Emergency Fund?

I don't have an emergency fund, do you? We all know we need one but many of us don't have one. Can I call my 'mad money' stock account an emergency fund? This is the problem I have and so do soooo many others. There is an insurance survey out there that says 50 percent of us have less than one month's expenses saved for an emergency. That's what I have; one month. How do we fix it?


First you need to know how much you need in that emergency fund. I have $3k a month in expenses, more or less. Some say you need 6 months saved ($18k) and others say you need to have a year ($36k.) I'm in big trouble. I have $5k. I guess my emergency plan would be to move back in with my mother after I lose my house or get a roomate before I lose it, and use my credit cards. That's my emergency plan; keep my credit card balances low, collect returnable bottles, and get a roomate. I have no problem with that right now.

I do, and so do you, need to start building an emergency fund. If you have not started getting into the stock market, this is another thing you're supposed to do before you start. I know what you're thinking. I'm never going to get into the stock market. I know, I feel that way too. As you can see, I'm doing this all wrong. I opened my stock account last year and am now just trying to get together a realistic budget and emergency fund together. But how does someone do that? Coupons.

I am starting to only spend money on entertainment if I have a coupon. When I go to the grocery store; coupons. And all the money I save with coupons I promise I will put into a savings account. Here's how I plan to do it for August.

In August I have budgeted $300 dollars for school clothes, shoes, and items. (I am a teacher.) I have a coupon for DSW, Kohl's, Bob's Stores, and Macy's. After I'm done spending, whatever I saved with the coupons I will save.

For entertainment, if I want to go to a restaurant I will use restaurant.com and buy a half-priced gift certificate and save the money. I will use my AFT union card to buy discount movie tickets and save the money. And I will look at groupon for cheap entertainment ideas.

I am a teacher with a second job. After taxes and all the other stuff they take out of my checks I make $3k a month as a teacher and $1200 a month at my second job. I know I don't make a lot of money, but there are lots of people who make less than I do. How will they ever put enough money away to retire? Are we going to have a society that works until they drop dead?

Looking ahead

I'm always looking for the next trade, but not a daily or weekly trade.  I do it quarterly.  In April of 2010, I started looking at positions that would make me a profit during the summer,  My catalyst was going to be July earnings.  All I needed was a pullback in May and/or June.  Boy, did I ever get that.  It almost felt like I was magic.  I finished buying all my positions that I had researched starting in April by July 3.  My thinking was that traders would get out of equities by July 3 because it was a long weekend and anything can happen during the long weekend.  So on July 3 I bought my last and most expensive stock position with my bulk summer (teacher) check, GS.  My hope was that beginning July 7 things would start getting better as earnings came in.  There were a few bumps and potholes in the road, but overall, I think most of us are doing well. 

The S & P just passed a technical, whatever that means, of 1100.  From what I understand about all the experts' posts is that if we can get past 1100 and make it to 1130, the bears will have to cover their shorts and a spike in the market will happen.  I have no idea how anyone comes up with those numbers, but I love the internet, and I guess I don't have to know how to come up with 1100 as the magical number, I just need to know what to do when it happens.  If it happens, and the earnings reports of my current positions is positive, then I'm going longer than I originally planned.  The original plan was to be out by Aug 6.  If we hit 1130 by 8/6 then I'm going to keep going until the 13th and keep reevaluating week to week until I need money.

At the same time I'm looking ahead to 3rd quarter earnings.  Another bonus, mid-term elections.  Here's what I learned about mid-term elections and the stock market; according to Marshall Nickles of Pepperdine University the first two years of a president's term is not the best time to be in the stock market, but that the last two years are very productive.  And he showed charts that were simple to read.  I got it.  Apparently, lots of people seem to like the paper Nickles wrote in 2004 and are beginning to reference it now.  So according to trend, 2009 and 2010 are supposed to suck, and by 2011 things should start getting better.  Why? Because the incumbent party wants a happy voter and they usually "prop" up the stock market.  I would  read his paper and see for youself. 
gbr.pepperdine.edu/043/stocks.html

After you're done reading, google his name and see how many times this paper is referenced.  A lot and I think it will be referenced more and more as we get closer to mid term elections.  But I still have questions.  Should I get positioned right before the mid-term election in October (remember, it is earnings season again.) or do I wait for what some people are predicting will be the massive sell-off before the end of the year due to the rise of the capital gains tax expected to take effect 1/11?  That would mean I either get positioned for earnings in October, sell off quickly, and then buy back at the bottom again at the end of December or I go to cash after this technical of 1100 is done making me money off bear shorts and wait until the end of December.  As always, more research is needed and I'll let you know.  But as always, I would love some educational input.

