Slowly Moving Forward

I can’t believe it’s almost the end of March already. I thought 2014 just started? *sigh*

I don’t know about you, but I’ve been just slammed these past few months. It’s not even that bad – I’m just slow. I’ve been making excuses for myself, taking advantage of all Glow Worm and my doctor appointments (between his allergic reactions and my back going out), I’ve dropped most of my house-cleaning (except the bare minimum) and paying attention to the mail (eg: medical bills from all these appointments). Plus, my 2014 Goals were just slammed to the back burner and I ignored them.

Well, I’ve been very productive today. Of course, it’s 1:30am and I am also really screwed tomorrow (today?). But I’ve gotten several monkeys off my back. (Which makes me exceedingly happy even though really, these things are just what normal, responsible adults do on a daily basis. Whatever. I’m still feeling chuffed.) It especially makes me happy in light of my previous post addressing stuff I suck at.

So, because I’m four years old, I’m gonna tell you what I finally did:

1) Cleared out and filed approximately 3-4 months of unopened mail. SO PLEASED and SO RELIEVED. Do you know that this isn’t even the longest I’ve gone without going through my mail? I had at least two years worth of mail in several paper bags that I powered through right before Gamera was born. Or was it Glow Worm? I really don’t remember. All I know is that it was pathetic. And yes. Really. TWO YEARS. (This includes medical bills – I really don’t know how I was that bad. It’s not like we don’t have the means to pay for things. I was just really fucking lazy. *sigh*)

2) Gathered my 2013 tax documents for my CPA appointment today. Now, at least I was a teensy bit better last year and started a folder for tax documents (both a physical one and an electronic one). But, of course, I didn’t download all my 1099s and W-2s until past 11pm. (Hey, Cookie Monster and Gamera didn’t conk out until past 10:30pm and I ranted about it on Facebook and then I watched a well-deserved episode of The Vampire Diaries.) And you know, we have a shit-ton of accounts.

3) Paid a lot of slightly past due/about to be past due medical bills. What? I kinda mentioned this in #1? Pffft. This is so awesome it’s worthy of it’s own mention. (Admittedly, this is a lot like being proud of NOT beating my own children. But I don’t care.)

4) Started back on my housecleaning schedule again. Ok. I didn’t only do it today. And I am still letting a lot slide. But baby steps, ok?

What? You were expecting more? TOO BAD. That’s all I’ve got. I really need a wife.

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Chasing that Status

An article on why poor people spend a lot of money on stuff they can’t afford has been making the rounds on the interwebs lately and I’m glad I finally read it. I’ve always wondered this very same thing and would make confused comments to Hapa Papa like, “If they don’t have money, why are they spending it on huge flat screens and name brand clothes and things that we, who do have money, don’t even spend on?” Hapa Papa‘s theory was that if you thought you were always going to be poor, why delay gratification? Get what pleasures you can when you can.

However, this article finally explained why in a way that I could understand and even identify with. The tl;dr gist can be summed up in this quote:

Why do poor people make stupid, illogical decisions to buy status symbols? For the same reason all but only the most wealthy buy status symbols, I suppose. We want to belong. And, not just for the psychic rewards, but belonging to one group at the right time can mean the difference between unemployment and employment, a good job as opposed to a bad job, housing or a shelter, and so on.

We’ve all heard of the expression, “Dress for the job you want to have, not the job that you do.” This is just a variant of the expression – except for your whole life. It never occurred to me that the poor might possibly be spending so much on these items because it helped them not be immediately lumped into an easily dismissed category. That they wanted to signify they belonged at a job interview or at a restaurant or a nice store.

It totally makes sense to me. I do the same in my own life – but perhaps not in this extreme. And the only reason it’s not as extreme is because my ethnicity, clothing, demeanor, and gender scream, “middle class housewife with lots of spending money.” I don’t need as many outward symbols of wealth because I already fit in.

I recall distinctly my mother telling me that when I go get a haircut, or makeup, or even shopping for nicer clothes, to always dress up. Not only would I get better service, but I would get a better haircut or clothing or makeup as a result. My mom explained that if I showed up looking the part, it would take the sales person less stretch of the imagination to put me in quality than if I had shown up in sweats and no makeup. I thought it was a horribly classist way to view the world, but in my own experience, I have found my mom’s statement to be completely accurate.

