Monday, December 31, 2007

The Seventh Sin - Operating Sans Budget

Groan. Sigh. Boo. I know, how much more boring could a HMW be -- talking about budgeting on New Year's Eve?!! The good news is, 2008 is a chance to renew and have your greatest financial year ever! Plus, you can read this now and ignore it until tomorrow :)

Instead of making a resolution you know you won't keep, why not choose to embrace a spot on the mindful spending continuum? I'm not suggesting you fret over every penny, nor that you stop treating yourself -- (I'm still going to buy wine and go to restaurants), just that you think about what you're buying and why. And commit to tracking your spending. Different HMW will have different plans. The point is to have a plan, a budget, or at minimum know how your cash leaves your pocket. More good news: this should only take about 15 minutes!

Management books say "you can't manage what you don't measure", so start with you unique situation by plugging your numbers into the outline below:

Net take home pay
= salary - 401k - (possible) flex spending account deduction
Net spendable = net take home - savings - rent - bills (cell, utilities, gym, insurance, car, etc.)

So "net spendable" is what I allow myself for travel (got to see the world), running shoes, wine, etc. All the things I technically don't "need" but wouldn't care to live without.

One of the best practices I found for embracing mindful spending was ditching my credit cards. Sure, I still use a credit card for major planned purchases from time to time, but not without thinking about it and ordering a side serving of guilt. It's just too easy to put it on the card, get into the mindset of paying it off "later" and then end up in debt. My debit card and me are now bff.

Separating yourself from plastic is easier than you think -- you're probably already practicing mindful consumption other life arenas quite well. Have you ever had a few too many calorie-laden fruity beach drinks while on vaca, and then come home to soup and salad for a week to balance it out? Or ramped up your workouts after a week of long work hours that meant skipping the gym?

You can do the same thing with your spending! After a big fancy dinner out, perhaps you join your girlfriends for coffee or a hike instead of more expensive dinners. Or organize a rotating potluck instead of routinely being the hostess. Perhaps you buy the shoes next month. You get the picture -- the point is to think before you spend.

Now go open something sparkling -- I'm a huge fan of Prosecco since it's festive, light and tends to be a bargin when compared to its Champagne sister :)

Thursday, December 27, 2007

Sin #6 - Owing More Than Your Car's Value

Today's post-holiday post likely only applies to a sub-set of you, but it's an important topic for all HMW to understand. But before I get started, since it's a relatively mundane topic, I'm bringing back the wine pairing -- today's is Merlot.

"But isn't Merlot out of favor?" you ask. This is precisely why I'm recommending it! While everyone else is pawing at the shelves to pay a Pinot premium, you'll enjoy Merlot's sexy, silky, blackberry-infused flavors and perhaps even more wine quality for your money. (Besides, Miles is one of the worst type of wine geeks -- he didn't even know his prized Cheval Blanc was predominantly a Merlot blend.) So uncork, pour and dive into stop gap coverage!

Most of you own a car. Some bought outright (good for you!), some lease, and others are paying down a loan. For HMW in the latter two cases, you may need additional auto insurance coverage. Auto gap coverage is what covers the difference between your car's value and the amount you owe on the lease or loan.

Have another sip -- it's math and worst-case-scenario-thinking time. Let's say you owe $30,000 on your car. But it's only valued at $23,000. If you have the misfortune to be in a car accident that totals your vehicle (or some ne'er-do-well steals it), your insurance company will cut a check for the value of your car less the deductible -- not the value of your loan. So guess who would be liable for the $7,000 difference? Not exactly how you'd like to spend your money nor your SDH fund, especially when you've just had an accident!

Gap coverage pays the $7,000 difference -- a lot of peace of mind for a relatively small monthly payment or a one time fee. Most dealerships offer high prices on this coverage -- shocker, so I don't recommend that route. The best bet is to call your auto insurer (if you have a good relationship -- otherwise, this blog should cue you to shop around for that, too), and discuss the possibility with them. They'll give you an estimate of the value of your car, which you can double check on Bluebook, and a quote. If you like, you can comparison shop to make sure they're giving you a good deal by Googling "gap coverage" as there are several companies dedicated to this type of insurance only.

