 percent say so today.

This should be exciting news for women I suppose, but as a fairly successful single female in her late 20's who seems to be chronically single, these statistics are a bit depressing to me. It seems women are now under more pressure - from society, from themselves and from men - to be educated, professionally successful and high earners. Of course we're also still under pressure to dedicate our lives to any children we bring into the world, to manage a comfortable inviting household and of course to be and manage somehow to stay "hot" well into middle age.

Meanwhile men are becoming less ambitious and educated and financially stable as a group - not to mention fatter and less healthy, if we're being honest - leaving fewer desirable partners for high achieving women (assuming that women find men desirable who are stronger, higher earners, and more educated than they are).

Don't get me wrong; I'm not trying to bash men here. And not all women are healthy or wealthy by any stretch. But overall as a group women are closing the income/career/education gap - and by many predictions we will soon soar past men in those categories. That's social progress of course, but biological/cultural tendencies don't evolve as quickly. Women and men both struggle with communication, responsibilities and respect when traditional gender roles are reversed.

Personally, I don't interact well for long with guys who aren't as smart as I am. In fact I prefer to be intellectually challenged by someone who is decidedly smarter - and/or more experienced. I could speculate as to why, but it's simply a fact. Additionally, I'd prefer to find a partner who earns at least as much as I do. It's not a deal breaker, and yes it's most important that my theoretical future husband be someone who is kind, etc., but I would prefer that his earnings be roughly in the same ballpark as mine. Income gives you options, and - for instance - I would like to have the option to stay home and focus on my theoretical future children one day, at least for awhile. If I end up making two thirds of the household earnings though, that option becomes less realistic. And while we're making a wish list let's throw in taller and older.

But if the stats in this article are any indication I may end up choosing to stay single when I can't find an available man with those traits who also happens to be interested in settling down and who - oh yeah - is also interested in me.

Financial Plan for My Friend

noreply@blogger.com (MEG) — Sun, 19 Feb 2012 00:01:00 +0000

In my last post I described a new friend who confided that her finances are in disarray and she simply spends every dollar she earns right now.

I drew up a relatively simple financial plan for her, which I haven't yet sent. Thoughts? Other than that she's probably going to think I'm nuts?

Here are a few simple steps to get you from FINANCIAL FRENZY to financially fabulous!

RETIREMENT PLAN – You should be investing at least 10% of your income for retirement. If you start now you will retire with millions in tax deferred accounts, and you will never miss the money from your paycheck – I promise.

1 – Make sure you are contributing enough to your 401k to get the full company match – that’s FREE MONEY from your employer you don’t want to leave on the table! Most companies match up to 6% of your contribution.
• Invest the contributions in index funds if possible. Usually there will be one total stock market index fund option or an S&P 500 index fund option.
• Tip: If you aren’t sure how much they match or need to change your contribution rate or investment election, head to your “401k benefits guide” on the HR page of the company website. Or call your HR Administrator.

2 – Open a Roth IRA at a discount brokerage company (Vanguard is a great option), and max it out every year you are eligible. You can still contribute $5000 for 2011 until April 15, and you can also contribute $5000 for 2012.
• Pick a target retirement date index fund such as the Vanguard Target Retirement 2050 fund and put your contributions there.
• Tip: The IRS limits your ability to contribute to a Roth IRA if you have over $127K in Adjusted Gross Income that year. So if you already made that much last year, just go ahead and skip this step.

3 – Once you max out the Roth IRA OR once you make too much to be eligible for a Roth IRA, then come back and boost your 401k contribution until you are investing a total of 10% of your total income income for retirement (appx $1000 per month).
• Before you boost your 401k contributions any further, focus on your savings plan (below). THEN when that’s in order come back and try to max out your 401k. The current annual contribution limit is $17,000.
• Tip: When you switch jobs or leave the workforce roll over your 401k to the discount brokerage you selected for your IRA. DON’T EVER CASH IT OUT!!

MOTIVATIONAL TIDBIT! – If you start now and invest 10% of your income each year, you’ll have over $3 million in 35 years.
(assumes a 7% annual return, $115K in annual starting income, and 3% 401k match).

SAVINGS PLAN – You should be saving 15% of your income for emergencies and short term goals. You need a minimum of 6 months of expenses in savings (appx $40,000) at all times in case of a layoff or dip in income. Additional savings can be used for goals such as a new car, a home, or big vacation.

1 – Open a savings account earning at least 0.50% interest for your emergency fund (ING Direct and Ally Bank are good options). It won’t take long to get 6 months of expenses if you focus, and once you get there you can spend more freely and have plenty of additional savings for the fun stuff!
• Save 100% of your bonuses until you get to the 6 month goal of $40,000. Live off your base pay in the meantime. You’ll be there in no time!!
• In addition, until you get your own place, set up an automatic savings contribution of $1000 to come out on the first of every month as your “rent” payment. If there are other bills your parents cover, add them to this amount as well (utilities, groceries, cell phone, insurance). Until you pay those bills on your own again, pay that money to yourself! If you spend it you’re just wasting it – and getting used to a lifestyle you can’t really afford.
• Tip: Don’t get a debit card or checks on this account, and don’t link it to your checking account – that way you aren’t tempted to dip into it. In fact the best bet may be to have your savings at a different company than where your checking account is.

SPENDING PLAN – Spend what’s left of your base salary after you’ve updated your retirement contributions , saved 100% of your bonus, and set up an automatic “rent” payment!
• I know it sounds like you won’t be left with much to spend, but don’t worry! Assuming a base salary of $50K, you should be taking home about $2700 a month after taxes and after putting $830 into your 401k. If you pay yourself “rent” of $1000 that leaves you with $1700 left to blow every month. And that’s quite a lot considering you have few bills right now!

MOTIVATIONAL TIDBIT! – Once you reach your savings goal you can quit saving 100% of your bonuses, get your own place, and set up a new savings plan based on a new promotion (hopefully!), a new apartment, and a fat new security blanket in the bank. Then when you spend you can do so confidently, knowing you’re on the right track!

Tip: Easy ways for you to cut your spending without changing your lifestyle at ALL:
• Quit paying for other people’s drinks and food. Period. No exceptions.
• Quit over-tipping. No tips over 30% allowed. If you want to give money away, start donating to a charity so you can track and deduct it.

Having Friends Who Don't Save

noreply@blogger.com (MEG) — Sat, 18 Feb 2012 21:25:00 +0000

Friend One
One of my best friends lives a life very similar to mine. She lives in a one bedroom apartment in Uptown Dallas; she travels extensively; she graduated from a private university about 5 years ago and is relatively successful in her career; she dines and drinks at all the trendiest places and wears designer clothes; her parents are fairly well off. There is one big difference between us though. She doesn't have any retirement investments, nor does she have much in savings. She also carries a small credit card balance from time to time.

She has been lamenting her lack of savings more and more frequently and wishing/planning to do something about it so she can buy a home one day. I recently confronted her and told her I refused to travel with her or hear about any shopping trips until she swore to me that she had paid off all her credit card debt. She appreciated my semi-tough-love advice and asked me to come over this weekend to help her set up retirement savings accounts and go over her budget.

Friend Two
Another one of my friends - a relatively new friend - also lives a similar life. Her parents are well off; she spends freely; she drives a luxury car; she earns 6 figures and is excelling in her career. And over mimosas at brunch just now she confided to me that she doesn't have a dime in savings and she gets stressed whenever anyone even talks about money. She admitted that she spends all her money on going out and often picks up the check for others and leaves huge tips for wait staff and strangers. On top of all this she just was transferred to Dallas for work on short notice and moved in with her parents temporarily, so she doesn't even pay rent or utilities currently.

I confronted her at brunch, in front of three other folks I don't know well no less. I tried not to sound preachy or lecture her to death, but I flatly told her that she was wasting a huge opportunity to save a ton of money and that she would totally regret blowing 100% of her income once she actually had bills to pay, much less if she ever had kids or a mortgage or other bigger expenses. I told her that lots of people - women especially - give and give their money away because they want to look/feel financially secure when really they are sticking their head in the sand and know they are mismanaging things. It's no different than shopaholics who spend so they can feel wealthy even as their debt mounts.

She kept trying to turn the conversation back to her income - she just needs to make more, her income is tough to project because she's commission based, she'll always have to earn more and more, she works her ass off...I brushed off her excuses with zero sympathy and insisted that she could live well Uptown on her base salary of $50K, especially since she wasn't even paying rent! She conceded that she should be saving half her income, and she eagerly accepted my suggestion that at the very least she should pay herself a rent check on the first of each month until she got her own place.

I heard the familiar refrain: "You're so right! Will you help me?"

How to Help These Friends
I never know how to help my friends when these conversations come up - and they frequently do. They listen to my lectures and agree with me and ultimately ask eagerly for my help. I'm debating writing a short simple outline or article for these friends, a sort of Financial Planning Basics or Getting Started Guide.

How do you approach friends who don't have their finances together, especially if/when they ask for your input?

Big Net Worth Milestone

noreply@blogger.com (MEG) — Sun, 12 Feb 2012 00:11:00 +0000

Last week I transferred another $5,000 into savings (from my signing bonus), and with that my net worth ticked up over $500,000!

I wish I was more excited about this, but in reality it didn't make me feel much of anything. I didn't rush out to celebrate or buy anything; this blog post is about the extent of my recognition of this milestone.

The truth is that I've had a roller coaster of a relationship with money lately. I had one financial emergency after another last year and depleted my savings. Then I found out I was going to lose my job. Then I negotiated an amazing severance package and a great new compensation package at a new company. Then I got a huge financial gift at the end of the year. Then I bought a pricey new car. Then I lost the severance package. Now I have some rental vacancies, and I just found out there was a fire at one of my rentals last night.

