Monday, December 1, 2008

Monthly Interest for November 2008

Making ends meet on minimum wage, currently at $6.55 per hour is tough. As the numbers for a basic wage, tax and net pay breakdown show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out.

Since, it’s so close to Christmas I’d thought I would jot down a few memories of my gifts from Christmas past, long past. This idea came from a post by Trent Hamm at The Simple Dollar (www.thesimpledollar.com) “Christmas Inspiration from a Stick and a Cardboard Box” that he wrote. In the article, Trent included a link to the National Toy Hall of Fame. I found some of my old favorites such as an Atari 2600 Game System (No longer for sale), a bicycle ($99.00), a Cardboard box (Free) (actually two cardboard boxes was my favorite. Find a grassy hill and use one to slide down on the other.), a kite ($4.99), Lionel trains ($69.95), a Monopoly game ($13.99), Tonka Trucks ($24.99). I added prices for items that I could still find for sale. All but two of these toys gave me hours of fun and lasted for years. The cardboard box did need to be traded out for one that wasn’t ripped to shreds and sometimes a kite would get away.

The two cardboard boxes that my neighborhood friends and I played with one Christmas Day was a blast. We slid on those boxes all day long. Remarkably for us, there weren’t any fights over whose turn it was or who had slid the most, the furtherest, etc. I’m sure our parents were a little miffed at the price of the toys that came in those boxes and the fact that we were neglecting them.

The first bicycle that I remember getting for Christmas was when I was 7 years old. My father put it together, but didn’t have a way to inflate the tires in the middle of the night. After he rolled it outside for me, he turned to go back into the house thinking I was following him. I climbed up on it and started to ride around. He shouted at me to get down, "You're going to pop the tires!" Fortunately, I didn’t put a hole in the tubes in the tires and he later inflated them just fine. It didn’t occur to him to ask me where I learned to ride until much later. I think he was a little surprised when I told him I’d never ridden a bike before.

My friends and I spent countless hours playing Monopoly. Sometimes, the games would last all day. Lordy, lordy the number of hours I’ve spent (wasted?) playing that game. I guess taking turns being the banker improved our counting skills.

For a boy of 10, a Lionel train is magic. I’ve loaded up my family and friends on my train and taken them on trips around the world. With stops to eat, sight see and explore, I spent hours traveling to places I couldn’t even spell. Lol

As the month of November draws to a close, it’s time to see how much interest I’ve earned toward my goal of ‘A Dollar A Day”. As the downloaded information below shows, I’ve earned 88 cents this month toward my goal of a dollar a day in interest. Yeah! Only $362.89 left to go.


ONLINE SAVINGS: ######### (Acct number hidden)
Bank Balance: $370.11 Available Balance: $370.11
Last Statement: 11/26/2008 Interest Earned Year To Date: $2.11
Information as of: 11/30/08

Date Transaction Description Debit(-) Credit(+)
11/26/2008 INTEREST PAID FROM 10/28/08 THROUGH 11/27/08 $0.88
INCLUSIVE AVERAGE DAILY AVAILABLE BALANCE
$351.15
11/24/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $14.00
11/10/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $14.00
10/27/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $14.00

Tuesday, October 28, 2008

Monthly Interest for October 2008

Making ends meet on minimum wage, currently at $6.55 per hour is tough. As the numbers for a basic wage, tax and net pay breakdown show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out.

I contributed an additional $30.00 dollars to this account this month from additional income earned from doing some tree trimming, yard work, etc. I was paid much more than $30.00 dollars for my efforts for a two day time span and I do mean all day. Oh, my aching back! I didn’t want to skew the numbers too far out of line, but felt that I should recognize this additional earned income in some way. $30.00 dollars seemed about right to me.