Do your future a favor in the event of a wreck -- unfortunately they're so common with all the idiots on cell phones sans hands-free (so '90's): make sure all of your car's payments are covered.

Friday, December 21, 2007

Sin #5: Copy Cat Investing & Linear Expectations

Some purchases are best made with the help of others. You dine at a new restaurant because you've heard great things. You check out a new boutique because your best friend got a fab pair of black pants there. Or you go to your friends for advice when you've gotten sick of your hair guy who continually keeps you waiting 30 minutes, then barks at you for being 6 minutes late one time. These are all perfectly sound methods for finding restaurants, stores and services. Just not for choosing your investments.

Picking individual stocks based on what other people are doing -- because of a "hot tip" or your buddy's "feelings" about the market will likely trap you in a cycle of irrational copycat investing. Even if your friend works for the company or in the finance industry! Why?

Turns out that even the fat cats aren't superbly skilled at predicting the market: a study of 47 gurus and their 3800 plus predictions yielded an average forecasting grade of 48%! Sure, some "passed" (none got over 70%), but less than 20 of them predicted the market better than I could by simply flipping a coin!

The HMW shouldn't be dejected by this information, nor should she necessarily rid herself of her financial advisor (more on how to choose one later). The important take-away here is that most people, even the majority of the experts, can't predict the market, much less a stock's direction with any real accuracy. And that's okay! Picking individual stocks is much less important than how your assets are allocated -- the percentage divvied up between stocks, bonds and other classes. And most crucial is having your money in the market for a long time.

So don't try to outsmart or beat the market with a copycat tip. Join it! And better yet, appreciate and embrace its volatility -- a non-linear ride is totally normal. This means you needn't worry about day-to-day ups and downs in the Dow or any other index. And definitely shouldn't sell or go to cash just because an investment is down! Remember Siegel's great words if you start feeling shaky: "It's time in the market, not timing the market" that matters most. A HMW invests as much as she can, allocates correctly, rebalances once a year, and let's her money do the compounding while she's out getting her nails done :)

Thursday, December 20, 2007

Pecado Cuatro: Being Bar Santa

I'm not talking about putting on a fat suit and white beard and hitting the town, nor am I advocating those sexy/slutty costumes you see out during the holidays (although the chicas with the right bods do look pretty fab in the latter).

Sin #4 is acting like Santa while out with your friends -- i.e., being "that gal" buying the round(s). While it's all fine and dandy to treat, continually buying drinks for a group -- or the bar if you've had too much, is a real budget killer.

Thankfully, it's a pretty easy behavior to remedy. First, there are some questions to ask yourself to determine whether you're round-buying is a genuinely friendly and occasional offering or a budget-slashing bad HMW habit:

1. Did you plan to treat before you left the house?
2. Do you tend to hate to ask your friends for money, even if you were the one who spent the 15 minutes batting your eyelashes at the bartender to get served? Prefer saying "just buy the next round" and subsequently being disappointed because they aren't as generous as you? (You might actually need new friends if you answered yes to the latter. :(
3. When you look at your receipt the next morning, do you promise to stop being so "generous"?

If you've gotten this far and you're patting yourself on the back thinking, "Of course not!", then either wait for tomorrow's post or continue reading so that you may help a friend in need or prevent this behavior should the mood ever strike.

If on the other hand, you sheepishly nodded "yes" to your computer screen while posing the above questions, the second step to solving your "fat suit" -- i.e., over-speding problem, is a quick action plan. It's much easier to fall into Bar Santa mode when you start a tab. So the best place to nix this habit is quite ironically, at the ATM: withdraw what you're planning to spend plus your cab fare home beforehand. You'll be a lot less likely to buy a round if it means you only get one drink! Then, leave the plastic chez vous so you're not tempted after the wine starts thinking :)

Wednesday, December 19, 2007

Sin #3: "I'll Do it Tomorrow" Thinking in Your 401(k)

How many times have you lost weight on a diet that starts "tomorrow"? Gotten a raise by going to work "tomorrow"? THEN WHY IN THE WORLD WOULD YOU FUND YOUR 401(k) TOMORROW??!

