Money Reasons

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Archive for January, 2011

MR Review 2011, Jan 16 – Overwhelmed

January 16th, 2011

Overwhelmed:

It seems like in the process of re-inventing myself, I’m constantly running ragged. Everything is new, both in a good and bad ways. A big accomplishment is I got my haircut! After my barber died, I created a mental block where I just kept pushing off the task until later and later.

Working out has already had benefit in my health. My strength has come back quickly and I feel a bit better already. I still need to start my new diet though.

Overall, I’m a bit overwhelmed but also excited…

My Favorite Reads of the Week:

101 Centavos: HSE: Health, Safety and Environmental – Safe Work Practices in The Home – Info on proper safety practices, and really cool pictures of ingenious workers from poorer countries and their methods to be safe on the job.

My Journey To Millions: What Does it Mean When an ETF Jumps the Track - The Fonz would be proud if you check this article out! I know I learn what “Jumps the Track” means, not to mention “Jumping the Shark”…

Budgeting In The Fun Stuff: The Best Financial Advice I Ever Received – Sounds like BIFS’s dad knows what he is talking about!!! I wish my family had given the same advice to me! Luckily, I didn’t want to pass up that free money so I started out jumping into my company 401k’s plan too!

Everyday Tips and Thoughts: The Snowball of Savings and Health Benefits From Eliminating Pop/Soda - Kris is giving up pop/soda entirely! I’ve don’t drink pop at work anymore, but I still drink diet pop on the weekends. So kudos to Kris for cutting the sugar juice out entirely.

First Gen American: 6 Month Blogaversery - Congratulations to Sandy on her 1st 6 months of blogging!!! She has a truly wonderful site!

Momvesting: True Savings - I agree with Jessica, why buy stuff just because it’s on sale! If you’ve never thought about buy something at normal prices, why buy it now?

Financial Samurai: Should I Have Closed My Credit Cards? - Sam brings out concerns to closing out a credit card account.

Watson Inc.: The Fall Of The American Democracy! - Shawn point out a great reason why I promote asset diversification, possible buying precious metals in my post: ”Does Money Have Value?“. Maybe even buy some foreign currency… It couldn’t hurt to have diversified assets. Check out Shawn’s article, he brings up some great points!

Hope everbody has had a great 1st two weeks of the year, other than the flat I got yesterday… It’s been a good start.

-MR

13 comments »

Posted in Weekly Review

Tags: pf weekly links

Pride In Your Work

January 15th, 2011

There is a certain beauty in having pride in your work, and having the ability to see it through, even when things go badly.

My brother-in-lawand his wife recently had a baby, and we were going to go see them, but the hospital had a rule about kids under 11 not allowed in to see the baby.

So I stayed home and watched the kids while my wife went. When she got back, I expected to hear a story about how cute the baby was, but instead she told me how impressed she was with the security guard.

Apparently, he was friendly towards people who were asking him questions, and instead of being stoic and reserved, he was open and helpful… even though directing people wasn’t part of his job. My wife said he helped her by explaining where to find the room she was looking for and was all around courteous.

I bring this to light because lately I’ve become a fan of people who do their job very well. In the security guard’s case, he was helping people in ways that wasn’t even really his job!

I would even go so far as to say that there is something to be admired when a person that is doing a simple or unglamorous job extremely well! I know a girl (literally a girl), that works at an taco bell drive thru that shows these characteristics. Whenever you drive through, her entire face lights up and she become such a positive force, you can’t really leave not feeling better about the entire day. Most teenagers cope an attitude and are stoic if not rude, so seeing such a person as the Taco Bell girl is like find a $100 bill in the parking lot.

People like the 2 examples above are amazing!

The attached video is another great example of a small girl doing her job/task extremely well. The girl singing does such a great job singing the national anthem, that even though the speaker system give out, she continues. Amazingly, people join in on the song to complete it! I think they join in to support the girl because she was doing such an amazing job that it touched them!

Ironically, after the speaker system goes out 1 person does laugh at first, so maybe the others people singing tried to counteract the one rude persons laugh. It’s amazing how some people when in the presence of beauty, only find defects to point out… I feel sad for them…

-MR

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Posted in Beliefs

Tags: job job pride work pride

It’s About More Than the Money (Book Review)

January 14th, 2011

The book: “It’s About More Than the Money” is written by a Saly A. Glassman who is a Senior Vice President at a major financial institution in the Wealth Management area.

This book is a bit different the standard run of the mill financial book, so I decided to review it differently. Instead of a chapter per chapter analysis of the book, I’m just going to tell you what impressed me the most!

Reading this book, it was obvious that the book was written for wealthier investors. In fact, I would guess that the target segment is the top 10% of the population with respect to net worth.

What impressed me was some of the thought involved in her writing technique! She start with a great comparison of the way we make money. She states that as we are younger we derive most of our money from human capital then later we hopefully make most of our money from financial capital.

Her approach to money is very rational and logical. She has one of the best approaches towards determining your investing risk that I have read to date.

A major point in her book is to striking what I would call a holistic balance toward life and money. In such an approach, she advocates health, responsibility and discipline.

This is a book that I’ll probably end up reading again some day in the future when I have more financial investments and assets.

The only part that I wasn’t so keen on in the book was the pushing of getting an financial advisor scattered throughout many of the book chapters. But if I were in the top 5% or 10 % of the population with respect to wealth, even that element would be good advice.

So would I buy this book? Yes, but only if you expect to have a net worth in the upper 10% of the population someday. For me, I’m not at that level yet, but I hope to someday be in that scenario, so I personally would recommend this book to someone who as similar aspirations. So if you are at least in the top 40% of the population with respect to net worth, I believe you may find that this book is worth reading!

