Spring 2010 Financial Goals

2. Roll over 401(k) from my holiday job to a Roth or transfer it to my brokerage

One of my Spring financial goals included rolling over the 401(k) I contributed to during my holiday job this past Christmas break.  I contributed 50% of my paycheck which was a grand whopping total of $527.00!   I was planning to do a direct rollover but since I was no longer an employee and my funds were less than $1k the Big Box Retailer, my former employer, closed out my 401(k) and cut me the check in February.  

Since the check was in my name, I could no longer do a  direct roll over and opted to do an indirect roll over.  This constituted of me opening a traditional IRA account with my broker/dealer and depositing the check with them within 60 days.  So, I opened an account on Friday and this morning I went over and deposited  my whopping $527 in the IRA.  The IRA had a minimum of $500 and I was so glad to have had enough to meet the minimum and continue to put that money towards retirement.  Although it is a very tiny amount, I am sure my $527 will grow mighty in 30+ years!

Millionairehood

Departure: 2008 – Age 24 

Arrival: 2028 – Age 44

Speed: Aggressive.

 My blogging friend Don and I decided to buddy-up and join J. Money’s Millionaire’s Club.  It is an e-club for prospective millionaires.  The only requirement is that you make the committment and list the steps you will take to achieve your goal. Right now, since I haven’t landed a job yet I have no idea about my earning power but I am going to estimate conservatively and give myself 18 more years to achieve my goal.  I plan to become a millionaire by doing the following things:

1. Develop multiple income streams.
2. Diversify my career.   
3. Invest wisely for retirement.
4. Live below my means.
5. Give back to the community.  

Develop multiple income streams

I will develop multiple income streams that will increase the amount of money that I bring in. 

• Start a business before 30
• Open a Roth 401(k) or other another tax advantaged retirement plan available to the self-employed. 
• Identify and consistently develop five income streams before 2011.  
• Use the “snowballing” technique to keep track of all the small amounts that come in. 

Diversify my career. 

Basic fundamentals of supply and demand tell me the legal field is doomed until the ABA wakes up.  I must diversify my career.   

• Get a job with an organization I can see myself staying at least 5 years. 
• Attend night school or go back to school and obtain a degree in another field where the supply/demand ration isn’t so out of whack. 

Invest wisely for retirement

I will invest wisely for retirement by using every tax advantaged retirement vehicle available to me and by always getting my 401(k) match.

• Max out my Roth IRA as long as I am eligible.  If I cross the eligibility territory then max out a regular IRA.
• Max out or place 20% of my income yearly into a 401(k) before 30.  After 30, I need to max out the 401(k).

Live Below My Means

I will resist the urge to keep up with my cousins.  I will not buy possessions in order to impress other people. I will live on 50% or less of my salary.

Give Back to Family & Community

In my zeal to become a millionaire, I will not forget the importance of staying connected to my family and giving back to my community. 

• I will either give my time or money to worthy causes that match my values. 
• I will stop being a safety net for Bum my parent and help Bum make wise financial decisions to the best of my ability.
• I will look into opening a Vanguard Foundation to best maximize any donations that I wish to make. 

 Don’t forget to head over to Money Reasons to see Don’s list. 

Is a million what it used to be or should we be aiming higher?  Do you believe you can become a millionaire?  What are you doing right now to achieve that goal? 

Financial Goals for Spring 2010

1. Make my 2010 Roth IRA Contribution
2. Roll over 401(k) from my holiday job to a Roth or transfer it to my brokerage
3. Find more affordable car insurance before February 11
4. Obtain a credit report from one of the three agencies
5. Budget/Keep track of my expenses
6. Diversify my investments

Today I visited Scottrade and wrote them a big fat check for $5k for my 2010 Roth IRA contribution.  I like to make my contribution at the very beginning of the year so it can grow the entire year.   

Attempt at Minimizing Trading Fee Damages to Roth Contribution

When I first opened up a Roth IRA I was disheartened by the fees that I got charged everytime I bought something (usually $7).  This is not a huge figure but for my first contribution I made  6 trades so its $7 x 6 trades = $48.00.  That is a lot of money and if you do the math that $48 can grow to $483  in 3o years at 8% and that is a whole lot of money that is basically leaking out of my maximum $5k contribution.  Not cool at all.  I called up Scottrade one day and asked if there was any way the transaction fees could come out of another account so that my $5k contribution would really be a $5k contribution rather than $ 4952 contribution.  The answer was no.  I also wanted to buy some securities that I thought were good buys and I would want to eventually put them in a Roth IRA when I could contribute again next year. 

