401(k) Losses, Markets and Birthdays

Even doing everything right for a “normal” market (large caps, mid-caps, small-caps and bonds), my 401(k) is hemorrhaging.  Scary, yes, as much because my allocation just took a 3 point jump in bond valuation vis-a-vis total portfolio.  That hurts.

This in October, when both my boys have birthdays.  We have one combined party to save on expenses, and I already do the invitations and catering myself (including tables, folding chairs, tents – all either left over from my single, entertaining days or thanks to my sometime duties in marketing communications (I have nifty publishing tools)), but oy vey, it doesn’t take much to add up.  I’ve even cut *way* back this year, and it still feels tight – more so, perhaps, because more went on debit instead of credit, a minor accomplishment.

And now some gurus are suggesting that the pubic sell their utility positions.  I know I said something earlier about cookies, and foodstuffs are not, imo, a bad investments, but when the go-to guys are suggesting that you divest yourself of traditional utilities, then I tend to get a tad more nervous.  Not that I will, necessarily, because I think as long as we have power people will want it, but that’s a fairly old-school sector, which should remain viable, even if diminished, even in the worst of modern times.  The idea that it might not be stable – well, it send more chills down my spine than the dot-com or even the housing bubbles. 

Hitting utilities like this would be akin to Atlantans avoiding bread and milk while being warned of a blizzard; there’s just something fundamentally wrong with that picture.

I changed my allocations today, with slightly more targeted at bonds, because I don’t know how long this crazy, upside-down world will last, but I’m not divesting individual utilities or their suppliers just yet.  Perhaps it’s Pollyanna syndrome, but it’s just so difficult to get a handle on the idea that Americans won’t pay for power (generated in any form), that I can’t give up my positions there wholesale, despite whatever Jubak might have to say.

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Oooh, Microsoft and AOL Have Teamed up to Give me Money!

And I know this because they’ve sent me an email, in only slightly bad English (and some Portugeuse), with a return to a Yahoo address, telling me that I have won £1MM GPB in a lottery I never entered, and all I have to do to collect is to hand over all of my bank details.  Woot, woot!  I’m RICH!  See, look, sample is below:

The prestigious Microsoft and AOL has set out and successfully organized a Sweepstakes marking the year 2008 anniversary we rolled out over 400,419,864 USD for our Mid-year Anniversary Draws. Participants for the draws were randomly selected and drawn from a wide range of web hosts which we enjoy their patronage.

The selection was made through a computer draw system attaching personalized email addresses to ticket numbers. If you ignore this massage, you will defiantly regret it later. Microsoft and AOL are now the largest Internet companies and in effort to make sure that Internet Explorer remains the most widely used program, Microsoft and AOL are running an E-mail beta test.

So, if I don’t go to the spa right now, I will feel bad about it in a rebellious or cantankerous sort of way?  Well, at least this one’s learned to use spell-check, if not a dictionary.

I’m making light of this scam email, but people do fall for it, losing thousands of dollars before the scammers move on to their next victim(s).   If an email seems too good to be true, it is. 

1. No stranger wants to give you money for you to donate to charity in their name,
2. No deposed dictator’s family is asking a complete stranger and average Joe to help them free millions of dollars from a secret account,
3. You cannot win a lottery you haven’t entered,
4. There is no Mr. Smith who died in an accident of any kind, leaving behind a fortune and no relatives or instructions, so that his lawyers are picking random people from the internetz to pretend to be related and inherit. 

None of it is real.  The only people getting rich from any of these schemes are the thieves preying on the desperate, the ignorant, and the greedy.  Run Away!

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Evgren Says – Why You Need Savings Even When Paying Off Massive Debt

1. Vehicles need maintenance.  Not just routine maintenance, either.  If you keep them long enough, vehicles need tires, and brakes, and tune-ups, and replacement belts and valves you’ve never even heard of – lest your engine overheat and eventually blow – and it’s really only the oil changes that are affordable.  Not to mention that even the the safest, most cautious drivers can get into accidents which unexpectedly total their vehicles and require that they purchase a new one.
2. People get sick and/or injured.  Health insurance or no health insurance, people pick up viruses, and the right ones can turn into pneumonia, or strep throat, or chronic bronchitis, or staph.  Children, especially, tend to bring stuff home.  People can also turn out to have long-term illnesses or disabilities, which insurance may or may not cover.  People may need surgery – replete with deductibles and getting billed separately for every aspirin and toilet flush.  This tends to add up.
3. Appliances are not immortal.  Refrigerators, water heaters, sump pumps, dish washers, clothes washers and dryers, they all give out eventually, and not uncommonly all at once.  Sure, you can live without an ice maker, and you can line dry your clothes, but if your AC gives out in the south, or if you’re living without heat in New England, can you really forgo these repairs?
4. Clouds don’t care about you.  In Hartford, Hereford and Hampshire, hurricanes hardly ever happen, but otherwise, “acts of God’ (aka, weather), tend to strike without regard to debt, or savings, or even trying really hard to reach some financial goal.  You can’t count on the blizzard to push off to the east and hit Altoona, even if that would be easier for you.
5. As soon as you start to feel comfortable, something unexpected will happen.  Call it Murphy’s law, call it luck, call it the law of averages, or karma, or supercalfragilisticsachebealidocious, the label isn’t really relevant.  Life is made up of the unexpected as much, if not more so than, the expected.  If you have no savings, that unplanned for or unexpected event goes entirely on your credit card, or, at best, leaves you scrambling for a way to deal with it. 

