August Budget / Goals Round-Up

In August I went over my budget by $15. What hurt me were mainly gifts for others, so I’m kind of okay with that. I filled up the Guy’s tank and bought gas for some friends when they took us up north to their cabin for a weekend and bought some gifts for friends who are writing business school recommendations for me. Otherwise, it was the usual suspects – I went $75 over my clothing budget and way over on expensive dinners with the Guy.

Oops, plus I didn’t even count the fact that I finally booked my flight to ARGENTINA! Which was actually quite a steal at $1100. We’re leaving mid- November so it will be late Spring there. Any recommendations for the following cities: Buenos Aires and Mendoza, Argentina; Colonia, Uruguay; Santiago, Chile? Any and all will be appreciated. The plan is to see the sights in BA, do the wine region for a bit of indulgence mid-trip and then do some hiking and outdoorsy stuff in between Mendoza and Chile to wrap up.

Oh, we also have half a day in Miami on the way down. Anyone save the last 36hrs in Miami column or have cheapish recommendations for what to do besides South Beach?

August Read/Bought Review

I bought no books this month! Although I’ve been very tempted by How Fiction Works, written by a former professor of mine, and I was given this book as a gift at my company: Team of Rivals: The Political Genius of Abraham Lincoln, which is 944 Pages long, and which will take me some time to even develop enough interest to peruse the introduction.

I did read three from my own bookshelf:

How Soccer Explains the World (An Unlikely theory of globalization) by Franklin Foer –If Foer had titled his book differently (perhaps “Soccer Teams I Like and Random Observations about their Country of Play” or “On Hooliganism”), I might have liked it better. As it is, soccer doesn’t explain anything. Rather soccer hooligans, are affected by the same world factors as international businessmen and politicians. Yet they resort to horrific gang violence.

Bel Canto by Ann Patchet – A mesmerizing, truly lyrical book. I was entranced. I haven't read a piece of fiction this good in awhile. This is also a book I would recommend to someone who doesn’t read a lot of fiction. It’s just that penetrating, and it’s a good story that happens to also have beautiful prose.

Gilead by Marilynne Robinson – This book finally got enough book club action among my acquaintances that I finally had to pull it off my unread bookshelf. I recently committed – like The Writer’s Coin – to read only the books I own before buying any new ones, and I separated everything into separate bookshelves to help me track my progress.

Blogging Hiatus.

I'm taking a bit of a hiatus from blogging as you can see... but for a good reason... working on my b-school essays.

Status...
Stanford: 3 of 4 essay drafts complete
Harvard: 1 of 4 essay drafts complete
Columbia: 0 of 3 essay drafts complete

Deadlines... 44 days away.

Financial "Attribution Error"

As mentioned previously, I recently went through some training at work through HR, and we spent a good deal of time talking about attribution error. This is the very human mistake we make when we are more permissive of our own behaviors and actions than we are of others. For instance, if I’m late to work, it’s because of the traffic that I ran into – completely out of my control! But if Jane is late to work, it’s because she’s careless and didn’t plan ahead. In other words, [from Wikipedia, people have an unjustified tendency to assume that a person's actions depend on what "kind" of person that person is rather than on the social and environmental forces influencing the person.]
I’ve heard a lot of people talk about the self-righteousness of some personal finance bloggers, and I think the idea of attribution error plays a definite role. I can more easily rationalize my spending habits or my “wants” vs. “needs,” and it’s a lot easier for me to “be objective” about others financial decisions. In reality, this objectivity might be more plainly called misjudgment as it’s probably not taking in all of the external factors you would if you were evaluating yourself.

Financial Definitions: Funds = FUN.

