Selecting Funds for the Rollover IRA

Ever since I saw this particular episode of Jim Kramer's "Mad Money", a few months ago on the potential rise in the healthcare sector due to the healthcare needs of aging babyboomers, I've been thinking about getting a healthcare sector fund. I'm not a fan of "Mad Money" but I agree with his reasoning on this topic. Frankly, he scares me quite abit with his squeals (his voice).

One fund that I was thinking about buying was Fidelity Select Medical Delivery (FSHCX). I should have done so earlier this year, of course, when the value was abit lower. I think I'll wait a wee bit for a small drop.

I already have primarily allocated retirement contributions to Large Growth and Value Funds as well as a Bond Fund and Foreign Funds. Also, some into the Midcaps as well. So, maybe, the rollover IRA money can be allocated to a fun and exciting (and scary, perhaps) focus fund or sector specific fund. Compared to other specific sectors, the healthcare sector seems to be abit less scary for the next few years.

But, I really have no experience in assessing funds and their potential, except for having read a couple of books on such topics. I've read that it's not advised that one buys a fund toward the end of the year due to fund distributions that are usually issued at the end of the year. But I am in not in a high income bracket to worry about a high tax bill, so I think it should be allright for me to buy at this time. I just don't want to leave the money in the rollover ira to stagnate for a couple of months or so.

The Price of Smoking

I've smoked socially before I started to smoke regularly in my 24th year. In my mind, I've never seen myself as a smoker. So, I bought cigarettes from the gas stations nearby, pack by pack...never in bulk like most regular smokers. I was in denial and of course, it cost me more financially to buy pack by pack. I ended up smoking a pack every two days and I blamed a pretty stressful job for it.

Cost of Smoking:

$4.95 (approximately) + $1.50 (something cold to drink) = $6.45

$ 6.45 x 183 = $1,180.35 x 4 = $4,721.4 Total Spent Approximately on something that didn't benefit me healthwise and financially. It definitely feels like I've paid alot more than this, though.

By the way, it has been over a week since I've last smoked!! They say that you don't know for sure if you've gone off on cigarrettes after you've quit for at least five years. A long way to go.

Spending Overboard!!

I went over budget with my holiday spendings...I was pretty good at keeping track of my spending until about a month or two ago. Today, as I sat staring at the computer screen ....at my credit card balance, I realized how easily the eating out costs added up fast along with the holiday spending. I really need to bring food from home more often. I've been eating out everyday since I started this new job.

Thankfully, most of the balance will need to be paid next month and I'm hoping I can get some extra cash next month either from cash receivables or extra income. Either way, I won't be able to hit my savings goal for next month.

I definitely need to stop smoking....that's definitely been a drain...financially and in terms of health. It's been three days since I've touched a cigarrette. *sigh* :)

From Red to Green!

The past month or so, the stock market hasn't been performing well. However, in the last few days, it's just been spiking upward! The little red boxes are becoming greener and greener :D. Since my roth ira and taxable account are both made up of front load mutual funds (5% front load), I was starting out with a loss already before the market has had any effect. But this past week has allowed my small savings to beat the automatic 5% loss and even, go over approximately 2%. Not much but after watching that darn red 5% loss for almost a year, I'm glad it's starting to go into the positive zone.

Talk about front load funds, here's an article I found on www.usatoday.com by Paul Merrimen, concerning the never-ending debate about investing in Load vs. No-Load Mutual Funds.... the eternal tug of war in the world of Mutual Funds.

Basically, the gist of it is that -

***"Every study on the subject has concluded that over long periods of time there is virtually no difference in returns between the performance of all load funds and all no-load funds-except for the sales commission. "

***The load funds fund the pockets of the broker...not the investor.

***If the load and no-load funds are in a horse race, a load fund is like a horse that has to start a race from far behind.

Invest $10,000 in a no-load fund and you have to pick funds by yourself. But your entire $10,000 goes to work for you. Buy a fund with a 5 percent load and somebody else tells you which fund to buy and does all the paperwork. Except, you now have 5% less than what you could have potentially invested.

If these two funds are equally successful in the future, the load fund will find it hard to catch up. Due to effects of compounding, it will fall farther and farther behind.

***Load funds are sold based promises based on a long-term period. The brokers convince investors that the sales charges will only be a small cost when they are amortized over many years. But life is full of surprises. So, potentially, you will not conquer that load charge if you pull out your money before five to eight years. At least, that's what I've heard.