It's never ending. I've managed to keep my net worth going up by maxing out retirement accounts and from normal mortgage amortization, but my ability to save outside that has been eaten up by rental issues over the last 12 months. This year I am making a lot more, and SURELY I'll have less going on with the rentals, so hopefully I'll be saving a lot more this year in addition to retirement.

Here's my net worth breakdown:

Cash - $26K

Investments - $8K

Retirement - $122K

Trust/LLC - $223K

Real Estate Equity - $118K

Car Equity - $5K

TOTAL - $502K

I plan to add at least an additional $50K to my net worth during the remainder of this year. Here are a few ways I'll do that:
$17,000 to new 401k (1700 per month starting in March when I'm eligible)
$5,000 from tax rebate to savings
$10,000 more to savings from monthly contributions
$13,000 in mortgage reductions from regular monthly payments
$4000 - my share of LLC interest/growth

The rest will have to come from increases in market value of investments, additional savings, gifts, or other income sources.

My Annual Income & Spending Over Four Years

noreply@blogger.com (MEG) — Tue, 07 Feb 2012 04:22:00 +0000

Well here it is - where my money goes, in black and white (well, yellow and orange):

A few notes on 2011:

Housing costs spiked because I had to replace my water heater and bought some small pieces of furniture.

Shopping spiked because I spent around $2,500 on two new suits plus shoes and a purse in December in preparation for my interviews. I hadn't bought new work attire in over a year and had lost some weight; I wanted to look tailored and fresh. Obviously shopping needs to DECREASE and I think I can say for certain it will be lower in 2012 than it was in 2011.

Transportation spiked because I had to spend $3,500 on maintenance on my old car and then because I had to buy a new one when I totaled it (I put down a net $2K in on the car under "auto payments" in December)

Giving dropped because it was unusually high in 2010 due to a volunteer trip I took and several large one time donations I made. I plan to increase it in 2012.

Pet spending should drop now that I do not intend to purchase another dog; I had puppy start up costs in 2010 and 2011.

And here is my income, for reference:

Please note that net rental contributions/distributions is NOT actually representative of the amount of rental cash flow I experienced in those years. It just represents how much cash flowed between my personal checking and my rental checking accounts. For instance in 2011 I contributed $42K to my rental property accounts but about half of that was my decision to pad my rental accounts with the $24K gift I got in December.

Speaking of that gift, it was an annual exclusion gift from my grandparents. For the first time, they gave the checks directly to us rather than putting them in trust (which they used to do annually but haven't done in a few years). I got another check in January, but that is supposed to have been the last of their giving until they do so in death.

That's about it; the charts are pretty self explanatory I guess. I'm hoping and expecting 2012 to be a LOT better. I should make more, I should spend less, I should save more, and my rentals should cash flow more (2011 was TERRIBLE with about a $20K negative cumulative cash flow as the perfect storm hit on all fronts).

New Job Brings New Challenges

noreply@blogger.com (MEG) — Mon, 06 Feb 2012 03:25:00 +0000

I've been at my new job for two weeks, and I've encountered a lot of new challenges - some expected and others surprising.

Of course the job itself is the biggest challenge: I'm tasked with building a portfolio of clients from scratch, which is something I have never done before. At my old job I spent 80% of my time managing an existing portfolio, 10% on internal/administrative issues, and 10% on marketing and business development. At my new job I don't yet have any clients, so my job is officially 90% business development and 10% internal/administrative. I've been filling my schedule with lots of meetings, lunches and happy hours with former clients, external referral sources, and new colleagues.

I've also been pouring over my new company's lending policy and deposit offerings to try to ascertain just what it is that I can and should be selling when I meet all of these people. This is more challenging than it sounds because my new company is just now building a Private Banking team in my city; I don't even have a boss yet. Published explanations of procedure are scarce, and apparently people just pick up the phone and call the head of various departments when they have a question about whether we can do certain types of loans (call the senior credit approver), what the rate should be on a fixed rate loan (call somebody in the finance department), what today's 30 year fixed mortgage rate is (call the mortgage team leader), or what kind of entity can purchase CDARs (call the head of treasury). It's great because everything feels much more collaborative this way, and I'm meeting lots of new people, but it's much more engaging which takes more energy.

This company is much smaller than my old employer and also still privately held, which is putting things in an interesting new light for me. Everyone knows everyone else for one thing - And everybody knows what everybody is doing as a result; I mentioned a large possible loan opportunity to the Private Bank manager who hired me (who is based in another city), and the next day the head of the Heavy Equipment lending group in Dallas asked me how "my real estate deal" was coming along. I didn't realize I was so "on the radar," but then I realized that everybody is. In a 2 billion dollar bank every deal has the potential to move the needle. The focus here is very simple: it's on growth and profitability so that we can go public in a few years. Everybody is excited and focused and every new client and new deal is celebrated.

In other words the pressure to perform will be much larger than I am used to. But then again I'm getting paid much more than I am used to as well.

Management is giving me and my team a lot of freedom to develop our own local Private Bank brand also, and I'm already being asked for my opinion on everything from the layout of our marketing "pitch book" to the location of my team's new suite within the building. I'm not used to having a say in anything at all, and although I relish sharing my opinion I'm still trying to figure out the balance between taking initiative and absorbing the company culture.

Another new challenge is navigating the social waters. Members of every team all the way up the ladder are on a first name basis, and some of us are (frequently?) invited to socialize with the execs when they fly in every week or two. I went to a happy hour last week with the Chairman (read: majority shareholder), the CFO, the Senior Credit Officer, the mortgage team leader, and a few other bankers; we drank and ate and laughed until 11pm - all paid for by the company of course. I got a referral from the Chairman the next week (one of his buddies/one of the bank's investors needs a loan on his ranch), but I think the CFO brushed me off as unambitious when we were going around talking about where we wanted to be in a year.

In short, I'm still trying to find my footing and remember names and titles while also learning who the real decision makers are, who might be trouble, who I need most to impress and how to impress them. The social hierarchy seems to be somewhat different than the organizational hierarchy. And I don't yet know where I stand in either system.

Meanwhile I'm trying to look my absolute best every day, smile and converse with new people constantly, be friendly but not flirty especially after cocktails, and remember to carry all my new key cards so I don't have to keep asking the receptionist for access to different floors.

Allocating My New Rollover IRA

noreply@blogger.com (MEG) — Sat, 28 Jan 2012 16:38:00 +0000

One of the first things I did after leaving my old job was to initiate a rollover of my 401k to an IRA account. Since I already had my Roth IRA in a Vanguard mutual fund account, it was the easy choice.

I briefly considered moving everything to a Vanguard brokerage account because ETF expenses are lower than fund expenses in general, but then I realized that I will now qualify for Vanguard's Admiral share class in most of my investments (assuming I choose a fund with an Admiral share class option). The Admiral share classes have even lower expense ratios - as low or nearly as low as the ETF expenses in a comparable fund. So I decided to stay put. Besides, I like being able to see the 5+ year history on my account.

My 401k Rollover is now complete, and so for the first time in six years ALL of my retirement assets are in one place. Now I have to decide what to do with them! As a default I selected the Vanguard Total Stock Market Index for the initial transfer of my Roth 401k assets, just so I wouldn't be totally uninvested while I debate about how to allocate everything. My traditional 401k assets (employer matches and what I put in before my company rolled out a Roth option) are in cash (technically I now have 2 IRAs - my original Roth, into which I was able to roll my 401k Roth assets plus a new Traditional IRA into which they rolled the Traditional assets).

I have almost exactly $120,000 in my IRAs right now. Here's how it's allocated:

Total Stock Market Index: $57,500

Total International Stock Index: $21,100

Prime Money Market Fund: $16,750

Precious Metals & Mining Fund: $12,000

Total Bond Market Index: $5,100

REIT Index Fund: $4,200

TIPS: $3,700

In cash you're wondering, that breaks down into 31% Large Cap US, 30% Small/Mid Cap US, 18% International Stock, 7% Bonds and 14% cash. The small/mid cap holding is skewed with the REIT and the Metals/Mining though, which I consider a separate "alternative' holding that totals 13%. Ultimately I want that to be more like 5-7% so I have no plans to add to those assets.

I will be eligible to contribute to my new 401k Plan in March, and I plan to max it out for the year. The only decent/cheap fund they offer is the Vanguard 500 Index, so I have set it up to put 100% of my contributions ($17000 for 2012) in that fund. My employer will match around $3000 so I'll have around $20,000 in that fund by the end of the year, assuming zero market appreciation. Therefore I need to slightly under-allocate large cap US stocks in my IRA.

SO the number one question is - what should my asset allocation be? Secondly, which fund should I choose to help me execute my allocation decision?

I am thinking 30% International, 50% US stocks, 15% bonds/cash, and 5% "other" including REITs and commodities. But as for the fund choices I'm torn a bit. Any suggestions??

I Bought A New Car

noreply@blogger.com (MEG) — Wed, 18 Jan 2012 17:45:00 +0000

I've put off this post because I expect very little support from the personal finance community. My recent purchase may even make me the recipient of some derision. And that derision may even be justified.

But I'm not here to share only my most fiscally conservative financial decisions. So here goes.

I don't splurge often - usually I wait until I really need something - but when I shop I tend to spend big, particularly as my discretionary income has grown. I keep things for years, including cars and clothes and homes, but when I am faced with the necessity of a new purchase I tend to get the best I can afford.

My last car was a relatively conservative one in every way - it was a Volvo sedan, known for safety and reliability. It was the perfect image for a responsible young banker to be riding around portraying. In addition I bought it used, paid for it in cash, and held onto it for about 6 years.

Then I had a car wreck and totaled it.

