$3 ATM Fees? Banks Increase the Price of Your Money

Consumers who rely on ATMs for quick cash access may find that getting their money actually costs them more as banks raise their ATM fees. The financial institutions, which already generate $10 billion a year in revenue from what they charge people for accessing their accounts from other banks’ ATMs, have increased the fees in response…

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The Economist: The End Of Cheap Food

Rising food prices are a threat to many; they also present the world with an enormous opportunity

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Zimbabwe Releases $10 Million Bill – Which is Worth USD $4

As the US economy inches ever closer to a recession, it might provide a little perspective to look at what a real economic crisis looks like. Plagued by hyperinflation of over 50,000% a year, Zimbabwe’s central bank recently decided to issue $10 million notes.

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America’s 25 Fastest-Growing Tech Companies

It has been a rough 12 months for the stock market, including technology stocks. The S&P 500 is off 2.1% over the past 12 months (dividends excluded) and the Nasdaq 100 Tech Index is off 8.7%. But you could have done well owning these really hot technology companies.

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Sales of New Homes Fell by 26% in 2007

For the past 6 or 7 years, housing prices have increased significantly faster than salaries, at least in my area. I have so far not been able to understand how our economy could possibly support such a trend. It seems that some serious corrections might be on the horizon?

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Baby Steps, or, Rome wasn’t built in a day.

So I have read Dave Ramsey’s book “Total Money Makeover.” I really like his suggestions, which include several baby steps along the path to financial success. They are simple enough, and honestly, none of his Baby Steps are a surprise. It comes down to common sense: establish an emergency fund, pay off (and never again use) debt, invest wisely, and give. What I really like however, is that he breaks it down into something that’s both easy to understand, and easy to implement. I highly suggest purchasing his book. He also offers a course, called “Financial Peace University” which sounds very interesting. Ironically, I purchased that class for some friends as a Christmas present, but have not (yet) decided to take the course myself.

The thing is, his book makes it really simple. I’m not sure that the course itself could add anything substantial; except, of course, sharing your experiences with others in the class, and gaining some insight from their experiences. Kind of like financial group therapy. I could be completely wrong, and in fact I have talked to my friends for whom I purchased the class, and am beginning to think I should take it myself.

Dave Ramsey’s Baby Steps (You can download a poster here):

1. $1000 in an emergency fund
2. Pay off all debt with the Debt Snowball
3. 3-6 months expenses in savings
4. Invest 15% of income into Roth IRAs and pre-tax retirement plans
5. College funding
6. Pay off your home early
7. Build wealth and give!

On Dave Ramsey’s website (here) you can download a PDF document showing his Baby Steps; I printed this out and put it on my wall next to my desk as inspiration.    I also listen to Dave Ramsey’s podcast, for additional insight, and most importantly to be inspired by people who call in to yell “I’M DEBT FREE!“  It’s very inspirational; one day soon I’m going to be calling him myself. 

So after working diligently on my own spreadsheets, I have determined that I am on Dave’s Baby Step #2. I already have more than $1000 in my emergency fund, because I had set up my paychecks so that a portion of each paycheck is deposited directly into that savings account. Now I believe that, according to Dave Ramsey’s strict advice, I should keep only $1000 in my emergency fund and use the rest to pay off debt, only moving on to Baby Step #3 and adding to my emergency fund once my debt is paid off.

This may be a mistake, but I am going to continue to deposit into my emergency fund until I have 6 months of expenses saved, while simultaneously working on Baby Step #2. I expect to have a fully-funded emergency fund by about March 2009 if I can keep this up.

In the meantime I’ll be doing Dave’s Baby Step #2. So because I am continuing to fund my emergency fund while paying off debt, I’ll actually have Baby Step #3 completed before Baby Step #2 is completed. I know, I probably shouldn’t attempt to do things different, but here’s the thing – I’m a web developer, and the job market hasn’t always been as stable as I’ve wanted it to be. For most of this decade (2001 – present) I’ve never honestly believed I would stay at my current job for more than a few years. Psychologically, I want to feel like I have my bases covered. Paying off debt is important; however, I want to at least have something in the bank should my fears ever come true.  Admittedly, I may decide that my way isn’t as smart as I think it is right now.  Stay tuned. 

For me, Baby Step 2 comes down to paying off almost $60,000, which is more than I want to admit. Most of my debt is my car loan and student loan. Still, it’s uncomfortable.

So, in accordance with Dave Ramsey’s Baby Steps, I’ll be attacking this systematically. He suggests using the “Debt Snowball” and paying off the debts from smallest to largest, rolling previous payments into new payments as I pay off each of the smaller ones.

My goal for completing Baby Step #2: January 2010. It feels like a long time, but 2 years? 2 years ago for me seems like only yesterday.  Already I’m paying off two of my smallest debts before February 2008!And since Baby Step #3 will already be completed, I’ll be moving on to Baby Step #4, which is to invest 15% of income into pre-tax savings. That’s not so much of a process as it seems like a one-time setup.

Baby Step #5 is to save for your children’s college; however, I don’t have children.  Yet.

Baby Step #6 is to pay off your mortgage as quickly as possible. Currently I am renting, so this will be the time when I begin the process of saving for a down payment on a home.

Baby Step #7 is to build wealth and give.

So there it is. The good, the bad, and the ugly. Stay tuned to see how it all works out!

I am embarrassed.

For both myself, and also for our country. I endured a fairly normal education: I graduated from high school, went to a 2 year college, and then on to a university to graduate with a Bachelor of Science in Computer Science.

So I was a little startled when, after starting my first career-related job after college, I was presented with something I knew absolutely nothing about: a 401(k). Now that I’m well into my career, and have accumulated enough personal finance know-how to understand the difference between a 401(k) and an IRA, I’m embarrassed. I’m embarrassed because our education system has failed me in a very important way: I graduated with a 4 year degree, basically financially illiterate. Through most of college, I managed my money the only way I knew how: by the seat of my pants. For the past several years I’ve done a little better because I make more money, but when I realized that it is now 2008, and I’ve been out of college for a decade now, I decided that enough is enough. I’m ready to do what it takes to be responsible with my money. I’m ready to be humble and learn what needs to be learned, and do what I can to try and ensure I can retire with some comfort. In short, I’m ready to make up for what I didn’t learn in college or high school.

So, I guess this means I won’t be purchasing that HDTV before the Superbowl this year. Bummer.

I’ve been reading a few books, and am ready to put good advice into practice. I intend to use this blog to document my progress – to let the world know how I’m doing, whether good, bad, or otherwise.