The employee suggested I open an individual investment account with Scottrade and then transfer the funds when it was time to make my Roth IRA contribution.  I opened an individual account and invested some money.  A few days ago I called Scottrade about how I could transfer my funds in the individual account to the Roth account.  I was told that there was no way I could just transfer those funds since the individual account is taxed and the Roth isn’t taxed.  To use the money in my individual investment account I would have to sell the securities, pay taxes when its time to do so, and transfer the cash to my Roth and then buy the funds again.  So, instead of me spending just $7 to buy a security in my Roth account now I would have to pay three transaction fees.  First $7 charge to buy the stocks for my individual account, $7 to sell them, then transfer the cash to Roth, then $7 to buy the stocks again.  Perfect, instead of $7 it suddenly becomes $21 for the transaction.  I wish I knew who the idiot at Scottrade who advised me to open an individual investment account.   I’ve had basically good experiences with Scottrade so I am not holding it against them.  And now that I think about it, it makes sense that I can’t transfer assets in a taxable account to a non-taxable accountable as simply as I envisioned.  So, I decided to leave my individual account alone to be dealt with another day and wrote the check.

 Tiny Problem with the Roth Contribution

You can only contribute money that you earn to the Roth.  So, in order to contribute $5k in 2010 I need to earn at least $5k in 2010.  There is a tiny problem in that I haven’t earned any money in 2010 and I will likely not earn any money anytime soon because I will be in school until May and then I will be doing bar stuff until the end of July.   So, instead of going on a trip to celebrate graduation I may need to get a job, any job, to get at least $5k in earnings so that I don’t have to withdraw the $5k contribution I just made. 

How do you keep transaction fees from whittling down your actual contribution?  Have you made your 2010 Roth Contribution? 

According to Sailing the Caribbean, the Frugal Way, a great way to travel the Caribbean (and the world) is to search for sailors looking for crew members.  In exchange for your work you get to sail around the Caribbean for free.  There is no need to have experience sailing because you can work as a deckhand or a cook.   There are sailors out there who will take unskilled people and teach them the basics about sailing.  If you can’t find one of these then an alternative will be to work and pay a small fee to the boat as the author Matt Gross did.  He paid $55 a day to work a few hours for the boat S.V. Illusion and had a great low-cost vacation.  Another option in addition to the S.V. Illusion is the  Karaka.  The Karaka’s  shared expenses total about $150 a week.

 Here are some sites that connect sailors with a crew. 

• CrewRecruit.com
• Crewfinders.com
• GlobalCrewNetwork.com
• FindaCrew.com
• FloatPlan.com
• CrewFile.com
• WorkOnABoat.com
• WorkOnAYacht.com

I first focused on the legal sector, then narrowed it down to those with their doctorates so as to exclude paralegals.  Then I gathered all the data for the 25-29 age group.  I came up with 20 young lawyers between 25-29.  They all have decent to really good incomes.   Of the 20 young lawyers, 9 were making six figures.  The highest income was in the $250,000+ range while the lowest was in the $40,000-49,000 range.  And the average networth was…drum roll please…   -$22,651.  Yes, that is a negative netowrth.     Yikes.  Only 4 out of 16 or 20% of attorney’s actually had a positive networth. 

• Total young attorney’s with debts:  16 of the 20 or 80%
• Average Income:  Between $101,000 and $126,499
• Average debt: $84,942.93
• Average networth: -$22,651

This is quite a small sample size so, this is not exactly a scientific examination of the networth of young attorney’s.  But, it is very clear that young attorney’s are burdened with a lot of student loans (according to several of the profiles).  If their networth is the negative then after going to school for a very long time it is difficult for them to move onto other adult life stages such as purchasing a home, starting a family, saving and investing for retirement etc…

This little exercise reinforces my decision to go to a school from where I believed I could graduate without debt.  I wouldn’t want to have a debt load of even $22,651 to carry just as my career is starting.  Graduating into a recession means that I will be looking for a job past graduation if I want to hold out for something that I am actually interested in.  It’s good to know that when I graduate I will be with the 20% and will actually have a positive networth.    

 NetWorthIQ: Networth of Young Lawyers

Women Personal Finance Bloggers Rock!

