After some thought and a lot of help from Andrea @ Curiosity Killed the Blog, I’ve moved to my own domain. That’s right, I now own a website. Come on over and visit the new site here. The site isn’t 100% done, so feel free to leave some feedback on the looks/layout. I look forward to it.
Monthly Archives: April 2012
Yesterday Congress voted on the Paying a Fair Share Act of 2012. Just as many have predicted, it was shot down. The President and the Democratic Party are trying to get this passed. Basically saying that people earning more than $1 million are not paying enough taxes or at a lesser tax rate than lower-income taxpayers. How can this be? Well, there is a crap-ton of loopholes for one, also there is this thing called Long Term Capital Gains, which are taxed at a lower rate. The reason for this is to encourage people to make long-term investments, therefore encouraging economic growth and stability.
Why am I against this “Law”? Plain and simple, this law penalizes those that are successful. Some people have the belief that all millionaires are just trust-fund babies, ones that were just given money and never had a hard day in their life. That statement is completely false. Are there some that had wealth handed to them? Yup. Do the majority of millionaires fall into this category? The answer would be no. Most millionaires have worked very hard to get where they are. They were normal people (not that they aren’t normal now), the average Joe on the street working a 9-5 like most people. The only difference between them and the average person, is that after their 9-5 was done, they worked a couple more hours, or attended some college courses, giving up their free time, sacrificing one thing for another. They didn’t expect anything to be handed to them, they went out and took it (not literally) by putting themselves in a situation to succeed. This is one of the great things about the United States, everybody does have a chance to succeed. Yah sometimes it is harder for some people, but the chance is always there, the choices just need to be made.
A solution that I think would work: A flat tax. I think everybody should pay taxes. This goes for the lowest earning individuals and also for rich peeps like Mr. Warren Buffett. Should Mr. Buffett pay a higher tax rate because he earns more than his secretary? I don’t think so. I think everybody should pay the exact same rate. Hypothetically, starting at an annual income of say $10k, everybody, and I mean everybody should pay an income tax, lets just say 15%. That means that a person making $10k would pay $1500 in taxes for the year, and a person making $100k would pay $15k in taxes for the year. This system, in my opinion, is fair for everybody. The same rate is applied to all, nothing else. No deductions for energy-efficient windows, no deductions for having a child, nothing. This includes businesses as well. We all know GE didn’t pay a single penny in taxes last year, which is ridiculous. Get rid of all the loopholes, everyone lives here, so all should pay taxes. Get rid of the IRS, because there should be no need for any refunds. If you make $1k this week, $150 gets taken out in taxes, if you make $2k the next week, $300 gets taken out. Simple math.
I am not even close to earning enough money to be effected by the Buffett Rule even if it was passed. My whole point of this post is equality. Everybody wants equality for the most part, taxing the rich because they are successful is not equality, its class warfare. It is discrimination against the rich. I am definitely not rich, and I do not expect any help from the rich either (although if they wanted to throw me a couple G’s I wouldn’t be against that). I made a choice to do what I do, to earn what I earn, and pay the bills that I agreed to pay. I am responsible for myself and the decisions I made, nobody else is and should be. The government sucks at money management as it is, taxing the rich to get more money isn’t going to change the governments spending habits. How about making, and actually following, a frickin budget.
A lot of people have jobs that they don’t like. They work at jobs they don’t like for many reasons. Food needs to be bought, the electric bill needs to get paid and we need a roof over our heads. I myself am not a fan of my current job. I have a little over 4 years in, and will probably do many more. There are days when I think my job sucks, that I wish I could quit. I have to remind myself that it could be worse, that no matter how much I think I hate my job, there are worse jobs that I’ve done and that this job is just a stepping stone to something better.
I don’t hate everything about my job. For the most part, I work with a good group of people. My pay is decent and the benefits are good. The thing that I hate most about my job is that it doesn’t challenge me intellectually. It never will. I really think my job makes me stupider (see, that’s not even a word). This is one reason why I read a lot, to learn and experience new things. It is also one reason why I am so fascinated with the stock market. It is constantly changing and I learn something new everyday.
My ideal job is to become a successful stock trader. I will do this eventually, but not until the timing is right. I have set some rules for myself, here they are in no particular order.
