JENNIFER L | NET

New Year - 7 in 7

01.26.09 - 11:31pm

It’s a new (lunar) year and although a new year shouldn’t be the only time to set goals, I happened to set a new one yesterday.  

One of the goals I set in 2007 was to visit an international destination at least once a year.  That year, I went to Taiwan, Hong Kong, Shunde, Vietnam, Macau and last year, Hong Kong, Macau, Shunde, Beijing.  Had it not been for the Olympics last year, there wouldn’t have been such an overlap.  Before that, I set a goal to see and photograph the Seven Natural Wonders of the World (though there doesn’t seem to be a consensus on an official list).

Inspired during a recent conversation, my new goal will shake things up a bit yet still fits in with the previous goal:

Seven Continents in Seven Years.

At first this sounds like a daunting goal, but as I thought about it, I might be able to reach my goal in 4-5 years especially with my home continent already checked off and a rough potential plan:

2008 — North America, Asia
2009 — Europe, Australia
2010 — South America
2011+ — Africa, Antartica

My friends and I have been talking about going to Machu Picchu, Peru and I’ve always wanted to see the Egypt and Zimbabwe is on the Seven Natural Wonders list for Victoria Falls.  And last year, visiting Antartica was a topic of discussion… it will be a little more tricky and likely more costly, though.

Now this isn’t about quantity and simply checking off the continents.  With my wanderlust tendencies, I’m also going to try to limit the use of tour operators to only portions of the trips, if I must.  This is about experiencing different parts of the world and wandering off the beaten path… the journey and not the destination.  Now with a concrete plan.  

When I started this travel site, I found a quote that captured what should be the essence of travel and this site: 

“To my mind, the greatest reward and luxury of travel is to be able to experience everyday things as if for the first time, to be in a position in which almost nothing is so familiar it is taken for granted.”

Bill Bryson, The Best American Travel Writing 2000

So I now have 6 years to experience everyday firsts in 5 of 7 continents.  I can’t wait for the journey ahead!

My lifetime progress is 3 of 7 with 15 countries (6%):

world66.com

 

Category: News, Travel | Tags: | Be the First to Comment »

Free Book: 2009 Action Plan for Your Money

01.09.09 - 08:00am

The other day I was browsing some deal sites and found out about a free financial book download coming this week. It’s Suze Orman’s new book, "2009 Action Plan: Keeping Your Money Safe & Sound", offered by Oprah. Along with the free book, Suze offered some advice on the Oprah show as part of the Best Life Series. This is the second Suze Orman book Oprah has made available (the previous, "Women & Money: Owning the Power to Control Your Destiny").

The book includes action plans for credit, retirement investing, saving, spending, real estate, paying for college, and protecting your family. I browsed through the first part of the book and there’s some good advice in there.

You can download the free book here until 1:59 p.m. CT on Thursday, January 15.

You can also register for a live webcast with Suze Orman on Thursday, January 15 9pm/8pm Central.

Since I started watching her show, I recorded her appearance on Oprah with my TiVo to see what she had to say. Her tips…

Credit Card Payment Plan

• Line up your cards from the highest interest rate to the lowest
• Pay the minimum on each card
• Pay any extra money to the card with the highest interest rate
• Once the first card is paid off, roll that money over to the next card
• Continue this system until all cards are paid off

(Though JD from Get Rich Slowly recommends the reverse approach called the Debt Snowball method)

Steps to Improve Your Credit Rating

• Pay more than the minimum payment on each card
• Pay credit card bills on time
• Never go over your credit limit

Spending Action Plan

• Sit down with your expenses and separate ‘WANTS’ from ‘NEEDS’
• Circle all expenses that are ‘WANTS’
• If you have debt or no savigs, eliminate the ‘WANTS’

(Basically know your limits)

Retirement Action Plan

• Don’t panic when the market goes down
• Keep investing monthly in your 401k or IRA
• If you need the money within 5 years, take it out of the stock market

(Yes, don’t panic!)

2009 Action Plan Pledge

• Don’t spend money for one day
• Don’t use your credit card for one week
• Don’t eat at restaurants for one month

(Similar to Ramit/I Will Teach You To Be Rich’s suggestions to Create a “No Spending” day once a week, Go cash-only for 15 to 30 days, and Pack lunches for the rest of the week from his Save $1,000 in 30 Days Challenge)

Category: Books, Investing, Saving, Wealthonomics | Tags: | Be the First to Comment »

$280,000 of Credit Card Debt

01.08.09 - 11:32pm

When I was in college at Cal, I remember there was always a group of people tabling in front of the campus store often at the beginning of the school year. They would try to get your attention with offers of free stuff if you fill out some forms on a clipboard.

They were credit card applications and who knows how many college students were tricked into applying for various credit cards. I was. At that time, I was lured by the free stuff (hey, I’m Chinese) and I thought I only needed to fill out one form, but after the second form and then the third form and so on, I felt like I had already filled out so many, that I should finish. At the time, I had no idea that each application meant an inquiry on my credit report which negatively impacted the credit score. Luckily, that issue wasn’t problematic.