So clearly this was a "need a car" situation. I have never been really into cars, and I was more or less content with my 6 year old Volvo. I was especially content whenever I remembered that I didn't have any car payments to make and that my monthly gas bill was under $80. But the car had started requiring more frequent and more expensive service visits, so I had started to vaguely consider an upgrade.

The decision was imminent. I had very little time to mull it over or consider the options. And I procrastinated until the final hour. I dreaded the purchase, to be honest. I was sad about the huge check I was going to have to write, and I resented the fact that I'd probably spend tens of thousands of dollars on an item that would bring me little more joy or use that my old car did.

My mother drove me back to Dallas after Christmas and planned to stay for 4 days, during which time I had to buy a new car or be stranded when she left. We spent the first day furniture shopping and cleaning out my condo; the second day I had to go to work. Finally I did some brief internet research on "how to buy a car." The Motley Fool has a detailed and helpful, if somewhat outdated car buying section.

First I made a list of everything I needed to use the car for: getting to and from work, meeting clients and colleagues for lunch/happy hour on a daily basis, running errands, and driving my dogs home for the holidays once or twice a year. That's pretty much it.

How I Chose A Car Type
I then made a list of all the types of cars and compared my needs to their features. I ruled out truck and minivan because I don't need that much space or cargo room. I ruled out SUV even though I really liked some models because I figure if I do end up having kids I'll probably drive an SUV for the entire second half of my life so there's no need to start just yet - plus they use more gas and are more expensive in general. That pretty much left sedan and coupe and convertible. I don't like convertibles, so I had pretty much decided upon another sedan.

I decided my goal was to find a 2010 or 2011 sedan for around $40,000. I had no idea how realistic that price range was at the time, but it seemed reasonable to me.

How I Picked a Brand
I wanted a luxury car for several reasons. Primarily, I need a nice car for my job. I work with wealthy clients and though I rarely transport them I often meet them at high end restaurants and hotel bars. I have to represent myself and my company well by displaying an elegant, refined image of success - and though you don't need a wildly expensive car in order to do that, of course, it would not do for me to putter up to the valet line at the Ritz in an old beater. It's important enough to my employer that I drive a nice car that my new compensation package includes a $500 a month car allowance.

Of course I also wanted to drive a nicer car that I previously owned (my income has more than doubled since I bought my Volvo, after all), and most of my friends and colleagues drive luxury brands and I won't pretend that I don't like to fit in. I was also conscious of the fact that this may well be the last car I ever buy without having to take children into account, so even though I'm very young this may be the most luxurious, selfish indulgent car purchase I'll have the opportunity to make - at least for a few decades.

I was considering, therefore, purely off the top of my head, the following: Mercedes, Lexus, BMW, Audi, Infiniti, and Acura. I'd have considered Volvo too, but I'd been driving that brand for 10 years and wanted a change. I know some of them are nice, but I just wasn't going to consider a Honda or Ford or GM, or Toyota. Jaguar and Cadillac and Lincoln seemed too mature for my age.

I ruled out BMW and Lexus because - and I know this is going to sound snobby - but they are too ubiquitous in Dallas. It's what every 16 year old drives. Acura was a bit too sporty for me...or too hard/angular if that makes sense. Infiniti was a front runner but I don't love their bubbly looking recent models. So that left Mercedes and Audi. Some of my best friends drive Mercedes though, and I didn't want to seem to compete with them by buying a slightly better or similar - or lesser - model of that car.

So Audi was the finalist, by elimination of all other options. No one I know has one, they are nice but relatively rare/unique, and I figured I could find a slightly used one in my price range. I'd feel comfortable pulling up anywhere in it, and it would last for years.

How I Picked a Car
So my mom and I drove over to the Audi Dallas dealer on the third day. We HAD to buy a car that day (we had a full schedule for her last day), and I was panicked that I wouldn't find anything I liked, that I'd worn out all my negotiating skills with my old and new employer, that I wasn't nearly informed enough to buy a car yet, and that I'd regret my eventual purchase.

My mom was cheerful and confident and told me if I was anything like her that I'd buy a car in 45 minutes and then we could make it back over to the furniture store to pick out a rug before lunch. I rambled anxiously about what an important decision this was - how you really make or break your finances with these big purchases, how this single decision was more important than years of trying to minimize smaller budget categories such as dining out and shopping.

She agreed of course, but as I was explaining how much depreciation you save by buying even a slightly used car, she mused that "there was just something about" having a new car. I slumped in my seat and sighed.

We arrived at the Audi dealer and slowly circled the lot, getting the lay of the land. I couldn't even tell which row was new and which was used, but luckily we ended up stopping in the used area. The sedans seemed quite small and plain (though gorgeous of course), and nothing had price tag stickers. Looking at the small row of coupes next to the sedans, I was drawn to the coupes - particularly one metallic grey one. It seemed more spacious, oddly, as the body was nearly as large as the sedans'. And it was SO streamlined and pretty and sporty. The sedan looked like a Honda with an Audi label stuck on it. I dreaded spending so much money on that car just for those four intertwined circles on the back.

I expected a salesman to come rushing out to us as we peered into the windows and circled the car, but we had to go inside to inquire for service.

The Rest Was History
Let me stop here and acknowledge that I know - and knew - that I was going about this purchase ALL WRONG. I was getting swept up, wasn't asking all the right questions, hadn't considered all the options, should have put the Audi dealers up against each other and spent weeks test driving and researching, and so on. Truly I was open and ready to just get sold.

And so I did. The salesman really did seem genuine and honest and non-salesy (he had just had a new baby and I think he was sleep deprived and a bit rusty, which was just fine with me). He followed us out to their small lot and over to the coupe I'd identified, repeating which model was which as I inquired down the row. Even he had to look up which car was what year since the body styles stay so similar. When I expressed a surprising fondness for the coupe he suggested I hop in and take it for a spin, and so I tentatively did. He brushed me off when I asked if he needed my license or insurance or me to sign anything; we just hopped in and drove. He explained the features as I floated around town, by my house, and back to the dealership.

I was very surprised when he said the price was around $53K - for a 2009?! I told him if I was going to spend that kind of money then I'd want to buy new. He went into some details about how Audi controls supply so that there really isn't much depreciation on their models, so that they really retain their value over time. I debated him a bit on that point, but it did seem true enough based on my internet research and the prices of their used cars. And I really did love that car.

Then he decided to mention that I'd selected and been test driving the Performance series coupe - a suped up version with the same body style as the A series but with a much higher performance engine. They run about $25k more than the A series coupes even though they look the same - and the insurance and gas is much more expensive too. Well that was welcome news. I didn't need or even want high performance.

The problem is they didn't HAVE any used A5 coupes. They are scarce. He said they were desperate to have more pre-owned vehicles but that even when leases were up lately, people have loved them so much that they are tending to refinance their leases with Audi - which is very unusual. Of course I recognized this as sales-speak on some level, but what he said is more or less true.

They did have a couple of brand new ones at $47,500 - which was significantly less than the 2009 one I'd been eyeing. But they only had white. I explained that was the only color I really didn't want, so we went inside to see if other dealers might have one.

He scoured the entire south and southwest region and came up with 3 other A5s - all in a different color than white and all also right at $47,500. He said honestly there wasn't really wiggle room in the prices on the new ones, especially since they were transporting them in from other dealers and because there were so few available. He also said it really didn't matter if we paid cash or financed because they get paid in cash within a day or so either way.

I chose the one with fancier tires and a better sound system (there were only a few differences between the 3 cars, such as interior color and seat shape). He got the order in just before they were cutting off dealer transports for the remainder of the year, he got me the paperwork to sign, and he told me to come back the very next day to pick up my brand new car. So technically I bought it sight unseen. And technically I never even test drove the model I purchased. And technically I paid full price without even attempting to negotiate.

And yet I walked out of there beaming, thrilled with my decision.

I rationalized that I'd rather spend $50K on a car that I LOVE than $40K on a car that is simply filling a basic need. That's my story and I'm sticking to it.

PS - I debated whether to pay cash or finance it, but I went ahead and financed $35K of the price at 3.5% so that I can wait until all the dust settles for me financially. In other words I wanted to collect my severance check, start my new job, and deposit the gift from my mother/grandfather which wasn't yet in the bank.

I was planning to just pay it off within the next few months, but now I'm wondering if I should use my cash to pay down some other debt at higher interest rates instead (like one of my rental mortgages). After all 3.5% is pretty good as far as rates go, and I have mortgage loans which vary from 4.75% to 6.8%. We'll see; I'm not going to worry about it for now.

But it is really weird to have a car payment of over $700 a month - which happens to be more than $100 more than my homestead mortgage payment!

Section 8 Tenant a Known Criminal

noreply@blogger.com (MEG) — Tue, 03 Jan 2012 21:21:00 +0000

One of my tenants has been getting into some trouble with the law. My knowledge of it started the week of Christmas when a housing inspector for the city called me to let me know that they were investigating due to some property damage. The front door appeared to have been kicked in (again), and it was a fire hazard I needed to address immediately.

When they went to inspect for that, they also found the property was in general not being taken good care of. Inside there were piles of clothes - none hung in the closets - people sleeping here and there, and general lack of tidiness. So the tenant was also cited for a "housekeeping violation." She also told me that the water had been cut off 6 months ago, but the tenant was still living there, so they thought she may be stealing water and would be investigating.

She also mentioned that there had been a few complaints nearby about loud parties and that the police had been called out the weekend prior - which I'd never heard anything about. She tentatively told me that I might consider evicting this woman, that she didn't appear to be taking good care of my property. I told her I'd investigate all this and thanked her for the heads up (her only job was to get me to fix the door, after all).

I called my contractor to fix the door and he promised to go over that day.