- Be 100% debt-free
- Have a minimum of 1 year EF
- Must have consistent profits for 2-3 years prior
- Trading account minimum of $50k (preferably more though)
After looking at these rules I set for myself, it will probably be quite some time before I quit my job and try trading full-time. I am fine with that because I think this is the safest way to do it. I know how stressful the market can be, I trade everyday. If I were to try this right now I would be stressed out of my mind. I made the debt-free and 1 year EF rules that way I wouldn’t be worried if I was going to make the bills for the month. Trading because you need the money only stresses you out and makes you worry about making the wrong decision. This is not the way to trade. I can’t be scared to lose money, it has happened before and will again. It is just part of the game, the key is to make more than I lose.
I look forward to the day when I can leave my job and go full-time in the market. I know I will be happier. I will get to spend more time with the wife, and at some point maybe a child or two. My main priority will always be to provide for my family. If stock trading doesn’t work out and I have to work a job I don’t like so be it. I am ok with that as long as my family is provided for and they are happy.
What is your ideal job?
I’ve been kind of busy/lazy the last couple of days and haven’t written a post since Monday. I feel like I am letting my 3 readers down by not writing on a consistent schedule. That being said, I will try my best to post at least 3 times a week. Probably Monday, Wednesday and Friday with maybe a random smaller post in-between. This is the post that I was going to write yesterday, but was too tired to write (really just wanted to relax after a long day of driving).
I have a deep love for dirt bikes. I’ve mentioned it in past posts and I’ll probably write about it in at least 30% of my posts continuing forward. Trail riding, motocross, hill climbing, freestyle motocross, I love it all. If something can be done on a dirt bike, I have aspirations to at least try it. The wife is a huge fan of dirt bikes also, and is improving every year she rides. As much as she likes dirt bikes, her real love is snowmobiling.
We have been thinking about buying snowmobiles for a couple of years now. I have been wanting to put it off because I have a feeling that once I get one, I’ll want to race snocross. She would probably be all for that too, but I just don’t think its realistic. Dirt bikes come pretty much ready to race, no need to modify them for a person with my skill level. Snowmobiles on the other hand need a lot of modifications to race, and I just don’t think the added expenses will be worth it. I’ve come to terms with this.
At the beginning of winter we started looking for snowmobiles. We weren’t searching to hard, just randomly searching Craigslist, and the occasional newspaper ad, sometimes a local dealerships website. As winter was drawing to an end, we started looking more actively, comparing snowmobiles to each other, by price, make/model, mileage and how old they were. We both agreed before we started looking that we would be patient, and only buy if it wouldn’t add to our debt.
About a week and a half ago, we found one that the wife really liked. We thought the price was decent, the mileage was low, and the sled wasn’t that old. Last Friday I called the owner and talked with him about the snowmobile. Saturday I called back and told him I wanted to come look at it. We set a date for Tuesday after he was done with work. The wife took a vacation day (my days rotate) and we drove (3 1/2 hours) to go check it out. When we got to his house I was impressed by how clean everything was (something I use to gauge how well a person maintains their stuff). The sled was clean, a couple scratches which is to be expected but overall in pretty good condition. The engine looked good, no oil stains near the exhaust, no fluid leaks, the clutch appeared fine, track and suspension also was in good condition. We decided it was worth the price he was asking, and when compared to other sleds of the same model, it was a great deal (other sleds we have seen for the same price had 3-5k more miles on them). We ended up paying the asking price ($3k) which is something I hate doing, but I don’t feel too bad about it considering how good of condition it is in. Next months net worth update is going to suck, but I know the wife is happy (she actually cried when I said we were going to look at it) and that is something that I can’t put a price tag on. Now we have to find one for me, but that can wait until after the camper and student loans are paid off. Here is a pic of the wifes new love, it’s an 06′ Polaris Fusion 600 (you can see my baby in the background). You can click to enlarge the pic
I have written about different types of stock strategies, and how to choose your broker. This post will focus on trading the market or as Allen Iverson would say, “we’re not talking about the game, we’re talking about practice.”
