Financial Advice from a Boomer

No, I'm not a Millennial, I'm a Baby Boomer.  While you may think that means I don't know what it is like to be in your shoes (just like I thought that of my parents' generation) what it really means is that I've already been there and done that, and along with an assortment of t-shirts, I've gotten some battle scars and some knowledge learned the hard way or by watching friends do it the hard way.  Here is some advice to all of you:

Stay Out of Debt

With the exception of a house, there are very few if any things worth going into debt over.

Education?  Ok, maybe, but what are your other options?  Can you live at home and commute?  Do you need the private school?  Can you work part time?  Go to the community college for a couple of years?  While student loans for medical school or law school may be the only way to afford these, student loans for undergraduate work should be taken out only with caution and only in the smallest amount needed.  You are supposed to live in crowded conditions with little money when you are in college.  For other ideas on paying for college, see this article.

A car?  An older used car perhaps, but make the loan short term.  Remember, not only does it cost less to buy an old cheap car, it costs less to insure it.  You can buy a lot of car repairs for the price of a car payment.

Furniture?  Clothes?  Vacations?  Nope.  They aren't necessities.  Use what you have, buy used, get creative but if you can't pay the bill at the end of the month, (that mean in full, with no interest) don't buy it.  

Get Married and Stay Married

And no, living together isn't the same as being married.

Finding a committed life partner who has the same goals as you make it so much easier to achieve those goals.  You have someone to split the bills and work with and hopefully you have skills that compliment each others. Two may not be able to live as cheaply as one, but a couple can live more cheaply than two singles.

Divorces on the other hand are one of the big wealth-stealers in our world.  Assets have to be split. Non-retirement assets may need to be sold, creating tax liability.  The income that was supporting one household now has to support two.  The house may need to be sold and at least one party will incur moving expenses.

Why isn't living together the same?  Basically it is because the chances of splitting up are higher for couples who are living together than for couples who are married, and couples who live together before marriage split at a higher rate than do those who do not live together. Further, living with someone can delay entrance into marriage, whether or not that is your goal.  In short, most couples who marry do so with the intent of staying together forever.  People who choose to move in with someone may do so as a step towards marriage or may do so instead of marriage.  The problem is when someone who sees it as a step toward marriage moves in with someone who sees it as something to do instead of marriage.  Living together is comfortable and convenient, it allows couples to put off committing to each other while still maintaining many of the comforts of marriage (including a roommate to help with the bills).  If your goal with someone is marriage, don't settle for second best--either get what you want, or, if the other party isn't interested, get out and find someone who is.  Living together makes you too much a member of a couple to be available to others and not enough of a couple to give you long-term security.

Start Saving Early--You Will Never Have Enough Money to Start Saving

I know your paycheck is low but unless you are sharing a dumpy apartment with a roommate, taking public transportation and never eating (or drinking) out, then you have some disposeable income.  Pick an amount per paycheck and get it automatically tranferred to a savings or investment account--even if it is just $10.

Learn About Investments and Investing--And Remember That No One Cares About Your Money as Much as You Do.

Do you understand what a share of stock is?  Do you know how investing in the stock market can make you money?  Do you understand how it can cause you to lose money?  Do you know what a bond is?  Do you understand what a mutual fund is and the differences in the types of mutual funds?  Do you understand asset allocation?  If not, get some good books on personal finance and/or read a bunch of personal finance blogs.  It isn't that difficult a subject.

If you are tempted to hire a finanical advisor, find one who will bill by the hour and pay for advice, not portofolio managments.  We hired someone on the "Assets under managment" plan and we are still paying for it.  Not only did the company's picks underperform our other assets, they put us into a large number of funds that are going to cost us a small fortune in fees to get out of.  If someone suggests that HD Vest will do a good job with your money run in the opposite direction. 

  *Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Financially Fit & Fabulous*

Are Subscripton Boxes Worth It?

If you have spent any amount of time surfing the web lately, you've probably run across ads for subscription boxes of various ilks.  You can get costmetics, snacks, books, meals or clothes delivered to your mailbox on a regular basis, but should you?  If you are in debt or if money is very tight, the answer is probably "no".  But what about for people who have a little extra money?  Are these boxes a good idea?  You be the judge.

