Send Troubles to the Ditch: Preparing Before They Get There

President Calvin Coolidge once said: "If you see ten troubles coming down the road, you can be sure that nine will run into the ditch before they reach you." One of the surest ways of sending troubles into the ditch is setting up roadblocks before they reach you. Underestimating the impact of planning for the future can have huge implications for the direction your life will take. It is amazing to me how many people act as if life will just come on its own and sweep them off to good fortune and fulfilled goals, not realizing the effort it takes to acheive anything more than mediocrity.


Retirement. Education. Marriage. Buying a house. Having children. The majority of us will have a number of life events for which we can be easily plan and prepare - and most are not purely financial. Marriage, while certainly not devoid of financial aspects (one of the largest reasons for divorce is finances), involves at least as much preparation on the emotional, relational, and spiritual levels. At some point, the day of decision on these matters will come - waiting until that day to begin planning is far to late to make a real impact on the outcome.

Take retirement for example - waiting until you are sixty to start preparing for retirement is woefully inadequate to meet the majority of people's needs. The earlier you start to plan and prepare, the more leverage and control you will have over the outcome. There really are only two solutions for under-planning: Postpone or reduce the size of your goals.


Failing to plan for foreseeable life events is a lot like waiting until the day before your vacation to start preparing for the trip. Suddenly, you realize that you need to pack, get tickets, accomodations, transportation. Typically, you'll spend more. You'll forget items. You'll waste time figuring out what you want to do. You'll add stress. And in the end, even if you manage to go, you won't have nearly as fun or relaxing a time as if you had taken the effort to project into the future a bit.

So start packing your bags: figure out what decisions you are going to need to make in the next 5, 10, or 20 years. Next, figure out what kind of tools or skills you'll need. Maybe it will be a budget. Maybe it will be something like setting aside an evening for a family activity each week. Maybe it means taking some extra classes to improve your job skills. Whatever it is, look ahead, start planning, and send those future troubles into the ditch!

Current Savings Rates: Feb 04, 2008

About 8 months ago I posted about some of the online high-yield rates being offered. Since then, FNBO Direct's promotional 6.00% rate ended, and perhaps more importantly, the Federal Reserve has dropped the key federal funds rate (the rate that banks charge each other) from 5.25% to 3.0%.

In response, many of the online banks have lowered the savings rates that they are offering. I have decided that it is time to update what many of the popular rates are out there, starting with the highest and going down. The yields shown are for a minimum deposit of <$1000, in an institution that is FDIC insured - peer-to-peer lending operations such as Prosper.com and LendingClub are not included. (All numbers are APY) This obviously isn't a complete list - if you find a great deal, be sure to let me know!

E*TRADE's Complete Savings Account:
Rate: 4.40%

(Also currently offered is an extra $25 when you sign up)

FNBO Direct Online Savings Account:

Rate: 4.30%
(This is the account that I currently have - I've been extremely pleased with the ease of use.)

Washington Mutual Online Savings:

Rate: 4.25%

(caveat - with a WaMu checking account, otherwise, .25%)

Citi Ultimate Money Account
Rate: 4.25% (caveat - must make at least two online bill payments each calendar month) otherwise, it looks like you'd get 3.50%

HSBC Direct Online Savings:

Rate: 3.55%

ING Direct Orange Savings

Rate: 3.40% APY (Also contact me, and I'll send you a link so that when you sign up with >$250, you get $25, and I get $10)

*All institutions are FDIC Insured up to the maximum allowed. Be sure to read the terms and conditions before signing up with any of the institutions named. Rates are subject to change without notice.

Review: H&R Block's TaxCut

Today I finished my taxes, and I thought I would give a review of the software I used: H&R Block's TaxCut (for year 2007 of course) Premium Federal + State. I'm sure that it is available from a number of places, including the H&R TaxCut Website, but I bought it from Walmart for $34.96 +tax, which is cheaper than buying off the website. I did not buy the e-file option because I can mail it in for much cheaper, and don't feel like the additional support is likely to add a great deal of value for me. In comparison, TurboTax from Walmart was approximately $69 in order to have all the forms in the software that I would use.

I have used TaxCut for the past 3 years, and this year thought that the product was much improved. While I don't have the most complicated of taxes returns to complete, I did have interest income, capital gains and stock transactions to report. In addition, I had plenty of deductions to take as well as a Hope Credit. Previously I had to fill out the actual forms on a couple of items because the questions they asked didn't quite cover the situation - I remember specifically student payments being an issue, as well as my mortgage since it isn't through a banking institution. However, this year it was much easier to fill out all the information, and the process seemed to flow very nicely.

Installing the program was a little tricky, only because my computer acted up, and not because of the software itself. Once it was installed, it took me approximately 2 1/2 hrs to complete both my state and federal returns, check it over, and print it out. A nice feature that I didn't remember before was it reminded me deduct any payments for state taxes that were part of my 2006 taxes, but were payed in 2007. For me, I had underpaid on my state taxes, so the $308 check that I sent when I sent in my state return I could deduct. That translates into roughly $75 savings. This year I didn't use any of the tutorials, but previously I have found them to be adequately helpful or better.