***Load funds tend to have higher expenses than the no-load funds.

So, why, then did I put in money into my front load American Funds? Basically, I just didn't want to think about it so much at the time, and investing in something is at least better than not investing at all. I, also, liked the fact that during the lean and low years, American Funds did not have big drops like most of other funds. They were consistent.

Merchant Network on Citi Dividend Card

It's Holiday Shopping Time! Citi Dividend Card has the Merchant Network through which you can get 9% cash back on your purchases at Target.com. Usually, the cashback programs for most merchant networks are around 3% to 5%. So, I just bought holiday presents for my mom, my sister, two of my girlfriends, and for my nephew. 9% cashback is great! Although, it does take about a month or so before the cashback, at least for the merchant network, is credited to your citi dividend credit card account as part of the cash rewards program. Usually, it takes a billing cycle or so. I love this card!

Friends & Money

"My open wallet" had recently done a post over at http://www.myopenwallet.blogspot.com, discussing about the various issues of having friends who are at different income levels than you are. She had talked about a friend of hers, with whom she either has to pay or watch her spending style during the times they spend together.

I believe I was/am viewed as that kind of a friend by alot of my friends and family. Whenever, we go out and eat or plan a get-together, they always have to plan somewhere inexpensive and most of the time, they offer to pay for my half of the bill. Of course, I try to cover for myself with my own money, unless people take great offense to not accepting their money or if it's causing a big scene in the restaurant. They make three folds the money I make, so somehow, they feel this "duty" to be overly sensitive to my income level. I am grateful to have friends who are this nice, but for once, I just want to feel like a normal friend, the person they can genuinely feel comfortable with, even when we're eating out a fairly expensive restaurant or shopping. She can really shop and I really don't mind just window shopping! I really don't!

One day, I want to have a social life without having my friends/family feeling bad for me everytime.

Variable Universal Life Insurance

Finally, I received some word back from One National Life Insurance that was bought through a representative from the MONY group. I went through the medical exam a few weeks ago, that consisted of loads of medical history inquisition (:D), a blood test (twice because I'm supposedly hard to draw blood from), and a urine test. I guess they didn't find anything exciting about me because I got the standard rate for the variable life insurance.

The monthly payment is quoted at $ 96.00. This rate will not change with age or medical problems in the future ( which I know there will be loads of, with the way things are turning up). The money will be tax-deductible and will be invested in a few mutual funds or annuities. I don't have the list of investment options yet. If the investments do well, you can opt to pay for the insurance premiums with the profits you make from the investments. The principal amount of the balance would be available for withdrawal at any time. The growth of the money in the account will grow tax free until, of course, you take it out.

I wonder if it would be a wise option to use or view this life insurance account as a forced savings account that has a growth feature with compound interest with the benefit of having your life insured for $250,000. But then, I've heard that this is not a very wise thing to do as well.

I haven't been able to update frequently during the last week due to this week being the exam week. Have exam on this tuesday and wednesday..I really hope I pass!

Also, I found out today that my work only pays for $1,500 per fiscal year for tuition reimbursement!!! That's pretty low. But then, it's better than nothing!

Side Income

I was beginning to get nervous with my side income money from my second freelance job since during the month of October, I havn't received any projects at all. So, no extra income for October. But as of today, I got two projects for the month of November, so I hope to bring in an extra amount of side income this month. I am expecting about an extra $ 1,500 to my regular income this month. This will help out alot with my savings goal. Not bad for a total of two days' work....one and a half day if I'm not lazy.

I wish I can get two projects per month regularly but the company I work freelance for is a small company and their monthly project load varies wildly. Of course, I can work part-time for the last biggish company I was at to get more money with regular monthly project loads, but their projects would be mainly out of state projects and my same day flying deals are over (at least for now). With the smaller company, I get the local projects and I get to breathe easier since I don't have anybody driving a strict dealine over me.

I'm happy, nonetheless, that my November asset amount would at least be abit higher than the October's balance.

An Evening with A Real Estate Agent

Last night, at a gathering party, I met a REMAX real estate agent who had a few tips and advice for the first time home buyers. I brought back some advice from the conversation;

>> Make sure your FICO score is in the good or excellent range.

>> Make sure that I am not spending over half the allowed limit on my credit cards. Have more than one credit card in order to prevent this.

>> Make sure you keep a good rental history of two years and that you can have a copy of all the rent checks from the bank to give proof of this to the lender. The lender wants to see both front and back of each check.