Ipsy Glam Bags

I've gotten into a make-up rut and haven't tried anything new for a while.  I hate spending lots of money on make-up and I'm not the kind of person to spend a lot of time on her face.  I decided to subscribe to Ipsy to get some new make-up and types of make-up.  The box is only $10.00/month and contains five items each month, mostly sample sizes.  Here is what I got this month:

The blush compact is a "free" welcome gift; not part of the monthly bag.  Each month they send you a cosmetic bag, plus the five things.  This month I got the mauve eyeshadow and a brush, plus the mascara and a highlighter stick (kind of like concealer but a little sparkly).  The final item is some eye cream.  I'll give it another few months and see how it goes.  From this month's bag, I know I'll use the mascara and the eyeshadow.  The brush is nice.  I'll use the eye cream too.  I suspect the highlighter will hit the trash eventually--I've never figured out the whole highlight, contour thing.  I think I got my $10 worth.  If you want to try Ipsy, use my link and I get a referral credit.  

Dia & Co

I hate to admit it but in the last few years I've put on more than a couple of pounds.  Between being laid up with a sprained foot that took over six months to heal and going through menopause, and just generally finding a lot of sedentary activities I like, those pounds have crept on and don't seem to be going anywhere.  However, I'm still trying to dress the shape I used to have and I haven't figured out what to do with the body I have now.  I'm not much of a fashionista anyway but as my daughter says "You go shopping and come  home with another red sweater".  

Dia & Co is a styling service for women who wear sizes 14-32.  You register with them and then go online and fill out a personal profile about your style and preferred colors.   You can get boxes as frequently, or infrequently as you want.  You can sign up for a monthly or quarterly subscription or you can just order  a box when you want to.  Dia & Co's sylists put together five garments based on that information and send it to you.  The cost is $20, but that is applied to any purchase.  If you buy everything in the box you get a 20% discount.  Anything in the box that you do not want goes into the prepaid mailer and you send it back.  

I thought Dia & Co would be an interesting way to explore fashion that I might not pick off the rack.  Let's take a look at my first box.

I actually like this picture better than I liked the shirt.  It fit funny, and just didn't feel good.  It is a Zenobia Amelia top in Yellow and it costs $36.00. 

I don't know how well you can see by clicking on the photo, but give it a try.  These are Rafaella Carson Pants in Gray.  They cost $65.00 and were just big all over.  They were too long, and the crotch kind of hung, and the waistband slipped down closer to my hips.  I would like to try them a size down, but anything you order from Dia &  Co is not returnable so I won't do that.  The top is a royal blue Junarose Destiny top, which was basically a poly silk in the shoulder area and cotton knit from the chest down.  $59.00 is way too much for a t-shirt and this one was way too big anyway.  

Here I am wearing the blue top again, this time with an Emerald/Leslie Kimono in blue, which sells for $42.00.  I don't know if it was too big or if I just didn't like the look.  Basically I felt like I was in a robe.  The fabric is pretty though.  

This is a dress I never would have tried on in a store or ordered online.  For one thing, that style doesn't look good on me; for another, at $89.00, there are a lot less expensive clothes out there.  Guess what I'm keeping?  This is a Lysee Leanna dress.  The fabric is a thick knit and it is lined, but still machine washable.  My husband and college girl say it looks good on me.

Are Subscription Boxes Worth It?

I can't speak for every box out there. I've tried these two, and several years ago I tried Birchbox.  For $10 Birchbox and Ipsy are fun and expand my make-up collection in a low-risk low-cost way.  I'm not a big make-up customer so I'll probably get tired of this pretty soon.  People who have a tendency to spend too much on make-up may find these boxes help, since they get new toys monthly; or they may just encourage more consumption of more stuff.

As far as Dia & Co, you can tell by the prices that these aren't low-end clothes  You can certainly dress yourself for less elsewhere.  On the other hand, I found a nice dress that I would not have otherwise even tried.  Yes, it is a little high, but not so much that I can't afford it.  Honestly, if I had been out shopping and a salesclerk handed me the dress and suggested I try it, I probably wouldn't have bought it, just because of the price.  However, I had already spent $20 to get the box; if I sent everything back I would have nothing for that $20--so now I'm out $89 rather than $20, which makes all the sense in the world, right?  Obviously the way the program is set up, it encouraged me to spend money I would otherwise not have spent.