Tomorrow doesn't work, my fair ladies. The day to start contributing to your 401(k) if you didn't yesterday is TODAY. Here's a quick list of reasons to call your benefits office, pronto:

1. You benefit from the incredible power of compounded returns over time. Your investments work just like you do! (This is akin to burning calories while you sleep, but much better :)

2. You lower your tax burden. 401(k) contributions are taken from your gross earnings so if you earn $100,000 and contribute the max ($15,500), you are taxed as though you earned $84,500.

3. There's often an employer match. Sometimes it's a 5% of your salary add-on, at other times another figure, and often you have to be with the employer for a period of time, but the point is, not contributing means walking away from free money! Would you pass up a several thousand dollar gift certificate? Then don't do it with the employer match at work -- we're talking thousands of dollars!

4. You're farther from trying to subsist on social security payments. Have you ever checked how much money you can expect? (A HMW likely has neither the time nor the care to do this, so I did it for you.) I went onto the SSA website, entered in a 30 year-old who makes $100k and plans to stop working in 2048 (ugh!), requested the payment in today's dollars (not inflation adjusted) and found out she'd receive a whopping $2900. Can you live on that each month? I think not -- that's my rent plus a few extras!

5. You'll likely barely miss the money. Twenty more lattes or another few pairs of Choos versus the sound sleep you'll get seeing that statement growing every quarter.

So do this: a lot of you will be getting raises in the coming weeks. Challenge yourself to at least putting that much more in your 401(k) next year. I promise it will be the gift that keeps on givin'! AND keep you one step farther from ended up like cousin Eddie :)

Tuesday, December 18, 2007

Sin Numero Deux: Picking Socially Responsible Funds Just Because They Sound "Good"

Have you ever bought something just because it looked or sounded good, only to be later disappointed by the purchase? Perhaps it was a fabulous bra that squeezed you in all the wrong places? A wine in a fancy bottle that tasted a little too much like cat pee (while "feline urine" is a common and sometimes desirable descriptor for New Zealand Sauv Blancs, there is definitely such thing as too much of a "good thing")? Or a book with a delicious looking cover that once opened on the plane made you turn to reading the emergency exit procedure card?

We all eventually become better and more efficient shoppers by taking the time to try on the bra on, ask the sommelier, and flip through the book before purchasing. But how many of you selected XYZ "Socially Responsible Investment Fund" in your 401(k) because it sounded like the "good" or "right thing to do"?!! I've seen a lot of these in my HMW friends' portfolios and am sorry to say that a number have downright irresponsible returns!

Let's take a look at the Investopedia definition of Socially Responsible Investing:
"An investment that is considered socially responsible because of the nature of the business the company conducts. Common themes for socially responsible investments include avoiding investment in companies that produce or sell addictive substances (like alcohol, gambling and tobacco) and seeking out companies engaged in environmental sustainability and alternative energy/clean technology efforts. "

Sounds pretty lukewarm, perhaps even positive to some of you (except for the part about avoiding alcohol companies -- wine has been around since Man learned to walk bipedally, and to me is therefore perfectly responsible and enjoyable for most people).

Here's the problem: a number of these SRI funds lag the indexes they're using as a benchmark and charge pretty steep fees for all the research necessary to weed out all of supposedly sketchy companies.

Investopedia cautions: "Just because an investment touts itself as socially responsible doesn't mean that it will provide investors with a good return." Over time, these high fees and lagging returns will ultimately compromise your ability to save and be a philanthropist. (The ultimate giver of late, Warren Buffet, waited until he had accumulated an extraordinary net worth before unveiling a gradual plan to donate over $35 billion so his contribution could first benefit from growth.)