my budget is killing me

I put together a budget and decided I was going to stick to it for the month of July.  It seemed comfortable.  I was going to try it for this month and tweek as needed.  Not even a week after I create it I forgot to add my car registration and inspection stuff.  $285 dollars to reregister and inspect my car.  Does anyone have a budget that works for them?  I want to save $500 a month but it's starting to look impossible....help.

budget busters

How much money do you spend on stuff you don't need? I know I spend a lot. I looked at my top 3 monthly money busters and they were my mortgage 1100, cable (internet, cable and phone) 160, and my cell phone 110. There is nothing that I pay more for, consistently, month after month. Where are the savings and can I live with them?

Mortgage: I can't refinance because I don't have enough equity in my home so 1100 a month it is.
Cable: This is a bundle that includes cable, internet, and phone, and it costs a bundle 160 a month. I called them and tried to lower the cost and they gave me some really cheap basic numbers on the cable side, until I realized I only watch informational programming which is an added cost. The internet is a flat fee. If I get rid of the phone it's no longer a bundle and I buy ala carte which means I'm only saving about 15 bucks. I like my home phone, I give the number out to people I don't want to have my cell phone number.
Cell phone: 110 a month. Wow!!! I can't live without my phone so I called to try and get the basics. All I really want it for it to text and use the internet on it. I told the customer service rep I wanted to drop my minutes to 200 because I don't really use it, and I wanted unlimited texting (a cheap $10 a month) but I can't go down to 200 minutes because I NEED an unlimited texting and data plan which requires 700 minutes, which I have.

So in the end, my 3 biggest money busters were going to have to stay that way unless I really wanted to disconnect from everything...No way. I'm not at that point yet.
But are you? Or do you have an alternative for me? What do people do when they try to save money on their cell and cable bundles? I could use some advice.

scary numbers aka the budget

Did you figure out how much money you need to save for a comfortable retirement? That number is scary!! Mine is 2m. I need 50k a year on top of my 26k teacher pension. I figure in 2024 75k a year is a comfortable amount of money. And again I'm retiring at 60 and living to 100 (40 years retired), so 50k * 40=2m. How does a teacher save 2m dollars in 14 years? Go on a budget, save, and choose wise investments. How much do I have to save to make 2m in 14 years? 2m/14=143k a year. I don't make 143k a year, how am I expected to save 143k? This is where we need to make sure we put the little money we can save in the right place so it can grow.

Did you figure out how much money you have right now for retirement? Did you figure out how much you need to live comfortably during those retirement years? Did you figure out how much you need to save every year to make that number? That number is scary too!!

Time for a budget to see how much we can really save.

If you are on a budget, skip this part.

The best online budget resource is mint.com, but I don't use it. When I signed up it asked me for my credit card numbers and I got the willies. But if you feel comfortable, and millions do because it is rated highly, use it. Everyone I know who uses it raves about it and then tells me to get over myself. Well, I'm not at that point. If you decide to use mint.com skip the rest of this blog and go to it.
Here's what I learned about creating my own budget...you have to be realistic. The first budget I put together was so tight I couldn't do it. I am right now doing another one.
Get all your bills together. Remember this, you will not remember them all and this is where you need to practice your budget for a month or two and tweak it along the way to make sure it is realistic.

Here are the bills I thought I had:
Mortgage
heat
electricity
cable
water
cell phone
charge card #1
charge card #2
car
car insurance
gas for car
food
Where did I get this? From my online banking statement under future payments. That was easy. Nope, here's what I forgot.
delta dental
total gym
gym membership
flood insurance
car maintenance
clothing
entertainment
gifts
coffee on the way to work
banking fees
medical co-payments
time share that I bought after a bottle of champagne
time share maintenance fee
vacation

You get the drift......you will make the same mistake, which is why I say try out your budget first to make sure it is realistic. Here's what you need to do the first month while trying to figure out your budget..save 10 percent of your check. I make 1500 every two weeks. I put 150 aside....and I always spend it on something I didn't think about. I'm trying. Set yourself a date to get your budget in order. Mine is 1/1/2011. And yes, I am not listening to my own advice. I've been playing the stock market since last July, I'm still not on a realistic budget, and I don't have an emergency fund. Which I'll talk about in the next blog.

