On 10 May 2004 09:00:06 GMT, "mark"
<Ih8SpamminScum[at]especiallyyours.net> wrote:

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I hear good things about Sharebuilder, but, I don't use them so that's
second-hand at best.

I would recommend going with Vanguard. They're a great company and
index funds are an effective way to invest.

The account minimum is 5k (to have no annual fee). You won't hit that
minimum this year (2004), unless you have previous contributions to
transfer. Maybe you can transfer yours and your wife's accounts. Each
account is counted separately. I'm not certain what the minimal
monthly contribution is, but, I'm pretty sure it's higher than
$25/month (what I think you said you were contributing).

If Vanguard turns out to not work for you, you can also consider
TIAA-CREF. They definately have no annual fees, and their expense
ratios are only slightly higher than Vanguard's. Their minimal account
contribution is $50/month.

Gwen

Thanks for the advice. Yes, I did stop all of my automatic investments
beginning this month (Roth IRAs for both myself and my wife, a non-qualified
growth mutual fund audtomatic contribution, and a money market fund.
Although I'll always appreciate the broker/agent that got me on these plans
because he got my wife and I started with savings, I never totally trusted
the funds he put us on and with the cash-flow crunch we've been in lately I
was thinking about cancelling at least some of the contributions. But then,
when I get two $35 "annual IRA maintenance fee" notices, I said screw it and
cancelled everything and plan on starting a roth with an online broker (to
skip the middleman this time) for my wife this month.

Can anyone recommend a good online broker? I was thinking of just using
Vanguard as I like their funds, but I have not looked into their minimum
contribution requirements yet but will soon.

"Gwen Morse" <goldmoon[at]geocities.com> wrote in message
news:d0fr90t79ou3jtvg5vrtvphunvthmb0j9f[at]4ax.com...
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On Mon, 3 May 2004 03:58:56 CST, "mark"
<Ih8SpamminScum[at]especiallyyours.net> wrote:

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You sound like you're in a reasonsably secure place, financially.

I would say cut off the growth fund and MMF and apply that money to
the student loans. I'd at least 'think twice' before stopping the Roth
IRA's. The Roth is a really good retirement investment opprotunity and
it's time-limited (that is, once you pass up investing for any year,
you can't go back later and then put that money in). I'd also
emphasize this when there's no other (ongoing) 401k contributions for
your wife.

Then again, I set up my Roth IRA myself (no planner 'sold' it to me)
and you'd effectively have to pry my contracts out of my cold dead
fingers .

Gwen

Mark,

Why so bummed? From what you are saying, you are better off than most
couples your age... You don't own too much house, you buy sensible cars,
you have a 3-month emergency fund, you invest automatically at the
source, you have a pretty manageable debt load. Heck, you're doing what
I've been trying to teach my son to do for years!

Being as you are NOT currently in a cashflow crunch (you are paying your
bills on time without having to raid savings and you are not in
arrears), here is a suggestion that may help. DOLP (Dead On Last
Payment) your student loans. This is a technique often used to pay-down
credit card debt. Pick the smallest balance loan and accelerate the
pay-off by putting extra money against paying down the principle. In the
mean time, make only minimum payments on the other loan. Once that one's
out of the way, DOLP the other one.

Where do you get the extra money to DOLP. Do what David Bach of "Smart
Couples Finish Rich" fame suggests and measure your "Latte Factor".
Both of you track what you spend your money on for a week (cigarettes,
cokes, coffee, anything). Add it up at the end of the week. See if you
can't locate a spare couple of bucks this way. My wife and I found
$120/month! Then, modify your expenditures and use the extra money to
DOLP your loans.

Also, check what you're paying out per month. Can you get a better rate
on cable TV, phone charges, auto insurance?... Every bit helps!

Finally. Don't stop saving! You owe it to yourselves to pay yourselves
first and one day, in the not too distant future, you'll be mighty glad
you developed those good habits of yours and stuck to them.