When I first started working as a financial advisor, it took me almost a year before I finally settled in on clothes that suited both the position as well as my personal sense of style. At first, I had purchased all these suits from a suit outlet, but I just looked so old and dowdy. I hated the clothes – especially when I went on a three week training session and there were young women there who dressed so fabulously. I felt insecure, unprofessional, and sadly, somewhat less confident. Thankfully, my personality is such that it didn’t affect my interactions too badly. All the same, when I got home, I went shopping.

I would work with men who got custom made suits and spent ridiculous amounts of money on monogrammed shirts and fancy cuff links. I thought it was ridiculous. After all, if you had a financial advisor, wouldn’t you be looking for someone who was PRUDENT with their money? But then again, would you want someone who didn’t look outwardly “successful” and didn’t drive the “right” car?

I was teased about driving a Toyota Avalon. Not sure why since it’s totally a grandma car (nor exactly cheap), but they said it wasn’t flashy enough. Quite frankly, I wouldn’t really want a flashy advisor – I’d be too worried about them trying to make as much money off of me as possible. But I can see WHY certain people gravitated towards that type of advisor. Thankfully, I attracted clients just like myself. People who had money to invest because they didn’t spend it all on fancy clothes and cars.

Anyway, I guess this is just my rambling way of saying, I kinda get why poor people choose to spend their money a certain way. I do it, too. It’s just less obvious because I have more discretionary funds – and no one is judging me on my purchases because it’s in keeping with my income threshold.

One other thing. As much as I love to judge people, ultimately, who are we to tell people how to spend their money? Whether or not people are rich or poor, the money is theirs and they can spend it however they want.

Why I Have a Financial Advisor: Money Series Pt 5

Now, it may seem weird to you that I have a financial advisor – especially since I used to be one and own a financial advising firm with my mother. I’m sure it won’t be any surprise to anyone that my mother is my financial advisor. What can I say? It saves on fees.

Well, the reasons I have my mother manage my money versus managing it myself are largely the same reasons most people have a financial advisor. And those are because I don’t have some combination of the following:

1) Time
2) Interest
3) Ability
4) Resources

(For the record, mine is a combination of 1 and 2.) With that said, here is my inside scoop on what to look for in a financial advisor should you choose to have one.

Disclaimer: I am a financial advisor and own a financial advising firm with my mother. I am not being compensated by any entity or company for the following information. I am ONLY explaining what I do for my own family. If you should so choose to take this advice, please realize that it is not customized nor tailored for your specific situation. I am not dispensing personalized advice for you or your family. I am not responsible in any way, shape, or form if your investments rise or fall due to market conditions. YMMV. You have been warned.

1) Make sure you like the person. This seems like such a stupid reason. After all, there are plenty of likable people out there who should NOT be financial advisors. But ultimately, you’ll be discussing the details of your financial life as well as your hopes and dreams for the future (because let’s be real – that all requires money). If you don’t like your financial advisor, it’s going to be pretty difficult divulging such intimate information. Plus, you’ll be talking to them at least a few times a year. If you don’t like the person, you’ll put off meeting them, likely not follow their advice in a timely manner, and in general, waste everyone’s time.

2) Don’t get hung up on “The Best.” Just like the rest of life, “The Best” is a moving target and different for everybody. Whether it’s “The Best” advisor, fund, or stock, you’re most likely not going to have it. Or have it at the wrong time. There is no way out of the thousands of financial advisors you are going to have “The Best.” Even if you’re a gazillionaire, you’re not. Settle for good and competent. You want reasonable returns (whatever that means to you), sound advice, and a responsive attitude.

3) Don’t pay for a financial plan. Pay for advice and management. This is not to say that paying for a financial plan is a waste of money. Indeed, if you are confident that you will hold yourself accountable to following every single item on your plan, then, have at it. But let’s be real. You most likely won’t. Instead, you’ll have paid approximately $1,500-2,000 for a fat pile of paper that just sits on your shelf collecting dust while your financial house is still in shambles. Then a few years later, you’ll go through the cycle again.