LMF 4 HMW bottom line: Unless your 401(k)'s SRI fund choice is beating its benchmark net of fees, do something socially responsible outside of your portfolio. Give to charity, volunteer at a homeless shelter or the Boys & Girls Club. Or heck, buy a renewable energy gift card credit at Whole Foods -- I didn't say it actually had to be useful :)

************ EXTRA CREDIT
This is a super idea, courtesy of my fabulous fiance, who happens to be in the industry: "Why not track the performance difference between the SRI fund and what you actually invest in. Then contribute this amount of money to charity. You still come out ahead in the long run thanks to compounding, and you sleep more soundly at night knowing the world is a better place?" Not very LMF, but another way to contribute without sacrificing your ROI.

Monday, December 17, 2007

#1 of 7 HMW Sins: Operating Sans Renter's Insurance?!!

In honor of the famed "days before Christmas" count down, I'm offering a less festive, but arguably much more important ticker during my next seven posts: The Seven Deadly Sins of HMW. These will be shorter, as we're all quite busy donning little black dresses for holiday parties, but definitely worth your precious minutes.

Toady's sin, #1, is operating sans renter's insurance. Think you don't need it because you haven't accumulated a ton of belongings? Think again. Remember the last time you moved? How many boxes did you pack? Were you not tired after lugging them around all day? That weight right there proves my point!

Still not convinced? Try this simple exercise: Pick one room in your house and go through it, clockwise, listing every single item in it with a cost estimate. Add those figures up and multiply by the number of rooms in your house. Or better yet, do this exercise for your closet!!! Even one filled with Issac Mizrahi is bound to cross into the multiple thousands.

Still thinking it's not worth the bother because your a HMW and a few paychecks could cover you? Put it this way, for the price of a couple of venti soy lattes each month, you'll be protected. If you remain resistant because you feel you'd never do anything stupid, think again! When was the last time your roommate did something dumb? In college, I left a tea kettle on the stove until it had melted into it -- thank goodness my fabulous roomie came home and interrupted my hair drying to tell me about my close call before it ruined our party evening.

Or, later in life, when my "candle accident" turned into a $3500 renter's insurance claim?!! Had I not had renter's insurance, I would have been in a serious bind. Instead, I went right back to Bed, Bath and Beyond and in a matter of hours, had replaced my belongings. (My nerves took significantly longer, especially since I had to explain to the adjuster exactly what happened while on my "date".)

If you haven't already called your provider of choice or looked online for rates, do so now! I just might be the new neighbor next door.

Friday, December 14, 2007

Bonds in a Retirement Account are for Women Who Hate Money!

It's true! According to esteemed Wharton professor, Jeremy Siegel, "over the last century, accumulation in stocks have always outperformed other financial assets". Even with the crash of 1929! Even with all of the volatility and the somewhat media concocted sub-prime "crisis"! Even with any other mumbo-jumbo negativity you will see during this bull market now five years strong. And even when we do enter an economic slowdown, which by the way, is a perfectly normally occurring activity. (Does your weight stay the same every day-month-year? Does your mood? Your tolerance? Your eh-hum, drive? Anything?) Who said the market was supposed to have a linear relationship pointing toward the heavens, anyway?

Here's why: with a retirement account, it's all about your time horizon, or how long you'll need the money. And the very vast majority of us have a time horizon greater than 20 years. (I know my mother is reading this thinking, "But I'm retiring in three years!" Good for you, Mom, and thanks to your fabulous genes, people in our family have oft lived to see 100, so may I remind you that your horizon is well over 20 years!) Remember: it's when you expire, not when you retire, that a retirement time horizon makes.

