photo credit: shellac

For the last few months, I haven’t touched my retirement accounts in light of the market’s erratic behavior. However, this weekend I finally sat down to rebalance my accounts. Because of all the fluctuations, my asset allocation was way off. Now, it’s still not where it needs to be but it’s not as skewed as before. Next step, figuring out what to do with the cash in my IRA.

Have you rebalanced your account(s) lately? If not, why not?

*Note, here are a few asset allocation calculators that I like -
CNN/Money calculator
 Forbes calculator
MSN Money calculator

photo credit: TheTruthAbout…

This Old House published an article on 50 Nifty Tricks for Big DIY Savings.  A lot of them are simple and low-cost.  Here are some of the ones I might try at home.

• Shorten your dryer-vent hose. First, disconnect it and vacuum it out. Then trim the hose length so that it’s just long enough for you to pull the dryer a few feet out from the wall. A short and unobstructed line makes your dryer run more efficiently.
  Cost: Free.
  Savings: $25 a year on electric, gas, or propane.
  Bonus: Your clothes will dry about 20 percent faster.
•  Replace central-air-conditioning filters every month during the summer to keep air flowing freely through the ducts and reduce strain on the blower motor.
  Cost: About $11 for three filters.
  Savings: $40 or more on cooling costs.
  Bonus: New filters keep dust and mold from collecting on condenser coils, extending the equipment’s life.
• Insulate hot-water lines. Preformed foam tubes fit right around the pipes, thanks to a slit along their length.
  Cost: 29 cents to 35 cents per foot of insulation, depending on pipe dimensions, at Energy Federation.
  Savings: $50 per year on energy.
  Bonus: Halving the wait for hot water to reach upstairs faucets.
• Plug in a SmartStrip. Three-quarters of the energy that electronics burn is consumed when the equipment is turned off. Rather than unplug items after every use, hook them up to a SmartStrip surge protector, which automatically kills power to electronics when you turn them off and returns it when you switch them back on.
  Cost: $31 for a seven-outlet strip at SmartHomeUSA.com.
  Savings: As much as $240 per year in energy costs.
  Bonus: Two always-hot outlets ensure that slow-to-reboot devices like your digital cable box can be left on all the time.

What are your favorite DIY tips for saving money around the house?

Tell us a little about yourself

I am a Fee-Only independent financial advisor, a Certified Financial Planner practitioner (CFP) and a Registered Investment Advisor (RIA) registered with the State of California. I own a firm based in the San Francisco Bay Area, Curtis Financial Planning, and I have been in business for 8 years. I specialize in the finances of women, their families and their businesses.

Why did you become a financial planner?

 My previous career was in sales and marketing management in the food industry.  I gained valuable business experience and made a good, stable living but I didn’t feel like I was making much of a difference in people’s lives. I wanted to be of service as well as enjoy what I was doing.   Financial planning fits the bill for me perfectly.

What advice would you give someone interested in a career in financial planning?

When I left my old career, I was seeking freedom from corporate structure, so I decided to start out on my own.  This is probably the hardest way to build a financial planning practice – not only because you can’t share expenses with anyone, but it can be isolating.  I would recommend starting off with a partner or partners or an established firm  I would also decide what kind of planner you want to be – fee-only, fee-based or commission-based.  I am biased towards the fee-only model because I feel it has the least conflicts of interest and serves my clients well, but investigating the pros and cons of all three is a good idea.  If you do start your own firm, decide early one what how much and what type of fees you will charge for which services, and then decide which tasks you will do yourself and which tasks you want to outsource.  The key to success is not getting bogged down doing everything yourself. Identify your strengths and the let someone else do the rest.

For those who prefer the services of a professional, how do you suggest someone choose a financial planner?

As I mentioned earlier, I am biased toward the fee-only model, which means that the advisor does not earn their fees from commissions on product sales.  The best place to learn more about fee-only advisors is on the NAPFA (National Association of Personal Financial Advisors) website www.napfa.org. On this website, you can also search for a planner in your area.   There are a few steps I recommend in choosing a planner:

• Ask how they are paid
• Find out how they are licensed and if their licenses are current
• Don’t hire someone that asks you to write a check to them.  Find an advisor that uses a custodian where your money is deposited in your name.
• Check out references.
• Interview at least three planners and see if you have personal chemistry and if they listen to you.  

What are series 65 and 66? Is this something that matters when choosing a planner?

