Saturday, January 12, 2008

Move Up the Career Ladder

I think that tendency for American's to job hop more now than ever before can be a good thing...for you that is. It sucks for employers but they have to deal with it. That is just the way we are now. No one stays in a job for 30+ years anymore. Here is why this can be a good thing for you:

1. You can keep moving up the pay ladder. Often, the best way to get paid a substantial amount more money is to a) Leave and get a higher paying job or b) Threaten to leave and force your employer to pay you a substantial amount more to stay. Often this tactic is the only way you will get anything more than a 2 or 3% standard of living raise every year.

2. If you want to stay with you current company, you can often move into a higher ranking position very quickly because of people constantly leaving the company. If you have proven that you are a capable worker, often you can move into a team lead or management position pretty easily. Companies are generally more likely to promote capable workers that already work for the company, rather than take a chance on someone from outside the company.

3. Doing a little bit of job hopping can help you obtain a lot of experience in a shorter period of time. The more well rounded you are, the more marketable you make yourself to prospective employers, thus giving you more choices. I suggest staying at each position for at least a year if possible. While moving around a bit can be beneficial for you, it can also be detrimental if you do it too much. Nothing will turn a recruiter off more than someone who has worked at 6 jobs in 2 years.

With all that being said, I really hope that you can find your dream job and never have to look for another job again. However, the majority of us just go to our jobs to receive a paycheck and feel that we are doing something with our lives. It can't hurt too much to move around a bit and see if you can fall into that dream job that we all hope is out there. You'll never know unless you give it a shot and aren't afraid to leave your current situation every now and then. Especially if you think you found a better opportunity.

Wednesday, January 9, 2008

I Changed Brokerage Firms Today

So I decided to change brokerage firms today. Now don't get me wrong. I liked Fidelity and what they had to offer. However, I happened to like TDAmeritrade more. I started using Fidelity a couple years ago because my current employer used them to house my Employee stock that I received from a discount purchase plan. After that, I decided to start my other accounts with them as well. However, I decided that today was a day for new beginnings. I started the process of moving my accounts over to Ameritrade.

I chose to move to Ameritrade for 2 main reasons:

1. They had awesome customer service. Not only could I call them on their 800 number, but I could pop up an IM window and speak with representative without having to wait for 30 minutes before speaking with someone to answer one short question that I had. They also happen to have some awesome stock tracking/analyzing tools which I haven't seen anywhere else.

2. The cost of trades are cheaper. I currently pay $20 for a trade with Fidelity. Ameritrade is only $10. It doesn't sound like much, but for a small time guy such as myself, I would rather keep that extra $10. It was also nice that their IRA accounts don't have a minimum to open. When I wanted to open a Roth IRA through Fidelity, I had to put in a minimum of $2500 or setup a $200 automatic withdrawal from my account. Now this wouldn't be bad if you had that money to spare, but I know a lot of young professionals need to start with even smaller amounts than that until they can get on their feet. I would have to give the edge to Ameritrade in this category 4 sho (who says you can't use slang when talking about personal finance?).

Anyway, I can't give Ameritrade my full recommendation yet because I just started rolling over my account today. I am sure I'll give everyone an updated opinion a couple of months down the road but so far, things look good.

Tuesday, January 8, 2008

Book Review: Rich Dad, Poor Dad

Awhile back I decided to immerse myself in the world of personal finance, entrepreneurship, management, etc. Basically, I just read a bunch of books pertaining to each of these subjects to try to give myself a good overall idea of "best practices" that each of the authors would try to pass on to the readers.

One of the first books I read was Rich Dad, Poor Dad by Robert Kiyosaki and I have to tell you, I was pretty disappointed. This book had pretty nice reviews and has sold a bajillion copies so I figured I was in for a good book. I wasn't. This book tries to tell a general story that would persuade you to take control of your life and put yourself in a position to have constant cash flows coming in. Now I have no problem with this concept, except the fact that he almost seems to dismiss the fact that traditional savings and investment strategies can also allow you to take control of your life. For the majority of people, they will need to get rich slowly. Kiyosaki seems to almost push everyone towards investing in real estate or other "riskier" investments. For the average person, these are not smart investments. I hate to break it to you Robert, but not everyone has the knack to know where to invest in the real estate market or the knowledge and leadership skills to run their own business. However, everyone does have the ability to become rich by using simpler means. For most people, this means being disciplined over a long period of time and allowing the power of compounding to work in your favor.