Save everyone the trouble. Pay an advisor to manage your money. I wouldn’t necessarily give them full discretion over your funds (that seems unnecessarily trusting), but do follow their advice. Usually, this translates into a monthly fee. Think of it as having an advisor on retainer. Not only do you get to call them up and ask for advice any time you want, you also have someone actively looking at your account and managing it in a way that is consistent with your desires.

4) Along with #3, avoid paying per transaction/by commission. Now, realistically, some products are commission only. (eg: Annuities, life insurance, REITs) But for the most part, this way, you know that the advisor is recommending you buy/sell something because it really IS a good thing for your account (and not because they get paid a commission). As for annuities, life insurance, and REITs, they all have their place and can be good for you depending on your situation. Annuities and life insurance get pilloried quite often but in reality, I have highly recommended their usage. (Annuities especially since despite the higher cost, it’s the closest thing most people will get to a pension.)

5) Have as much of your assets at one place. I don’t mean one fund or one stock. I mean, have as much of your assets as possible held with the same financial advisor. Why? Because they will have a fuller view of your financial life and can give you better advice if they have the big picture. Also, it sounds awful, but financial advisors are only human. They will pay more attention to more money (because you are a bigger client). If you spread out your assets across several advisors, you are pretty much guaranteeing no one will look at your stuff.

Ok, that’s it for now. If I think of more, I will add it to this post or write another one. For those of you with financial advisors, what has your experience been? And for those of you without one, why haven’t you gotten one yet?

ETA:A friend asked me a great question on FB that I wanted to share with the rest of you.

I want to get started! Where do I start? It’s long overdue. How do you know which advisors are for you and your best interest? I thought of reading up on stock trading and understanding it, so I can do it myself. Signing up on Etrade? Talk to me. Lol.

Here’s my response:

I’d start by asking friends (especially those who are wealthier than you). Check out their recommendations. Or you can just walk into a Schwab, TD Ameritrade, or Ameriprise and ask for a broker on duty. Or, keep your eye out for seminars and attend some. Once you have some names, google and interview them.

Most advisors will talk to you and get to know you without charging you. If they do, run away. If they recommend you open an account or buy something with them before getting to know you, run away. Find out how they get paid. How do they decide or evaluate what is a good stock or fund? How do they determine when to sell? How often will they review your account? What type of clients are they looking for?

Also, trust your gut. If someone makes you feel uneasy, run. They may be perfectly honest but if YOU don’t feel comfortable, then they are not for you.

Most advisors end up with a book of business that looks like them. So you want to look for someone who is similar to you (except has time, interest, ability, and resources to do investments). You want someone who has similar values and world view.

Thanks for asking! Hope that helps. Feel free to ask more questions.

Why I Buy Used: Money Series Pt 2

Now, everyone knows I do my fair share to stimulate the economy. I can be quite the profligate spender – especially when it comes to buying fruit from Costco. I have often come back from a trip to Costco after throwing down a ton of money only to be asked by Hapa Papa, “Where is the food?” Because all he can see are piles and piles of fruit. What can I say? I’m Chinese. We eat fruit. Lots of it.

But even with Hapa Papa being my personal money train, we do still live off of one income (albeit, very generous) and have a mortgage and preschool and utilities so at some point, there is a limit to my spending. One time, in despair, Hapa Papa asked, “Why don’t you love me? Do you want me to work until I die?” After that, I started to watch my spending as a way to love him. He asks for so little, you know. The least I could do was throw him a bone.

Anyhow, even though Amazon and Costco are kept in business almost single-handedly by me, I do try to limit my spending without hampering my desire to hoard and get stuff. What I do, however, is buy used.

For those of you who have had the dubious honor of coming to my house, you know that it is a giant toy store. I own pretty much every toy known to man and the beauty of it is that around 80% of them were purchased used. I’m sure my kids think my day job is a drug dealer because I constantly go to people’s houses, give them cash and get something in return. People also come to my house to buy things I sell. I don’t think Cookie Monster or Gamera realize that we can go to stores to buy toys. They think toys come from other people’s houses.

It has actually come to the point where I no longer troll craigslist or the various Facebook virtual garage sale pages because I OWN EVERYTHING. (This helps a lot because now, I don’t really buy anything anymore.) When I go to real garage sales, I go for fun and rarely spend more than $20 because again, I OWN EVERYTHING. (Of course, my house is crammed full of toys, so you know, there are downsides to owning everything.) I justify having so many toys because I will have so many children they are bound to be used.