Series 65 and 66 are minimum competency examinations given to professionals with the investment industry.  Both exams are assembled by FINRA (Financial Industry Regulatory Agency).  In my opinion, it is more important that you check whether your advisor is registered with the state they live and practice in, or with the SEC (Securities Exchange Commission).  Also, choosing a planner who has achieved the Certified Financial Planner designation is a wise idea.  Fee-only NAPFA registered advisors and Certified Financial Planners are held to the highest fiduciary standards – meaning they are expected to put the clients interest first at all times in order to maintain their designation and membership.

I’ve been seeing mention of t-bills and muni bonds in the news of late, due to all the fearfulness of being in the stock market right now.   What are these and do you suggest for readers?

I can explain what T-bills and muni bonds are, but I would not presume to recommend to anyone unless I knew what their personal risk tolerance, age and financial objectives were.  But these explanations may help.

T-Bills or Treasury Bills are short term (maturities up to one year) government securities. They are very safe as they are backed by the full faith and credit of the United States Government.  Because of this federal backing, they are considered to have a risk-free rate of return.    But the returns are not high, so not always suitable for particular investors.

Muni bonds or Municipal Bonds are debt obligations of a state or local government. The funds raised may support general government needs or special projects.    They are most suitable for investors who have large tax burdens as the interest is generally exempt from federal tax.  In the case that the bond is bought by a resident of the state that issued the bond, the interest payments are also exempt from state tax. Interest payments are further exempt from local tax if they are bought by residents of the locality that issued the bond.  Depending on the issuer and project muni bonds are considered fairly safe investments and can have good returns.

What financial advice do you have for the self-employed among us?

• Separate your personal and business expenses – have a separate checking account and credit card for business and for personal.  Keep a good record of all your business expenses during the year so you are not scrambling and wasting time finding things at tax time.    
• Develop a business plan, even a simple one, and update it every year.  Make sure it includes cash flow projections so you know if you business will generate the cash you need to keep it going and pay you an income.
• Develop a support network of other self-employed people so that you don’t feel isolated and you get the support that you need. 

Last but not least, what is your favorite pf book?

Right now I am reading the updated version of Your Money Or Your Life by Vicki Robin and Joe Dominguez.  It is a book that attempts to teach people how to develop a healthy relationship with money in order to live more deliberately and meaningfully.    It will make you stop and think whenever you pull your wallet out of your pocket or your purse to buy something new.

Once again, thanks so much to Cathy for a wonderful interview!

photo credit: curiouslee

This weekend, I finally finished our 2009 budget.  Unlike traditional budgets, I don’t set a hard and fast dollar amount for each category.  Rather, I plan for the important things (tithes, taxes and retirement savings) then see what’s left after that.  That amount is considered discretionary spending (my personal spending, Mr. Savvy’s personal spending, travel expenses and household expenses).  I was surprised to see how much disposable income we have left, especially since it sometimes doesn’t seem like it.

However, when I look back over our 2008 spending, I can see where the bulk of the money went.  Travel expenses (something we LOVE to do) and household expenses.  Last year was our patio project as well as the purchase of some big-ticket furnishings and incidental decor.  I suspect that this year will show similar spending.  We have a week-long vacation coming up soon and are in the process of planning a week-long spring/summer vacation.  We just purchased dining room furniture and will probably buy another big-ticket item this summer (still deciding on which one).

Do you budget?  If so, what method do you use?  If not, why not?

I didn’t have any unplanned spending this weekend, but I spent nonetheless.  There was the rental car, gas and aiport food as a result of flying to see hubby’s parents.  Then there was my dad’s birthday party (though the cost was split with my brother) in my hometown.  It was a busy few days with all the traveling we did.

I never partake in the Black Friday madness though it might have been nice to take advantage of some of the online deals.  However, I have not made my Christmas list yet.  Tsk tsk on me.  Thankfully I only have a few people to shop for.  Plus my family is easy, more than likely I will just call and ask what they want.  LOL.

However, I HAVE purchased our Christmas cards.  We did photo cards this year.  I’m going to try to write a few each night (I do handwritten notes inside) so I don’t get overwhelmed.  At some point we need to go take pics for next year’s cards.  I’m actually planning ahead for once and the shopping area near our house has the cutest lighted reindeer that I want us to take pics with.  Cute and free!

I also got my BlackBerry.  Yay!  No more forgetting dates or double-booking.  I love it thus far though I’m still figuring out how to use it.  The only downside is that the bill will be higher than I expected.  The discount I get from my employer only covers the calling plan, not the Blackberry data plan.  Boo!  I guess I was so excited about getting it that I failed to read the fine print.  All is well though because I did switch over all (auto, home, umbrella) our insurance and the savings will cover the additional costs.