As the month of October draws to a close, it’s time to see how much interest I’ve earned toward my goal of "A Dollar A Day". As the downloaded information below shows, I’ve earned 75 cents this month toward my goal of a dollar a day in interest. Yeah! Only $363.77 left to go. One thing you’ll notice besides the additional $30.00 dollar deposit is that the September 30th deposit is $15.00 dollars rather than $14.00 dollars. 2008 is a leap year and I needed to account for that in my deposits. I failed to remember this when opening the HSBC Direct account originally, so I made up the missing dollar here.


ONLINE SAVINGS: ######### (Acct number hidden)
Bank Balance: $341.23 Available Balance: $341.23
Last Statement: 10/27/2008 Interest Earned Year To Date: $1.23
Information as of: 10/28/08

Date Transaction Description Debit(-) Credit(+)
10/27/2008 INTEREST PAID FROM 09/28/08 THROUGH 10/27/08 $0.75
INCLUSIVE AVERAGE DAILY AVAILABLE BALANCE
$292.48
10/24/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $30.00
10/14/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $14.00
09/30/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $15.00

Tuesday, October 7, 2008

The Financial Crisis and You

Making ends meet on minimum wage, currently at $6.55 per hour is tough. As the numbers for a basic wage, tax and net pay breakdown show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out.

The $14 dollar contribution to HSBC Direct ( www.hsbcdirect.com ) for this pay cycle is winging its way there as I write this. I’m currently on track to hit $366 dollars (2008 is a leap year) by my last pay cycle in December 2008. I did get off to a slow start because of HSBC’s silly and annoying sign up process, but that’s all done and now all I need to do is keep up the pace.

I have avoided writing anything about the current economic mess that we find ourselves in … until now. What could and should you do during the current economic crisis?

First off, don’t panic. Trent Hamm at The Simple Dollar ( www.thesimpledollar.com ) wrote a great article linked here ( http://www.thesimpledollar.com/2008/10/02/the-only-thing-we-have-to-fear-is-fear-itself/ ). I recommend giving any financial decision time to age, say 24 hours. If you still feel the same way about a situation or decision after a 24 hour cool down period, then perhaps consider a small change. Don’t make any sudden or drastic changes to your financial plan. Financial decisions made in haste based on emotions will almost always end up biting you in the backside. I speak from experience. It’s a hard lesson to learn.

Secondly, how’s your insurance? No, not your life insurance although that is important. Are you FDIC or NCUA (National Credit Union Association) Share Insurance protected? And to some extent SIPC as well. More on SIPC insurance in a minute. If you are covered by the previously mentioned Federal Insurance programs and you’re within the limits of these programs, you will not lose your money if a financial institution is taken over by the Feds, bought out by a competitor or even shut down. The worst case, a bank shut down, will only mean a delay in access to your money. Now about that SIPC insurance. SIPC, which is the Federal insurance program for investment accounts, does not protect you from loss from fraud, fluctuations in the market or investment losses.

Thirdly, are you diversified? Make sure whatever ratio of stocks, bonds and cash that you have lets you sleep at night. Check your allocations and make sure you’re maintaining your ratios. If you feel the need to boost one category in particular, add more money to that category rather than selling something to rebalance. In these trying times, now is not the time to sell in a panic.

And lastly, do you have a cash cushion? How fluffy is your cash cushion? Do you have three to six months of expenses in a high yield savings account? If not, consider boosting the amount of cash on hand to better weather a sudden job loss or credit freeze.

If all else fails, get help. Liz Pulliam Weston wrote an article linked here (http://articles.moneycentral.msn.com/CollegeAndFamily/RaiseKids/WhereToTurnWhenYoureDesperate.aspx) about where to turn to if you end up at the end of your rope.

Sunday, September 28, 2008

Monthly Interest for September 2008

Making ends meet on minimum wage, currently at $6.55 per hour is tough. As the numbers for a basic wage, tax and net pay breakdown show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out.

As the month of September draws to a close, it’s time to see how much interest I’ve earned toward my goal of "A Dollar A Day". As the downloaded information below shows, I’ve earned 48 cents toward my goal of a dollar a day in interest. Yeah! Only $364.52 left to go. Also as the statement shows, there was a long lag time between opening the account and actually getting access to it to add the rest of the start up deposit.