I have repeatedly turned to WiseBread’s List of Personal Finance Blogs by Women to find new personal finance blogs to read.  But, occassionally I find that some of the links are inactive or broken. 

This is understandable since the list was posted on August 5, 2008. While I wait for WiseBread to come out with an up to date list of personal finance bogs by women I am providing the list of blogs with links that work and that are active. The blog is considered active if there was a post for the month of October.  I am leaving out non-personal blogs such as blogs hosted by newspapers and other businesses.  Ggoing through all the blogs took quite a lot of time but I had fun reading about personal finance from various perspectives.  Please let me know if there is a blog out there on WiseBread’s list that’s not here but may have moved to its own domain name or changed its name and such other things.  Are there any other blogs that should be on this list?   

Also, I am trying to get a list of new personal finance blogs started by women in 2009.  It can be very hard starting and keeping any blog going and I want to be sure to find and support other new personal finance blogs by women.  So, share away!

• Almost Frugal

• The Baglady
• Barbara Stanny
• Beach Girl’s Budget Blog
• Being Frugal
• Being Money Smart
• Blogging Away Debt
• BlogHer
• Brunette on a Budget
• Brown Eyed Girl and Money
• BostonGals

• Chief Family Officer
• Counting My Pennis

• Debt Marathon
• Digerati Life
• Distilled Rose
• Debt Hater
• Don’t Mess with Taxes
• Dog Ate my Finances

• Erica
• Experiglot
• Fabulous Financials
• Fabulously Broke
• Feminist Finance
• Finance Gets Personal
• Frugal Babe
• Frugal Chick
• Frugal Family Kitchen
• Frugal for Life
• Frugal Freedom
• Frugal Upstate
• Frugal Zeitgeist

• A Gai Shan Life
• Ginger Won’t Snap
• Girls Just Want to Have Funds
• Grad Money Matters
• Graduated Learning
• Gotta Little Space to Fill

• How I Save Money
• Iowa Hippie Chick
• Juice Fairy
• Kingdom First Mom
• Krystal at Work

• Living Off Dividens 
• Living Almost Large

• Map Girl
• Millionaire Mommy Next Door
• Mommy Advice
• Money Illusions
• Money Common Sense
• Money Crush  (formerly Blunt Money)
• Money to Live
• Money Monkey
• Money Saving Mom
• Mrs. Nespy’s World
• Mrs. Micah
• My Crazy Debt
• My Dollar Plan
• My Open Wallet

• No More Spending
• Northern Cheapskate
• Notes from the Frugal Trenches

• One Frugal Girl
• Plonkee
• Remodeling This Life

• Saving for Home
• Savings Not Shoes
• Savvy Saver
• Sense to Save
• Small Budget Big Style
• Sound Money Matters
• Stacking Pennies

• Talking Tax
• Thrifty Little Blog
• Tax Girl
• Tax Quips
• 20 Year Challenge

• Udandi
• Ultimate Money Blog
• Well Heeled Blog
• Wealth This Good

Edit: Her Every Cent Counts has posted a comprehensive top 100 list of personal finance blogs by women. 

 

The Pudding Index is a nifty little tool that you can use as a benchmark to see how you are progressing in your retirement planning.  You put in your information and they compare that information against an index derived from a benchmark account.  The goal of the benchmark account is to produce 55% of your final retirement income(60% for males).   If you score above a 100 points then it means you are ahead of the curve and if you score under then you are behind and need some serious fine tunining.  

I scored 106 out of 100.  How thick is your pudding?

My Pudding Score was 106 out 0f 100 which means I am on track for retirement when compared with my age group and my replacement income goals.  Since I have been a fulltime student my income is more on the low side.  My high savings rate is the only reason I got a high score that put me among cohorts of a similar age who are most likely working full time now. 

What’s your pudding index?

To find out your Pudding Index, go to www.puddingindex.com and enter your date of birth, current annual pay and the amount of your retirement savings.

See Jane Get Rich

I am a voracious reader of personal finance blogs.  I especially enjoy reading “open-wallet” personal finance blogs.  These include MyOpenWallet.net (written by a NY based blogger) and BostanGals.com.  I like reading these personal finance blogs because they give you a complete picture of their personal finances including their spending, investing and networth. 

I am a law student based in Washington, DC.

I hope to share my personal finance journey now until my retirement in 2050.