Overall, TaxCut is easy to install and use and with the price is one of the best values for your money if you can't use a free online service such as TaxSlayer.

Recommendation: Highly Recommended

Fine Print: I am not in any way affiliated with H&R Block or TaxCut, nor am I in any way compensated for this review. Additionally, I am not a tax professional, so nothing in this review should be taken as tax advice. For your specific situation you should talk with a tax professional.

Give Yourself a Raise! - You Deserve It!

Yesterday I got my paycheck with my new "raise": I just signed up for the Employee Stock Purchase Plan (ESPP). This is a benefit that some companies offer where you can buy company stock at a discount. In my case it is a 10% discount. The only way that you can do this however, is by having the company take a percentage of what I make directly out of my paycheck, up to a maximum of 15%. So you can see, since the company allows me to use 15% of my paycheck to purchase stock at a 10% discount, essentially I am giving myself a 1.5% raise! (Caveat: This assumes that the stock price remains the same - if the stock price rises, I would make more than this, if it goes down, well....you get the picture.) For a person making $50,000, 1.5% translates into $750 - not bad!

It took me awhile to do this however, because I don't (who does?) have a spare 15% in my paycheck to be taken out and not run short. So I have had to reserve money in a separate account dedicated to funding my ESPP. As money is taken out of my paycheck to buy the stock, I replentish my checking accounts from the reserve. Twice a year I will liquidate the stock in the ESPP account and replace the money in the reserve to start the process again! Doing this twice a year would mean I need to have an account with approximately $3750 to take advantage of the ESPP.

A lot of companies offer benefits like an ESPP, and even more offer company matches on 401(k) contributions. Consider it giving yourself a raise to take advantage of this free money. By fully utilizing a company match on your 401(k) contributions of 50% up to 6% of your salary, you essentially have given yourself a 3% raise (in addition to any taxes that you would defer.) Make sure you fully know what type of benefits your company offers, and then use them! A spare $750 or $1000 adds up to real money before you know it!

10 Lessons Learned from a Year of Marriage

1) Marriage should be built on a lot more than financial expectations (hence the phrase in marriage vows "for better, for worse, for richer, for poorer...")
2) Marriage will not solve money problems - keys to successful money management work whether you are married or not
3) But some of the best memories are from doing activities that require little to no money
4) Its important to talk about financial goals and expectations
5) But FAFSA rules are against getting married
6) Taxes are a lot less
7) But you also spend less in total on housing, food, utilities, etc.
8) You also spend more than you would have to buy nicer things
9) As a male, you take a lot better care of yourself than when you were single
10) You spend a lot less on gas to go visit your fiancee six hours away

Over the next couple of days, I hope to talk about each one of these lessons - so be sure to tune back in!

Money Saving Tips: Eliminate Baggage from your life

Over at NCN, a popular post has been the compilation of money saving tips from all over the blogosphere. To keep up with the Smith's and the Jones', I thought I would go ahead and post as well.

On Sunday, I talked about the "Ancient" Portfolio theory and how important it was to look at the choices you are making and determine to life simply and not strive for luxury you can't afford. This is my biggest money saving tip (perhaps its a philosophy really): Eliminate baggage from your life.

Here at Smiths Trading Post, my goal is to help people figure out the habits that they need to pick up, and the items in their life that need jettisoned. Let me explain. By eliminating or significantly reducing vices in our life, whether that be alcohol, cigarrettes, or an addiction to Starbucks lattes. MSN had an article on vices awhile back that itemized the costs of some of these, and revealed that they can reach in the thousands of dollars. A $2.50 latte every workday may not seem like a lot, winds up being over $500 in a year. Maybe you'll decide that you don't really need cable television - perhaps you can save $300 a year. Perhaps you'll eat home one more time at home in a week - for a couple of two at $20 a meal, that would save you almost $1000.

Essentially, taking stock in this way forces us to evaluate our conceptions of what give us meaning - do I have to have cable in order to be happy? Will I really feel deprived if I buy a used car rather than a brand new one?

Just as the pioneers had to forge a new path for themselves, we are blazing the trail for our financial future. An just as they had to leave much of their former life behind, we have to leave much of our (hidden) passion for luxury on the side of the road. I'm not necessarily advocating a strict Spartan existence, but I do think most of us (me included) could take a rather critical view our lives and can find items that are holding us back from achieving the the goals we have set for ourselves.

Quick List of current savings rates

FNBO (First National Bank of Omaha) 6.00% APY until Sep 28. Previously 5.25% APY
$1 to open.

HSBC: 5.05% APY
$1 to open

E-trade: 5.05% APY
$1 to open

Citi: 4.65% APY
$500 to open

ING Direct: 4.50 APY
$1 to open