About sixteen years ago, I met him for the first time. My trainwreck sibling brought home this adorable puppy he had no business adopting because he had not one thing in his life that wasn’t a mess. I was furious at my sibling – he didn’t even take care of himself, how could he drag
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September 18, 2008
An acquaintance of mine is planning a trip to Australia this winter. The cost of the business class ticket?
$18,546
*gasping for air*
A coach class ticket for that self-same flight booked in June went for about $4000. That’s … that’s … I think my brain is broken.
People … who … how? I actually can’t even form a coherent thought about this.
Yes, it’s a business trip and the cost of the ticket will be paid for by someone else. My entire system is still outraged by the notion.
An exercise in thinking like you’re rich.
I had a financial conversation with a colleague recently. ’twas random, we don’t usually talk money. He was on his way to open a new account over at Wells Fargo so that he could move his money out of WAMU, and I dismissively joked that as long as he had less than $100k in there, he’d be fine. Stressed, he said that he DID have more than that in there.
Yipes! I immediately, reflexively, scolded him, and then asked, “why Wells?” After all, they’re the one bank I remember as consistently charging the most and highest fees of all the major banks. It turns out, he says, they’re one of the few banks doing relatively well.
We chatted for some time about banks, online and B&M, and I had a hard time believing that he knew nothing about online banks. He’s understandably nervous, since he apparently isn’t very financially involved, so he just wants protection for his money. I can understand wanting to protect yourself, but I cautioned him not to settle for the first thing that seems safe just because he’s desperate for safety. Also, that’s what causes bank runs!
I advised him to look at INGDirect, Emigrant Direct, HSBC Direct, and FBNO Direct to get an idea of what kinds of online banks and services are available to him.
He wanted to know how I know that ING is safe. Well, darlin’, no bank is ironclad safe, but I don’t see any evidence that ING was offering the kinds of creative, “exotic” mortgages that all the big (B&M) boys were. At least it appears they didn’t participate in the bad-debt-generating feeding frenzy, so we know that’s good. Their primary business seems to be savings vehicles like their Electric Orange and savings accounts, CDs, and basic mortgages.
After we hung up, I realized: what am I doing giving somewhat superficial financial advice to someone has actual money to worry about? My net worth is less than his small change in the bank! Good grief.
I know he started picking my brains, but I felt a tad irresponsible for not assessing the situation more properly, asking more questions, and working with some actual data before making suggestions. Who’s to say I’m ready to play with big boys’ money?
All of that got me thinking: What DO you do when you have that kind of money (in the six figures)? What should you do if you had upwards of $100k in cash at the bank? I wouldn’t imagine that it would all be cash sitting in a savings account, right? My immediate reaction would be that some of it should be locked up in some high-interest bearing CDs, and a certain amount would have to stay in liquid cash savings accounts, but what about the rest of it?
The main goals would be 1) maximizing interest earnings while 2) keeping the money as safe as possible. Both conditions would have to be fulfilled when picking banks. Part of keeping that money safe is diversifying banks so that if one fails, I still have access to money at another one that is (I hope!) still functioning. Another part of that is making sure that all assets are insured by the FDIC: this means keeping the balances below the 100k limit. Theoretically, this isn’t playing-with-stocks-money, this is all savings.
If you had $150,000 in cash, how would you divvy it up and where would it go?
I’d keep $30K in savings accounts, at ING, for emergencies. Next, ING has an 18-month CD at 4.5% APY so I’d take them up on that for $50k, leaving myself a $20k FDIC cushion. After that? I’m not sure. Another $50 would probably be stashed at ED, at 3% APY. That leaves me with $20k. Without doing more research, I’d be tempted to leave the remaining $20k at Emigrant, but I still don’t have a regular B&M in this plan. So I could leave most of that $20k at ED, and a few thousand in a checking account like my Citibank account for paying bills.
I would also consider the Charles Schwab Bank which seems to have solid financial footing right now, and very little credit losses.