I don't think I will be getting a lot more of these boxes, but I will get at least one more to see if they do a better job of fiting my size--they say that the first box is hit or miss on sizes and it gets better after that as they get to know you.  After trying everything in  your box , you go to thier website and let them know what you are keeping and what you are sending back.  They ask you how you liked the color, fit and price of each piece and give you a space for comments.  Hopefully my next box is more moderately priced (the lowest price range they offer is $50/piece and that's what I selected) and has more clothes that fit.  

If money is a problem at your house, Dia & Co isn't for you; however, if you usually buy clothes in this price range (or even if you don't but can afford a piece or two) then Dia & Co is a fun way to explore fashion you might not otherwise try.   If you want to try Dia & Co. use my code and they will style my next box free, so if I don't like anything it can go back without guilt.  

Portfolio Update July 1

Wow, half the year has gone.  It is time to take a look at our investment portfolio, analyze it and decide if any changes are needed.

Vanguard:

We have Roth IRAs invested in Vanguard's S&P 500 index fund, plus regular IRAs and a taxable account that we tranferred to Vanguard from a financial advisor.  The advisor had us in a large number of mutual funds, and the cost to sell each one is $20 per account; therefore we have not been in a hurry to sell them.  We did move out of the worst performing ones late last year and we just analyzed what was left. We have several funds that are significantly underperforming their associated index and if that continues at the end of the year, they will be on the chopping block.  After anaylzing everything we did decide we were overexposed in US stocks and so we sold some of our S&P 500  fund and bought Vanguard's index funds for international bonds and for international stocks.  Overall, these accounts are up 5.23% this year. 

One of the things a lot of people track is the income generated by their portfolio.  So far this year, this portfolio has generated $2788 in dividends and capital gains.  I expect that amount to rise as we have increased the bond percentage in our portfolio from about 25% to about 30%.  My husband is 60 and I am 55; we are getting to the point that we need more stability and income in our portofolio.

My 401(k):

My 401K was invested 25% in MFS Agressive Growth Allocation Fund A, 25% in Franklin Total Return Fund A and 25% in Janus Triton, with 12.5% each in MFS Growth Fund-A and Delaware US Growth Fund A.  For the first six months of the year, the YDT performance was 1.77% which is lower than my other investments.  

I decided to re-allocate and now I have 38% MFS Government Securities Fund A, 20% Janus Triton, 19% Oppenheimer International Small Mid Co A, 11% Delaware US Growth Fund A and 12% Pioneer Fundamental Growth Fund A

For the first six months of the year, my dividends, capital gains and other earnings (as opposed to increases in share value) totalled $1,647.85.  I expect that to increase in the next six months due to the increased bond holdings.

Motif Investing:

This was a toy for me to play with.  Motif Investing allows you to invest in up to 30 different companies at one time, for one fee.  You can either assemble your own group (Motif) or buy one of theirs.  Once you own the stocks, you can sell them one at a time, or you can sell the whole motif for only one fee.  The motif I developed isn't doing very well--my $1000 is down to $960, though I have collected some dividends.  Overall, I invested $7,000.  My portfolio is worth $7223.69 and over the last few months I have transferred $320 in dividend income to Loyal3.  So far in 2016, I have earned $105.31 in dividends at Motif, for a yearly yield of about 3%.  If you want to invest via Motif, use this link and we both get $100.

Loyal3:

I started investing with Loyal3 as an incentive to bring lunch from home rather than to buy it from the lunch counter in my building.  I got tired of that, but have used the account as a place to invest the dividends I got from Motif.  Through Loyal3, which is a no-fee stockbroker, I own stock in AMC Theaters, Alibaba, Disney, Hershey, Intel, Kohls, Target, TimeWarner, Unilever and VF Corp.  So far, I've broken even; AMC, Hershey, Intel and Unilever are up, the others are down.  My $630 investment has garnered me $5.91 in dividends for an annual yield of about 2%.