Considering that I’m headed to business school in the next few years, I feel I should be doing the baseline self-education to figure out the finance and investment-related lingo that I’m frankly less interested in studying, but want to be able to navigate as a student and investor someday. This is a post I admit to being self-conscious about since half my graduated classmates have jobs at hedge funds and i-banks and have far more sophisticated knowledge than I, lowly bookish English major. These definitions below start broad and go specific.

exchange-traded-funds: investment vehicles traded like stocks, a fund is roughly the net value of all the assets included in the fund; most funds track to a certain index, like the S&P500
actively-managed exchange-traded-funds: in this type of fund, an investor can actively manage the assets within it, they can focus on market inefficiencies, and try to find the value assets versus passively tracking to an index in which the fund would likely be holding a mix of growth and value stocks
mutual funds / open-end funds: a collective investment of assets, equity funds are the most common type; in the US they are open end funds, which means they can issue and redeem shares at any time; most of these funds are actively managed
closed-end funds: collective investment with only a limited number of shares
hedge funds: a private, largely unregulated pool of capital; charges both a performance fee and a management fee; I’m not going to pretend to understand why yet, but because of exemptions that don’t apply to mutual or other funds, hedge funds can typically invest in more complicated, risky investments than a public fund can (like short selling, futures, swaps and other forms of leverage)

Because it's Friday...

Just for fun... I always love the Forbes lists...this week it's:

The Top Five Highest-Paid Female CEOs:
1) Indra Nooyi at Pepsi – $12.7 Million
2) Andrea Jung at Avon – $12 MM
3) Anne Mulcahy at Xerox – $11 MM
4) Susan Ivey at Reynolds America – $7.2 MM
5) Christina Gold at Western Union – $5.7 Million

I've been doing a lot of thinking about my career vision (business school essays, woo!) and I can't really imagine making that list with what I have in mind. I can see myself running a smaller organization, with a brand I'm passionate about - or even creating a company. But nothing quite that big.

What Matters Most

On one of my business school applications for a particularly prominent west coast school, there is a notorious annual question that every potential student must answer: What matters most to you and why? This is an open-ended question with no word limit. Write what you want and for as long as you want. I have struggled with the question for several weeks now. I have to say my writing. My writing is what matters. The only thing I know I’ll be doing when I’m eighty years old. But articulating why that is… and the transcendence and the joy in it… has been overwhelmingly difficult. I am looking for inspiration from anyone and everywhere – if you’re a writer, why does it matter to you? How do you explain why you do what you do to other people?

Expense Tracking Enlightenment

Whew, I’ve been behind on posting due to some travel (stayed in a cabin and went fishing up north in Minnesota: so not me but really fun!) and some training at work (on influencing people and innovation). So far, just a headline that I’m participating in Poorer than You’s Know-Where-the-Money-Goes Challenge for the month of August. Barely halfway there, and I’ve been surprised at how enlightening and non-invasive the tracking process has been. As minor as it seems, it helped me to start on August 1. Psychologically, it’s been an issue for me when I’ve tried to track spending before – where to begin? The spending is a constantly flowing stream. I highly recommend trying it for a month, and if it helps you, starting on the first day of the month. It has kept me feeling a lot more aware and cognizant of how I’m spending.
It’s definitely been enlightening to some bad behaviors (Wow, two days in, I had spent two-weeks-worth of my eating-out allocation) and helped instill some good behaviors (Day 3, I declined a morning brunch with friends that I normally would have tagged along on unthinkingly spending another $20 on eggs and toast that I could have made for free at home). I’ve also been spending more deliberately, and prioritizing as I go. Hopefully this is the month that I WIN on my budget. And I need it to fund that travel budget – my trip is at the end of November!

Obama vs. McCain on the Economy

My vote is already decided, but I was really happy to find this clear article from Forbes on the economic policies of the two presidential candidates. It’s a good read with some quotes from Obama’s main economic advisor, but I’ve summarized the highlights below:

Corporate Taxes
- John McCain has proposed lowering the maximum corporate tax rate from 35 to 25%.
- Obama has also proposed to lower the corporate tax rate, though he hasn’t announced how sharply. Also, he’ll go about it in a different way. His plan is to clean up the tax code which taxes company differently based on various factors (whether or not the company is financed through debt or equity for example).

On the National Debt
- Obama’s plans will send the national debt to 3.4 Trillion by 2018.
- John McCain will send the national debt to 5 Trillion by 2018.

Tax Increases & Reforms
- Obama is proposing a payroll tax surcharge on people earning more than $250,000 annually, a dividend tax rate of between 20-28%, an income tax exclusion for seniors making less than $50,000, and an increase in the maximum capital gains taxes from 15 to 25%
- John McCain: no new taxes, (maybe?)