For clothes, I often buy used to supplement clothes I buy on clearance and clothes swap with friends. I think Cookie Monster’s baby clothes have gone through at least five (soon to be six) babies so far. The majority of them have held up just fine because babies grow so quickly, they really don’t wear them long enough to do enough damage.

I buy ahead for the next year or two when clothes go on clearance at the end of each season because why pay full price for clothes if I don’t have to? Who’s going to know they were purchased on clearance? Do kids’ clothes really go out of style? (Not the clothes I’m buying.) Plus, as the kids get older, the clothes wear out more quickly because they are more actively running, jumping, climbing, and therefore falling. I have bought many an iron on patch! Also, Cookie Monster grows so quickly that he is sometimes in between sizes in the spring – but I know he will be out of them by fall or winter. Why buy brand new pants if he’s going to be wearing them only for a few months?

Here’s my secret to buying used things: go to the super-nice, rich neighborhoods. People often have a glut of barely worn, brand name clothes that they want to get rid of quickly. I have purchased a bag of clothes for $25 that contained nine pairs of pants/shorts, ten shirts, and a sweater or two thrown in for good measure. When you consider that often, a pair of jeans from Old Navy is $15, that’s a really good deal.

The same goes for toys. Usually, used toys start at 50% retail (and are sometimes lower). You will get better deals on toys at garage sales, but if you want something specific, you’ll have to wait a long time. If you don’t want to wait, craigslist or the Facebook pages will be a better bet (although a little more costly). Sadly, I know the going rate of almost any used toy (as well as their retail price). Why is my brain so full of useless minutiae? My family will HATE me for all this useless information in the coming zombie apocalypse.

As for books, I usually buy them when the local library has their book sales. Children’s books are usually $0.50-$1 and I also get to support my local library. Incidentally, I use the library a TON for my personal use as well as for my kids. I read at least 100-150 books a year and if I bought them all new or even used, that would be thousands of dollars. Instead, I am willing to wait for new releases and get pretty much all my books for free. That allows me to pay for the occasional new book in order to support an author or a series that I really appreciate and enjoy. Plus, I already paid taxes for my library access – why shouldn’t I use it?

This also keeps my house from accumulating hundreds of books every year. Between my brother and I, we had hundreds of books that I no longer had room for. I gave several boxes to the local library and sold at least twenty boxes back to various used book stores for either cash or credit. Nothing is sadder than an unread or no longer read book sitting on a dusty shelf, waiting to be noticed. Why not send it somewhere it can be loved or put to good use?

I also buy used furniture – but usually, I buy things that are made of wood because the thought of a used mattress or couch I find squicky. I know. I’m a snob. But all my dining tables have been used – and they were great deals! I once got a dining set with six chairs for $100. The guy even lent us his truck to move it! Hapa Papa was very sad when I sold the same set three years later for the same $100.

Ok, this post ended up much longer than I originally anticipated. To sum up in nice bullet-points, here are some reasons I buy used:

1) It saves money – sometimes at least 50%.

2) Helps the environment – reduce, reuse, recycle and all that. (But it seriously is not a very important reason for me, personally.)

3) I can get more for less money – therefore, it frees up more money for things I really want but cannot get at reduced price. (It’s the same basic premise as #1.)

4) I feel smug/brilliant every time I see something go “on sale” new and it’s STILL more expensive than I spent on a used item. Even better when I can’t tell the difference between the new and used item due to the previous owner’s awesomeness.

5) My kids end up turning new toys into “used” toys almost immediately. Why not just save myself the trouble? It pains me less when they batter something I bought used than when they batter something I bought brand new. Although, sometimes I get even more upset because WHEN WILL I EVER GET WEDGE-ITS FOR LESS THAN $1 EVER AGAIN?!

6) My kids don’t really know any better – they are just happy they get toys (and lots of them). Bonus: they don’t realize you can buy the toys at the store – so they never ask me for anything they see in a store.

7) DO YOU KNOW HOW MUCH LEGOS COST BRAND NEW? OMG – it’s the biggest racket EVER. Even used, they are pricey. But let’s just say that I’ve spent about $200 in total on both the BIG and small Legos – and I guarantee for the same price, I would’ve come away with two, small, sad regular Lego sets. (Perhaps a slight exaggeration – but not by much!)

