SmartyPig, the Stock Market, and Savings Options

I got back from the beach to find a notification that SmartyPig has reduced its APR to 1.10%, effective June 15th.  The Bureau of Labor Statistics puts the un-adjusted 12 month inflation rate at 3.2%.  That means that I am losing purchasing power by keeping my money in a SmartyPig account.

Here's how it works.  If the savings and inflation rates stay constant for the next year, if I put $100 in a SmartyPig account on June 15, 2011, the account will be worth $101.10 on June 15, 2012.  However, inflation will have eroded the value of $101.10 to the equivalent of $97.97.  To add insult to injury, I will also have to pay income tax on the "gain" from the interest.  Assuming a marginal tax rate of 15%, that is $0.15 in federal income tax, yielding purchasing power in June 2012 equivalent to $97.80 in June 2011 dollars.  Unless inflation falls or SmartyPig's interest rate rises, I am guaranteed to lose purchasing power over time by saving at SmartyPig.











So what is a saver to do?  There are no safe investments paying 3.2%.  1.10% is high for a savings account (Although I do get 1.25% at Discover because I have a credit card with them as well).  BankRate's highest 1 year bank CD is 1.4%.  One year treasuries are .18 and ten year treasuries are 2.28 today, according to the Department of the Treasury.  People are piling into corporate debt, but highly-rated corporate debt is barely beating inflation; you're not going to fund your retirement on 3.734% interest rates (the yield on a 10 year Google bond issued May 16th).  For instance, I recall that the annual rate of return in the retirement calculator Dave Ramesy uses in Total Money Makeover assumes an 8% average annual rate of return.  (I read the 2003 edition, the 2009 edition may have updated this)

Enter the Stock Market.  As of yesterday, the Dow Jones Industrial Average ("DJIA") gained 21.62% over the last year, closing at 12151 (per Morningstar).   Those are some impressive gains.  Also, unlike interest, which is taxed as income, long-term capital gains rates are 0-15%.  (If your marginal tax rate is 15%, your long-term capital gains rate is 0).  Next to the anemic yields of traditional save investments, the stock market is looking good, if it can continue the historical trends of the past couple of years.

But can it?  At it's height, on October 9, 2007, the DJIA closed at 14164.  As of today we're at 85.8% of the highest market in history.  And, just in case you didn't notice, the unemployment rate edged up to 9.1%.  Half the PF blogs I read right now seem to focus on either dealing with current unemployment or planning for future unemployment.  The housing market is in the toilet and expected to stay there.  Looking around, do you feel 85.8% as prosperous as you did on 2007?  If the DJIA rises another 21.62% in the next year, it will be at 14778 next June.  Does this seem likely to you?

For those of us who want to save money, it's a real catch-22.  Thanks to the Federal Reserve's decision to keep interest rates low, there is no such thing as a safe investment for our money.  We are forced to either lose purchasing power or move into moderately risky investments like the US stock market.  I think the current rise in stock prices signals not particular strength in the market, but the lack of any place else for money to go.

So what do I do now?  I keep my funds that I expect to use within the next six months close to hand in a savings account at Discover (because money is much easier to transfer in and out, and the APR is better at 1.25%).  The rest of my money is in various foreign and domestic equities and indexes.  But I am very tempted to lock in my gains now and wait for a more appetizing place to put my money to materialize.  Is anyone else feeling this pinch?  What are you doing with your savings?

My Bigest Mistake, and How to Fix It

I thought I would plow through the Simple Dollar's "Out with the Old, in with the New" in order, and #2 is "create a five year sketch."   But it tied in too well with #3 and #4 "figure out your biggest mistake" and "plan how to erase that mistake" to block them out separately.  Because my biggest mistake was giving up my last set of life plans without figuring out where I wanted to go next.