Perhaps hard to swallow, especially since I haven't yet discussed a wine pairing, but beautifully true. Think of it this way: when my Mom retires in four years, she'll be in "the new 40's" (i.e., her actual mid-sixties). Based on her life expectancy, she'll be kickin' it for another 30 years -- wanting to withdraw her hard-earned money and still see growth within the account so she can fund trips to come babysit my kids. If she keeps her money in cash, it will not keep up with inflation. Sure, it won't look like it's going down -- she checks it 17 times a day, but it sure as hell won't increase! And when milk is $5 a gallon due to all of the subsidies for ethanol for green energy, she will actually have less money.

If she keeps her retirement in bonds, she'll have more than if she'd kept it in cash. But if she keeps it in a diverse portfolio of stocks, Siegel assures her she'll have the most: "As the holding period (your time horizon) increases, the probability that stocks will outperform fixed income assets (bonds) increases dramatically... for 20 year horizons it is over 90 percent of the time; and for 30 year horizons, it is virtually 100 percent of the time." Well, Mom, since you're likely going to live for 30 more years, you're now in love with stocks.

But cash is "safer" she cries! False! Losing money over time is not only unsafe, it's downright dangerous. (How do you expect to fund your wine habit if you have less and less money over time?) Again a retort from her: "Then bonds are a better bet -- stocks are so risky". Wrong again! Siegel puts it best: "It is very significant that stocks, in contrast to bonds or bills (Treasuries), have never offered investors a negative real holding period return". For a time horizon/holding period of over 10 years, "the worst stock performance actually has been better than that for bonds or bills".

The net of it is that for long time horizons (those over 20 years -- i.e., yours, mine, my Mom's and likely your Mom's), stocks are the way to go. Thankfully, the HMW knows that patience, hard work, and healthy amount of moderation and laughter are really important keys to success and living well. So it should be easier for us to understand is that the most effective way to "beat" the market is to in fact, join it! And join it for the long-haul. Starting yesterday.

******************* WINE PAIRING FOR ONLY THOSE SEEKING EXTRA CREDIT: BUBBLY!!!
Crack open a bottle of bub after your fingers "run" on over to Amazon or your preferred online retailer and buy Siegel's Stocks for the Long Run. I know stocks aren't exactly what you want to snuggle up to while on your upcoming holiday flight smashed in between the-cougher and the-guy-who-is-taking-up-both-his-and-one-half-of-your-seat, but the book will take your mind off your situation. And scare off any lame dudes seated in your vicinity who will be intimidated by a hot chick reading a finance book!



************* DISCLAIMER -- DON'T EVEN TRY TO SUE ME: I am not discussing how to make quick money or figure out the next Google before it's Google. I don't even have a trading account, nor do I bother searching for the next-best-thing. Doing all of that would not be considered LMF. A HMW doesn't have time for this, and now knows that a lot of people who do that let their emotions do the investing -- they buy high, sell low, and basically trip all over themselves to find the next "hot" issue. Those who day trade would be better off viewing their account like a gambling habit -- taking 5% or less and having fun with it, but never "betting the farm".

Thursday, December 13, 2007

Dealing with Your New File

Now that you've completed those five zippy steps, this next exercise requires a more full-bodied vino, and a little more oomph from you. (If you haven't read my post from yesterday, "Five Quick Steps" do that first -- it'll bring you up to speed.) Since it's getting cold out there -- unless you're one of the lucky few to live by a warm, sunny beach, I'm recommending Syrah. It's typically packed with luscious fruit and balanced by peppery spice -- just like you on a hot date!

Start with the easiest account, checking. If you don't bank online, now is the time to set that up with your provider. By the way, if you have a parent or husband in the military, the bank of choice is
USAA -- they are phenomenal, and best of all, you can put all of your eggs in their basket. They offer everything from checking to renter's insurance (more on that later) to bling! Here are some initial questions to ask yourself:

1. Do I bank online (for those who haven't been reading carefully)? And is my password secure -- i.e., not easily figured out?

2. Does my company offer direct deposit of my hard-earned paycheck and if so, am I using it?

3. Am I paying myself and my creditors first? (This means you buy the lattes after accounting for all of your bills and putting some aside.)

