I have been meaning to research and open a 529 college saving account for the last 3 years. I'm finally going to get serious. I suppose I "lucked out" because I bypassed the big stock drop last year.
My plan is invest as much as possible as early as possible. The tax benefit of Ruth IRA and 529 account is exactly the same. I'm going to redirect my Ruth IRA contribution to the 529 account. Then switch back once I have a decent 529 balance.
Now the only question is which fund family / state plan do I want to invest. If you have a 529 account, would you share with me what you like about your particular plan?
Wednesday, February 18, 2009
Monday, December 29, 2008
visual guide to the financial crisis
Wonder how the financial crisis got to our current sad sad state? Wonder no more! Here is a visual "flow chart" that walk-through and summarize the events.
http://flowingdata.com/2008/11/25/visual-guide-to-the-financial-crisis/
In short.. Never under estimate the power of "GREED". History has show over and over again, as long as here is human capacity for greed, we'll continue to have financial bubble that leads to a major crisis.
http://flowingdata.com/2008/11/25/visual-guide-to-the-financial-crisis/
In short.. Never under estimate the power of "GREED". History has show over and over again, as long as here is human capacity for greed, we'll continue to have financial bubble that leads to a major crisis.
Tuesday, December 23, 2008
cheap vs frugal
It's has been on my to do list to write a blog entry on this topic for a long time. Happily to report that one of my favorite blogger has written just such topic.
http://www.iwillteachyoutoberich.com/blog/stop-being-cheap-and-go-buy-something-valuable-today
If you haven't visited www.iwillteachyoutoberich.com, I highly recommended it.
http://www.iwillteachyoutoberich.com/blog/stop-being-cheap-and-go-buy-something-valuable-today
If you haven't visited www.iwillteachyoutoberich.com, I highly recommended it.
Saturday, December 13, 2008
think you had a bad day?!
check out the pictures from this blog.
http://brokershandsontheirfacesblog.tumblr.com/
http://brokershandsontheirfacesblog.tumblr.com/
Tuesday, November 18, 2008
Library Elf - a handy web service
I just discovered this new web service. If you are like me that needs email reminder for just about everything. This service automatically send you remind of item due date and on hold items at the public library. So stop paying those library overdue fees.
Library Elf
-------------------
Elf is a web-based and email tool for library users to keep track of their library borrowings. Elf is like a personal assistant, whose task is to help with keeping track of what one has on loan from the library.
Designed with the busy or avid library user in mind, Elf is ideal for families with multiple library cards or for individuals (writers, researchers, students, readers, etc.) who have cards from different libraries.
Elf makes it easier to keep track of what's due, overdue or ready for pickup from one or more library accounts. Users have the option to consolidate their library accounts into one account if they wish. This account is checked everyday and email notices are sent when items are coming due, overdue or when holds are ready for pickup. As well, get up-to-date realtime information by browser.
Library Elf
-------------------
Elf is a web-based and email tool for library users to keep track of their library borrowings. Elf is like a personal assistant, whose task is to help with keeping track of what one has on loan from the library.
Designed with the busy or avid library user in mind, Elf is ideal for families with multiple library cards or for individuals (writers, researchers, students, readers, etc.) who have cards from different libraries.
Elf makes it easier to keep track of what's due, overdue or ready for pickup from one or more library accounts. Users have the option to consolidate their library accounts into one account if they wish. This account is checked everyday and email notices are sent when items are coming due, overdue or when holds are ready for pickup. As well, get up-to-date realtime information by browser.
Wednesday, August 27, 2008
opt out of prescreen credit card and insurance offers
When I get the mail, the first thing I do is rip up all those unsolicited credit card offers. For the first time, I actually took 30 seconds and read the letter. On the very bottom, I found this gem of information that I never knew about.
To submit your Opt–In or Opt–Out request by telephone.