In 2003, I was a shiny new law school graduate, and I knew exactly what I wanted to do: become an associate at a premier law firm in Texas.  That was in the middle of the last recession/depression/economic slowdown, and the market for newly minted lawyers was crap.  Since I couldn't get the associate job right out of law school, I did the next best thing and got a federal clerkship.  I really lucked out and got one in Texas.  It was a two year term, and I figured that would be enough time for the market to pick up and allow me to get the associate job that I wanted.  I wasn't exactly where I wanted to be, but I was on the path.

Clerking was pure misery.  I had waited tables in undergrad, and I thought I hated that.  Clerking was worse.  It was dull, it was monotonous, it required me to keep a set schedule in which I woke up at 7 am every day and  spent eight hours a day catering to the whims of another person.  It was Hell on Earth.  It was pretty much a starting associate position, except the hours were shorter and the pay was worse.  Also, I really liked the judge that I worked for, both as a lawyer and as a human being, and my summer clerkships had already taught me that I could not assume that it would be the same for the partners I might work for.  Life was too short to spend like this, even for the money premier law firm associates made.

So I decided to go to Beijing.  This isn't as weird as it sounds, I had studied Chinese in undergrad and before law school; I wasn't fluent, but I was conversational.  I had always thought I might like to work there.  Unfortunately, Mr. Goat hates China, so he wanted me to be 100% sure that moving to China was what I needed to do before he moved out there with me.  I had a good time, but I decided that it wasn't really for me.  I have a delicate constitution, and I just couldn't hack the pollution; I was sick pretty much continuously.  So in May 2006 I came back to Texas with no real plan for what to do next, and I pretty much did nothing for the next two years.

In March 2008, Mr. Goat got a 100% telecommute job and we moved back to my family's ranch.  I tried ranching full time for a while, and I enjoyed it, but my constitution again got in the way.  In May 2009, I started having some pain in my right hip.  By October 2009, I was pretty much disabled by hip pain and headaches, and it's only been in the last couple of months that I have really started to recover. 

So now we have a full-time manager on the ranch and I am no longer in the work rotation there.  I could work back in, but I am not sure that that is where I would like to be.  I've also got an offer from a friend who works as a broker to mentor me there.  I don't know much about the day to day operations of the job, but she seems to believe that a love for the stock market and complex formulas (which I have) would translate into enjoying what she does.  Also, if I'm going to have children, now is pretty much the time to start.  Or I could give writing for profit a shot, which I have said I was going to do for the last 5 years and have never done (this may be a sign that it ain't gonna happen).

I have a ton of great options to choose from, so what I need to do is decide a direction and start heading toward it.  I just can't seem to make myself decide - some days one thing seems better, some days it's another.  I'm paralyzed by the idea of shutting down so many choices to pursue a path, but what I have now are so many choices that nothing is getting done at all.  I'm beginning to think I should just flip a coin.  But I've decided in the spirit of Out with the Old, in with the New,  that, by the end of January, I'm going to have a five year sketch. 

I'm setting it at the end of January because this is an exercise that will take a lot of thought, time, and prayer for me, and I know that I won't have the mental energy for that for the next two weeks.  But if I don't put a time frame on it, then it's just too easy to push it further and further out on the to do list, and continue to compound the mistake.  Now I have written it out in black and white, with a date, so I have to be accountable to myself for it.

Did anyone else have blocks like mine or problems imagining where they would be in five years?  How did you move past it?

Reflecting on 2010

The year's not quite over, but this year I hope to have my goals and financial plans together by the 1st, so I'm starting with a recap of how well I did this year.  When I made these goals, I was thinking that the surgeries I had just finished and the physical therapy I had just started was going to give me a relatively pain-free year. Unfortunately, it didn't work out that way, but as of October, I think I'm finally getting my medicines in balance and my pain under control without opiates.   