You have chosen your broker and your account is now funded. Are you now ready to start trading? I don’t think so. While I am definitely no expert when it comes to trading, I do have some experience and a little bit of knowledge about trading. From my experience, my first suggestion to someone who wants to start trading is to NOT trade. Would you jump into an airplane and try to take off without ever learning how to fly? I think not. The stock market is a lot like the Honey Badger. It doesn’t care about you. It will eat you up, take your money and spit you out. If you don’t know what you are doing you will lose money. Even if you know what you are doing it doesn’t guarantee you anything. For this and many other reasons, I suggest new traders to practice trading. Otherwise known as paper-trading.
There are many different ways to paper-trade. The first and oldest way, is to practice trading on paper. Take the stock you want to buy and write down the price you “buy” it at. Imagining you own shares of the stock at that price and see if it goes up. The easiest way to paper-trade is to sign up for a free account at Wall Street Survivor or How the Market Works. I haven’t used these very often, due to TDameritrade having their own practice software, but either way practice is practice. A lot of the practice accounts delay quotes by 15 minutes, so it’s not realistic for practicing day trading.
One big problem that you have to deal with when paper-trading is you have to act like the money is real. This is a hard thing to do. It’s easy to throw money at a stock if you know you can’t lose money. It’s a completely different feeling when you are using real money that can lead to real losses. One of my rules when I trade, is that I only put an amount in that I am willing to lose. Why do I do this? Because there is a possibility that I could lose every cent that I put in. This has actually happened in some of my options trades. You can do all the research you want, which is a thing I like to stress, but that still won’t change the fact that congress could pass a bill that effects a company’s profitability. You can never know if something bad could happen, like if a company will declare bankruptcy (although research should for the most part keep you away from these ones).
You have to think of your paper-trading account like its real money. That means you need to include commissions and any fees that you might have. Follow the pattern day-trading rules (3 day-trades in 5 day rolling period), and act like its money you can lose. Do this for a while (3-6 months) to get a good idea of what your skills are. Analyze each trade and see what you are doing right and what you are doing wrong. Don’t worry if you make a lot of mistakes, it’s going to happen. Just try to fix them and focus on becoming consistent. One of my problems, especially when I first started out, was being too impatient. I would see a loss and become scared of losing more, so I would sell. Give yourself time for the trade to work. I was trying to time the market perfectly. No matter what anyone tells you, you cannot consistently time the market perfectly. Set some rules and follow them.
You can practice forever if you want, but at some point you are going to have to use real money. No amount of practice will make you perfect in the market, but it can help you limit your losses.
Are you one to jump into something head first? Or do you like to learn first, jump later?
Like many people, I love to travel. However my love for travel is basically in my head, seeing that we haven’t been on a big vacation since our honeymoon. We will probably wait to go on the larger, more expensive vacations until after our debt is paid off. One of the places that I want to visit (the wife not so much) is Machu Picchu in Peru.
Even before our cruise, I was always fascinated with the Mayan and Incan civilizations. It is amazing how advanced the civilizations were. Which is also why I’m fascinated by the old Egyptian civilization. It is crazy how these structures were built. The craftsmanship is remarkable to this day. I still don’t know how they built all these sites with the tools they had. I have only been to the one ruin, but I plan on visiting many more in my lifetime.
So back to Machu Picchu, there are many ways you can do the trip. The easiest way is to take the touristy transportation straight to the site. That one seems like it could be pretty boring, and you don’t get to really feel a true sense of adventure. My buddy from work visited Machu Picchu a couple of years ago and recommends to do the Inca Trail Hike. I agree with him. The hike is 4 days 3 nights and totals 45km. This means camping in the woods, in tents. Something that I don’t mind doing. Especially for a great experience like this. The only thing that will bug me, is the bugs. I’m not a huge fan of spiders, especially the hairy looking ones. Also centipedes are the creepiest thing ever, and my buddy showed me some pictures of them that were pretty disgusting. Other than those things, I think this trip will be awesome and am looking forward to when we can afford it.
What kind of trips are in your bucket list? Are you fascinated by ancient civilizations like I am?
We kept track of all our monthly expenses for the first time ever. It was actually pretty easy, just ask for receipts on every purchase and put em in an envelope. Add em all up at the end of the month and see what the total is. Our total money out this month was $3,659. Barely below our normal monthly take-home pay although this was one of my 3 paycheck months.