Keep up the good work. Chin up, you're doing better than you think!



mark wrote:
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======================================= MODERATOR'S COMMENT:
PLease

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Heres what my wife does. She made a spreadsheet (she is almost
illiterate about spreadsheets so this is an easy task for anyone to do)
and put our monthly expenses in columns and we figured out what our
biggest expenses are per month. We have that spreadsheet going for three
months now and we have an average estimate on what we spend on
everything in general - rent, car payments, cable phone etc..
After looking at this sheet, we realise what we can cut down on to save
more money. Basically decide what you need, what you really want and
what is a luxury and you'll easily end up saving a couple of 100 more a
month. Plus spend everything on credit cards and use the cash back
bonuses to get some more money. Buy everything online (use
resellerratings before buying anything), it's cheaper. You can easily
achieve your 400$ extra goal without dipping into your savings
contributions too much. My wife is also currently unemployed, she spends
a good deal of time hunting for deals ..

Thanks Jim for the advice. Yes, after a few days of really thinking about my
situation, I've come to the conclusion that for whatever reason (see below)
wasn't obvious to me until now - I should stop the automatic payment towards
the two IRA's, growth fund, and Money Market. I'd like to continue with the
money market but right now we're just too strapped at times and I'd like to
make a go at taking that money and putting whatever I can towards paying
down the student loan debt. If I can pay down the student loan debt, that
will really put me in a good spot a few years down the road, when both cars
are paid off and I'll have no debt other than my mortgage.

The reason I started the two Roth IRA', the growth fund, and the money
market savings was because I went to a "successful money management" seminar
with my wife once we got engaged, with the idea of getting on the same page
with our finances. Of course, the thing about these types of seminars is
that the only reason the Instructor is there is because he's looking for new
clients, and we were new clients! So he set us up with these accounts, and
I've been pretty happy with them until now, though I'm damn happy we started
saving when we did (wish we started sooner actually) otherwise I'd be in a
world of hurt stress-wise, and would be forced to get a part-time job (which
I'm thinking I may try to do anyway in order to pick up more cash).
"Jim" <noreplysoccer[at]hotmail.com> wrote in message
news:b7cb2d49.0405021022.1de2754f[at]posting.google.com...
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======================================= MODERATOR'S COMMENT:
Please trim the post to which you respond.

"mark" <Ih8SpamminScum[at]especiallyyours.net> wrote in message news:<FyZkc.17594$wY.12613[at]nwrdny03.gnilink.net> ...
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If you have 3 months emergency cash already, I think your situation is
NOT BAD. In addition, you have little debt, so that is NOT BAD
either. YOu are doing a good job of living within your means.

I would suggest having seperate checking accounts for bills and
everyday expenses. Move about $500-$1000 of your cash reserve to this
account to cushion those two week periods where money is tight. In
this extra account, have all monthly bills electronically withdrawn-
mortgage, cars, utilities, for example.

The investments you mentioned (IRAs and growth mutual fund)do not make
sense (to me) for emergency savings. There are penalties and fees for
accessing some of these accounts.

as far as student loans, have you considered the impace of paying more
than required each month? Instead of sending $50 to IRA, what is
impact of the $50 towards student loans? This worked for me when
paying off mine, every little bit helps.

I'm in a bit of a quandary and am not sure what to do.

My wife and I are in our early 30's, we have a 1 year old daughter and
another baby due in September. We own our own home, which fortunately has
gone up in value by about $60k since we purchased it 3+ years ago.

Our debt is as follows:
My wife and my student loans: approximately $18,000 combined, both at high
rates - mine is at 8% hers is at 9%. We were stupid and consolidated about 5
years ago at a high rate, and from what I was told a while back when
checking with my lender you can only consolidate student loans once (I think
that's a scam but it is what it is).

Car #1: owe $9,000 [at] 5%
Car #2: owe $9500 [at] 4.5%

These are both modest, economical vehicles that fortunately are worth about
what we owe and perhaps a little more on trade-in or definitely private
sale, though we have no interest in selling either of them.