1) Religious / Spiritual:
     A)Never miss church unless sick or out of town.  Win. I've gotten into a good routine vis-a-vis church, so I consistently make it when I am in town.
     B) Participate in a mission or outreach with my church.  Fail. This never really got off the ground.
      C) Read The Message: The Bible in Contemporary Language.  Fail (s0 far).  I'm through to Kings.
     D)Write every day in a prayer and gratitude journal. Fail.
     E) Continue to Tithe. Win.  
2) Health
     A) Maintain my weight between 145 and 155 pounds.  Fail (but not too badly).  Today my scale says I weigh 161 lbs, but my weight does fluctuate; last week it was 158.  Not where I want to be, but nowhere close to regaining the 30 lbs.
     B) Swim or do Physical Therapy 4 times a week.  Fail to Win.  Didn't happen for me until July, and I was sick during one month, but I have made it to the gym at least 17 times a month for all of the last 5 months.  I see a big difference in my cardiovascular fitness.
     C) Do Physical Therapy Exercises Every Day. Fail. The exercises didn't end up helping, and I dropped them.
     D) Practice Aikido Every Day.  Fail.  I barely did any aikido this year.

3) Financial 
     A) Pay off loan from relatives in the amount of $1000.  Win. One more debt paid off!
     B) Pay off loan from relative in the amount of $30,000  Fail.  My health did not allow me to find any extra money to pay this off.  I did keep working on it, though, and I should be able to pay it off in July 2011 if everything goes smoothly. (Update 1/1/2011 WIN - got the money together to pay this off in December 2010)
     C) Fully Fund 2009 and 2010 Roth IRAs.  Win.  And this year the stock market actually went up, so there was some advantage to getting it together early.

4)  Dreams
     1) Write something besides this blog. Fail.  I didn't even do a good job writing  on this blog this year.
     2) Learn how to Accompany on the Piano.  Fail.  This fell by the wayside about March.
     3) Get officially affiliated with a dojo.  Fail/Win.  I didn't manage to figure out aikido, but I did find a nice Judo dojo, so I'm back to my Judo practice 2x a week.
     4) Keep up with my Chinese.  Fail.  This fell by the wayside about March.

5) Prosaic
     1) Practice with my carry firearms at least once a month.  Fail.
     2) Keep my house in a reasonable state of neatness.  Fail (but not too badly)  My house never really got neat, but it is not any messier than it was a year ago.


There's a lot of fail there, but a bit of win too.  OK, so the lessons I learned from this to use next year are:


(1) Prioritize goals.  I made myself a wish list and called it "goals," but basically it required too radical a lifestyle adjustment in all areas of my life.  I need to decide what is really important to me and set a few clear goals at a time to really get this to work.


(2) Don't make the perfect the enemy of the good.  On the other hand, I've got several goals that, while I did not succeed, I made some progress.   For instance, I won't be paying off the 30K loan this year, but I did keep throwing money at it, and, barring unforeseen problems, we will pay it off in July.


(3) Sometimes life kicks you in the nadgers.  Some stuff on this list did not get done and should have.  But a lot of stuff just fell by the wayside while I tried to regain a modicum of reasonable health.  Although I should have re-prioritized sometime around March (when I knew that there wouldn't be a quick fix), I kept thinking it would turn out OK and that I'd have time to catch up.


The Simple Dollar is doing a "a daily series focusing on specific activities you can do right now to set the stage for a great 2011."  I'm thinking about using it as my template for resolutions next year.  How are you going to set goals for next year?

January Goal Updates

At the beginning of this year, I set myself some ambitious goals, and, since the year is ¼ (almost 1/3) over, I need to take a look at how I am holding up, and what I plan to do about it.

1) Religious / Spiritual:  A) Never miss church unless sick or out of town. I haven’t missed once for Sunday morning sloth.  Go me!

 B) Participate in a mission or outreach with my church I’ve thought of some ideas, now I just need to get some momentum going.

C) Read The Bible  I started off fine, but then tapered off.  I still have plenty of time, I just need to get back on the wagon

D) Write every day in a prayer and gratitude journal. This happens some days.  I need to make it happen every day

 E) Continue to Tithe Pretty much done.  I’ve put it in the budget and my church gets a cheque from the bank automatically every month. 2) Health A) Maintain my weight between 145 and 155 pounds   I weighted in at 155.8 last week.  I need to get back to exercise, as I can’t seem to stick to my assigned points without some extra from exercise. B) Swim or do Physical Therapy 4 times a week.  I am so fail on this.  After I ended physical therapy in January, I’ve done basically nothing.  I have not even joined a gym.  I go out of town this weekend, but I am going to join first thing on Monday morning.