A few hours later he called me to tell me he was at the property, but couldn't get in because the police were there arresting the tenant - and Child Protective Services was collecting her children.

A few hours after that a detective called me. He said he'd found out the tenant was on housing during the arrest and got my number from my contractor at the scene. He wanted to let me know what was going on. He said the gang unit had been out there the week before and had been watching the property because apparently my tenant's male relatives/friends had been hanging out there and the police had gotten wind of another party being planned. They'd gone over to warn her to cancel it, and had found stolen water meters on the premises.

He recommended that I evict her if I could, and just wanted to let me know all this since I wasn't likely to hear of it otherwise (the rent checks come automatically from the city so if my contractor hadn't been there and the detective hadn't called I may never have heard about all this).

In addition he told me that she had warrants out for two felony probation violations and that they'd been looking for her for 8-9 months. So she was being hauled off to jail. I was shocked and asked how on earth they hadn't managed to locate her since she was on public housing assistance and her address was clearly a matter of public record with the housing department. He expressed his regret about that and more or less made it clear that those two departments maintain separate records and don't really communicate much.

The even MORE shocking thing is that when I contacted the Housing Department to fax them a copy of my lease termination notice, the housing rep for my tenant said it wasn't for sure that my tenant would be kicked out of the housing program and asked if I was sure I wanted to terminate the lease. I demanded angrily to know under what circumstances she thought that our tax dollars should be supporting a woman who had warrants out for her arrest for felony probation violations and who had gang ties and who was stealing utilities from the city and had blatantly and repeatedly failed to maintain my property.

Her response was that it "wasn't for sure" whether she'd lose her Section 8 voucher, and I told her that she certainly wouldn't be remaining in my unit either way.

I'm considering bailing from the whole program now. I currently don't have any other tenants on Section 8, and though overall I've had a good experience with Section 8 tenants, the fact that the system doesn't screen for criminal activity - or even seem to mind it - is shocking and appalling to me as a taxpayer and landlord.

A Surprising Financial Gift from Mom

noreply@blogger.com (MEG) — Tue, 03 Jan 2012 20:32:00 +0000

About a year and half ago my grandfather decided to go ahead and give his children an early inheritance. Due to relatively favorable estate tax laws, he and my grandmother gifted roughly half of their estate to their four children. They figured it would be cheaper to pay gift taxes at that point (which I believe were in the 30% range) than risk dying when the estate tax skyrocketed back upwards of 50% (which it was scheduled to do within a year or so).

They have always been very concerned about the tax rate to be paid by their heirs on their inheritances after their deaths. Personally I think I'd be more concerned about making sure I had enough money give and spend during my life as I saw fit; I can't imagine losing much sleep over how much my kids might one day get after my death and after taxes. But that's just me.

Well the estate laws are still favorable, and now he's worried they will change for the worse in 2012 (despite my prediction that no one is going to touch those laws with a 10 foot pole in an election year). So he decided to squeeze in another big gift in the last week of 2011 - allegedly his last until the final bequest. Each of his kids got another unexpected chunk of change in December, and to my surprise my mother decided to direct part of her windfall to me and my sisters.

I have no idea why; when she first ran the idea by me a few weeks ago I pointed out that she could easily live another 4 decades and should probably remain in the "accumulation" stage of wealth for awhile longer before considering the "sharing & giving away" stage. After all I'd rather go without the gifts now and avoid having to pay for her retirement home later, which I bluntly told her.

But she brushed my comments off and said she wanted to do it and the paperwork was already in process. We are each getting $50,000. She was concerned however about whether to direct the funds to us as individuals or have it deposited into our trust funds, where a trustee would stand between us and any spending of the money.

The issue is that my uncle is trustee of my sisters' and my trusts, and we've all had some concerns about him lately. In addition, she really wanted us to be able to - and have to - manage the money ourselves. I'm the only sibling who works in finance, and the two youngest in particular are relatively new to the workforce and to dealing with budgeting and investing.

She wants us to have freedom to use it or save it how we please, but she also doesn't want us to blow it. I told her that in any case it would be a good test. If one of us blew the money or frittered it away over a couple of years, the lesson would be learned with a relatively small amount of money - and well before my mom is considering larger gifts down the road.

So in addition to the severance check and the signing bonus I'm expecting, I now have another $50K to anticipate this month. I can't believe all my savings goals will be reached in a matter of weeks. I don't feel like I deserve this really, and I'm fully aware that with these blessings come the responsibility to do something meaningful and give back. I'll have to mull that over.

But for the short term I will fully enjoy the comfort and security that comes with the fattest bank account balance I've ever had!

Funemployment Plans: What Should I Do?

noreply@blogger.com (MEG) — Sat, 31 Dec 2011 19:21:00 +0000

I'm currently unemployed. My last job ended yesterday, and my next job doesn't start for at least two weeks - probably closer to four.

So for the first time in nearly six years, I woke up this morning without an office, a boss, a paycheck, or a schedule. My mother is keeping my dogs indefinitely, and so I don't even have to worry about them.

I am almost at a loss. I plan to spend the next few days, maybe even the whole week, getting my life in order here in Dallas. Cleaning, organizing, working out, learning about the features on my new car, establishing a firm start date for my new job and calling a few contacts to let them know, etc.

But then I will have 1-3 weeks to burn before starting my new job. Far too much time to simply waste hanging around. What should I do? Where should I GO?

I've considered a health/spa retreat such as this option: www.rancolapuerta.com. Or I could my own version by simply flying to Cabo or somewhere cheap-but-safe and taking a few days to lay on the beach, work out and be pampered a bit.

Or I could take the chunk of time I'd need to really explore part of Asia or Australia - which I have put off due to not wanting to travel that far if I can't stay for a week or more.

The only problem with traveling abroad right now is that I'd be cutting communication ties at a very delicate time. But as long as I'd have email access I could make it work. I'm tempted to try to start sooner rather than later so I can hit the ground running at my new job. I have a few deals in the pipeline that I could reasonably expect to close in late January or early February if I get over there quickly.

But on the other hand the opportunity to take a real break comes around rarely and I feel I should take advantage of it. My new boss said I was welcome to take a month off and start in February. They are trying to coordinate my start date with another person who probably won't want to start for a few weeks anyway.

Any suggestions?

Severance Package and New Job Offer Finalized

noreply@blogger.com (MEG) — Sat, 31 Dec 2011 17:48:00 +0000

The letter that I wrote to Human Resources sure did pay off! They came back and offered me more than DOUBLE what I was going to get.

The standard basic severance package is a simple 2 weeks of severance pay plus any unused vacation time. Whatever. The main thing that irked me and prompted me to contest the offer was the fact that I was not going to receive my 2011 bonus since it is payable at the end of January - and my termination date was scheduled for December 30. So basically I would have worked the entire year, fully earned my bonus (since I exceeded my production goals), and yet they were trying to say they wouldn't pay me for that. Um, I don't think so.

After consulting with my mentor and several other more experienced colleagues, I drafted a letter (in which I hinted that I had sought legal counsel), and I asked for 5 months severance pay plus my entire bonus. I've worked there for over five years so I asked for one month of pay for every year of service I'd completed.

They came back and offered 16 weeks severance pay plus my entire bonus (16 weeks by the way is NOT the same as four months, BTW). The HR rep called me at home the Wednesday before Christmas to go over the offer, since I'd requested a response to my letter within seven days. She said she'd fly to Dallas to meet me in person to give it to me in writing this past Tuesday, which she did.

New Job Offer!
In the meantime - that same week - I'd received an offer from a new employer. It was even better than what I asked for! They came back with an offer for a $95K salary plus a $500 a month car allowance, bringing my base salary to $101,000!!! My bonus for the first year is guaranteed at $25,000 (payable March 2013 though - bonuses are only paid annually there). And I get a company iphone and ipad and 3 weeks vacation and a Vice President title...

I am SO thrilled. I can't believe I'll be earning 6 figures as a BASE salary. It's kind of overwhelming.

But before accepting I decided to sit on the offer until I got my severance in order.

The Twist
You see various people in my company who had heard I was going to be laid off were working very hard to find me another position internally, in a different department. I know that their intentions were good - the Texas management tem and the commercial departments here locally really know and like me, whereas the layoff stuff was coming from executives on the Private Bank side in another state who were just slashing my position across all markets.

When I sat down with the HR rep she said up front that she had "good news" - the CEO of the Texas division of the company (which I don't currently report through but to which they were trying to move me) was willing to extend my date of termination for a month or two by footing my salary in his cost center while I explore internal options. This way they wouldn't have to lay me off then rehire me in a few weeks - and I wouldn't have a gap in salary or experience.

That was great, except that I was ready to sign a $35K severance package and take an offer with an outside company. If I stayed I'd be forced to quit to take the other job and then I wouldn't be paid any severance at all!

I somehow talked my way out of that scenario. I told the HR rep I really appreciated all that but that I was really not willing to consider an internal move unless it was more of a last resort. I have been in Private Banking for 5 years and felt that shifting to commercial banking would be a step back - more likely I would try to use my CFP Designation and move into wealth management, or work in Private Banking somewhere else.

Luckily she said she understood and just wanted me to be aware of my options. Then she signed my severance package and gave me a copy to "have reviewed" and mail back to her. I signed it and shipped it off on Thursday of last week.

And I accepted the new offer, in writing. So it's all official. In my last paycheck yesterday - my last day of work - I received the standard 2 weeks severance plus my normal pay. The additional severance will come at the next pay period (January 15th). I don't have a start date set up for the new job yet, but they think I just gave notice so it won't be before January 16th.

I am officially unemployed!!