Your homework: Make a budget as realistic as you can and try to start saving 10 percent of your check. Next blog...an emergency fund. And don't think we're done with talking about the budget. We still have to discuss what we can cut back on....now that's scary!!

the goldman

This blog is for those that have a good understanding of the fundamentals of the market. If your still trying to figure out how much you might need to retire...skip this blog till after. It will be enlightening to read after the fact as everything i'm wondering about will be revealed.

I bought GS at 131. I bought them at the beginning of July with some of my teacher summer money. 10 measly shares, but hey, I was looking for about a $10 profit per share going into earnings. I expected GS to, as usual, blow away earnings even though they were in trouble with the SEC. The company is fantastic at making money and what many call "best in breed" so I had confidence I could make an easy 100 bucks off of them this month.

Last night GS settled with the SEC for 500m. A drop in the bucket for GS and the key to all this, they don't have to admit any fraud wrongdoing which means the likelihood of civil suits are taken off the table. The stock shot up to 155 and this morning it's about 151. A $15 profit, more that I expected. It will drop after Bank of America's less than stellar earning report and the fact that the dow futures are lower this morning. I should take my profit and pull the trigger right at the opening bell. But I'm hesitant.

GS is a fantastic stock. I could keep the 10 shares of GS, knowing it will drop a few bucks but will pop back up over the long haul. I wasn't planning on staying long on GS but now that they settled with the SEC there's no where to go but up for GS throughout the year. If I sell at the bell I could buy the 10 shares back at a lower price...but what if it doesn't go low enough to cover my trade expense? And then they have a blow out quarter and the price gets away from me on Tuesday? Here's what I decided to do...what do you think of this.
I am going to buy Nov 2010 155 calls on the what I expect to be a small pull back. I am going to keep my GS shares and let them run knowing they'll be back up to 180 by the first quarter of 2011 and take the dividend. I want to pick up more shares but I probably won't be able to do that until I start getting paid again in september. I tried to sell 1 contract of 130 puts to make some money but I don't have that much money in my account. It's too bad...I can't wait till next year when I'll have more money and can do that move. So that's my move for today.
Just getting numbers from Citibank. I have 3 units (300 shares) of jan 2012 calls with a 4 dollar strike price. I have time to figure out what I'm doing with that...

learning about the stock market

I am a teacher and as most of us say, a life long learner. This summer and last I decided I would have a lousy retirement if I retired like most teachers at 60 because I'll need to live off of about 26k a year. Who can live off that? Sure, I'll have my 403b, but due to the fact I make an uncomfortable salary, I haven't been able to put that much money in it. This will not be a boo-hoo blog about how teachers are being treated unfairly, but more of a step by step process of how I learn, make mistakes, reflect, and cry while trying to learn the stock market. I think that a lot of people are in my position...realizing if you don't figure it out now, you'll be living off government entitlements if there are any, and if there are not any entitlements, eating and living off your kids. How old are you? I'm 46, so I figure I have 14 years to get comfortable with a retirement. How many years do you have? And don't say "I plan on working till I drop dead!" Do you really want to do that? If not...let's get to learning together. The first thing you have to do is see how much money you will have for retirement if you keep going at the rate you are going today. I'll be much better off if I retire at 70 than if I retire at 60, but I don't want to teach a bunch of hormonal 7th graders into my 60's. So I have set my retirement age at 60. Take the time and think about how old you want to be when you retire. This means I'll get the following: Teacher retirement system: 26k a year 403b: total at 60 is 50k (49920 to be exact based on a 7 percent interest rate) That's it!!! What did you get? If this is the first time you looked at your finances you probably realized it's not much different. Most people will receive a social security check and a 401k. Can you live off of that? I can't. So I have decided to take charge of my finances and figure out how I can retire at 60 comfortably. The first thing I need you to do...homework if you will, is figure out how much money you need to live when you retire. I can live off of 50k after my personal taxes have been paid, and that's modest. I plan on living to 100. According to my calculations, I need to save 2m in 16 years. If I saved every penny of my salary for the next 30 years I still couldn't touch that. So I need to figure out how I can take my modest amount of money and assets and turn it into 2m or something close to it. Figure out your simple numbers and join me again tomorrow. We'll begin putting ourselves on a budget that has the ability to save 15% of our money for our retirement. Don't give up, we can do this. I cannot guarantee we'll get rich, but putting our brains together and figuring it out, we'll do better than the path we're on.