We had our normal fixed expenses like our home, camper and student loans, cell phone, cable/internet, and car insurance. Some of our other expenses went over our budgeted amount, and also some stuff that we haven’t budgeted, like miscellaneous expenses and recreational money. I didn’t break down exact receipts, if we bought stuff at a grocery store I put it in the food budget, just generalizing.
Food: $354 Pretty much spot on the budgeted amount for the month. This doesn’t include money we spent eating out though.
Auto Gas: $287 This would have been closer to our budgeted amount, but I pay $25/paycheck to my carpool, and unfortunately it doesn’t discriminate against 3 paycheck months. Hopefully I will teach the wife how to drive my car soon (manual transmission) so we can save on gas. Although it really won’t be saving too much because MX season is coming up and we will need use the SUV to pull our camper, negating the savings.
Utilities: $174 Includes heat, garbage and electric. Our natgas bill comes in mid-month, so seeing that February was freezing, our heat bill was a little higher than normal. I can’t wait until it’s summertime.
Misc: $1,104 About 1/3rd of this is the cost of the appraisal ($414) for our home refi. $161 of it was spent on eating out, which is something we really need to cut back on. Not only is it unhealthy, but we could be putting that money to better use somewhere else. Also the wifes cooking is awesome, and I would rather eat her cooking than most restaurant food. $139 was spent skiing/snowboarding and on a new winter coat for myself. I think I’ve had the same coat for like 10 years now, it was time for something new. We went to the movies once this month which totaled $20, so not too bad. I would like to go more but there isn’t really anything I want to see until the summer. We finally gave in and bought a paper shredder, which I proceeded to overheat like 4 times in the first day we had it. The papers were stacked pretty high. We have our normal $25 gym membership that I never use, (the wife goes all the time) so that needs to be added to our budget in the future. The rest is medical expenses and random purchases like dog toys and personal hygiene stuff.
This next month we will try to limit our eating out. Hoping to keep our discretionary spending under $500, but knowing that I need a new helmet and boots for MX that probably isn’t going to happen. Also the wife is planning a small weekend trip with two of her friends which will cost a little bit, but it’s totally worth it. She definitely deserves a little vacation.
How was your spending this month? Did you go over on your budget like I did?
This months budget update is kind of misleading, but I guess all of them are going to be misleading because I have no idea how to incorporate our actual expenditures. We use our credit card for a lot of our purchases and our bill never comes until mid-month. Either way I guess the budget corrects itself every month.
Savings: +$2481 Although we had another good increase, it is not as much as it could have been. This month was one of my 3 paycheck months, but we spent a lot more on stuff than we thought during the month. We finally kept track of everything that was spent this month and by doing this we now see where we are overspending. We bought some one time purchases like a paper shredder, a winter jacket (75% off), and spent way to much on eating out. We also spent another $414 on a second appraisal due to our first refinance not working out due to not having enough comparable sales. Hopefully this bank will approve it. We also went skiing for the first time in years, and don’t regret spending the money on it.
Investments: +$1728.95 I guess I can’t be angry about a gain, but wow did I have a bad month in my 401. Due to a really dumb trade by me, my account went from being up a little less than 17% on the year, to being up a little under 10%. Although I can’t be too mad, it would be negative if I didn’t sell when I did. Still have 9 months to make up for my stupidity.
Debt Payments: -$521.94 Still waiting for our refinance to get done. So no extra payments on any of the debt until that is done. I can’t wait until we can start throwing extra down on these. Until then I feel like we aren’t making progress that I know we can make. Either way, we are supposed to close on our refinance by the end of May at the latest. If for some reason it doesn’t go through we are done trying and will pay pretty much everything except for the mortgage off.
Total Asset Increase: $4210.29
Total Debt Decrease: $521.94
Net Worth End of Feb: -$78,335
Net Worth End of March: -$73,613
Total Increase in Net Worth: $4,722
Can’t complain about a positive month. We also haven’t gotten our taxes back yet. Once we do it will be going into savings until the refinance is done (we are hoarding cash til then). Then it will be part of our debt snowball. Here’s to hoping next month will be productive.