Our Race to Retirement: First Month

Financial Fluency: My first Month

BLOGGER: DEBORAH HEISER

Click this link to read the first article: Our Race to Retirement

Click this link to read the second article:  Our Race to Retirement: The Preparation Begins

A bit more than a month has passed since Jackie, Judy and I purchased our first stocks.  Here’s how it happened.  We took a financial fluency course and were inspired to compete (using 1,000) to see who could do the best at picking stocks.

Jackie, Judy and I each set up accounts for 1,000.  Here’s how we’ve done so far…

Debbie:

To start, I decided to use an old retirement account that had been doing poorly for many years (and I mean poorly – when I got it way more than 10 years ago, it had 5,000 in it.  Since that time, it has dipped to less than 1,000).  I wondered if I’d end up owing money on it and figured I couldn’t possibly do worse than the professionals who had managed it.

• I activated the account online and added some money to bring it up to 1000.
• Next, I started reading the Wall Street Journal and my usual news sources each morning.

Then I looked around at what I like personally, and what I use personally on a regular basis. I continued to read the papers and online news: NY Times, CNN, WSJ,  and I added something new.  I looked at what I tend to purchase, what I like, and what I notice others doing and buying.  Since I don’t’ eat out all that often, I didn’t feel comfortable buying fast food or restaurant/coffee shop stocks.  I also don’t have major brand loyalty when it comes to major stores for shopping.  I’ll go anywhere for the basics.  So, that left me with my annual gift that I get from my husband.  A handbag.  If there is a major holiday or birthday, I’m sure to get a handbag.  And, it is from Coach.  Although this didn’t start based on brand loyalty (he couldn’t find the store he was originally looking for and stopped in at a Coach store and bought the bag in the window).  I liked the bag, so rather than try something new, this bag purchase has become a tradition.  I looked around and noticed a lot of other women toting Coach bags and accessories: on the subway, in the grocery store, on the street, and in airports.  They are everywhere!  So, I made my first purchase of nearly 500.00 (I found out you don’t get much for 500.00) and left the rest of the money in the account to see how I did with my first pick.

• Then I watched as it did GREAT – it climbed, climbed and climbed.  I was feeling pretty good, so I threw caution to the wind, and went against my original idea of waiting 6 months to see who I did on my first stock and bought my second stock.  Hewlett Packard.

This was because I’ve always had HP printers, and everyone I know for the most part has HP printers.  I realized this isn’t a good reason to pick a stock, but it worked for Coach, so why not.  Anyway, it did well for a day or two and I felt like a stock picking winner.  Then…the decline.  Day after day, decline in both stocks.  In fact, I kept reading the news and came to find out even Coach CEO and EVPs sold massive amounts of their personal stocks in the company.  So, I am not considering myself a stock picking maven.

I did notice, though, the market has bounced back up and my stocks are about even with where they were when I purchased them.  I’m going to just sit back and wait to see how they do.  I’m not planning to impulsively sell them or do anything for now.

• So, end result, I’m down right now, from my original 1000.00, but not far down.  I’m doing better than the account was doing before I started, but let’s see how it all works out in the long run.

Judy:

Judy has a bit more knowledge than me (she is the smart one) and she bought her stocks when they got to a price per share she was comfortable with .  In her words “I placed orders on all these stocks.  I did a little research, saw the previous days lows and highs, and picked a figure a little higher than the low.  Wouldn’t you know, the stocks kept climbing from that day on!  It took a few days/weeks to secure my stocks at my order prices.”  Judy bought Target, Diamond ETF (I have no idea what that is) and Panera (based on her 18 year-old daughter’s advice).

Target and Diamond ETF went down, but Panera went up.

Jackie:

She opened her account, bought her stock, and hasn’t checked it since, so we have no idea how she’s done.   So, by default, unless she can prove otherwise, she moves behind me in this race.

So far…Race results are :

Judy

Debbie

Jackie

But don’t count anyone out yet.  The race continues!!!!

If you’d like to join in on the “race” leave a comment.

And, we welcome advice!

To read the bio for Deborah Heiser, click here.

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Our Race to Retirement: The Preparation Begins

Our Race to Retirement: The Preparation Begins

BLOGGER:  DEBORAH HEISER

Click this link to read the first article: Our Race to Retirement

On our midlife quest to use our newly acquired basic (and I mean basic) financial knowledge about stocks, bonds, mutual funds and all sorts of other gobbly gook (I mean important information), Jackie, Judy and I have been preparing for May 1^st . The- big day when we use our new financial skills to actually start trading! We’ve decided to take $1,000.00 and see if we can make it grow (and whoever does best…wins. I’m not sure what we win but anyway…).

I’ve been keeping track of what I’ve been doing since we took the course less than two weeks ago. Here’s what I’ve done so far:

Day 1

I came home at the end of the course filled with excitement. That evening I opened my binder. Then I closed it.

Day 2

The next day I got up and took out my binder again and opened it. Then I took a break and got a cup of coffee.

I came back and reopened the binder, took a deep breath and told myself it was now or never. I turned to the first tab: Day to Day Financial Planning. That was hard work. I needed another break, so I checked my email.