While Kiyosaki is a great investor and obviously a very successful entrepreneur, I do not think his methods will work for the average person. Maybe, I am just a pansy that is too afraid to take the leap and run my own large Real Estate corporation but I am pretty sure I will be just fine in the long run if I sock away 15-20% of my check each week. To each his own I guess.

Monday, January 7, 2008

3 "Must Do" items for 2008

This is an extremely simple post. I hope the majority of people reading this have already done these 3 things. If you have, then you are far ahead of most people.

1. Start contributing to your 401k. Make sure you contribute enough to get the full company match. Here's a tip: Don't ever pass up free money. If you fail to contribute enough to get the full match from your employer, then that is exactly what you are doing.

2. Start a Roth IRA. Besides your 401k, this is best investment account young professionals can setup. Put money in now and get it back whenever you need it (preferably at retirement).

3. Start a high yield savings account. It takes 10 minutes and you will make a lot more money by leaving your money in here instead of your current savings account.

If you have already done these three things then you are on the right track. If you haven't, then get these accounts open today. Not one of these things would take you more than 10-15 minutes to get up and running. That little bit of your time will make you a crap load of money (yes that is the scientific term) in the long run.

Sunday, January 6, 2008

Saturday, January 5, 2008

Track Your Money and Face Reality

A lot of people think they are better off financially than they really are. A good way to come face to face with your finances is to use a website I found to track your net worth month to month. NetWorthIQ is a great website that allows you to put down all your assets and liabilities into a easy to use table and gives you a break down of your total net worth and lets you track how well you are doing from month to month.

When you actually sit down for 5 minutes and input the numbers, you can take a step back an reevaluate what you are doing well at and what you need to work on. Personally, I keep it pretty simple. I try to make sure my net worth increases each month no matter what. I know its not possible to do every single month because of large purchases and the ups and downs of the stock market, but I do think it is a pretty good goal to have and it is usually a easily obtainable goal as long as you use some discipline. So go ahead and start tracking your net worth today.

Wednesday, January 2, 2008

Want to Take Risks? Start a Risky Investment Fund

I just recently started a "Risky Investment" fund of my own so I can invest in those investments that I was always scared to before. A Risky Investment fund is exactly what it sounds like. You put aside some money just for risky/new investments (i.e. Real estate, penny stocks,, etc.). Pretend the money doesn't exist. That way, if you blow your money on your risky investment, it doesn't hurt so much.

For example, I have always wanted to mess around with trading penny stocks. They are very risky but if you are lucky, you might be able to make some decent money off of them as well. Anyway, I will be the first to tell you that I don't know jack shit about penny stocks but I want to mess around with them and see what I can do. So here is what I decided to do. I automatically take a small amount out of each paycheck ($10) and put it into a high yield savings account each week. After a couple of months, I plan on taking that cash and seeing what I can do by investing in penny stocks. If I end up making money on the penny stock, then all is well. If I lose money, then no big deal. I planned on losing that money anyway. It might as well be money I set aside to go to the casino with. Just make sure you know how much you are willing to lose up front before you invest.

***I do not advise putting a very large portion of your money into a "Risky Investment" fund. This should account for only a very small portion of your portfolio.

Tuesday, January 1, 2008

Buying a House? Pay it off Faster

A lot of people buying their first house (and many people that already own houses) don't realize how much quicker they could pay off their mortgage if they just threw down a little bit extra per month. Making just one extra payment on your house per year can take 5-8 years off of your mortgage. Pay 2 extra payments per year and you could save more than 10 years off of your mortgage. I attached a link below so you can check out how quickly you can pay off your house (and how much money you can save over the life of your mortgage) by paying a little bit extra per month on your mortgage.

Mortgage Payoff Calculator