Prosper:

So far this year we added $300 in new money to this account and we transferred $550 from Kickfurther to Prosper.  Our XIRR return on this account is 11.48%. Prosper shows my seasoned returns to be $12.85%.

Lending Club:

I'm not liking all the things I've been reading about the corporate troubles Lending Club has so I haven't wanted to invest more money with them.  I haven't pulled any out, but I'm thinking about it.  Right now my account value is $19,791.89 and my adjusted account value (Lending Club computes a hypothetical value based on the number of late notes and how late they are) of $19,173.84.  The increase is only $313 so far this year.

Kickfurther:  

Kickfurther says my profit since the inception of the accout is $382.17.  However, they have yet to subtract anything from that for bad debts.  They paid me for the first four bad deals I had, in the amount of about $175.  Right now I have about $260 in deals that aren't paying.  Some I think have some recovery potential--KF has indicated that it has the inventory and I personally think the inventory will sell at some price (bamboo kitchen drawer organizers and silk comforters); the others I suspect won't give us much if anything, but hopefully I'm wrong.  Bottom line, for in investment of about $2500 made in dribs and drabs, mostly from June-Dec 2015, there is a real possibility that the value of the investment is a $20-50 loss, if you consider the $175 that KF refunded me to be a loss, along with my predicted loss from the deals I have that aren't paying.  The real questioin is how much value can KF get out of the bad deals; and at this time we haven't seen evidence they can get any.  However, they have a legal team working on it now. I think Kickfurther has potential; I'm just not sure the pricing is right on it.  If you want to try it, use my link and you get $5.00 toward your first investment.  

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and One More Broke Twenty-Something* http://diseasecalleddebt.com/extreme-saving-no-new-clothes/ 1. How We Avoided Buying New Clothes for a Whole Year http://brokegirlrich.com/the-little-costs-of-friendship/ 2. The Little Costs of Friendship http://familymoneyplan.com/interview-brokegirlrich/ 3. Behind the Screen Interview #7

2016 Goals: How Are We Doing

Goal:  Continue my Loyal3 Lunch portfolio, adding an average of $20 per week, or $1000 over the year.

Progress:  I lost interest in this.  My numbers on those posts were low and I got into a stretch where I ended up buying lunch a lot...but I will say I am making more of an effort to remember to bring lunch.

Goal:  Devise a budget and work with my husband to stick with it.

Progress:  I created a budget and tracked our spending for a couple of months.  We spend less than we make and we really don't enjoy tracking every penny.   The leaks were where we thought they were and we just aren't real motivated to plug them.

Goal:  Unless we end up needing to buy a car this year; do not take any money from savings; live on current income.

Progress:  If you average our one-two times a year bills (mostly insurance and tuition) and divide by twelve,  you end up with about $2,000/month, with more due at the end of the year than the beginning.  Right now my checking account balance  is $4150.00 higher than it was six months ago.  I have about $15,000 in those big bills left to pay this year, so I'm $1,000 ahead.

Goal:  Add $300/month to our Prosper or Lending Club accounts as savings for another car.

Progress: Two out of six ain't bad, is it?  Acutally, I have purposely not worked on this goal because the next car purchase is in sight--we are buying my college girl a car at the end of the summer.  It will give her a chance to get used to driving on a regular basis in the small college town rather than in suburbia.  She'll also be able to drive herself to job interviews and otherwise prepare for life on her own--and she is moving off campus this year too.

Goal:  Continue our 401K savings at the current level.

Progress:  One of those out-of-sight, out-of-mind things.  Yes, since we didn't change the paperwork, we've met this goal--and since I had a lot of overtime in April, it got a nice extra boost.

Goal: Add $100 per month to each of our Roth IRA's.

Progress:  We owed money at tax time so I put $1,000 each in our regular IRAs to take care of that problem, so in some ways we are ahead ($2,000 vs $1200) but I'd like to get more money into those Roth IRAs too.  

Goal:   Renovate my den with the last money from my dad's estate.
Progress:  Still waiting on the IRS

Goal:  A second honeymoon for me and my husband.
Progress;  Done!  We had a great time in New York City last month.