My wife decided to stay home after we had the first baby, and I supported
her in that decision (and continue to do so) even though I knew times would
be difficult financially. Fortunately we have done some saving - we have the
3 - 6 months emergency cash in a money market fund already saved. We also
each have 401k's (her's from her previous employer, still sitting in that
account in an investment mix we're fine with so I see no reason to move it
out.).

We're basically living paycheck to paycheck right now and have been for a
few months. I'm paid bi-weekly, and sometimes I can cover the upcoming bills
immediately/early and other times I have to wait a week for the next
paycheck. It all kind of balances itself out. We have never been late paying
any of our bills, but I do worry that one of these days I'm going to have to
start dipping into our savings a little at a time to cover unexpected
(sometimes even expected perhaps) expenses. I want to avoid that obviously.

In order to get to the point where we have approximately 4 months of my
salary saved, we had setup an automatic investment plan whereby $400 per
month is deducted from our checking account and is allocated as follows:

$250 to money market
$50 to my Roth IRA
$50 to wife's Roth IRA
$50 to a growth mutual fund

So here's the deal. As I mentioned, times are tight. Right now our cash flow
is really not what it needs to be, to maintain our current lifestyle (which
isn't very extravagant believe me!). We're very fiscally responsible folks,
have no credit card debt, always bought sensible used cars, saved, etc. But
quite frankly I need to increase cash flow. About $400 more per month would
be perfect. Fortunately I just got a promotion/raise and that really will
help (raise kicks in this coming week). To come up with the other $400 I
could:

a. Get a part-time job, though to come up with that much I'd probably have
to work most all weekends and maybe even some weeknights. I want to avoid
this because I'm already working 45 hours a week and don't want to miss out
on watching my child/children grow during their early years.
b. Stop the automatic savings ($400) from coming out of my account each
month.
c. I currently contribute 7% of my pre-tax pay to my 401k. My employer only
matches 3%, but I figure since my wife doesn't contribute to her 401k
anymore because she no longer works, I should keep mine at 7% (there's no
way I could increase it at this time unfortunately).

Also, I applied and received a $20,000 HELOC that has gone untouched since
we got it last year (meaning we haven't used any of the credit line). That
is at Prime Plus .25%. So the interest is low. I was thinking perhaps paying
off the student loans with that, to save on interest and also increase our
monthly cash flow, as that would save me another $200 per month. I hate to
use any of my home's equity, but I don't plan on leaving this house for
another 5 years minimum and the student loan interest is horrible. We've
been paying them forever it seems, and yes, I regret not paying them off
prior to having our first child but we were stupid I guess. If we were to
continue making the regular payments, we wouldn't pay off my wife's student
loan until the year 2010. Mine wouldn't be paid off until the year 2015! In
case you're wondering how this is possible - I started college late (age 24)
and so didn't start paying off the loan until I graduated at age 27, then I
made the bad mistake of consolidating and I remember her asking me if I
wanted to extend it out to a 15 year payment plan and I was stupid enough to
take it. My wife, she finished college at 21, but went to work for a
parochial school and had her student loan deferred for 5 years until she
quit there and got a better paying job.

What do you guys think? I'm pretty bummed these days. We were doing well,
considering my wife hasn't worked since last Summer. But we did get a decent
tax refund and that helped quite a bit during the beginning of the year. I
plan on getting a book on budgeting this week, since we currently do not
have a budget and we definitely need one. But in the meantime, I was hoping
I could get some advice from here.

To summarize, my pay and my expenses are at about break-even, with just a
little left to cover a meal out once in a while and the day-to-day stuff.
We're still saving quite a bit - though I guess since it comes out of my
paycheck automatically each month I view it as a bill!

My wife keeps saying that we should stop the savings. I hate to do that. My
thinking is to try to make up the cash flow (again, about $400 would be
perfect) some other way through reducing our monthly fixed expenses such as
paying off the student loans with the HELOC. Though that extends the
payements out 15 more years, at least at lower interest though.

Any advice is greatly appreciated. I feel like we have made good choices
since starting our lives together (though this second child that is due
later this year was unexpected), but it's pretty unnerving to me to live
paycheck to paycheck like we're doing now (minus the savings/retirement
investments).