Please call toll free: 1–888–567–8688
I googled for stop pre-screen offers and found this
news release by www.BBB.org. This news release give the web version of the service : http://www.optoutprescreen.com
I took a few minutes and submitted my requests. You have to print out, sign and mail in a letter to get your name permanently removed from the opt out list. Otherwise, you only get 5 years of opt-out.
The www.bbb.org news letter also indicated 2 other services for reducing junk mail and emails.
1) https://www.dmachoice.org/MPS/proto1.php
2) http://www.dmachoice.org/offemaillist.php
I'm going to try all these services. It would be so nice to reduce the volume of junk mail.
To submit your Opt–In or Opt–Out request by telephone.
Please call toll free: 1–888–567–8688
I googled for stop pre-screen offers and found this
news release by www.BBB.org. This news release give the web version of the service : http://www.optoutprescreen.com
I took a few minutes and submitted my requests. You have to print out, sign and mail in a letter to get your name permanently removed from the opt out list. Otherwise, you only get 5 years of opt-out.
The www.bbb.org news letter also indicated 2 other services for reducing junk mail and emails.
1) https://www.dmachoice.org/MPS/proto1.php
2) http://www.dmachoice.org/offemaillist.php
I'm going to try all these services. It would be so nice to reduce the volume of junk mail.
Friday, August 8, 2008
Should you buy a home now?
here is a recent LA Times article : Should you buy a home now?
Here is my take on this question. Buying a home is fundamentally a lifestyle question. It's a burden of love. Buying a home brings it's own set of stress and pressures, but it might be all worth while if it's a burden carried with love.
1) Have you found a home that you love and can imagine living there for 30 years?
2) Can you expect to live in the house for 10 or more years?
3) Have you got a financing that you can afford and a plan in place even if you and/or your spouse get laid off for 6 month to 1 year?
4) Are you ready to deal with all the hassle of home ownership : yard work, repairs, upgrades, HOA, and neighbors?
5) Do you expect the mortgage interest rate to go even lower?
I consider these things the right questions to think about when purchasing a home. There are some wrong questions to consider when deciding to purchase a home or not.
1) What is the biggest / best home that I can afford?
2) Is the housing marketing price going lower?
3) When will the value of the home go up?
4) Will I save a bunch of money on taxes?
Let me explain why I think these are questions to ask.
1) Have you found a home that you love and can imagine living there for 30 years?
Besides marriage, buying a home is probably the biggest commitment you'll have to make in your life. You are tied down to a huge financial burden, and not flexible to move to another part of country for career. You better be ready to commit to a home that the whole family will love.
2) Can you expect to live in the house for 10 or more years?
No one can predict what's going to happen in 10 years, but this is a good bet if you have a stable job. The transaction cost of selling a home is huge, easily 5% to 10% of the selling price. Not to mention the stress it brings.
3) Have you got a financing that you can afford and a plan in place even if you and/or your spouse get laid off for 6 month to 1 year?
Don't commit all your cash into the down payment. Some people stretch and take on all these financial risk that they can't handle when times gets rough. You need the cash reserve for repairs, layoffs, medical issues, and all the other financial risks that can happen to any one at any time. Again, a home is a financial BURDEN and risk. Go in with your eyes wide open.
4) Are you ready to deal with all the hassle of home ownership : yard work, repairs, upgrades, HOA, and neighbors?
You home is your castle, but you neighbors and HOA really cares about how you live (at least how the house looks on the outside.) Be ready to deal with that hassle.
5) Do you expect the mortgage interest rate to go even lower?
You probably noticed this is the only timing related question. All the questions so far has been about emotional commitment or financial planning. You can do that any time, even in a down market. Most people forget, for the life of the loan, you pay more in mortgage interest than the home itself. The house market price might go up and down 10 or even 30%. That is SMALL potatoes compared to the total mortgage interest paid! One percent point change in the mortgage interest makes a big difference in the total cost of the home. Check out any mortgage calculator. Here are some number I just ran:
1) $500,000 mortgage, 30 years fixed at 7.00%. At the end of 30 years, interest paid will be 697,544
2) $500,000 mortgage, 30 years fixed at 6.00%. At the end of 30 years, interest paid will be 579,191.