4. Do I routinely overdraw my checking account and incur fees? If so, STOP! Go back to question number three.

There is no one answer for how much should be sitting pretty in your checking account, but it should be enough to pay your bills and provide a cushion. I actually keep relatively little in my checking for two reasons: 1) I almost never use a credit card and instead pay with my debit card using the "credit" option because this keeps me from over-spending; and 2) I'd rather be getting a higher rate of return with any leftover cash. And that ain't in checking! (Pretty good for someone who at one point had over $13k of credit card debt due to going out, laser hair removal treatments, buying a car I couldn't afford at the time, etc.)

Reward thyself with a sip or two of Syrah! We're moving onto your savings account -- you do have one, don't you?!! (Now is not the time to protest that your live in the most expensive city and don't have anything left to save, as I won't buy it. Ever. If you went to Starbucks this month, you can start a savings account.) Set one up with that handy online banking system you've created -- even if it's just $25 a month. This is the beginning of your new emergency fund! While not quite as exciting as Mr. Choo's newest footwear, it'll help you out if you get in a bind, like the time I almost burned my house down on a "date". Sh*t does happen, so think of this as your SDH account if you don't like the emergency nomenclature. Even if you're not dumb enough to burn down your apartment, I could be your new next door neighbor :)

The reasoning behind the SDH account/ emergency fund is that you don't want to turn to credit or have to call your parents if you need cash in a bind. A lot of finance gurus say you should have 6 months of living expenses racked up in there (this is the point where I'm running a "do as I say, not as I do" play). I might argue that 3-4 is sufficient because there are other options if the SDH happens, but the point is that you shouldn't be coasting paycheck to paycheck. If you're staring at that bottle of wine like you want to throw it at me, now is the time to seriously consider removing the credit card from your wallet. I probably don't even know you. (Or wait, since my mother and closest friends are the only ones reading this, I probably owe you dry cleaning since last time I saw you, I spilled wine on you! To rectify the problem, ring me and I'll walk you through your SDH set up.)

Some of you have the opposite issue -- a wad of cash in a savings account. I'll deal with y'all now. Keeping a huge amount of cash in a savings account (more than 6 months of living expenses unless you're about to put a down payment on a house or make another huge purchase in cash) is akin to keeping it under your mattress. So wipe that smug grin off your face and behold the power of
time value of money, especially if you aren't maxing your 401(k). Basically, you want to be beating inflation and in a savings account, that is barely, if at all occurring. The good news is, this is easy to fix!

Down to investing business. Since you're a HMW, you are likely aware of your 401(k), the tax-deferred (as in you don't pay until you withdraw when you're gray) retirement account. If your company offers one and you're not contributing, put that glass down, cork the bottle, and come back stone-cold sober. There are a myriad of reasons to contribute, and almost none not to do so. First, your company may offer a match as a percentage of your salary, a dollar figure or another metric. This is free money! The only "catch" is that you have to contribute (and you might need to be there for a certain amount of time for this money to vest or become yours). Second, Social Security distributions will absolutely not give you the lifestyle to which you've become accustomed. Third, the prince on a white horse is not going to come rescue you; retirement is no longer the (future) man's problem. Even if you're married, there's nothing hotter than an independent HMW with a phat investment account. DO NOT give me any "my man deals with that stuff" -- you wouldn't be reading this if that were the case. And you definitely aren't one of my friends.

So here's what you need to do:
1. Contribute the maximum amount possible. This may mean $25 a pay period (like me right out of college or if you're saving the world in a low-paying non-profit job), or it might be the full $15,500 per year ($20,500 if you're over 50).

2. Commit to raising this level of contribution annually until you reach the summit (which may increase in the future). I started at 5% three years ago, went to 10% last year, and this year will be the proud owner of a fully contributed (and matched) 401(k). Point being, it may take time to get there, but you should get on this plan like you hit the treadmill after a pint of ice cream weekend! One of the best things about "maxing" is lowering your net income and therefore the amount you owe in taxes. Given that we're HMW, a good number of us are in danger of the
Alternative Minimum Tax (more on that later) and lowering our net income is one of the best ways to avoid this ridiculous legislation. Make this escalating contribution scheme slide down more easily by upping it each time you get a raise.