HSBC Direct’s account opening process is a right pain in the posterior. At one point, I was berating the poor representative because the answer to security questions can’t contain two of the same letters adjoining in the answer. So for example, if the security question is, “What is your father’s middle name?” and your answer is “Larry”. This is an invalid response and the password creation program will flag it as an error. The suggestion from the representative? Make the response “Lary”. So as I see it, HSBC Direct is encouraging you to lie about the answers to their security questions and then remember what lie you told to them.

I did apologize to the poor representative that had to listen to my short rant concerning this, but I still stand by my response. It’s a silly process to encourage your clients to lie about the answers to the security questions and then expect them to remember the lie.


ONLINE SAVINGS: ######### (Acct number hidden)
Bank Balance: $267.48 Available Balance: $267.48
Last Statement: 09/26/2008 Interest Earned Year To Date: $0.48
Information as of: 09/27/08

Date Transaction Description Debit(-) Credit(+)
09/26/2008 INTEREST PAID FROM 08/27/08 THROUGH 09/27/08 $0.48
INCLUSIVE AVERAGE DAILY AVAILABLE BALANCE
$167.34
09/17/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $14.00
09/11/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $153.00
09/02/2008 DEPOSIT FROM HSBC DIRECT-ACCT FUND $100.00

Sunday, September 14, 2008

Making Ends Meet

Making ends meet on minimum wage, currently at $6.55 per hour is tough. As the numbers for a basic wage, tax and net pay breakdown show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out. The local fast food restaurants were a frequent stop in our effort to save money. If we had been a little more money savvy, we’d have eaten at home and saved the leftovers.

One of the ways I boosted my income was finding a part-time job at a local fast food restaurant. Taking this job offered several benefits over trying to get extra income from my primary job by working over time. Fast food restaurants often offer discounted or free meals to employees if they work a shift. Another benefit is that a lot of food that would otherwise be thrown out at the close of the day is willingly given to employees if they ask.

So, in our example of “Minimum Wage Earner”’s wage breakdown, I can add 20 hours a week at $6.55 per hours minus taxes and be able to afford insurance, taxes, tag and phone. And lest we not forget, the dollar a day into a savings account.

It’s even more difficult to work those extra twenty hours a week and give up your “down time” from your primary job. I did this myself for 8 months when my wife told me we were expecting our first child. Actually I work 40 extra hours a week or pretty close to it. No, I didn’t get much sleep. But, the point is to take the money and do something smart/useful with it like put it in savings, pay off a debt, prepay an upcoming bill, etc. Trying to maintain a hectic work schedule and long hours will make you old … fast.

The high yield savings account at HSBC is setup (finally) and I’ll be updating this blog with the results of the monthly statement in October. One of the things that I did forget is that 2008 is a leap year, so I need to add an extra dollar for that extra day in February. I’ll do that on or after the 26th of September when I make my next scheduled deposit of $14 dollars.


$262.00 Gross Wages (20 hour Bi-Weekly Payroll)
$20.05 FICA
$24.30 Federal Tax (Zero exemptions)
$14.41 State Tax (This was figured for NC, no local tax)
========
$203.25 Net Pay (What you take home)

Tuesday, September 9, 2008

Hypothetical Minimum Wage Earner and Expenses

Making ends meet on minimum wage, currently at $6.55 per hour (unless you work as a waiter/waitress), is tough. As the numbers for a basic wage, tax and net pay breakdown below show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out. The local fast food restaurants were a frequent stop in our effort to save money. If we had been a little more money savvy, we’d have eaten at home and saved the leftovers.

With a net pay of $813.00 dollars per month (there are two extra pay periods each year) I’ll see how far it goes.