And Then I Wrecked My Car

noreply@blogger.com (MEG) — Thu, 22 Dec 2011 04:15:00 +0000

In case you haven't been following, it has been quite a week for me. I found out I am getting laid off, scrambled to fill my week with interviews and meetings, initiated talks with HR regarding my severance package, had lunch and dinner and happy hour plans every day, went on four dates, and that was all before I left for a two day interview marathon with my hopefully-soon-to-be-new-employer where I negotiated an offer which I have yet to receive in writing.

I slept maybe 5 hours each night, and my schedule was back to back to back with work obligations, social obligations, necessary errands such as dry cleaning and doctor appointments and Apple genius appointments, and so on. I wanted to slow down but I had no choice; I was headed to my parents' for a week on Saturday, so I had to get all that stuff crammed in.

So after my ridiculous whirlwind of what may have been the most stressful week of my life, I woke up at 8am Saturday, packed a bag in less than 40 minutes, and hit the road for a much needed relaxing week back home for Christmas. All I wanted to do was get home as quickly as possible so that I could relax.

A couple of hours outside of Dallas I was going about 80 mph and passing an 18 wheeler in the left lane when my youngest dog decided to leap into my lap. She jostled my right arm so that the wheel - and car - swerved right toward the truck. I overcorrected left as I tried to fling her into the passenger seat, and I lost control of the car. I swerved back and forth for several seconds and almost regained control, but when I realized I couldn't I headed for the median. Luckily there was about 20 feet of grass before a big concrete retaining wall, and I figured I could maybe just coast to a stop in the grass.

No such luck. When my front left wheel hit the mud, the car started to spin. I stayed calm, oddly, and remember taking a deep breath and just thinking, resigned: "shit."

My car slammed into the retaining wall, the impact occurring on the front right side of the car. It's actually a good thing I spun around or the impact would have been right by my driver door. The airbags didn't go off, and I briefly thought maybe the car would be drivable and I could just get back on the road. But then I hopped out and observed the smashed front of the car, sans bumper, with liquid pouring out and steam rising up from the crumpled hood.

Several cars stopped to make sure I was OK, which I was. I called the police, then my mom, then AAA, and a nice man waited with me until the firetruck arrived. The EMTs left as soon as they verified that I really wasn't hurt, but the firemen insisted on blocking the left lane, which caused traffic to back up, even though we were well off the road. It's protocol, apparently.

One of the firemen talked to my AAA representative and asked if they could take me to a nearby gas station to wait for the tow truck driver, which could take up to an hour. So me and my dogs piled into the firetruck. Then they decided to take me to the station instead, where at least there is a TV - since I'd be waiting for my dad for several hours they thought I'd be most comfortable there.

They knew the wrecker that was likely to be called, so they radioed him to direct him to tow the car without me and bring it to the station for me to sign the ticket. He did, and then the firemen left me - alone! - at the fire station to wait for my parents. They wrote their cell numbers on the white board and headed home to spend time with their families. After a few photos with my dogs by the firetrucks and uniforms, I plopped down to update Facebook and start making calls.

But then one of the firemen showed back up, with his wife in tow. They wanted to take me to lunch, and I graciously accepted. They drove me and the dogs to their house to let my dogs hang out in their backyard, then we went to lunch at a cute country diner, and then they took me to the wreck yard to get my suitcase out of the car (which I'd forgotten to do earlier when they came by with the car). By the time we got back to the station my dad was only 20 minutes away. I had just enough time to call Progressive and file the insurance claim over the phone before he picked me up.

In short everyone was incredibly nice and supportive, from the AAA folks to the insurance company to the local fire and rescue people and those who stopped to make sure I was OK. I slipped into the back seat of my dad's car in the closest thing to shock/coma that I've ever experienced, and I slept for most of the next two days.

So here I am back in action. I found out my car has been deemed a total loss, and I'll get just over $13K for the 2006 Volvo I paid $23K for five years ago (it was slightly used when I bought it). I just wish I hadn't just paid for $2K in maintenance earlier this month. But I AM grateful that I somehow remembered to renew my car insurance the day before leaving for my trip. If I'd forgotten then my insurance would have been expired by 2 days when the accident occurred.

Of course I am most grateful that no one else was involved and that somehow I managed to steer away from the heavy traffic when I lost control. Any accident involving other cars would have been completely my fault, and I'm not sure I could have handled that on top of everything else.

Negotiating a New Compensation Package

noreply@blogger.com (MEG) — Wed, 21 Dec 2011 21:03:00 +0000

Just over a week ago I found out I am getting laid off. Since then I've been navigating the complex world of internal Human Resources and having my negotiation skills challenged when it comes to severance and other benefits.

Luckily I had another job opportunity already in the works. I had interviewed with them several weeks before I got the news that I would be needing a new job, and they've been recruiting me pretty aggressively. I've been wined and dined here locally, I've met all the big players in the company, and I've even been teased with talk of equity and of benefiting when the company goes public in a few years.

I had just been talked into a final round of interviews "for my benefit" at corporate headquarters, where I could get an even better sense of the corporate culture. I had drinks again with a friend at the new potential employer just before leaving, and he told me I had better head up there "ready to make a decision." I played coy, but he was talking like I had already decided to join the team. "Ask for whatever you want!" he insisted. "You're golden."

So I bought a new suit and some panty hose, packed a bag and headed off for two days of interviews at corporate headquarters. I was trying really hard not to suddenly seem eager for a job after playing hard to get for over a month; but of course I DID really want - and need - the job offer. I just wanted to get an offer on the table before news traveled through the grapevine of my pending layoff. I was sure I could still get the job, but I didn't want the offer to drop by $20K.

It was a huge whirlwind. I had meetings with a different person every half hour from arrival at 1pm onward. A SVP picked me up at the airport and gave me a driving tour, then I met with another SVP, an assistant/underwriter, the head of the mortgage department, the EVP of Private Banking, then another SVP.

At that point the recruiter I'd been talking to all along (my potential new boss - or new boss' boss) took me to my hotel to check into my awesome suite. He is a relatively young, laid back but direct type of guy who apparently likes to have a good time. I felt comfortable with him but had met him only once, at my first round of interviews. However he'd been calling me at least weekly since then to run other candidates by me for another position. He seemed surprisingly candid with me. I'll call him Sam here.

I had about 20 minutes to freshen up before heading by private car to a team holiday party with a local law firm; then the head of the Private Bank took me for drinks at a restaurant while we waited for Sam and another banker. We dined on steak and pate and oysters and tartar and wine and desserts and dessert drinks. I thought the long day was finally over, but Sam ushered us into a bar next door as we walked out of the restaurant.

Soon it was just me and Sam, and it was after midnight. This is the context in which I negotiated my new compensation package. It's a little fuzzy, but he asked me what I thought in a pointed way, and I said I was ready to talk specifics. I liked everything I'd heard but it was time to see if we were on the same page, and I'd like to make a decision "either way" before the end of the year.

I think he literally said "So what's it going to take?" Or at least it was something very close to that as he smirked, obviously pleased to test my less-than-sober negotiating skills (which I suppose is a fair thing to need to judge when looking to hire a banker). I stammered, but tried to be smooth as I said "Well, based on what I make now, and the promotion I'm up for in a few months--"

He cut me off and asked what I make now. I was honest about my base salary - about $78K - but I quickly added that between bonus comp and easy-to-meet goals and the promotion I was about to get, not to mention the long term benefits such as 401k that I've accrued, that I would like to see a new base of six figures to really be persuaded to make a move and take on the new challenges.

He said there was no way I could expect that much of a bump at my company when I get promoted to VP (he used to be a manager at my firm), but he was smiling. He touted their significantly larger bonus incentives - 25% for meeting your goal, 50% for exceeding it in a fairly basic way and up to 75% if you really blow it out of the water - as though pointing out that regardless of my base salary I'd be making a lot more.

We ordered more drinks - my third Drambuie since dinner - and I smiled right back and we bantered about how aggressive my production goals would be. I claimed they seemed aggressive, and he scoffed at me, assuring me that he would personally make SURE that I reached my goal with ease each year. Finally he said, "What if I were to make your first year's bonus guaranteed? Would that make you feel better?" I smiled and shrugged and said it certainly wouldn't hurt.

Later (a minute? 20 minutes?) he handed me his iphone. He was making a list on the "lists" app, and he said "How does that look to you?" He had typed out "$90K base salary with $5K car allowance" on the first line. On the second line it said "First year Guaranteed STI of $22,500." I nodded, sipped my cocktail, and just looked at him.

"What about vacation?" I asked for some reason. I asked for four weeks, and he shook his head and typed it in. "Anything else?" he challenged, pretending to be exasperated but clearly relishing the whole exchange. So I asked about a signing bonus, my drunken confidence run amok. He raised his eyebrows and made some joke, leaning forward suddenly. I was saying that if I left before January that I would receive my year end bonus which was payable January 31.

I was distracted by his hand which was suddenly and solidly on my leg as he followed up with "Well how much are you expecting?" I ignored his hand, smiled sweetly and responded firmly, "Ten thousand ought to cover it." That is more than twice what I'm expecting, and he should know that since he knows my base, but as he whisked his hand away he dutifully typed that in too.

He added a line item for company provided iphone and ipad and asked me to review the list as we tabbed out. "I would definitely consider that offer," I assured him, then changing the subject to berate him for keeping me out past 1am. I insisted that he must be trying to test me with a full day of interviews - beginning with an early breakfast - on a decided lack of sleep.

The next afternoon, thoroughly exhausted after 10 more meetings, I met with him again and he told me to expect an offer in writing this week. Allegedly it should look "like what we discussed last night." We shall see.

:)

Negotiating A Severance Package

noreply@blogger.com (MEG) — Wed, 21 Dec 2011 16:58:00 +0000

What My Boss Told Me
When I heard I was getting laid off it was unofficial; my boss had found out my name was on the list, but he couldn't tell me the exact date the Reduction in Force would take place or give me any paperwork from Human Resources regarding my severance.