For the people who were tabling, I’m convinced that they got some sort of money for each approved applicant. Plus, many of those applicants probably ended up with significant credit card debt on those cards later.

It wasn’t until a few years ago that I realized that many people (more than I expected) don’t pay off their credit card balances every month, sometimes only paying the minimum amount and financing the rest of their balance at a high percentage interest rate, with rates like 27% now. This was a foreign concept to me because I had learned that paying the credit card bill in full every time was the way it was done; paying less than the full amount due was never an option to consider.

Yet… “the average household now owes $10,678 in credit card debt, up 29% from 2000,” according to a USA Today article from last November.

Recently, I started watching The Suze Orman Show (she’s got an interesting unique personality, at least on TV) and the other day, she had a guest named Dawn on the show, though it was rerun. Dawn was in financial trouble with $230,000(!) of credit card debt, car loan debt for two luxury cars, and $900,000 mortgage debt and turned to Suze Orman for help. The woman gave a video tour of her Southern California home and had two(!) flat screen TVs in her backyard which also has a pool plus many other additions to their home paid for by credit cards. They were bringing home $9,000 a month, but had $19,000 in monthly expenses. The husband wanted to file for bankruptcy to try to get back on track. Suze recommended that they sell their home immediately (with most of their belongings in it) and do short sale if possible, then with their 7 year old daughter rent a modest apartment and start over with just the things they really need.

Dawn was unwilling to take Suze’s advice because she didn’t want to give up her current lavish lifestyle. She couldn’t grasp the concept that they didn’t own all those material possessions and that they were borrowed from creditors. In the end, Suze didn’t know what else to say… she was left speechless. I just couldn’t believe the situation.

And when I thought $230,000 of credit card debt was unbelievable, there’s a woman with $280,000 in credit card debt, though some of the debt came from medical bills she didn’t anticipate.

It seems a lot of Americans are having a problem with buying things they can’t afford and knowing their limits. If only they followed this:

Category: Behavior, Wealthonomics | Tags: | 1 Comment »

2009 is Better for Gym Rats

01.03.09 - 11:15pm

I was having some friends over for New Year’s Eve and some of them were saying how they and their friends who regularly go to the gym hate the new year because the gym is crowded the first couple weeks of the new year thanks to the ever popular resolution of exercising more. Then as motivation dwindles, the gym reverts back to normal the rest of the year.

However, I just saw a local news story about how the gyms aren’t as busy as expected the first days of 2009 and talking to someone who went to the gym today, he thought it wasn’t as crowded as expected, just a normal Saturday.

Just like the tanking of the stock market, gym memberships and plastic surgery have taken a hit:

“Gym memberships, which average $35 per month, fell last year [2007] for the first time in more than a decade to 41.5 million from 42.7 million in 2006.”
—International Health Racquet & Sportsclub Association

So with the decline in memberships because people have already cut the gym as a luxury, even with the surge effects of hopeful resolutions in January, the gym doesn’t look as crowded as previous Januarys.

Also, most people overspend on the gym according to a UC Berkeley and Stanford study of three US health clubs in New England with about 8000 members over a three year period (also referred to in the NY Times):

“Members who choose a contract with a flat monthly fee of over $70 attend on average 4.8 times per month. They pay a price per expected visit of more than $17, even though a $10-per-visit fee is also available. On average, these users forgo savings of $700 during their membership [of $1,500 in costs].”

“…health club users overestimate their future usage by more than 100% percent.”

Gyms make their profit by expecting a drop-out rate (just like most subscription models) which happens around 30 days and slows down at 90 days with about a 20-30% average drop-out rate. For most, it’s actually better to pay as you go. Ramit with iwillteachyoutoberich.com calls it the A La Carte Method.

Check out the annual free National Body Challenge which comes with a 30-day Bally Fitness trial membership (though Bally filed for bankruptcy last month). Costco also has a 24 hour fitness 2 year membership deal for those who are ready to be a gym rat… or at least believe they are ready.

Category: Behavior, Saving, Wealthonomics | Tags: | Be the First to Comment »

Men and their Trophy Mates and Happy Partners

12.28.08 - 11:52pm

Finding more use out of my old iPod mini, I started listening to The Wall Street Journal This Morning podcasts on my drive to work.

Recently, they mentioned that the spending habits of men are related to their dating behavior based on findings from a research study from the University of Michigan. There’s also a WSJ blog article about it:

Men who have a greater tendency to maximize their display of economic power (even if this means racking up credit card debt to do it) score relatively higher in mating effort. Punchline: those who show more bling have more partners in the short run, but the savers tend to do better when it comes to marital bliss.

Also, “financial consumption was the only factor that predicted how many partners men wanted in the next five years” and there was some correlation between men’s financial strategies and their relationships.