How did you guys do with spending this weekend?  Anyone find any great deals?

photo credit: Just Ssome Film

Where will you be on Black Friday?  I will be snuggled under the covers at my in-laws’ house.  I don’t like battling crowds, particularly in the cold and at the crack of dawn.  There’s nothing in particular that I’m in the market for right now (well maybe a mini-laptop) but if there was, I would much rather take advantage of the cyberdeals out there.

Are any of you hitting up the Black Friday sales?  Any tips or tricks for the uninitiated among us?

photo credit: borrowed time | demi-brooke

I’ve decided to add a new ‘feature’ to this blog – answering reader questions.  Whether it’s a question about how to handle a particular situation or stock market terms or whatever, I will try my best to answer it for you.  You can leave a question in the comment section or send me an e-mail (see the sidebar to your left).  Whenever I get a question that I believe will benefit many people, I will post the question and the answer here.  Of course, if you’d like your question answered privately, I will do that as well.  So, ask away!

photo credit: deansouglass

SavvyBro recently sought my advice on buying a new (to him) car.  So I decided to share with you guys a little of what I told him.

• Consider the total cost of ownership – The true cost of buying a car is much more than just the purchase price.  For example, in most states, you will be charged sales tax.  This can easily add several thousand dollars to the final cost.  So just because you have $15K to spend doesn’t mean  you can buy a $15K car.  Also, you need to weigh the increase in your insurance premiums and possibly your gasoline costs (for example, if the new car gets less gas mileage or requires a higher grade of gas).  Also, maintenance and repairs often cost more for foreign or ‘luxury’ cars.  These are all things to be considered before you make a purchase.
• Increase your emergency fund before you buy a car – Unless you’re paying in cash (the best option), you should increase your e-fund.  By adding a car payment to the mix, your expenses will increase and your cash cushion should increase as well.
• Put money down – Not having a down payment is a good way to become ‘upside down’ on your car.  If you don’t have a down payment, your car is likely to depreciate faster than you can pay down the principal at first.  This means you’ll owe more than the car is worth (being ‘upside down’).   This is a perilous situation because if something happened to the car (stolen or totaled), your insurance would not cover the full amount of the loan and you’d have to come out of pocket.  You can avoid that by purchasing gap coverage from your insurance company but that’s just one more thing to increase your expenses.
• Avoid long financing terms – In my opinion, financing a car for more than four years is a sure sign that you can’t afford it.  In addition, you’re almost guaranteed to be upside down on your loan for years to come.  Strive to finance your car for three years and pay it off even sooner.  This may mean saving a higher down payment or consdering a lower price range.
• Skip the extras – Once you’ve come to an agreement (if you’re purchasing from a dealer), don’t allow yourself to be upsold.  Cars today are quite reliable and can be reasonably expected to last well over 100K miles.  Extended warranties and such are just a way to separate you from your money.  The same can be said for rustproofing and other last minute add-ons the dealer will try to sell you.  Steer clear of these.
• Don’t rush – Buying a car is a major financial decision.  Don’t let a dealer or anyone else rush into making a purchase before you’re ready and have had a chance to evaluate all the details.  Dealers often try to ’sell’ you or convince you that a deal (or that particular car) is only available for a limited time.  Don’t fall for it.  Take 24 hours to cool down and look at the deal in a less-pressured environment.
• Be smart about financing – While there are some very good dealers, the bad ones cause them all to get a bad rap.  Check your credit score and credit reports before you even start searching for a car.  This way you can be informed and know what to expect in terms of financing.  Often your local credit union will be able to offer you better rates than a dealer.  In addition, they can usually give you a rough estimate of the rate you can expect without pulling your credit.  If you don’t like the terms of the financing, go elsewhere.
• Last but not least, educate yourself on the process ahead of time (I guess this should have actually been first) - There are fantastic resources out there from the internet to your local credit union to your friends and coworkers.  Research the various models of car, their reliability ratings, insurance costs, etc.  Find out about what financing is available and what you can expect.  Learn about the various auto options offered and what you need and what you can live without.

Have any of you bought a car recently?  What was your experience like?

We’re in the middle of a home improvement project that is costing more than planned (35% over and we’re still not done).  Our pickup may be having some mechanical issues.  Hubby’s birthday is coming up and we’re having a party.  I promised SavvyBro that I’d come visit him (requiring a plane ticket and hotel stay) this summer.  And last but not least,  there’s a fantabulous trip that I’d love to take next August.   It would require a massive outlay of cash so I would need to start saving NOW.  So much for my finances being on auto-pilot..