Oh, and I couldn't resist: Paris Hilton's response to the McCain attack ad on Obama.

What It Feels Like...

The Guy gets a lot - I mean, a lot of magazines. And I've found myself going through them mindlessly on more than one occasion when he is puttering around getting ready in the morning. And I've found I really like the section in Esquire Magazine called “What it Feels Like.” Whereas Esquire might post on “What it Feels like to Pose for a Nude Photo” or “What it Feels like to Hit a Walk-Off Grand Slam” I would really like to host the personal finance edition. What it Feels like to pay off $10,000 in Credit Card Debt or What it Feels like to Miss out on an Experience because you were being too Frugal or What it Feels like to Finally Cash in on the Goal you’ve been saving for.

So I’m looking for guest bloggers to write about one of these topics – check in with me in the comments if you’d like to be featured in the new section! I’ll report back with the full list of topics to watch for.

Not Proud...

My parents just used their airline miles to get me a ticket to come home for Thanksgiving... and Christmas. I'm not exactly proud of that, but given how high flight prices have rocketed up, this is saving me $1,000! I'm secretly PSYCHED. (Sidebar: my mother works for one of the airlines and my parents can fly standby for free all the time, so they would rarely ever use the miles for themselves. I still don't feel proud doing the parental mooch at 24).

Financial Definitions: (Sort of) Current Events Edition

I’m a little late on the game with this one, so this is admittedly more for myself, but I wanted to sort through some of the terms that are helping me not glaze over at most headlines these days…Embarrassed to admit I didn't know the meaning of these terms BEFORE they became passe in the mouths of CNN anchors...

Core Inflation: a measure of inflation that excludes certain items that face volatile price movements (right now that would be energy/oil and food prices)
Headline Inflation: a measure of total inflation – it’s all in there, so might not be as accurate a figure of long-term inflation, although the WSJ’s Real Time Economics blog begs to differ and elsewhere the paper notes Bernanke’s increasing swap with core inflation
Fixed Rate Mortgage: locks in one rate for a fixed period of time (usually 30 years)
Adjustable Rate Mortgage: locks in a rate for a shorter period of time (usually 3 to 5 years), when the rate will adjust
“Securitization” of Loans: A lender groups together a package of various individual loans and sells them to another investor; All the risk is still there, but less transparent
“Subprime” Borrower: a borrower with a riskier profile

Credit Cards the new "Big Oil"?

Unreal. This article was in my inbox this morning from Marketing Daily: Can Credit Card Brands Weather Debt’s Image Problem? Wow, debt has an image problem? Apparently debt needs a makeover and some shiny new trainers. While of course I think it would be a boon to consumer lifestyles to observe a little more thrift, if American Express and Visa begin to be vilified along the same lines as Big Oil, we’ll be missing the point. It’s our spending that has us held over a barrel to the plastic, not the MasterCard priceless ads. The article bemoans a resurgence of cash, but is doubtful it will occur:

“Besides, unlike smoking and other personal habits that have fallen out of fashion, plastic is a little confusing--no one standing behind you at the Cineplex knows if you are financially intact and using a debit card as an electronic convenience, or a reckless spender juggling balances on eight cards. She doesn't expect much of a change in consumer behavior, although many advocates recommend using cash as a way to regain a sense of control over spending. "We've gone too far in the way of plastic-people perceive credit cards as safer, more convenient," she says. "I doubt cash will make a comeback."

Part-Time Professionals

I recently found out about two really great opportunities for professionals not in the workforce to find flexible part-time work they’re qualified for. (My company actually employs a similar group – but for retirees, which is how I caught wind of the industry.) The two are below:

MomCorps is a company what provides companies direct access to previously untapped segment of exceptional talent – professional women who have opted out of the workforce to care for children. Flexible Executives offers companies qualified candidates for project-based work at discounted rates. Companies can secure top talent for economical rates and professional women can choose stimulating work on their terms and timelines. If you happen to find yourself out of the workforce for a myriad of reasons, kind of nice to tuck away in your for-reference folder…