>> Have at least $6,600 to 10,000 (depends on the price of the property you're buying, though) in reserve money. This money is not part of my downpayment. I can show 70% of my 401/457 K money and Roth IRA money as reserve money.

>> It's better to buy a two to three bedroom home rather than a one bedroom apartment or condo. I had been aiming for a one bedroom condo/apartment with my budget limits. She said it's better to buy a two to three bedroom home and rent out the spare rooms to help pay for the mortage payments. Condos/apartment conversions will not do well in re-sale at all. They are becoming popular due to the housing price momentum of the single family homes. They are in more of danger for a bubble burst than other types of homes.

>> I should buy soon although I don't have the 20% downpayment since the home prices will probably cool down 5 - 10 % only, and the majority of the homes that will cool down in price will be at least $800,000 or more (the higher priced homes). With the interest rates going up, I will never win this race whether I wait or buy now. Do not wait more than a year.

>> Do not get interest-only loans. They tack the money/principal you owe during the interest-only years onto the back end of your loan, and once, you start paying the principal portion as well (once the interest-only period ends), you will realize that you have a mortgage bubble of a payment each month since you only have 25 years versus 30 years to pay off the whole bloated loan. Assuming you took out a 5 year interest only loan. At this point, she pointed to my sister and said they have done that and they will find it hard to cope in three years.

This is all that I can remember from that wine-filled evening. I'll keep her advice in mind but I still want to some more hard cash in my hands before taking the plunge. I also understand that, eventhough she might have good intentions in mind, she is still a real estate agent and might have her own interests in mind. Most of her advice was general and common sense, though.

An Odd Money Opportunity

Yesterday, I received an odd money opportunity. I found out, also, that even though I really want money to help with the downpayment fund, there are certain limits to where I'll go.

An acquaintance of mine, a former house mate, phoned me and asked me if I will be open to an illegal marriage to a friend of hers. He will get to stay in the country and I will get ~$20,000 in exchange. I will have to be married for three years. I believe she's asking all her single friends.

I'd like to think that I'm worth more than $20,000, but it took me a whole five minutes to say "No". Alot of reasons; self-respect, buying a small apartment in two years (which i don't want it to be in his name as well), the crime being a FELONY, and loads more.

$20,000 would have still helped out and I scared myself for taking that much time to say no....to have actually considered it an option because of the money.

Fidelity Rollover IRA Update

Earlier this week, I had talked about the rollover process from an old 401K plan into Fidelity's rollover IRA account.

I was worried about the length of time it was taking to get processed, but I received the check from the old 401k plan provider today! Whew! The check's made out to Fidelity and nothing was withheld, so I'm happy enough. I guess, they don't directly send it over to Fidelity but send it to me first and then have me send the check to Fidelity. I assume that this is due to security purposes.

It took approximately a month and a half, beginning from the day on which I had submitted the distribution form to my old employer til the day I received the check (today!). I talked to Fidelity today and told them to be patient... all of my meager $2,600 rollover is coming soon to them. $2,600 is still $2,600 and I'm darn glad to have it! :).

Wow, I'm talkative today...this being the third post in one day.

The Saving Mindset

Here are a few tips on how to think and act frugally that I've found to be useful:

- Create 5-, 10-, 15- and 20-year plans. Having short and long term plans will help you be disciplined with your financial goals. Keep a small business card-sized card in your wallet that reminds you of these goals whenever you open your wallet to buy that expensive bottle of perfume everyone is buying.

- Your fellow twenty-something year old friends are not You. Don't buy all the coach bags, flat screen TVs, and Juicy Couture clothes that they buy. I hope this doesn't offend any of my friends who happen upon this blog.

- Anything that costs over $50 should go through a need or a want analysis. I still need to work on this.

- Don't let your money slip away on small items, such as spa manicure/pedicures. Instread, let your money build up for big things that will make a big impact on your life, such as an emergency fund or down payment for a home.

- Gifts for others don't need to be elaborate. Unless your friends and family really don't love you but just love your presents, which I doubt is the case.

I need to control my spending on gifts for my nephew. I'm so attached to him that I buy him toys or books almost every month or every other week. Most of the time, he doesn't even notice the new toys or books after the first hour of uber excitement. I realize now that I buy him stuff so that I can feel and benefit from that utterly pure moment of happiness that he shows when he first sees the toy. Pretty selfish. There are other ways to make him happy, such as taking him to his favorite playground or letting him play with water (what is up with that kid and water??!!!).