The 25 percent of men with the most conservative financial strategies had an average of three partners in the past five years and desired an average of just one in the next five years. The 2 percent of men with the riskiest financial strategies had double those numbers.

So the male spenders typically get the looks, while the savers get the happiness. As for the females, they apparently don’t follow the rule. We’re still confusing and unpredictable.

Category: Behavior, Saving, Spending, Wealthonomics | Tags: | Be the First to Comment »

The Most Important Part of the Portfolio

12.24.08 - 11:12am

This past weekend, I chatted with two friends who took a financial economics class with me at Cal for one of our upper division electives. We spent a short amount of time reminiscing about our Econ days and studying together for Econ exams.

From that financial economics class (Econ 136), the two practical terms I remember the most were risk aversion and diversification. The description for the course (from the Course Catalog):

Analysis of financial assets and institutions. The course emphasizes modern asset valuation theory and the role of financial intermediaries, and their regulation, in the financial system.

A few weeks ago, I happened to browse through my old course textbook Investments, 4th edition by Bodie, Kane, and Marcus (the class is still using the same book, but a more updated version).

Chapter Twenty-Six — The Process of Portfolio Management — has some useful points, but they didn’t seem familiar from the class until I realized that according to the syllabus, we never covered it. We did play the stock market with fake money, though.

In a nutshell, the important considerations for a portfolio are the goals and restrictions:

Objectives	Constraints	Policies
Return requirements Risk tolerance	Liquidity Horizon Regulations Taxes Unique needs	Asset allocation Diversification Risk positioning Tax positioning Income generation

Table 26.1 Determination of Portfolio Policies, p811.

Which determines the strategy:

The first step is to determine the investor’s objectives. The second step is to identify all the constraints, this is, the qualifications and requirements of the resultant portfolio. Finally, the objectives and constraints must be translated into investment policies. … Objectives and constraints are greatly affected by the investor’s stage in the life cycle.
—p810

The most important part of the strategy is figuring out the asset allocation:

By far the most important part of policy determination is asset allocation, that is deciding how much of the portfolio to invest in each major asset category.
—p817

So that’s what academia advises investors, though often in reality that’s not what happens.

Category: Books, Investing, Wealthonomics | Tags: | 3 Comments »

Friends of the Public Library

11.28.08 - 05:45pm

Not too long ago, there was a story in local TV news about how people were turning to second hand clothing shops like Crossroads and the Berkeley Public Library to save money given the current state of the economy. Theory says it’s expected that as people have less spending cash, they turn towards alternative cheaper items. I don’t know if I believe the Lipstick Indicator, though.

As for me, there were two books I was interested in reading and had planned to buy them from Amazon, generally the best place to buy books next to Costco (if they carry the book), but I never got around to purchasing them. I decided to check the San Francisco Public Library’s online catalog and sure enough, the two books I wanted were available at a nearby branch library. Apparently, it’s been over four years since I last went to the library because I was no longer in the system and had to get a new library card.

The other day, my friends came over to watch the Big Game and I was telling one friend, who has been reading a whole lot of political books from the public library, that I had also just got a new library card and before we knew it, two of my friends were showing us their new library cards with imprinted art designed by local children.

The public library also has items beyond books like the wide range of current magazines you can browse at the branch, or issues from previous months for checkout. You can often find recent DVDs to check out like 522 of the DVD/VCDs released this year including TV Season DVDs in San Francisco. And if you’re a Berkeley resident, the Berkeley Public Library has 1188 tools in their catalog (yes, physical tools). Sadly, access to the famous Rosetta Stone language learning software was discontinued at the Palo Alto Public Library (no residency requirement there).

Aside from the other items, useful conveniences include requesting that a particular book be sent to your local branch from another branch library and returning the book at any branch in the system.

I was reminded that the library is a great way to save money from books or items you may read/view/use only once and on top of that, it’s also environmentally friendly and space saving. There are some books on my bookshelf I should have borrowed instead of purchased.

Look into becoming a friend of your public library, if you haven’t yet.

Category: Saving, Wealthonomics | Tags: | Be the First to Comment »

The Emotional Investor

11.24.08 - 11:09pm

I was recently talking to a financial advisor at Charles Schwab with a relative and he showed us the emotional stages of an investor:

Image: Charles Schwab

He mentioned that currently, the majority of investors fall in between the panic stage (where small investors dump their holdings) and the capitulation stage (where large investors e.g. funds dump their holdings). He went on to say that the next two stages before the upswing could take 10 years each and no one knows because you can’t time the market.

What’s true, however, is if you pull out now, you lock in the high percentage loss likely forever. For someone who’s close to retirement age, their panic mostly comes from never getting to the hope stage before needing the money.

When I was in New York for the first time, I took a stroll down Wall St. and took photos (as you can see from the banner of this site). I found the bull, but not the bear. People told me it was around somewhere, but I just couldn’t find it. I hope we pass it soon. Luckily, I still have 30 years.

Category: Investing, Wealthonomics | Tags: | 2 Comments »