If I wasn’t certain about the amounts I already had in the banks, if I wasn’t just-now divvying up and depositing my money which is a more likely scenario than suddenly finding a sack of hundreds of thousands of dollars, I would use EDIE the Electronic Deposit Insurance Estimator to determine how much I had in FDIC covered banks, and make my moves accordingly.
Whew! There’s a whole lot of work involved in managing wealth. I guess it might be true what they say: the more money you have, the more time you have to spend thinking about it. Or at least, you definitely have to have a plan if you want to protect that hard-earned money.
What if you had $150k? $200k? $250k?
Shenanigans!
The work computer and iPhone officially hate each other. If it’s not a failed Sync, it’s a failed backup. If it’s neither of those, iTunes refuses to acknowledge that iPhone is plugged in. If it deigns to acknowledge iPhone long enough to perform any sort of task, it’s sure to kick the phone out of its digital system the second I turn my back. Before it does that, though, it wipes out all my alarms and music so I’m stuck without music and don’t know my alarm won’t go off in the morning.
This feels like trying to get two belligerent three-year-olds to cooperate without smearing peanut butter all over the walls, in their shoes and hair, and anything else they can reach.
Or is it just me?
September 17, 2008
Inordinately proud of myself for keeping up with the insanity of working 60 hour weeks, organizing, shenanigans, budgeting. I almost started complaining there weren’t enough hours in the day, but caught myself in time: if there were more hours and I worked them too, I’d probably pass out. As it is …..
Managed to squeeze in a gift delivery, grocery shopping, prepped two more sets of files for the next stage of scanathon, dinner and a shower before collapsing last night. I did NOT squeeze in time for a short workout, so I’m bumping that to today’s list. Oooh, I even mostly composed my thank you note in Italian, finally, (the Italian still needs a lot of work) and started scribbling ideas for posts. Yes, I’m patting myself on the back for a productive day.
Back to work!
September 16, 2008
And what does dandy, mean, anyway? (so asked a friend of mine, today. I know what dandy means.) Current news has Merrill Lynch selling itself to BofA, Lehman Brothers bankrupted, and A.I.G. and WAMU on the mat.
What’s a girl on a quest to do? Contrary to all the other doom and gloom, or PANIC! articles out there, though, this article by Brett Arend has a few bits of rather sensible advice, my favorites in bold:
6. Stop pulling a Monty Python when it comes to your worst investments. If you ever saw John Cleese and Michael Palin perform their famous skit about the dead parrot, you know exactly what I mean. No, your Fannie Mae shares aren’t “resting.” They’re lying at the bottom of the cage with their feet in the air. What more do you need to know? So stop waiting for them to “recover” before sorting out your portfolio.
7. Don’t panic. Journalists, like markets, tend to move in herds. And by the nature of their jobs they write about the plane that crashes instead of the thousands that land safely. Remember, too, that pundits want to seem really wise by putting on serious expressions and saying things like “we don’t know how this thing is going to play out,” and “the situation could get a lot worse”. Bah. Guess what? We never know how things are going to play out. And the situation could get a lot better too. That’s the future for you.
8. When it comes to your short-term money needs, nothing has changed. Any money you might need within the next year or two should be held in cash or equivalents. That was true two years ago and it is true now. The stock market is no home for money you may need urgently. It could fall 30% or jump 30%. Nobody knows. You can get a one year CD paying 5% right now, and it’s federally guaranteed.
Seriously, a Monty Python reference? Perfect. It’s a toss-up, really, between that and that very salient point that Nobody Knows what will happen in the next six months, or heck, six minutes in some cases.
I’m not a fan of suggestion number 4, to set up a HELOC for emergency cash, though. Isn’t relying on credit in case of emergency just a step away from relying on credit? It doesn’t really seem worth the fix you might find yourself in by depending on a line of credit that the bank could very easily close off.
I already know that my deposits, minimal though they are, are covered by the FDIC over at WAMU. My other deposits are at Citibank, Emigrant Direct, ING Direct, well under FDIC limits, or in a family member’s debt ledger, so that’s pretty much a loss no matter which way you cut it.