:).

Financial Planning Workshop

Financial Planning Workshops

I signed up for a financial planning workshop that's offered through work yesterday. The financial planner doing the seminar is a regular financial planning advisor who writes for the Orange County Register. The seminar is scheduled for November 10, 2005. Hopefully, good information tidbits will come from the workshop.

Also, I'm looking into enrolling in flexible spending accounts with AFLAC that's offered through work. The main reason is that I recently found out that I have medical problems and this 2005-2006 year is expected to a high cost year in terms of medical costs. I might have to go through multiple surgeries and medical procedures plus specialist visits and prescription co-payments. I know it makes sense to enroll in a flexible spending account to keep the true medical costs down due to its pre-tax feature. But, my side consulting business has been slow for the last couple of months and I'm finding it hard to deduct money ahead of time for forecasted medical expenses.

Basically, the irrational mind is reigning queen. On November 19, 2005, there's a workshop with AFLAC that's going to explain more about the services they offer and the rational me has signed me up for it.

October 2005 Asset Snapshot

October Snapshot of Net Worth...Pitiful but I'm lucky that I have very few liabilities.

My car's a third generation hand-me down, which is barely keeping it together. Paid $1,000 for it. I don't own a house. Emigrant Direct Savings Account is designated as my very small condo downpayment fund.

Assets/Liabilities October, 2005

Assets
Checking $694.99
Emigrant Direct Savings $13,808.65
American Funds Roth IRA ROTH $2,250.20
457K Plan $806.65
Taxable American Funds Account $9,910.92
TOTAL Assets $27,471.61
Liabilities
Citibank Dividend Card $241.76
TOTAL Liabilities $241.76
NET WORTH $27,229.85

401K plan Rollover to a Rollover IRA

During the third week of September, 2005, I had initiated the rollover process for my old 401K plan at the previous job into a rollover IRA account at Fidelity Investments. Now, it's beginning of November but the funds still has not been rolled over into the new account. However, the funds have been emptied out from the old 401K plan already. The distribution check designated for Fidelity Investments still has not arrived. I think it takes about a month or so to get this process completed, so I'll give it another week or so before I start looking into why the check has not been received.

The distribution check isn't much since I didn't contribute the maximum contribution to get the company's match. The company's match is fully vested only after three years and since I knew that I would not be staying with the company that long anyway, I was not worried. However, I do wish that I had contributed at least 5% of pay to the old 401K plan. I believe I contributed the minimum contribution percentage, that's set as a default by the company.

Does anyone know how long the rollover process takes in general, beginning with submittal of the distribution form to your old company and ending with the deposition of your money into the new rollover IRA account?

Frugal Dating

The cost of dating in Orange County or anywhere else can be high. The cost of courtship and keeping up appearances can add up fast.

However, there are some cheap date ideas that I've used with the last few dating adventures that seemed to have worked well.

>> Once, I asked a guy I dated if we can meet up at a small local farmer's market on our first date.

Browsing through stalls and munching on fresh fruit as you get to know one another can be fun. This particular farmer's market was small enough to not charge any admission fees.

>> Propose a walk around a local park or a hike in a nearby national forests, which may end with a rewarding picnic near a waterfall or swimming hole at the end of the hike.

This actually worked very well. We got to know each other's lives extremely well as we bonded over profuse sweating and comfortable clothes. The need for keeping up appearances has basically been eliminated. You're there just as you are without any make up or nice clothes. You get health incentives and if he sticks around after seeing you at your worst during the hike/walk, he just might be a good one! :).

Examples: Red Rock Trail at Whiting Ranch in Lake Forest, Modjeska Canyon, or any hiking trails off the Ortega Highway on 5-South are wonderful places to visit.

>> Free poetry nights or open mic nights at local popular coffee shops, such as Gypsy Den in Costa Mesa, are fun and you get to meet interesting people.

>> Star watching along a beach. Example: Doheny State Beach's Ocean Institute's rear area.

>> Your local Community Theatres/Playhouses!!! Usually around $7 to $15 per person for a play with a close knit feel.

>> Some bars have free dance lessons before peak time (usually 10 p.m). This is a great idea unless you have two left feet like me. I will not try this again on a first date for obvious reasons. :).

I'm sure there are alot more cheap date ideas but I have had a very long day at work, so, my brain is only half-activated while my bed is acting as a neural disruptor, causing episodes of narcolapsy.