8) In addition, DO YOU KNOW HOW MUCH THOMAS TRAINS COST BRAND NEW??? It’s almost as big a racket as the Lego Conspiracy! I’ve spent about $8-900 used on various train related things since Cookie Monster started to like trains. This same stuff would have cost me several thousand if I purchased brand new. Yes, I realize $900 is A LOT of money already (not all at the same time, thank goodness), but for the same haul brand new? At least $3-4,000. This only makes me feel slightly better.

9) When my children finally are done with the toys and I start selling them, I can most likely sell them at the same price at which I purchased them – and possibly, even more. Granted, that’s likely another ten years down the line, but then I can claim “vintage” status so I can charge even MORE. It won’t hurt nearly as much as if I bought them brand new and I think to myself, “I’m selling these things at 50% off! GAH!! All my MONIES!!!”

Ok. I think you get my point. I buy used to save money and as a nice after thought, to save the environment. Either way, I’m a HERO. A SAVVY HERO!!!

What about you? Do you buy used? Why or why not? Tell me in the comments. 😀

How Am I Going to Send 3+ Kids to College?: Money Series Pt 1

The thought is terrifying from a monetary standpoint. In about twenty years, I will have three children in college AT THE SAME TIME. Talk about poor family planning (from a paying for college standpoint). And if I do end up having four kids, I will have three kids in college for at least 2-3 years IN A ROW. They’re on their own for grad school, man. Geez.

You’ve seen the numbers. From 1985-2011, college costs rose 500%. (I don’t even want to know what it will cost me in fifteen years when Cookie Monster starts college.) As for loans, I suppose I could have my kids take them out, but have you seen the statistics? Plus, all that brouhaha right now about student loans and interest rates and how I know people who are my age who are STILL paying off student loans (both for undergrad and grad school) and how much that hampers them financially.

So what am I to do? If I can help it, I don’t want my kids saddled with debt (at least too much of it). I can’t count on scholarships (especially not athletic) because who knows how smart or hard-working my kids will be? Since my neighborhood is half Indian/Pakistani and half Chinese, I really have no illusions of them being at the top of the pack. (And I’m OK with that. Hapa Papa was nowhere near the top of the pack in high school, went to a state school, and makes SCADS more money than I ever did because he works harder and smarter than I ever wanted to. That’s another post for some other day.)

And no, I’m not going to move to a less competitive neighborhood because really, who doesn’t want their kids surrounded by smart, hard-working kids? If I don’t like my kids’ grades, then they’ll just have to work HARDER, not move to an easier school. (White flight, I’m looking at YOU!)

The only other recourse (in terms of helping my kids with their education costs) is to save aggressively and to save NOW. (Of course, they can also work in high school – and Hapa Papa has big plans for that – and college, too. Those are absolutely on the table!) This is when it totally helps to be a financial advisor (and to have a mother for one as well).

Here is what we are currently doing and hoping to do so in the future. Hopefully, this will help you, but I do realize that I may be in a different financial situation than you and your family so please don’t feel too bad or too smug if you are doing better or worse than we are. There are many ways to pay for school. This is just what I am doing for now.

Disclaimer: I am a financial advisor and own a financial advising firm with my mother. I am not being compensated by any entity or company for the following information. I am ONLY explaining what I do for my own children. If you should so choose to take this advice, please realize that it is not customized nor tailored for your specific situation. I am not dispensing personalized advice for you or your situation. I am not responsible in any way, shape, or form if your investments rise or fall due to market conditions. YMMV. You have been warned.

1) 529 Plans – These are plans that accumulate tax-free and are dispensed tax-free as long as you use them for qualifying higher education costs. The funds remain in our custody and we can switch the beneficiary at any time. (So, if Cookie Monster gets a full ride and doesn’t need this money, then I can transfer the funds to Gamera or Baby3.)

We opened an account for each child as soon as I got their Social Security numbers. I seed it with some money and then contribute about $100/mo per account. I would put more in here, but because it can only be used for higher education costs, I don’t want to put TOO much money in here just in case the kids don’t end up at college or whatever.

