June, 2009
Starting this week, every Thursday I’ll be dedicating my blog post for the day to answering one of your financial questions. This week’s comes from Patsey in Woodland North Carolina. She writes:
I have a 22 year-old daughter who begins work as a nurse in July. I have recommended the asset allocation (early career in your book The Difference) after she saves up 8 months in expenses in cash or money market fund. Do you have a better recommendation or did I miss the mark?
Answer: In a perfect world, we would all have 8 months in living expenses in the bank. The reality is however, that putting that much in the bank, especially when you’re starting out, can be a daunting task.
Yesterday Karen Blumenthal stopped by my radio show to discuss her new book “The Wall Street Journal Guide to Starting Your Financial Life.” Starting small, Blumenthal says, is a key thing for workforce newbies to remember. “The first paycheck you might have immediate living needs…you don’t want to run up debt. You need to commit some of each paycheck to build that fund. Start with even $25 and then increase it. In every paycheck you should aim for as much as 10%. If you can’t do that right off the bat start with what you can do,” said Blumenthal. More…
What’s $7? Enough, evidently, to get me taken to task by my pals David Bach and Carmen Wong Ulrich on this morning’s Today. This was the question from JP in Odessa, TX:
“I want to refinance my wife’s car and her current interest rate is 7.4%. I am the cosigner for her. If we refinance her car, will that lower our credit score? We only owe $15,000 which is less than the car is worth. The reason I am asking is that we plan to purchase our first new home this year.”
I said yes. A car refi is a a no brainer of a transaction. It costs about 15 dollars and takes about the same amount of minutes. I also checked with the credit bureaus to make sure that this swap would not affect JP’s credit – something I would not want to happen in light of his desire to go mortgage shopping soon. They assured me it would not as long as he did the shopping within 30 days and replaced the loan with another the same size.
The others on the panel? They disagreed with me. It’s only $7, David said and Carmen agreed.
More…
Money 911
On this morning’s segment, we talked about how an auto loan refinance affects your credit (it doesn’t, if you do all of your shopping within 30 days) and how to lower your monthly student loan payments, among other things. Watch the video for more:
This morning, I joined Dr. Nancy Snyderman – author of Medical Myths That Can Kill You – on Today to talk about the number one cause of bankruptcy in the country. If you watched the video above, you know it’s not unaffordable mortgages or even credit card debt.
It’s illness. And cancer patients are suffering. They’re having trouble paying for life-saving care – running up large debts, filing for personal bankruptcy and even delaying or forgoing potentially life-saving treatment. Even having private health insurance (that you purchased or receive through your employer) isn’t enough to save you.
More…
I mentioned in my first post that I have a bad habit of emptying my wallet by going out to eat. Although I’ve cut back a bit – the pain in my back tells me my money would be better spent on a new mattress – I’m still managing to hit my favorite spots a few times a month.
How? I don’t know about you, but in my Brooklyn neighborhood, the restaurant deals are flowing.
On Tuesday nights, my fiance and I can bring our own bottle of wine to our favorite Mediterranean spot, saving us at least $20 – $30. On Thursdays, we can get a free entrée at a local French restaurant if we buy another entrée and an appetizer (Although not a deal I can take advantage of, this same restaurant lets kids eat for free on Friday nights). There are more than a handful of restaurants in Manhattan – including David Burke’s Townhouse, where an entrée at dinner will easily run you upwards of $30 or $40 – offering three-course lunches for less than $25. More…
Best job on the planet? The folks at Murphy-Goode winery in California are offering some lucky soul $10K a month for the next six months to blog, tweet and post on facebook for their wines. You even — according to the story I caught on CNBC.com – get to live at the winery. To apply go to www.areallygoodjob.com. And I assume it’s all you can drink…..
Stop stealing (and borrowing) from your kids. I’ve spent a few mornings this week doing research in the form of focus groups with middle school kids — grades 6 to 8. I’ve been astonished to hear from more than one about the petty theft that seems to be going on in homes around the country. Brothers. Sisters. Going into each other’s drawers, piggy banks, wallets and taking actual cash. Parents, it seems, are more guilty not of stealing but of borrowing and not paying the funds back. Isn’t that actually the same thing? (If you disagree — let me know.)
Going grill shopping. Brad Wilson of Brad’s Deals says that the best place to buy grills — i.e. to get the best prices — is not at your local hardware store or even a brick and mortar big box, but on the Internet. He also assures me that assembly for most grills isn’t nearly as difficult as you’d expect it would be. We’ll see…
My one word on the fraud indictment against Countrywide’s Angelo Mozillo: Finally. Read Alan Deutchman’s piece.
And have a good weekend!!
STUDENT LOANS
This year’s college grads are coming into a tough job market, no doubt about it. But because of a law that Congress enacted in 2007 – the College Cost Reduction and Access Act – they – and many other student borrowers – are going to see a little help with their loans.
More…
An unhappy result of the Credit CARD Act of 2009 – which is going to help regulate interest rates and other costs related to your credit cards – is that banks are already kicking their fees up a notch to compensate. I was on Today this morning to talk about what to look for and how to deal. Watch the segment below:
Money 911
Here’s the video from this morning’s segment on Today. If you’re trying to refinance your home, need to plan for a special needs child, or struggling to manage a hefty debt load, be sure to take a look.
Rebalance or not to Rebalance?
A couple of months back, the legendary John Bogle of Vanguard was on my radio show and I asked him about rebalancing your portfolios to keep a mix of stocks, bonds, and cash (or other asset classes) in check. “I think rebalancing makes a substantial amount of sense,” he says. With his own accounts, though, he noted, “I don’t rebalance… I leave it alone. I have not touched my asset allocation since March of 2000.”
Hmmm, I started to wonder. Which was better for an individual – doing as Bogle said? Or doing as he did? After all, the advice I’ve been giving for years is that if you take 100 and subtract your age, you’ll have a rough estimate of the amount of your portfolio you should have in stocks. The rest should be in bonds or other safer havens. Then, each year, as you age, you take down the stock component by a percentage point. But I hadn’t tested the theory – at least not recently. More…