If you think this book may be of some interest to you, click the amazon link below and read some of the other reviews listed on Amazon’s site.

Thanks for reading my review on this unique and original book!

-MR

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Posted in Weekly Review

Tags: book review

Paying Allowances From Dividend Stocks

January 13th, 2011

Paying Allowances From Dividend Stocks:

First let me start by saying that I wish I had thought of this 10+ years ago! The following is an idea that I would have liked to pursue for my kids, and while it’s still possible, the upfront investment for such a dividend stream is a bit steep for me right now. So instead, I will introduce the idea to see if others may find value in such simple idea.

What I wish I would have done was buy some solid, reliable dividend stocks each year and have the dividend payout from the stock go to my kids as an allowance instead of me paying for their allowance out of my wallet each and every week. Of course, the earlier years of the dividend payout would go directly back into the dividend paying stock during the ages when the child was too young to receive such an allowance.

I might even have the kids receive the payout once a quarter, just to get them use to quarterly payouts instead of weekly ones.

The following chart calculation is a very simplified table that will give a ballpark number.


			Div Payout	Div Interest
Year 1	Contribs.	Principle	Percent	Amount
1	1200	$1,200	0.05	$60
2	1200	$2,460	0.05	$123
3	1200	$3,783	0.05	$189
4	1200	$5,172	0.05	$259
5	1200	$6,631	0.05	$332
6	1200	$8,162	0.05	$408
7	1200	$9,770	0.05	$489
8	1200	$11,459	0.05	$573
9	1200	$13,232	0.05	$662
10	1200	$15,093	0.05	$755

				52
				$14.51

So using the table above, the payout in a childs 10th year could be $14 dollar based on a 5% dividend payout rate. The table above doesn’t take into account taxes, so the actual dividend payout will be a bit lower that the number suggested in the table, but not enough to discount the value of the information!

Yet Another Stealth Emergency Fund:

Recently, I wrote about my stealth emergency fund, and these stocks could be used as yet another form of an emergency fund. Would I be tempted to use these dividend stocks for an emergency first? No, only after the regular savings from an emergency fund has been depleted would I consider these stocks. That said, it’s still definitely a consideration!

Conclusion:

I was considering trying this idea, but after writing about it, I think I may have missed the boat on the implementation of this concept. It would have be easier to implement the idea earlier while your kids are very young! So while I really like this idea, I will put my money in dividend yielding stock for other purposes than and allowance fund. If I have the other ideas fully funded, I make come back to this one and give it a try.

Have you consider creating such an idea for your kid allowance needs? It’s kind of a win-win if you think about it. You get to pay your kids an allowance, and at the same time you have a portfolio of dividend stocks that may continue to grow!

-MR

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22 comments »

Posted in Investments

Tags: dividend stocks kid allowances

Dividend Stocks, Free Lunch Experiment #7

January 12th, 2011

Dividend Stocks, Lunch Experiment Update:

Dividend Experiment Update #7

This month, capital appreciation in the value of the stocks in the experiment has overall risen because of EV Energy (EVEP). Ironically, EVEP is also the stock that I bought the least amount of. Surprisingly, the market value of EV Energy has just surpassed the market value of ANH. This is surprising because ANH cost me double the amount as EVEP did. In fact, the share price of EVEP is starting to worry me a bit; it’s starting to look frothy so I’ll probably review the financial stats to make sure it’s still solid and not overbought.

The other two stocks in the experiment have remained close to the market values that they were last month.

Background:

The Free Lunch Experiment, which invests in dividend stocks so that I can use the yield to pay for my weekly lunches, is my first true experiment here at MoneyReasons.com and was started with the article called: “Paying An Adult Allowance, A Lunch Experiment”. As explained in the article link in the preceding sentence, the money used in this experiment is free money because I would have spent it on eating lunch out with friends at work anyway (and yes my friends still go out everyday). This means that if I were to lose all the money in this experiment tomorrow (very unlikely), I would really be out nothing!

By having free money fund this experiment, I’m able to take additional risks that I normal wouldn’t consider.

In some perverse way, one could consider the experiment money a form of emergency money, but I prefer not to make that claim…


Stock Name	Anworth	EV Energy	Chimera
Stock Ticket	ANH	EVEP	CIM
# of Shares	260	45	600
Orig. Price	$7.84	$23.25	$4.01
Curr. Price	$6.95	$42.33	$4.07
Orig Cost	$2,038.14	$1,046.25	$2,404.80
Curr Value	$1,807.00	$1,904.85	$2,442.00
Annual Yield	13.24%	7.15%	17.69%
Actual Dividend	$59.80	$34.07	$108.00
		Total Dividends	$807.48
		52 weeks	52
		Dividend / week	$15.53

		Total Gain in
		Stock Apprec.	$664.66

		% Change	12.11%


		Amt Loaned to myself:	$1,726
		Amt paid back to date:	$1,299
		Amt Still Owned:	$427

Priming the Pump:

While the money involved in this experiment is technically free money, to expedite the stock purchase funding I’ve borrowed money from my checking account a few times just to speed up the process (thus priming the pump so to speak). Of course I paid myself back too though. Currently, I still owe myself $427.

Evolution of the Experiment:

Now that the experiment is established and generating a decent dividend stream, after I pay off my loan to myself in mid-March 2011, I may cut back on the amount that I borrow from my checking account or not borrow any more from myself at all. This would mean that I would just save the money by not eating out first, then purchase additional stock after I save up enough to make a decent buy. I many use some of my dividend money to help purchase future shares too.

Hopefully, by the next monthly update I’ll be able to provide more details about the specific of the future changes to this experiment.

-MR

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