He did tell me verbally that I could expect two months of severance. I was kind of numb and simply nodded, momentarily grateful to be promised anything at all. But then I asked about my annual bonus. We get paid quarterly, and the fourth quarter bonus incentive is paid at the end of January. It's also the largest of the quarterly checks since it includes any addition for exceeding your annual goal, among a few other things.

He looked at me sheepishly and admitted that probably would not be given to me. If you're not employed on the day it's payable then you don't get it, essentially. I narrowed my eyes but went back to absorption mode and let it go for the moment.

After a long day of cleaning out my office and hard drive, being taken out to lunch by my coworkers, trying to graciously accept lots of condolences and advice and interview offers, going out to dinner and drinks with friends, running into two guys I've dated recently and then and meeting up with an ex (an emotional event in and of itself) I woke up the next morning hungover and overwhelmed.

What My Mentor Told Me
Then my colleague and mentor texted me and asked me to brunch. She's been in banking for decades and has left and joined banks at least a few times that I know of. We've gotten to be great friends, and I was in need of any advice I could find, so I dragged my ass to a restaurant in a daze and we ordered bellinis.

She proceeded to unload on me all kinds of valuable advice, which I struggled to absorb as I choked down gourmet pizza and waffles and bacon (as yet ANOTHER guy I've recently dated sat to my left with another party).

She told me that I was to stay as busy as possible; the busier I am the more confident I'll be. I am to agree to EVERY meeting and interview. "You tell everybody that you are considering several options, but you are most interested in them."

I am not to sign ANYTHING from HR without getting it reviewed by an attorney. I am to understand that EVERYTHING is negotiable and that the little details matter tremendously. "They'll try to give you the standard package, but honey nothing is standard - and in any case the standard does NOT apply to your individual situation. You tell them that; use those words."

She said she knew I was probably thinking about future employment opportunities and salary negotiations and interviews, but that I really needed to focus first on negotiating a severance package. She said usually HR blindsides you with the news and presents you with an offer which people numbly sign, grateful. I was to ask for 'the moon,' and she proceeded to outline everything she could possibly think of which I was to ask for, much of which I'd never even considered.

"You need to act like you'll never have another job again when you deal with them - they don't know and it doesn't matter that you have other options and that you'll be totally fine. Of course you will be fine. But you need to get what you deserve."

Then she informed me that everyone was pissed about the situation, that something smelled very bad about how this is all happening, and that she thinks they are totally screwing me over. The more I thought about it, the more I realized she is right. I refused to take the layoff personally, but it is personal on some level. And it's a mistake.

They JUST hired another guy from another department who moved over and has zero clients/portfolio. He probably makes more than me as he has a few years more experience, but somehow I'm the one who is being let go - and they will be handing over my enormous portfolio to him (perhaps because he's been there less than 90 days and they fear a lawsuit or something).

My boss told me point blank that he would have never hired that guy if he'd known this was going to happen (i.e. that he'd be forced to lay me off as a result) and that it wasn't his decision whatsoever; this was coming down from corporate. I told him dryly that it didn't really make me or anybody else on the team feel better to know that he was not only not in control but was not even in the loop on staffing issues. He acknowledged that and said he wasn't sure how bright his future is here either...

What I Told HR
Inspired, I issued a formal letter to HR a few days later, after I still hadn't heard anything official from anybody. I figured asking for something first would set the tone for negotiations, rather than waiting for them to give me a low ball offer and then having to contest it.

I said I had been informed that I would soon be impacted by a Reduction in Force, and that I would like to formally issue the following requests:

One month of severance for each year of service to the company (5).

All Bonus Incentive Pay accrued during 2011.

Current company email and phone number to be maintained for 60 days.

Written letters of recommendation from my boss and his boss.

All other standard termination benefits (vacation pay, insurance, etc).

I proceeded to say that "I have spoken to an informed party about my situation, and I believe these requests to be fair and reasonable. The standard severance package is not applicable given my individual situation, which I will briefly describe below, for reference."

I then outlined that I've given the company nearly 6 years of loyal service, that I was recruited into and completed their training program (which is held in high regard and bragged about to all new employees), that my performance reviews have always been positive, that I've been repeatedly told in writing and verbally that I'm an indispensable member of the team, that I was basically promised in writing by my boss that I'd get promoted to VP at my next review, and that I was even asked to train and mentor new team members, as I've been there longer than anyone from the President down.

I also pointed out that I'd exceeded my production goals every year, despite managing the largest portfolio in the Private bank (both by number of clients and by volume), and that every time anybody else left the bank their portfolio had been dumped in my lap to sort out.

In case that wasn't enough, I subtly added that there has been a significant amount of miscommunication among management that appears to have directly led to my termination. I declined to go into detail out of respect for my team and the bank, and I assumed that my merits and loyalty were more than enough to substantiate my severance requests, but I hinted that I'd be willing to drag it out as supplementary validation if necessary.

The whole letter read like it came from an attorney (maybe I should go back to law school), and I requested a reply within 7 calendar days. Then the waiting began.

Work Meeting or Date?

noreply@blogger.com (MEG) — Wed, 21 Dec 2011 03:01:00 +0000

About a year ago I had some trouble trying to decide if a lunch I had with a former colleague was more of a work or a social visit. I recently got some clarity on the matter.

I recently interviewed at a company where that very same individual happens to work. He saw me there, so I texted him and asked if we could meet for lunch of drinks so that I could pick his brain about the company.

He suggested drinks - wine - and let me choose between two very nice luxury hotel bars as the venue. We meet two days later.

To sum it up, we drank way too much, we talked at length about the company, he spent a ton of money on lots of ridiculous wine and food, and it became very clear that he was interested in more than just recruiting me to come work at his firm. And to be fair I'm sure I gave off a flirtatious enough vibe that his apparent intentions were not entirely unexpected - or even unwelcome.

Luckily I had enough wits about me to simply laugh through the encounter and head home before anything happened that might make it awkward, uncomfortable or scandalous to work with him in the future.

But I've learned a lesson: if you are wondering if a meeting is more of a date or if somebody is interested in you as more than a work contact, you are probably right.

Getting Laid Off

noreply@blogger.com (MEG) — Wed, 21 Dec 2011 02:34:00 +0000

Just over a week ago, my boss invited me to meet him for breakfast. I thought this was unusual, but I figured that he had heard through the grapevine that I had interviewed with a competing bank and wanted to encourage me to stick it out with our team.

Over the last couple of years as banking has been a tumultuous industry and our team has been in fairly constant transition, my boss has met with me a couple of times a year to make sure I am "ok" and tell me how much they value me and basically try to make sure I'm not looking for a new job. I've been there longer than anyone (including him), and he relies on me for a lot of things outside my basic job description.

But this meeting was different. Actually, it was like deja vu. He started out by saying that there are unfortunate changes coming down the pipeline from corporate [headquarters] and that they are going to impact me. He seemed upset and was rambling, so I figured that another one of my colleagues was being let go (which has happened five times in the last 3 years). I'd heard this all before, and my poor boss is not good at delivering bad news.

As I wondered which of my teammates he was talking about this time, I heard him say, "and I just think it's a huge mistake for them to let you go." I had been nodding intently and simply continued to do so. He was talking about ME this time. I was going to be part of a RIF - a Reduction in Force - and although it wouldn't happen officially for a few weeks, he'd found out my name was on the list and just had to go ahead and tell me.

I was surprised, of course, but I didn't really react. He went on about how they were eliminating my position across all markets and that he would have never made this decision if it were up to him and how we just aren't devoting resources to developing bankers anymore. Basically there is only room on the payroll to poach senior bankers who can bring in millions and millions in loans/deposits each year. In addition, it's become clear over the last few months that the strategy in our Private Bank has shifted from traditional banking (loans and deposits) to other revenue sources such as trust, brokerage and investment management. They are hiring on that side and reducing on the banking side.

All of this makes sense to me from a managerial standpoint. Our company is conservative and has basically no lending appetite which has made it decidedly less than fun to be a banker there for the last couple of years. Still, it's the only place I've ever worked full time and I truly like all my coworkers and I've literally sat at the same desk for 4 years reaching my goals with little to no effort really required.

I told him I didn't take it personally, that I understood the situation, and that I'd actually already talked to another bank about a position because I'd been sensing the need for a new challenge anyway (I threw this in almost to make him feel better, as I could tell this was really hard for him to say to me). He told me that while I still needed to come in and help with the transition, my schedule is my own and I can do "what I need to do."

I went into work that day and my boss told my teammates the news one by one. It was so surreal, and I hated for people to feel sorry for me, but I experienced such an outpouring of love and support. People were coming out of the woodwork to offer me leads and contacts on other jobs. I thanked them all but said I was going to need a few days to process the news before meeting with any new potential employers.

Oh, I also swiftly cleared out my office and hard drive and emailed myself every document I thought I could possibly benefit from having. I'm so glad they gave me the opportunity to do this, and I had a TON of personal stuff on my work computer - rental records, personal income tax documents, etc.

I also emailed the recruiter from the competitor bank I'd been talking to and told him I was very much looking forward to our next visit. He'd told me earlier that week that they were "ready to make me an offer," and I'd only JUST scheduled a trip to their headquarters to meet everyone up there and get a better feel for their culture.

Taking Recruiter Calls

noreply@blogger.com (MEG) — Wed, 21 Dec 2011 02:12:00 +0000

As a banker I receive phone calls, emails, and linkedIn requests from recruiters on a fairly regular basis. This activity has picked up in the last year as the economy has improved; apparently banks are hiring again. I find it interesting that most employers seem to be seeking to hire only those who already have jobs at competing firms; it seems that banks at least rarely hire those who are unemployed.