Once I got a grip on myself, I opened Excel and made myself sit at my desk. This was not easy. I got out the personal budget template, followed the category headings and made one for myself in Excel. Okay, not bad. I emailed Judy and Jackie to gloat…er…let them know I’d actually accomplished my first task. I felt pretty good!

Day 3

I was on fire. I turned the page in my binder and created my Personal Budget. This, I admit was not fun. Rationalizing all my take-out meals and other unnecessary necessities took a lot out of me. Granted, there wasn’t a real RED FLAG anywhere, all the spending just looks bad when it’s in black and white on a spreadsheet. Still, overall ICK.

Day 4

Drained from looking at spreadsheets, I took a day off to slack off a bit and tried to figure out how to rationalize my spending on take-out and eating in restaurants. This was tougher than I thought. So, I took anther day off to gather strength. Note, I didn’t even start to think about how I’d begin the investment part of the project.

Day 5

I still wasn’t thinking about investing, but figured I’d start thinking about the idea of thinking about investing. So, I set out to organize (which means open the file drawer) some of our accounts so I’d actually know what was in them. Lo and behold, I found an account I’d long ago forgotten about – an old Fidelity IRA account I had from a long ago job way before I even started grad school. It was one of those accounts where I received a statement in the mail periodically. I’d usually just throw it away, and ever so occasionally, I’d open it, see the amount had decreased yet again and then throw the statement away. That was the old me.

The new me phoned the company and asked all sorts of questions using my newly acquired financial lingo. I realized that I never called about my retirement accounts prior to this because I didn’t even know enough to know what kinds of questions to ask. I felt empowered.

I decided this account would be used as my starting point. My first steps were made – I have my $1,000 in an account and now I’m ready to start figuring out what stocks to buy. Wish me (oh yeah, and Jackie and Judy) luck!!!

If you have any tips or suggestions for us, please let us know.And…

Who do you think will win this competition?

Are you for Team Jackie, Team Judy or Team Debbie?  Leave your pick in the comment box below and it will be posted!

To read the bio for Deborah Heiser, click here.

If you would like to receive updates when new blogs are posted, type your email address in the “subscribe” box on the left side of the screen.

To become a Fan of ImagineAge on Facebook, click here!

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To Spend or Not to Spend, That is the Question

Out walking my dog this morning I ran into a former colleague from my investment banking days who was also out with her dog.  As our two pets tussled joyfully, blissfully ignorant of the dreadful state of the economy, we reminisced about our old banking days and the sad state of our former firm, one of the acquisitions that had been subsumed into the now teetering behemoth Citigroup.   Quietly she confessed that that she was close to completing a major renovation of her apartment.  Though her financial position is stable, her husband gainfully employed and their collective expenses under control she had considered cutting back on her apartment work, not because of any financial pressures on her family but because of the general economic mood.  She  didn’t want to be seen as insensitive, spending money while others were facing hard times.  Her embarassment at undertaking an apartment overhaul at this time made me think about expectations and attitudes in the face of our challenging economic times.  Without a doubt virtually all of us are substantially poorer, or should I say less weathy, than we used to be.  That said, do we all really need to cut back dramatically?  How will we get out of this mess if all of us, even those who haven’t lost their jobs or savings, stop shopping, going to the theatre, eating out, and going on vacation. I am not suggesting that we should all be throwing money away, but maybe now is a good time to take a realistic assessment of our financial positions.  If your expenditures were pretty reasonable to begin with and your job or income remains relatively stable, doesn’t cutting back now make things worse overall? 

Over the past few years I’ve gotten pretty lax about monitoring my spending.  With my income and savings impacted by the current environment I decided it was as good a time as ever to examine my cashflow. Essentially, I wanted to know precisely how much I spent last years so that I could compare it against what I expected to earn this year.  In mid-January I stopped thinking about this and began my examination.  Since I remain a Luddite when it comes to bill paying, my personal analysis involved pulling out my check book and calculator totalling all of my checks, netting out any offsetting deposits such as insurance reimbursements.  A tedious activity to say the least but still it didn’t take long to figure out how much I spent last year. The good news was that I hadn’t gone all that overboard.  After I netted out a few things that fell into the extraordinary category I felt even more comfortable.  Nevertheless, since a number of my 2009 expense items are on the upswing I wasn’t out of the woods yet.  Like most people my health insurance rates have jumped dramatically, followed closely by my apartment maintenance, a victim of the significant increase in New York City real estate taxes.  My garage costs, another uniquely New York City phenomenon, were also moving up for the first time in 20 years.  To help offset some of my expense increases I also took a look for places to shave a few outgoing dollars.  To this end, I cutback on my landline phone service and reduced the number of my premium cable channels.  Neither of these provide dramatic savings but still I’d rather spend that money on other things.  Net, net I’ve concluded that though I am not as well off as I used to be I can still maintain my standard of living without a draconian cut in my expenses.  Still like most people these days I’ve got to improve my own personal attitude because I have to admit though I am probably okay financially I am still stunned by the stock market’s swoon and the demise of the financial sector.  Last week I took my first step.  After avoiding all shopping during January and most of February,  in an effort to help the economy, I did buy a pair of not necessarily essential boots (on sale of course). Consider it my contribution to the economic stimulus!         

To find out about Arin, click here to read her bio.

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