C) Do Physical Therapy Exercises Every Day.  N/A I am out of physical therapy.

D) Practice Aikido Every Day.  I’m not doing this.  I don’t understand why – I really want to get better, but I can’t seem to make myself practice.  I guess I’m just a “casual” who can’t bring herself to practice solo.  This is a problem for me now that I don’t have a group to practice with.  I don’t have a quick answer for how to turn this around. 

3) Financial A) Pay off loan from relatives in the amount of $1000  Done!    

B) Pay off loan from relative in the amount of $30,000  Just not gonna happen this tear.  I’m saving as much as I can toward it, and I’ll look at it again next year.

C) Fully Fund 2009 and 2010 Roth IRAs.  Done! 4)  Dreams 1) Write something besides this blog.  This and aikido practice are my two biggest wants that I never make time for.  I need to figure out how to make this happen for myself or just let it go and realize that I’m not going to write.

2) Learn how to Accompany on the Piano I did well for the first month, but fell off the wagon.  Time to get back on.

3) Get officially affiliated with a dojo I haven’t looked into this at all.  I need to consider it as part of my overall aikido planning.

4) Keep up with my Chinese I haven’t been doing any character writing, but I have been practicing with a friend every couple of weeks, which is much better than what I did mefore. 5) Prosaic

1) Practice with my carry firearms at least once a month Massive fail.  This just needs to get on my calendar.

2) Keep my house in a reasonable state of neatness This is not even close to the most wretched my house has ever been, but it’s not where I’d like to be, either.  I started Flylady, but then stopped doing it.  I’ve gotten her book from the library in preparation for starting again next Monday.

In Summation: I restarted my Aion subscription and I’m still spending too much time reading news on the internet.  I’m managing Aion fairly well, though.  I still need better time organization, but I’m not as far behind on this list as I thought I would be when I began this exercise.

I obviously need to add blogging to my list of goals, as I have been massive fail in that direction as well.   Time to get back on the wagon!

Christmas 2010 Savings Plan

This year, I've decided to start saving earlier so that I can have a bigger budget for Christmas in 2010.  In 2009, I saved $250 but ended up over budget by about $200 (fortunately, my husband agreed to use an anniversary present we received to cover the shortfall).  This year, I plan to save $500.  Since my housekeeper quit, that's a $85 savings already for next year (unless I get another one), so surely I'll be able to come in under budget.  I've already added a new savings goal at Smarty Pig and the first $46 will be coming out of my bank account tomorrow.  I can't wait to buy everyone I love fabulous presents next year!  Anyone else beginning to save now?

2010 Goals

What I am going to get done in 2010, by category, with all the steps I can think of to get there.

1) Religious / Spiritual:
     A)Never miss church unless sick or out of town. Can be accomplished by not partying so much on Saturday night that I oversleep the next day.
     B) Participate in a mission or outreach with my church.  We have a very tiny church, so we don't  do this right now.  However, I know I am not the only one interested.  I need to talk to the people I know are interested, find out what they would like to do, and contact organizations that do it to find out how we can help.  Then I need to arrange for a time and place.
      C) Read The Message: The Bible in Contemporary Language.  At some point, I believe that I've read every word in the Bible, but never through an entire edition.  I'm not sure if this will take me a week, a month, or all year - my plan is to start from the beginning and read as I feel guided to do so.  Can be done by setting aside the time every day, and not by putting it off until I fall over dead tired without having done it.
     D)Write every day in a prayer and gratitude journal. I was very touched by Debbie Macomber's Testimony as to the effectiveness of a gratitude and prayer journal on her life..  I must set aside a time every day to read my Bible and to write in my prayer/gratitude journal.
     E) Continue to Tithe. Figure out our 2010 take home and set up an automatic debit every month.