Usually I ignore these solicitations, or if I accidentally answer one I politely let them know I'm not looking at the moment. Of course I always tell them I'm "open" to hearing about other opportunities, but I make it clear that I am happy at my current job.

A few weeks ago I received a phone call which appeared to be an internal one. I recognized the name on caller ID, and the area code was from the city where our corporate headquarters is located. So of course I answered. It turns out that the person calling is no longer with our company; he is now working for a competitor bank, and they are starting up a Private Bank team in my city (they have a commercial bank presence, but not a private bank in my particular city), and he'd love to talk to me about what they are doing. Thrown off guard, I congenially agreed to learn more. He said he'd let me know the next time he was in town and maybe we could meet to discuss.

I told my mentor and colleague about the call, and she urged me to meet with him. She advised me to always keep my ear to the ground about alternate opportunities, and she also pointed out that it's good to know what the competition is up to regardless of whether you're actually interested in a new job.

So when he called me again a week or so later and asked if I could meet on a Wednesday, I said I was free that whole day (assuming he'd want to do either a breakfast, lunch or happy hour). "Great," he responded. "Why don't you plan to be at our main office from 8am until noon."

So basically I stumbled into a full on first round of interviews. I went, and I was introduced to the CEO, several other executives, the chief credit officer, and a few others I can't recall. I was confident and guarded and open because I wasn't really looking for a job. For future reference this is the best frame of mind in which to interview for a new job.

I liked what I heard, but I still held the recruiter at arms length. However I wasn't leading them on; part of me would relish a new challenge, but the new job would in fact be a challenge. I'd be starting a private bank team, creating a new portfolio from scratch, getting to know a whole new corporate culture and working to impress a whole new group of colleagues. As a comparison, at my current job I have more clients than I know what to do with, a team and extended team who love me, and the security of having been at the company for nearly 6 years - longer than any of my team members including my boss and my boss' boss. Plus I've been basically promised a promotion and raise at my next review.

In the back of my mind I'll admit that I was hoping to simply get an offer from this new firm to use as a negotiating tool with my boss as he is trying to decide what kind of raise to give me in a few months at my annual review. But things got a LOT more interesting than that.

Respected Women: Smart, Sexy, or Must Be Both?

noreply@blogger.com (MEG) — Thu, 08 Dec 2011 16:40:00 +0000

Throughout most of history, women were judged pretty much entirely on their level of attractiveness. Both men and women focused on a woman's beauty as her most valuable asset, and the pressure was on women to maximize it. Being considered beautiful - and therefore being able to acquire a desirable husband - used to be one of the only ways for a woman to gain respect in society. If she was lucky, she might be pretty enough to land a good husband upon whom she would be more or less completely dependent. Men, naturally, have never been judged based solely on their looks; after all they have had access to money and power and academic prestige. Looks are just icing on their cake.

Well times have changed. Sort of. Fabulously Broke has a great post on the subject which highlights the trailer for a new film called Miss Representation.

The film seems to make clear what all of us already know: women are still judged according to a visual standard. The interesting difference today is that great women are also achieving in every category possible, which used to be accessible only to men - athletics, politics, comedy, business, academics, wealth-building. No matter how much a woman has achieved, however, her attractiveness is still considered important and will still often be one of the first things a person notices or mentions about her. Why is this true for women and not for men?

We have made strides in one sense as a society - beauty alone is valued less and less. Remember how much we derided ditzy Miss South Carolina and how much flak Jessica Simpson got for her inane comments?

Ironically, now that women CAN do it all, being an attractive woman alone no longer counts for much. You'd better be hot, but you'd better also be smart, funny and able to contribute financially to really be considered a "catch" - to an employer or to a potential date. Women are no longer being judged solely on their appearance; they are being judged on that in addition to a host of other valuable attributes.

Venus Williams is an amazing tennis player, but doesn't she look manly and unfeminine? Sarah Palin's political commentary is interesting, but do you think she has fake boobs? That female CEO sure has made a difference, but doesn't the poor thing look haggard and old? And on and on the newscasters go.

Only women who are smart, successful AND beautiful seem to be valued highly in today's world. Being able to do and have it all hasn't lessened the pressure on women; it's increased it.

Why It Matters How Much Your Date Earns

noreply@blogger.com (MEG) — Wed, 07 Dec 2011 17:03:00 +0000

The modern and politically correct opinion on the subject is that it doesn't matter how much a potential dating partner earns. Obviously in real life, however, it does matter (or else we wouldn't all be obsessed with talking and reading about it).

Studies and happy hour conversations everywhere have shown repeatedly that women prefer dating partners who make more than they do. This may make us all sound like gold diggers, but interestingly men also prefer to be the bigger earners. We can chalk this up to traditional gender roles and how we're all still more comfortable with them deep down, and we can argue about whether that's good or bad. My point is only this: it DOES matter what your potential dating partner makes. Usually.

Well Heeled Blog had a recent post on this issue which I found very thought provoking. She doesn't care that her hubby earns less than she does, and she describes a few of her friends who have different opinions on the issue. They are all in very different situations though, and after thinking about it I had a revelation:

When you are very young or very old, income may not matter as much in a relationship because spending and savings preferences are not as ingrained. But if you are searching for love during your prime earning and spending years (around 25-55), then your potential partner's income matters a great deal.

Young and Old are Unencumbered
If you are young and broke - in high school or college or even grad school - then it doesn't matter who earns more or has more. Not only are you both working with little money (and instead sharing plans and dreams and hopes alone), but neither of you are likely to have established major spending and savings rituals yet. When you're really old, conversely, you've already lived your life and saved and spent and now you probably just want to cozy up to that cutie at the retirement home and have great conversations more than anything else - you're sharing memories more than tangible goods or future experiences.

Folks In Between are Pickier
These days however, when most people are looking for a dating partner or spouse they have already developed specific lifestyle preferences, including savings expectations. This makes finding and choosing a partner a lot more complicated because regardless of what is politically correct to admit, both men and women realize that the single biggest contributing factor to your lifestlye - for better or worse - is going to be the person you choose to share your life with. And lifestyle is usually based at least loosely on earnings.

Me Myself and I
I'll use myself as an example. I'm in my late 20's and earn a lot - close to 6 figures. I live in a condo that I own in an urban center, I max out my retirement accounts, and I still have enough leftover to shop at Nordstrom, travel abroad regularly and grocery shop without checking prices. In theory I don't care what my date earns - as long as he earns enough to participate in my lifestyle without requiring me to support him while also saving an amount I feel is appropriate.

In other words of course I care what he earns.

The partner who earns more will inevitably end up subsidizing the spending/saving habits of the other partner. Men, as it turns out, are more comfortable with this. One reason is that many of them grew up with father breadwinners and they are conditioned to want to protect and provide for the women in their lives. Women, on the other hand, often find it difficult to subsidize a male partner. One reason is that it limits their ability to choose to become stay at home mothers in the future, a situation which many anticipate - or at least don't want to rule out.

All that said, I would never rule out dating a person simply because he earns less than I do. First of all, incomes are volatile and you never know what someone may be worth in the future. But also there are more important things to me than my lifestyle, such as finding chemistry, companionship and one day starting a family with someone I consider to be my best friend. If I meet someone who earns less than I do but is seemingly great in every other way, I'm sure I'd be happy to downgrade my lifestyle and change my expectations in order to date him.

But I realize that getting comfortable with that would be easier said than done. And I am aware that whatever my date/boyfriend/parter/husband earns DOES in fact matter. It will impact our relationship on every level - our lifestyle, our goals, our plans, and even our future kids' opportunities.

It's not politically-correct to say your partern's income doesn't matter; it's delusion. Relationships are hard enough. It would make things a lot easier to meet someone who shares your spending and savings preferences in general.

One in Eleven Shoppers Steal?

noreply@blogger.com (MEG) — Mon, 05 Dec 2011 03:21:00 +0000

This Yahoo! article claims that one out of every eleven shoppers leaves the store with at least one item they didn't purchase (based on data reported by Adweek).

Seriously? I find that very difficult to believe.

Perhaps they are simply dividing the number of stolen items by the number of shoppers during a given period, and perhaps the figures are skewed based on the fact that certain thieves steal repeatedly and in high volume.

Here is what researchers do know:

"Seventy percent of shoplifters tell us they didn't plan to shoplift," says Barbara Staib, spokesperson for the National Association of Shoplifting Prevention. We also know that three-quarters of shoplifters aren't troubled teens; they're adults--most with jobs. And 35 percent of losses will happen with the help of a corrupt employee.

It's depressing that such a large percentage of the losses are the direct result of employee involvement. I can definitely understand how the majority of shoplifting is simply the result of unpremeditated opportunity presenting itself. You realize you accidentally walked out with items in the bottom of the cart and decide not to go back in and pay; you consume a few free "samples," or you realize the package or tag is missing and simply slip an item onto your person or into your bag before you've really even thought about what you're doing.

Still, one in eleven shoppers? Considering that less than 1.5% of merchandise gets stolen, that's a ridiculously high percentage of shopper involvement.

Not So Happy With Vanguard

noreply@blogger.com (MEG) — Fri, 02 Dec 2011 20:53:00 +0000

My frustration with Vanguard customer service has grown to the point that I now feel the need to let it runneth over to all of my readers.

Let me start by saying that I have been a Vanguard customer for over a decade - and my granparents have been Vanguard customers for several more decades - and I feel their funds and ETFs are relatively unmatched in terms of quality and cost effectiveness. I also enjoy their website and its capabilities.

However their customer service needs some real work - not to mention their account opening process. I've called them three times over the past two weeks and have hung up the phone more frustrated and bewildered after each conversation. Each of the three representatives I spoke to seemed less informed and less savvy than the last.