My Vanguard retirement holdings, however, are not covered by the SIPC. Then again, my understanding of the Securities Investor Protection Corporation is that it does not exist to function like the FDIC. It’s a protection against fraud, or loss of actual stocks and bonds when brokerages go bankrupt, not against the loss of value represented by those stocks and bonds. The retirement account will continue to accrue more shares than value, and I’ll leave well enough alone.
Karen’s reminded me that while I still feel like I’ve got a foot on the ledge, I’m in FAR better shape than I was just a year ago, and I’m going to keep working at the savings and asset building no matter what happens in the economy. If I can pull the belt any tighter, I will, but I’d like to avoid corsetting while I still can.
What, if anything, are you doing?
September 15, 2008
I put all other stressful parts of my life on hold yesterday starting at 2 pm. I didn’t take work with me, as I always do “in case of down time,” and I resolved not to even worry about getting back in time to put in another two hours of work. I was going to spend time with friends, end of story.
It was amazing.
I had organized a mini-massage day at a girlfriend’s house since we sickies were in sore need. My masseuse friend was happy to make a house call for me and two other friends, and a fourth came over just to spend time with us because she couldn’t afford the massage. She was recently laid off due to governmental budget cuts, so hosting friend and I agreed to split the cost of her massage to treat her.
At $40/hour, it was the right thing to do: she’s been searching for a job since July, on unemployment, and I could swing half the cost, as could hosting friend.
All in all, masseuse friend worked for four hours, with a nice break in between, so I know that helped her financially. I got to catch up with masseuse friend during my massage, we spoiled four hung out, chatted, ate Godiva chocolates and potatos chips and watched football. And a LOT of Food Network. Did you know that Alton Brown has yet another “Feasting on …” show? And I finally saw Dinner Impossible.
After the massages, we had an impromptu pizza party, AND I made use of hosting friend’s multifunction, multipage scanner to scan two inches worth of auto insurance and Rollover IRA documents. Which, I hasten to add, was not work, it was organizational and I loooove organizing. It’s good for my soul. As are good friends, massages, chocolate, potato chips, and maybe one less slice of pizza for dinner. Four slices of Pizza Hut pizza plus honey barbeque wings were, perhaps, a bit much.
Massage, mine: $40 (I’m not allowed to tip, masseuse friend scolds me when I do)
Massage, friend: $25
Pizza/wings: $6
Scanning services: 1000 calories burnt, running up and down the stairs from scanner to computer
Total: $71
Lucky me, the massages will come out of my FSA/medical account, so I don’t even have to feel guilty. And coming home without a single nagging bit of guilt about how much work I didn’t get done that day? Priceless.
I hope everyone had a great weekend! And if not this past weekend, then this next one!
September 12, 2008
This isn’t about my complete lack of cooking ability, not this time. It’s about what to do for a good friend who has been extraordinarily good to me and BF’s family. She’s been above and beyond for them so long that I don’t think that they even realize that what she does IS extraordinary anymore.
I do, though.
Recently, she’s been coaching, encouraging, and uplifting me in every way during some very tough times. She calls to check on my progress, devoted an entire day to helping me do research, given me career advice, listened to my stories and offered great analysis and suggestions. She’s also done the best thing I could ever have asked for: she’s tough on me. She doesn’t let me make rookie mistakes when I’m upset to avoid hurting my feelings, she gives me a firm shake whenever she thinks it’s necessary. And I’m so grateful to her for it all.
So, really, a dinner just isn’t good enough. Taking her out to a fancy schmancy dinner would be nice, but it’s not good enough. I ought to mention that she was a highly successful businesswoman for many years and can afford to spend in a year more than I earn, saved and am worth! ;P I admire her financial savvy so very much, but it does sort of make it a little more difficult to figure out what to do for her or get for her.
My gift giving instinct tells me that I need to dig deeper to figure out what would make her life easier, something that’s a gift of time and love, not money. I’m not concerned with spending “enough,” just that it conveys how very much I love and appreciate her.
Any suggestions would be appreciated, meanwhile I’m going to meditate on it.