And that's assuming you keep the loan, if you refinance frequently the number only gets worse.
So why are these the wrong questions to ask about a buying a home.
1) What is the biggest / best home that I can afford?
Real estate brokers, mortgage agents and anyone in the real estate business often asks this. They will say a home purchase is biggest / best investment of your life so make it count and get that dream home (even if you can barely afford it). When I purchased our first home, we had the income for a house twice as expensive. Everyone pushed us to get a bigger home in a better area. Sure, we we would have made more money consider the real estate run up. But we loved our 1st home, it was just perfect for us at the time. Even with the house purchase, we still managed to invest in 401k, and saved money to started a business.
2) Is the housing marketing price going lower?
This is an important question, but not while deciding to purchase a home or not. The purchases price is actually only a part of your total cost of ownership of a home. Adding insurance, property tax, mortgage interest, utility cost, repairs, cost of sale, the purchase price is less than 50% and it's not even the single biggest item. However, this is an important question for price negotiation. If you think the housing market price is going down then you'll make your offer appropriate to that market risk. It's the same when the market is going up. When the market is going down, people prefer cash to house. Buyer doesn't want to give up cash and seller is willing to reduce value to get cash. Just the opposite when the market is going up. You can decide to purchase a house in a down market, as long as you negotiate with that risk in mind.
3) When will the value of the home go up?
I never understood why California had such a huge run up on housing prices. It was completely out of portion to rental cost, cost of living, inflation, wage, etc. I just wanted to build out my equity in a little place that I can call my own. I don't want to pay rent forever. If you want something that will go up in value, then you should invest in stock, bond, mutual funds, and other securities. The mantra of modern financial planning is diversification. If you stretch to buy a big home then you are sacrificing diversification and making this big bet that the housing value will go up. Not very smart, instead, buy a smaller home, make sure you have a diverse set of securities, real estate, and income streams. You'll be well covered in any market condition.
4) Will I save a bunch of money on taxes?
I like tax deduction just as much as the next guy. Tax deduction is icing on the cake. I'll alway try to maximum my tax deduction but it's not smart to make big purchases because of the money you might save. Sure, you might save 40 cent for each dollar spend in mortgage interest. But you still have to spend that dollar first. In case of layoff, you don't have have 40 cent tax deduction but you still have to spend that dollar.
In summary, I don't think there is a good time or a wrong time to buy a home. What's important is that you buy the home for the right reasons and make the necessary plans to manage the financial burden.
Wow, this blog entry turned out much longer then I expected. I really enjoyed writing and thinking about it.
Here is my take on this question. Buying a home is fundamentally a lifestyle question. It's a burden of love. Buying a home brings it's own set of stress and pressures, but it might be all worth while if it's a burden carried with love.
1) Have you found a home that you love and can imagine living there for 30 years?
2) Can you expect to live in the house for 10 or more years?
3) Have you got a financing that you can afford and a plan in place even if you and/or your spouse get laid off for 6 month to 1 year?
4) Are you ready to deal with all the hassle of home ownership : yard work, repairs, upgrades, HOA, and neighbors?
5) Do you expect the mortgage interest rate to go even lower?
I consider these things the right questions to think about when purchasing a home. There are some wrong questions to consider when deciding to purchase a home or not.
1) What is the biggest / best home that I can afford?
2) Is the housing marketing price going lower?
3) When will the value of the home go up?
4) Will I save a bunch of money on taxes?
Let me explain why I think these are questions to ask.
1) Have you found a home that you love and can imagine living there for 30 years?
Besides marriage, buying a home is probably the biggest commitment you'll have to make in your life. You are tied down to a huge financial burden, and not flexible to move to another part of country for career. You better be ready to commit to a home that the whole family will love.
2) Can you expect to live in the house for 10 or more years?
No one can predict what's going to happen in 10 years, but this is a good bet if you have a stable job. The transaction cost of selling a home is huge, easily 5% to 10% of the selling price. Not to mention the stress it brings.