2) Health
     A) Maintain my weight between 145 and 155 pounds.  I just lost 30 pounds last year, and I am not sure where the best  balance between maintainability and healthfulness is yet.  This can be accomplished by going back to strict Weight Watchers point counting and regular exercise (see below).
     B) Swim or do Physical Therapy 4 times a week.  I want to get back into better cardiovascular shape and work on my core strength.  I am going to sign up for a gym on Monday and set myself times when I will swim, same times every day, every week.
     C) Do Physical Therapy Exercises Every Day. Continue to work on my core strength by doing the exercises recommended by my physical therapist every day.
     D) Practice Aikido Every Day.  I have been neglecting this, because I am not healthy enough to take the falls and such that I enjoy.  This year, I will set aside time every day to do the daily solo kata 6 times and to do 1000 cuts with the Bokken, both of which my health does allow.

3) Financial
     A) Pay off loan from relatives in the amount of $1000.  I have this set up to be auto-paid; I make the last payment in February.
     B) Pay off loan from relative in the amount of $30,000  In combination with my other financial plans, this will require an additional $927 a month that I am not sure where it will come from.  The easiest thing would be not to tithe this year, and use that money, but I have rejected that option because I feel that tithing is the only way that I am consistent in expressing to God my joy and thankfulness for his eternal love.  I am contemplating several small business ventures including a) buying things at yard and thrift sales and reselling them on ebay, b) restarting my old document review business on a less than full time schedule, c) finding a part-time job (this is contingent on finding more help for the farm), or d) turning old feed bags into shopping bags and selling them on etsy or similar.  It will be hard, but if I can pull this off, the only debts I will have left are one more family debt and a school loan at 1.65% APR.
     C) Fully Fund 2009 and 2010 Roth IRAs.  I have funded Mr. Goat's 2009 Roth and I have the money for mine, but I want to make an appointment with my financial adviser to discuss mine when I deposit the money. (I have until April 15, 2010 to get this done).   The 2010 money should mostly come out of the present that my parents gave me, if I can find a nice car cheaply enough.  Since we don't get employer matches, I have limited our retirement contributions to Roths until we are debt free.

4)  Dreams
     1) Write something besides this blog.  I plan to purchase the 2010 Writer's Market and see what is out there.  I'd like to enter a couple of short story competitions this year, and maybe even try to get paid for writing, if I see something that I think I can do (and the editors will take unsolicited stuff).
     2) Learn how to Accompany on the Piano.  I'd like to be able to accompany people when they sing.  My Dad, who plays the piano, has offered to give me lessons on Monday afternoons.  I also need to set aside about 30 minutes a day to practice if I plan to make any progress.
     3) Get officially affiliated with a dojo.  Since there is no dojo for my Aikido system in my area, I've not been affiliated with any since I left Dallas.  Once I get well enough to travel, I need to figure out whether I should have the guys in Houston or Dallas be my teachers and get a regular training schedule going.
     4) Keep up with my Chinese.  I've let my Chinese lapse again.  My plan is to write characters every day, so I don't forget my vocabulary.  If I add a new character every day, then by the end of the year I'll be writing 365 characters every day, and in a few years years I'll be writing all the ones I learned, everyday.

5) Prosaic
     1) Practice with my carry firearms at least once a month.  This is the bare minimum, and I have not been making it.  Of course, I'm also so full of pain medication that I don't carry right now, but I have high hopes that I will soon be carrying again, and then I'll need to be in practice.
     2) Keep my house in a reasonable state of neatness.  My housekeeper quit yesterday and I've decided not to replace her.  I'm hoping to be able to keep my house in a reasonable enough state of neatness that I don't go crazy. This isn't a financial-based decision, it is because Mr. Goat hates having people in his house messing with his stuff.  We'll see how this goes - I may need to get some kind of monthly deep clean service to keep up with myself.  But it's not as though my late housekeeper really kept up with me - the house was never in good enough shape for me to be comfortable having company over.  So I'd just as soon live in a pile of mess for free as pay for it.