As I write this, gas is selling for $3.59 per gallon in my area. A compact car, such as a 2005 Corolla (EPA estimated 30 mpg City), we will assume burns a tank a week. A tank is 13.2 gallons in capacity and I’ll also assume that there is 2.2 gallons left at each weekly fill up (I like easy math). So, every week we have to buy 11 gallons of gas totaling $39.49 just to get to work, grocery shop, etc.

Rent in my area for a one bedroom, 1 bath, 500 sq. foot apartment runs about $550 per month. Adding a roommate and getting a 990 sq. foot apartment will run about $724 per month. For the purposes of this post, I’ll assume there is a roommate and rent is taking up $362.00 per month each.

The 2005 Toyota Corolla mention above I’ll assume was purchased in June 2005, using a $2,000 dollar down payment from Mom and Dad. There is a payment of $199.00 per month for a total of 60 months (5 years). There are 21 payments left on “Ole Blaze” as my grandfather used to call his cars.

Progress Energy and Duke Power are the usual providers of electricity in my area. A kilowatt hour of electricity is $96.86 per month from Progress Energy. I’ll assume that we use only half a kilowatt hour per month and that comes to a split of $24.22. I’ll also assume that water and sewer is included in the rent. I’ve had both types, included and not included in the past.

So, how do we “net out”? Taking our monthly net income of $813.00 dollars and subtracting expenses of $793.18 per month for rent, car, gas, utilities and groceries (at $50.00 per month), there is $19.82 left over.

As you might notice there is nothing in the budget for insurance, taxes or tag to keep “Ole Blaze” on the road. There also is no mention of phone, cable or internet service. I think my hypothetical “Minimum Wage Earner” needs a rich girl friend.

I listen to a morning radio show on my hour and a half drive in to work every day and one of the employees occasionally mentions how tough it is to make ends meet. Having gone through this little exercise, I can well imagine his issues. It does bring back (bad) memories of my days as a minimum “wage slave”.


$524.00 Gross Wages (Bi-Weekly Payroll)
$40.09 FICA
$48.60 Federal Tax (Zero exemptions)
$28.82 State Tax (This was figured for NC, no local tax)
========
$406.50 Net Pay (What you take home)

Monday, August 25, 2008

A Dollar A Day - The Startup

This series of blog posts will be a real money experiment about what can be achieved if you're only able to save, invest or give away a dollar a day. The original dollar must be earned from wages paid in exchange for services rendered. The dollar I will be using must be saved from wages or earned passively from interest or dividends. I will also be exploring giving my dollar a day to charity as well as donating part of my interest on my dollar a day through Zopa (www.zopa.com). The goal is to earn a dollar a day in various forms, savings interest or stock dividends, as passive income using only a dollar a day to create this income.

What triggered this interest in the subject was a blog post by Trent Hamm at The Simple Dollar (www.thesimpledollar.com) in which one of his readers complained that almost all financial advice was aimed at the well heeled. Trent replied with a post to show 10 things to do to improve your situation if you are working for minimum wage.

The first thing to do is find a low cost entry, no fee, high yield savings account to place my savings into. HSBC Direct (www.hsbcdirect.com) is the bank I chose after surfing around Bankrate.com (www.bankrate.com). I will be opening up an account and funding it with $253 dollars sometime after August 29, 2008. I get paid every two weeks, so I will be adding 14 dollars to the account every two weeks as I go along. This is a real money blog and as such, if there are any “bumps in the road” on the way to my goals, you’ll read about them here.

I will be using Scottrade (www.scottrade.com) in the near future to buy stocks for the dividend portion of this experiment. Scottrade’s minimum amount to open an account is $500 dollars. This account will be opened in December, 2008 near the end of the month. Scottrade’s transaction fees are only 7 dollars. The cheaper, the better for my purposes. As a friend of mine tells me, "Cheap is good, free is better!"

For those of you who like to read the end of the book, this experiment will take a few years. This should be a fun adventure. I hope you find this series of posts fun and entertaining.