3. Put your dough in the right places! That means creating a diversified portfolio -- you don't own all black pants do you? A diversified portfolio in the finance sense typically means getting exposure to different types of asset classes, like stocks (call them "equities" to sound really cool among finance dorks), bonds (ditto so say "fixed income") and cash-like investments ("money market funds"). I, however, beg to differ on this point. (A lot of you are going to disagree with me, but I'm not taking any flack until you read Stocks for the Long Run by Jeremy Siegel.) If your time horizon is over 20 years -- and I don't mean the date you're going to retire, I mean the date you're going to expire, you need to be in 100% stocks. Yes. Take a deep breath. Throw in a down dog if you must. Here's why: in every rolling 20 year period except for one since the Civil War, a diverse basket of stocks has beaten bonds. Sure, it's a wilder roller coaster ride, but who has time to check her accounts between trips and dates anyway?

4. Look at your 401(k)'s array of choices. Now that we're tossing anything with "fixed" or "target" in the title (these have bonds), it gets a lot easier. Ideally, your company offers stock index funds since they're cheaper! If you're not that lucky, choose a few funds invested in equities with the lowest expenses (listed on the fund sheet). You're aiming to have about 50% in the good ole USofA and the other 50% in the rest of the world. (I have 10% in emerging markets and about 40% in international stocks to make that 50%.)

Whew. Pour another glass, we're almost there. If you happen to be a HMW with cash left over post maxing your 401(k), you'll want to start either a
Roth IRA or a traditional IRA, depending on your income level. Still awash in cash? Time to set up or deal with your taxable investment account. In the spirit of brevity and me actually getting to work (this is a blog so I'll be back to expand on all of it), you want to focus your taxable account similarly to how you set up your 401(k). And if your 401(k) doesn't offer international stocks or emerging markets, this is your golden opportunity to invest in the rest of the world -- the US has less than half of the world's stocks and you wouldn't want to miss out on Beamer (BMW), LVMH, Nestle (chocolate!), Nintendo, and any of the other fine companies earning cash across the oceans. This is pretty simple, really:

1. 50% in the S&P 500 Index
2. 40% in
MSCI World Index
3. 10% in Emerging Markets Index

By the way, a nice hard cheese -- perhaps Gouda, would go well with your Syrah. You'll need something to soak all of it up after finishing this article!

Wednesday, December 12, 2007

5 Quick Steps to Getting Cotrol of Your Finances

Like you need another To Do list?!!

This one won't be too bad, I promise. Consider it a personal inventory of sorts, like when a "I have nothing to wear" day turns into a full-blown closet overhaul. Plus, you'll feel much better knowing that your financial closet is well on its way to being in order.

1. First things first -- what wine are you going to pair this with? Pour some Sauvignon Blanc. For one, it offers a great value for money -- you can find a good one at your local grocery store for under $15, and it's nice, crisp, and zippy. (Just like the process is going to unfold.) See, this isn't so bad, right?

2. Now down to business: Make a list of all of your accounts containing money. So you might have checking, savings, a 401(k) or two or three (depending on how many jobs you've had and if you've rolled them over), an IRA, and perhaps some investing accounts.

3. Ask yourself the most pertinent question: Have I forgotten anything? Are there any outstanding, lonely 401(k) balances from former jobs that could automatically bump up my nest egg?

4. You've likely joined the 21st century and moved to online banking, so now it's time to figure out the values of these accounts. Log on and write these down beside the account. (Have another sip of wine if you haven't already -- we're almost through!) Can't find your password? Don't know where your accounts are? Time to figure this out -- you can't manage what you don't know!

5. Create a file with this information, either on your computer (password protected), or in a cabinet. We'll get to what to do with it in the next post.