In Summation:
What my goals will require for implementation is time.  I believe that I can come up with this kind of time by cutting down on the time I waste on things which do not reflect my value system.  I am going to cancel my subscription to Aion because I spend my time playing it stressed, not relaxed.  I also need to cut back on my internet browsing; I spend way too much time reading news and blogs.  When I canceled my online WSJ subscription I thought it would help, but honestly there's not much difference between the paid and the free content on their site.

In 2010 I will spend my time with projects and people that reflect my goals and values.  I will not allow inertia to steal time, my most valuable possession, away from me.

My Perfect Day

Frugal Dreamer suggested this thought exercise - What is your perfect day?

The idea is to close your eyes, imagine it’s a Friday morning a few years from now (2 to 5 years from now). Now think about exactly how you’d want to spend the day, keeping in mind that it is a weekday. The idea is to plan your perfect day, using the following questions…

1. What time do you wake up, and how are you feeling as you greet the day?
2. Where are you?  If you’re at home, what does it look like?
3. Who is with you?
4. What kind of work are you doing? (if you have no idea what kind of work you’ll be doing or want to be doing, list the qualities you want to find in the work you do and the kind of work environment you want.)
5. As you head out to face the day, how do you look?  What are you wearing?
6. How do you get to work?
7. When you’re done with work, how will you spend you spare time and with whom?  What activities do you enjoy?
8. When is your evening like?
9. When you go to bed that night, how are you feeling after spending the day doing exactly what you love?
10. What are you most grateful for and what are you looking forward to as you go to sleep?

Mine looks like this ... which is honestly not much like what I am doing right now.  I know I should rethink my priorities and see how to get there, but right now, I am having enough trouble just putting one foot in front of the other.  But I thought I'd put it up for myself, just as a reminder.

1.What time do you wake up, and how are you feeling as you greet the day?

Whatever time I  feel like – there is no alarm clock.  Probably somewhere between 9:30 am and 11am.  I have time to get up, do my stretches, do some aikido drills, take a shower, and eat breakfast before I have to worry about getting anything done. 

2.Where are you?  If you’re at home, what does it look like?

I’m at home – in the same house I live in now, except that I have a workroom / dojo space in a building outside that also has a bathroom and a shower.

3. Who is with you?

Mr. Goat is puttering around the house somewhere.  My parents are just down the road.  My little brother is back living in his place, hopefully with a spouse and family.

4. What kind of work are you doing? (if you have no idea what kind of work you’ll be doing or want to be doing, list the qualities you want to find in the work you do and the kind of work environment you want.)

I am a sci/fi fantasy writer.  Or possibly a short story writer.  Something between Terry Pratchett  and Robert Heinlein.

5. As you head out to face the day, how do you look?  What are you wearing?

Like I do now, but slightly more muscular.  Jeans or yoga pants, a t-shirt, and wool socks with crocs.

6. How do you get to work?

I wander from my bedroom to the computer room.

7. When you’re done with work, how will you spend you spare time and with whom?  What activities do you enjoy?

I’ll wander over to the farm and see if our farm family needs any help with anything.  Or I’ll head over to Philippe’s and get some wine and cheese and hang out.  Or I’ll do some aikido, either by myself or with friends.  Mr. Goat and I will play our favorite video game together or go out to dinner someplace fun.   I’ll go shooting or hunting, either with Mr. Goat or other friends and family.

8. When is your evening like?

I’ll have an hour run right before sunset, in between doing all the stuff I was talking about above. 

9. When you go to bed that night, how are you feeling after spending the day doing exactly what you love?

I’ve put in a good day’s work and am proud of what I have done.  I am looking forward to completing whatever writing project that I am working on, and sure that reading it will be enjoyable to someone.

10. What are you most grateful for and what are you looking forward to as you go to sleep?

That I am healthy enough to run and do aikido.  That I have disciplined myself enough to write every day, so that I can become the best writer possible.  That I have Mr. Goat and my family to be a reflection of Christ’s love for me.