Savings may not be able to absorb the sum total of either any one, or any combination, of adverse events, but it will certainly provide a cushion and help to ameliorate the damage.  If you have more debt than you can pay off in a month, even putting your $25 oil change on credit will hurt you – as I learned the hard way – forget about buying a new/used vehicle after an accident, or replacing a water heater, or “acts of God.”

In fact, I might even argue that you need liquid savings even more when you’re paying off debt, because otherwise all of those “unexpected” expenses, which we all know should be expected on some level, will just pour that much more acid on our all-too fleshly plans for repayment.

So, Evgren says* savings too.  Seriously.

*Evgren is not a guru, nor a financial planner, nor the Dalai Lama.  Evgren is not clairvoyant, nor even super-human.  Evgren Says because Evgren has an opinion and a free blog, and any reader is both free to, and should, perform his/her own due diligence.  Evgren is not responsible if the blizzard does indeed push off to the east and hit Altoona.  Or not.  Evgren does like tall trees.

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Must be Nice to be Flush, or My Bank Doesn’t Want my Money

I’ve had the same bank accounts, checking and savings, for years.  I opened them my senior year of high school.  I’ve paid $12.00 per month on that checking account for almost 20 years now.  This in spite of maintaining an average monthly balance of $1000+ for the last five years.

So I called them last week to see if they would waive the monthly service charge.  The customer service rep, who was really a nice guy, said no.  I’ve got an account with perks they don’t offer any more – free checks, free online banking, unlimited check writing, free debit card, free overdraft protection, 5 free stop payments per year, and some other things he didn’t even get into.  Never mind the fact that, in the last six years, I’ve requested one debit card (during that conversation), and made one stop payment.  I don’t avail myself of the other “perks.”  I don’t write checks for money I don’t have or don’t want to give away, I write, maybe, 6 checks a month, I pay my bills using the online services of my creditors (immediate withdrawal), rather than relying on my bank to process a piece of paper and make a deadline which doesn’t affect their credit.  And I’ve been a loyal customer for 20 years.  But Customer Service Guy can’t do anything for me.  WEV.  What’s my other choice right now, Wachovia?  Yeah, right.  So I suck it up and deal.

But then I call tonight to find out the APY on my savings account – it’s been so long since I set the darned thing up that I don’t even have the beginnings of a clue.

Imagine my shock when Other Customer Service Guy says “0.1%.”

Yep, that’s right, 0.1%.

Me:  Seriously?  <pause>  Do I have any better options?

Other Customer Service Guy:  Let me check. (<Insert Jeopardy Theme Here>)  Unfortunately, for a savings account that will keep your money liquid, the only other account we can offer pays 1%, but that requires a minimum balance of $5000.00 to avoid a $9 / month service charge.

Me:  You’re kidding, right?  I’ve got an offer from ING Direct for 3.0% APY, liquidity within 3-5 business days, with just a $250 minimum balance.  I’ve been with you all for 20 years; can’t you come close to that?

OCSG:  <no hesitation> Sorry, but no.  Is there anything else I can help you with?

Me:  Nope, you’ve given me my options; thanks.

OCSG:  Have a good evening!

So I immediately log on to ING Direct and transfer $250 from my checking.  I had planned to let my old savings account have my monthly savings deposits, but since they’re really not all that interested in my money, I’ll give it to someone who is.  Or who is, at least, willing to offer me better than 0.1-stupid-percent-APY.

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C is for Cookie

Staring at the ceiling didn’t really work for long, so in the wee hours I wandered over to NetworthIQ and started plugging in my numbers.  I used my salary only, my cc debt, my vehicle, my 401(k) and 1/2 the house (mortgage and estimated value).

Strangely enough, it’s in the positive, a little over $90k.  I attribute this first to the fact that we got a good deal on our home (purchased well below market several years ago, so we still have equity even in this climate), and to the fact that the first time I was offered a 401(k), I jumped at it, and paid in the annual maximum while I was still single, maintaining a 12% contribution rate after that until the birth of my first child.

Now I’m sitting at 8% contribution, but all of those years in my early twenties socking away that money was one of the things I’ve done right.  The market isn’t helping me right now, of course, but I’m only in my late 30s, years away from retirement, and it’s not panic time for that yet.  I probably should look at moving some of my contribution rates around because I’ve got 30% going to an S&P 500 fund and I’d like to limit any additional exposure to financial stocks.

You know the best thing I ever did with my portfolio?  I bought Nabisco.  Even in the worst times, people still buy cookies.

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