Stock Gamble Comments

Lots of good comments on the Stock Gamble update.

I agree that buying/selling stock in short term moves is not for most people. Frankly, it is not for me.

But, this is something that Mr. Sam is interested in doing, he is using a small amount of money, he is researching, tracking and has a plan. So I support the experiment, because I support Mr. Sam. I also recognize that Mr. Sam's plan is a gamble and I'm prepared for him to lose the full $5,000 allocated to him. But, I feel that it is a worthy gamble because I want Mr. Sam to be more engaged and involved in our personal finances.

I also agree that it is very difficult, especially for a small investor to "time" the market, but that doesn't mean that someone can't find and undervalued stock, buy it and set up a limit order for when it hits a certain value. If you do that enough times, rolling profits in from prior buys it is possible to make money.

I think the issue of when to sell a stock is interesting and one I've been researching and plan to post on soon.

Retirement Monies

In January 2010 we had $318,424 in our retirement accounts, 401K/IRA. I just updated our networthiq.com profile and we have $421,849 (not including the small trading account). More than a $100,000 increase, mostly due to market returns.

But, looking backwards, we still have not recovered to the asset levels of mid 2008 (pre-crash). During the summer of 2008 we had $1.6 MM in assets, winter 2010 we have $1.5 MM in assets. Overall net worth is in the same range @$950,000. So, two years (of hard work) later, we are just about in the same spot.

Stock Gamble Update

Well Mr. Sam sold our stock.

• He bought the stock on 9/2 and spent $4992 (he had a budget of $5000).
• He sold the stock on 12/3 at $5868.
• Gross profit of $876, he has calculated a $525 net profit or an 11% return over 90 days.

His next move is to take the budget, plus profit and purchase two stocks in the next couple of weeks. He is already researching his next purchases.

MIA

I've been missing in action here due to work and travel (work and personal) and posting is likely to be light until the end of 2010. We are also having home internet network problems so it is difficult for me to access the internet at home and I don't like to blog post while at work.

But, I do have good news to report. I have received a 5% salary increase. Yay, yippee, yeehaw!! Just a year or so ago, July 2009, I had a 10% pay cut (everyone in my company took the cut due to the economy). In January 2010, I received some of that 10% pay cut back and in March 2010 I was returned to my full salary, plus I received my January 2010 step increase in March 2010. I hope this means that the economy is improving. The news doesn't seem to be any better and Florida is especially hit hard by the real estate bubble.

Wishing you all a wonderful Thanksgiving and holiday season and I'll be trying to do some more regular posting along the way but I need to earn that raise the last few weeks of the year.

Debit vs. Credit

I am not a fan of credit cards, but while I don't use them on a regular basis I do recognize that there are times when it makes sense to use credit over debit. This CNNMoney article provides some decent guidance as to when to use debit and when to use credit.



(1) Planning to make a major purchase. I generally agree, any purchase over $1000 or electronics/appliances purchases we use our credit card. However, I don't make the purchase until I have the full purchase price saved up and thereafter I generally pay the bill before it is due.



(2) Travel or gas. I generally agree, we use our credit card for booking hotels, rental cars, flights, etc. Often time we will use our debit card upon check out, when the final price is known and agreed to, but I have run into the problem of holds by hotels in the past. I've not had any problems with gas stations though.



I can't really get behind the other two stated reasons to use credit (1) rewards and (2) you don't montior your checking account close enough.

The Three D's

Somewhat similar to Dave Ramsey in both the goals of the program and the spiritual basis. This CNN article describes a church's "Dfree" program.


The three focal points of debt, delinquency and deficit represent the cornerstones of family financial strength.

First, debt: Americans owe a lot of money. The levels of family debt are threatening our ability to develop any meaningful wealth or to pass that wealth on to future generations.

Second, the commitment to eliminating delinquencies means that we, as a congregation, are pledging to pay our bills on time. Late payments lower our credit scores and this causes us to pay higher interest rates even on good debt such as mortgages.

Lastly, to be free of deficit living means to live within our means and thus eliminate the need to close our spending gaps by using high interest credit cards or --even worse -- alternative financial services such as payday loans, pawnshops and rent-to-own schemes.

While, the plan is nothing new. The best part of this program, in my mind, is the goal to popularize debt free living and the community support provided by the congregation.

If you are working on paying down your own debt, think about how you can make yourself accountable by setting up systems and by sharing your journey. My husband and I held each other accountable as we worked to pay off our non-mortgage debt back in 2007. But, we also talked about what we were doing with our parents, siblings, other relatives and friends. While it was a little embarrassing to share the fact that we had $50,000+ in non-mortgage debt, I soon learned that many, many of my friends had their own debt struggles.

I also like the focus on deficit spending, obviously it is impossible to get out of debt if you keep adding to your debt load each month by spending more than you are bringing in. The deficit step is one that I think a lot of plans gloss over. I found that by tracking our spending, using Quicken (but you can use a little notebook, Excel spreadsheet, any system that works for you), for a few weeks we quickly identified and targeted areas to cut. Also, our allowance system, which we still use, is another way to rein in deficit spending. By using an allowance we limited the amount of money available for day to day spending, and by doing so we reduced our spending and made more money available for debt service.

Stock Gamble Update

Well, it has been a month since Mr. Sam undertook his first non-tax advantaged (i.e. 401K, IRA) stock purchase (or gamble as some of you have called it). At present, if we sold today we would realize a net profit of @ $400 or a return of 8% in one month.

Obviously, we are not going to sell after one month so like any investment the profit is illusory until you sell it.

A Follow Up to Definition of Rich

Well, the New York Times picked up on the same question I raised - whether it is fair to define a professional couple who earns $250,000 as rich. Interesting to learn that in the 1970s there were 25 tax brackets.

And here is one from The New Yorker that makes the point I've been trying to make: that is doesn't make sense and it isn't fair for LeBron James and a dentist to pay similar income tax rates.