2) UGMA/UTMA Accounts – These are just regular savings/investment accounts for my children. I am the custodian but my kids are the ultimate owners when they hit either 18, 21, or 25 (For CA). (I am pretty sure I chose 21.) After that, the money is theirs to do with HOWEVER THEY WISH. Somewhat terrifying, but hopefully, I will have taught my children how to handle their finances well and to make good decisions. I do have to pay taxes on these accounts, but since they’re children, the tax rate is not as horrible.

Any gift cards/checks/cash I received during baby showers, gifts, birthdays, Chinese New Year, etc., I put in here. (In the case of gift cards, I just use the gift card and deposit a corresponding amount into their account.) As with the 529 plan, as soon as I get their Social Security number, I open an UTMA for my kid and deposit a “seed” amount. Then, when they receive money, I put it in their accounts – even if it’s as trivial as a few dollars for a birthday or Chinese New Year. (Usually, I round up and add something on top of it.)

If Hapa Papa gets a bonus at work, or sells some stock grants, or whatever, I will take either all or a portion of it and apply it equally among the kids. If we happen to get a really nice financial gift from family, I do the same. Whatever “extra” money that comes our way, I will always consider putting it in the kids’ accounts. (Unless, for some reason, we need to replenish our emergency fund, our IRA contributions are coming up, or property taxes are coming up, I usually put some in the kids’ accounts.)

Also, any time there is a new baby, I will not only seed money in the new baby’s account, I will also add some money into the older kids’ accounts. Not as much, of course, but some.

3) Aggressively pay down all other debts. That’s pretty self-explanatory. We paid off our mini-van last year ahead of schedule thanks to a stock grant, and we pay extra on our principal for our mortgage every month. Every now and then, we also send in a fat chunk of a bonus or severance or stock grant to pay down the mortgage principal even more. Our goal is to pay off the mortgage before Cookie Monster starts college. We are very lucky that currently, our mortgage is our only debt. This may change if we have to buy a new car later down the road or if we have to get a bigger house when the kids become teenagers.

4) Save aggressively for our retirement. This may seem strange to include as part of the kids’ education savings, but it makes perfect sense to me. The more we save now, due to the time value of money, the less we will have to put away when we’re older and much closer to retirement. In other words, when the kids are in college, we will not have to be scrambling any more than usual to come up with money both for college AND for retirement. The retirement money (barring some horrible economic downturn AGAIN) will already be there.

5) Have the kids work. My parents paid entirely for my education and as a result, I don’t think I took it very seriously. I have been coddled pretty much all my life. Hapa Papa, on the other hand, had some scholarships and worked his way through college without any substantial help from his family. I would like my kids to have something in between.

My current plan is to have the majority of tuition and board as well as some “fun” money for my kids covered. I will give them a monthly stipend and if they run out, they’re out. If they need more money, they can work for it. Also, Hapa Papa is thinking that some day, he’ll start his own consulting firm and farm out work to the kids. He’ll pay them and yes, they can spend some of that money, but a good portion of that will be forced into their college savings account so that they will also pay for their college in that way.

This, of course, is the highly speculative portion of my plan. The kids obviously cannot work now. (Such slackers! Their fellow Chinese kids are making clothes right now! Lazy bastards.) We have no idea if Hapa Papa will ever open up his own shop. We don’t know if college will even be relevant in the future (although, likely yes). But that is our plan for the moment.

I know that we are very fortunate to have so many options. Many folks do not have enough money after necessities to set aside for their kids (let alone for themselves). I would say in terms of priorities, take care of your daily needs first, then emergency funds, then retirement, then kids. No one will give you a loan for the first three, but the last one, there are plenty available.

Again, when I think of all these resources I have available for both myself and my children, I am overwhelmed with gratefulness and guilt and relief. We always want the best for our children – no matter what our circumstances. So I have no doubt that the folks who cannot provide as much for their kids would OF COURSE, do so if their circumstances allowed it. Ultimately, money is important, but there are plenty of children who grew up without a single financial want who have huge holes in their souls due to other unmet needs.

Hrm. Didn’t mean to get all Hallmark on you there. I just know that because of Hapa Papa’s job, we are able to provide much for our family without too much hardship. It isn’t fair; I’m sorry. My only hope is that we can be generous to others as well as ourselves.