I am simply trying to open a new brokerage account. This process should be so simple and straightforward that a phone call to customer service should rarely even be warranted - especially by someone like myself who a) is internet savvy, b) works at a financial institution and c) has opened dozens of personal financial accounts over the years without no problem.

Yet Vanguard has managed to make the process so complex and jumbled that I've had to call no less than three times already.

First Call
First I called over two weeks ago to see if business entities could open/own a Vanguard brokerage account. The online application only options included "individual" and "trust" accounts. The representative said he thought that maybe they could and put me on hold to find out. When he came back the answer was in the affirmative - so I asked how to go about it since the online app wouldn't let me select a business entity type. He put me on hold again. Then he came back and directed me to a "brokerage account kit" on their website.

Great. He should have probably known all that stuff without putting me on hold for so long after each of my questions, but I wasn't upset at that point.

The application was jumbled, but I am a financial professional and was able to read between the lines for the most part. I was surprised to observe several things though:

The application had to mailed - there was no option listed for fax or online submission.

The account could not be funded by a wire or electronic transfer - the only options listed included check, In-Kind brokerage transfer, and deposit of endorsed stock certificates

In order to set up the ability for the account to accept wires or electronic transfers in the future, you had to provide a voided check and then wait three weeks for processing.

The timeline associated with just getting the account opened - not to mention setting up the ability to wire in money - is shocking and disappointing to me. But in an effort to comply I had no choice but to order checks on my entity's checking account and wait for them to arrive so that I could void one and send to Vanguard for account setup.

Second Call
My checks finally arrived, I voided one and included with the pile of paperwork I needed to submit, and I decided to call again just to make sure I included everything necessary - since I was going to have to ship this fat envelope to Pennsylvania for processing.

The application listed several entity types to choose from as well as a blank for "other" so I first asked for confimration that LLCs could open business accounts. I was on hold for awhile so the confused rep could confirm that. I also asked whether I needed to include the Organization Resolution document; the application also said one "may be required" without explaining under what conditions and without including a copy of said form (though the convoluded 50+ page application "kit" includes copies of every other conceivable form along with descriptions of most of the investment options).

Apparently the poor rep had never heard of an LLC nor an Organization Resolution. He asked me what section and what page of the application I was looking at and explained that the last page had a note indicating that "other documentation" and an Organization resultion may be required. He found the section, made me confirm we were reading the same page, and then proceeded to read the whole section I had already quoted to him. He paused at the end as though that answered my question.

I was put on hold a few times and he finally managed to confirm that LLCs were OK, that an Operating agreement was the only entity doc I needed to include, and that the Organization Resolution was in fact required. He offered to email me the form and I agreed, though confirming my email address and describing all the options for receipt of that form took so long that I'd already found and downloaded it from Vanguard's website before he could finish his script.

He did manage to add one bit of value though, since he let me know I could fax the application in rather than mail it (though I couldn't fax the check to fund the account, he painfully explained - I'd have to mail that, or wait until wire capabilities were set up).

Third Call
So I faxed the application and waited for email or phone confirmation of receipt. None came. So today I called AGAIN and got a third rep who seemed confused at the basic prospect of a business brokerage account. "You opened a business account?" he kept repeating, obviously confused. No, I am TRYING to open a business account. I'm trying to get confirmation of the fax receipt. Confused, he claimed they don't normally accept account applications by fax. UGH.

He asked for my name and SSN, and I explained again that the account would not be under my last name, that it was a business entity - did he want the business name instead. "The account is a business?" Seriously, it was like he'd never heard of such a thing. Annoyed, I outlined the various options for account structure and told him I'd already called to confirm that my LLC COULD open an account. "But do you have a personal Vanguard account? Let me look that up."

I finally let him. He of course found no reference to the account about which I was calling. Eventually he let me give him the business TIN and name and said he didn't see anything on the system yet. But he helpfully explained that it can take days for new applications to even get scanned into the system for review, then more days for them to actually be opened.

At this point I was pissed and decided to inform this kind older un-savvy gentleman how ridiculous I thought it was that it took so long and was so labor intensive to open a simple brokerage account. I also threw in the fact that the market was up by a long shot since I'd been trying to get this account open and funded, which of course only rubs salt in the wound.

All he could offer me was the opportunity to wait for a few more days and call back then to see if it had been scanned in yet.

I can't wait.

CEO Resigns on Principle, Without Severance

noreply@blogger.com (MEG) — Fri, 02 Dec 2011 01:23:00 +0000

American Airlines recently filed bankruptcy, which has of course been all over the news.

What hasn't been highlighted is that CEO Gerard J Arpey opposed that decision for a long time. Upon finally losing that battle with his board of directors, he opted to deny their request for him to stay on board; instead he resigned with only his nearly worthless stock holdings.

According to this NYT op ed, Arpey believes that bankruptcy is morally wrong on both a personal and corporate level; he therefore refused to lead the company down that path and so - after 30 years with the company - he quit.

“I believe it’s important to the character of the company and its ultimate long-term success to do your very best to honor those commitments,” he said. “It is not good thinking — either at the corporate level or at the personal level — to believe you can simply walk away from your circumstances.”

It is easy to oppose or support ideals in theory; it is much harder to choose to support those ideals on moral grounds and reject lots of money, a cherished job and a career you've spent your life building.

Combining Active and Passive Investment Strategies

noreply@blogger.com (MEG) — Wed, 30 Nov 2011 15:45:00 +0000

As part of my Continuing Education Requirements to maintain my CFP (R) Designation, I recently read a publication called Strategic Index Investing offered by Beacon Hill Financial Educators. Though it was originally published years ago - and though it discusses many very familiar investment methods and components - it recommends a facsinating overall investment strategy.

Active VERSUS Passive
I thought I had exhausted the information available on common investment strategies, many of which seem to be directly at odds with one another:

Modern portfolio theory and strategic asset allocation versus betting on different industries and sectors;

Active versus passive investment vehicles;

Attempting to time the market versus buying and holding.

Almost everything I've previously encountered argues either for or against active managment techniques, but this book condones the implementation of some active strategies while still agreeing that passive investing is the way to go.

The basis of the argument and about half the book is spent showing how Exchange Traded Funds - specifically Exchange Traded Index Funds - are the best possible investment vehicle for individual investors. I outlined a few of the reasons in my last post.

The author agrees with many Bogleheads who firmly believe - based on much cited evidence - that investing in indexes which track the market or certain sectors of the market is a better way to go than investing in actively managed funds. And by "better" of course I mean that index investing is cheaper, more tax efficient, and statistically much more likely to provide investors with a higher return.

Most authors who espouse index investing also emphasize the importance of a Buy & Hold investment strategy and caution endlessly about the futility of trying to "time the market." It's as though the only two options are to buy index funds and ignore your portfolio for a few decades or become a caffeine-crazed day trader who is chained to his laptop making dozens of impulsive trades each week or month.

Passive PLUS Active
This publication opened my eyes to the possibility of rationally combining passive investment vehicles with relatively active investment management.

The author does believe that passive investment vehicles are best, that setting and sticking to an appropriate asset allocation is imperative, and that the market generally increases in value over time and so buying and holding investments for the long term is ideal. HOWEVER he also endorsed and explained several active investment strategies such as:

Tactical Asset Allocation (making small temporarty changes to a strategic asset allocation to over/under weight various asset classes or styles in an attempt to enhance overall return)

Core-satellite portfolio construction (where the "core" of the portfolio remains in passive investments according to the strategic asset allocation but 10-30% of the portfolio is comprised of "satellites" which may emphasize specific industries or geographies or be invested actively).

One active investment alternative which may be used in the satellite portion of the portfolio include the buying and/or selling of options, which the author spent some time explaining. Options are not necessarily any more risky than owning a security, and they may even be used as an insurance policy to decrease the risk (and return) of owning a particular stock or ETF.

These active strategies are all recommended as a way to attempt to enhance the returns earned through a primarily passively invested buy and hold portfolio; they are not endorsed as an alternative to passive investing. That's the key difference.

Benefits and Additional Considerations
There are situations in which these active management techniques can be appropriate. What if you want to take advantage of The January Effect or you work in an industry you believe is really about to be hit hard - or take off - and you want to edge toward or away from it? Perhaps you make your career as a banker and simply want to ovoid over-exposure to that industry by shorting or underweighting some financial ETFs. These active strategies allow you to make adjustments WITHIN the framework of a comprehensive investment plan.

Investors who simply invest in a broad market index fund and refuse to allow themselves to tweak their portfolios often end up getting to the point where they feel forced to move all their money either into or out of the market in huge waves (usually at the worst possible times), since they don't have a mechanism with which to tweak their 'all or none' investment approach.

Active management isn't for everyone of course - it does require some skill, some ongoing education, and some monitoring efforts. Important considerations when actively investing a satellite portion of your portfolio include creating an effective exit strategy, something that obviously does not come naturally to us classic buy and hold investors (this should include the use of Stop Loss orders so you aren't chained to your "sell" button or to CNBC). Another new skill that active investors must aquire is ongoing monitoring and evaluation.

Buy & Hold is the method chosen by most not because they believe it's the best way to prosper but rather because it requires zero effort. But you can still attempt to enhance return while keeping a total "hands off" stance; your "satellite" might be the portion of your portfolio you hand over to a professional to actively manage.

I don't know about you, but this all makes a lot of sense to me. I think most of us who may believe in indexing and buying and holding are also tempted to tweak our investments from time to time - to bet on certain industries or weight a certain asset class that's been underperforming for years. It's comforting to know that doing so can be a part of one's overall investment strategy - it doesn't have to be some heresy you do in secrety on the side.