3) Have you got a financing that you can afford and a plan in place even if you and/or your spouse get laid off for 6 month to 1 year?
Don't commit all your cash into the down payment. Some people stretch and take on all these financial risk that they can't handle when times gets rough. You need the cash reserve for repairs, layoffs, medical issues, and all the other financial risks that can happen to any one at any time. Again, a home is a financial BURDEN and risk. Go in with your eyes wide open.
4) Are you ready to deal with all the hassle of home ownership : yard work, repairs, upgrades, HOA, and neighbors?
You home is your castle, but you neighbors and HOA really cares about how you live (at least how the house looks on the outside.) Be ready to deal with that hassle.
5) Do you expect the mortgage interest rate to go even lower?
You probably noticed this is the only timing related question. All the questions so far has been about emotional commitment or financial planning. You can do that any time, even in a down market. Most people forget, for the life of the loan, you pay more in mortgage interest than the home itself. The house market price might go up and down 10 or even 30%. That is SMALL potatoes compared to the total mortgage interest paid! One percent point change in the mortgage interest makes a big difference in the total cost of the home. Check out any mortgage calculator. Here are some number I just ran:
1) $500,000 mortgage, 30 years fixed at 7.00%. At the end of 30 years, interest paid will be 697,544
2) $500,000 mortgage, 30 years fixed at 6.00%. At the end of 30 years, interest paid will be 579,191.
And that's assuming you keep the loan, if you refinance frequently the number only gets worse.
So why are these the wrong questions to ask about a buying a home.
1) What is the biggest / best home that I can afford?
Real estate brokers, mortgage agents and anyone in the real estate business often asks this. They will say a home purchase is biggest / best investment of your life so make it count and get that dream home (even if you can barely afford it). When I purchased our first home, we had the income for a house twice as expensive. Everyone pushed us to get a bigger home in a better area. Sure, we we would have made more money consider the real estate run up. But we loved our 1st home, it was just perfect for us at the time. Even with the house purchase, we still managed to invest in 401k, and saved money to started a business.
2) Is the housing marketing price going lower?
This is an important question, but not while deciding to purchase a home or not. The purchases price is actually only a part of your total cost of ownership of a home. Adding insurance, property tax, mortgage interest, utility cost, repairs, cost of sale, the purchase price is less than 50% and it's not even the single biggest item. However, this is an important question for price negotiation. If you think the housing market price is going down then you'll make your offer appropriate to that market risk. It's the same when the market is going up. When the market is going down, people prefer cash to house. Buyer doesn't want to give up cash and seller is willing to reduce value to get cash. Just the opposite when the market is going up. You can decide to purchase a house in a down market, as long as you negotiate with that risk in mind.
3) When will the value of the home go up?
I never understood why California had such a huge run up on housing prices. It was completely out of portion to rental cost, cost of living, inflation, wage, etc. I just wanted to build out my equity in a little place that I can call my own. I don't want to pay rent forever. If you want something that will go up in value, then you should invest in stock, bond, mutual funds, and other securities. The mantra of modern financial planning is diversification. If you stretch to buy a big home then you are sacrificing diversification and making this big bet that the housing value will go up. Not very smart, instead, buy a smaller home, make sure you have a diverse set of securities, real estate, and income streams. You'll be well covered in any market condition.
4) Will I save a bunch of money on taxes?
I like tax deduction just as much as the next guy. Tax deduction is icing on the cake. I'll alway try to maximum my tax deduction but it's not smart to make big purchases because of the money you might save. Sure, you might save 40 cent for each dollar spend in mortgage interest. But you still have to spend that dollar first. In case of layoff, you don't have have 40 cent tax deduction but you still have to spend that dollar.
In summary, I don't think there is a good time or a wrong time to buy a home. What's important is that you buy the home for the right reasons and make the necessary plans to manage the financial burden.
Wow, this blog entry turned out much longer then I expected. I really enjoyed writing and thinking about it.
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