Goal:  Earn at least $50 per month from freelance writing.
Progress:  So far this year I've earned over $688 so I'm ahead on this. In June I was over $300 and this month I will easily be over $100.  I am managing to find the work; the question is how much will I have time to do once school starts, and how motivated will I be to continue.  Suffice to say that I'm not getting rich with any of these assignments; most pay at or below minimum wage when everything is taken into account.  On the other hand, I do them in my pjs when I would otherwise be wasting time, and I generally enjoy doing them--and my rate is trending higher.

How are you doing with your 2016 goals?

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Little House in the Valley*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and One More Broke Twenty-Something*
http://diseasecalleddebt.com/extreme-saving-no-new-clothes/ 1. How We Avoided Buying New Clothes for a Whole Year http://brokegirlrich.com/the-little-costs-of-friendship/ 2. The Little Costs of Friendship http://familymoneyplan.com/interview-brokegirlrich/ 3. Behind the Screen Interview #7

Kickfurther Is Changing

Over the last year or so I've written a lot about Kickfurther, a relatively new investment platform through which investors help businesses by providing money for inventory purchases.  The Kickfurther concept has always been that investors were not lending money to the businesses but rather were purchasing the inventory, and then giving it to the businesses to sell on consignment.  The advantage to the business of this arrangment over a loan is that if things do not go as planned--if production is delayed or if sales are slow--money is not owed to the investors until sales actually happen, and interest costs do not increase.  The contracts call for a set amount of interest and an estimated payback time.  The advantage to investors over a platform like Lending Club is that we have a security interest in the inventory and that if it does not sell, we can reposses it.

How Kickfurther Used to Work

As investors we are not privy to the exact contracts between the businesses and Kickfurther.  However, from the investor perspective, once a business was vetted by Kickfurther, an offer was put on the website showing that XYZ business was raising $XXXX to purchase whatever they were buying.  It gave the interest rate and the payback schedule, with the schedule assuming linear payback.  Users would review these offers and purchase pieces of the ones they wanted (if they were quick enough--more demand than supply has been an issue on the site for some time).  Investors could invest as little as $20 or as much as 10% of the offer (and could buy more later if it didn't sell out).  When the business began payback, all investors shared equally in a pro-rata fashion.  

Problems with Kickfurther

My understanding of the consignment sale contract concept was that we as investors had relatively little concern about the overall viability of the business.  We weren't worried about whether they could pay the electric bill because we were supposed to be the first ones paid when a sale was made, and if the merchandise didn't sell, we (Kickfurther on our behalf) could reclaim it.  Since the merchandise did not belong to the business, I did not see it as an asset other creditors could seize.  

Unfortunately, I found out that Kickfurther did not actively monitor sales of the consigned goods and counted on self-reporting by the businesses.  Deals went bad--payments were not made--and I began to seriously wonder if investors really had any security.  One business posted on the Kickfurther message board for his offer (board is open to investors on that offer only) that he had sold over 20% of his inventory, but had paid us nothing because he needed the money to pay his salary.  Clearly there were problems.  

That same business owner complained that he had been promised that the investors would help market his product, and that had not happened.  I went and reviewed the agreement I clicked through when starting to invest (you know, the long one full of big words in small type that you have to agree to in order to do anything online, the one that I'm sure few people actually read) and sure enough, it said that investors would help market the products.  

Kickfurther appears to have started in late 2014 or early 2015.  By the summer of 2015 new offers were posting almost daily.  By the end of 2015 the first cases of obvious non-payment had occurred.  Kickfurther paid the investors off for some of these and I have not heard whether they were successful in recovering any of the inventory.  Since the beginning of 2015 there have been several offers where sales have been slow and the investors have not been paid.  There have been several others where it appears that either there were sales, but that the money was not paid to Kickfurther or that fraud was committed and the goods never manufactured.  Kickfurther brought aboard a legal team to standardize the way they dealt with non-paying offers and to shore up their contracts.

What Has Changed

Most of the recent changes seem directed toward firming up the consignment concept and the idea of the investors being participants in the business.  The consigned goods are now offered as a "package", such that each investor is buying a certain number of the consigned things.  In other words, if the offer is for red widgets, blue widget and green widgets, each "package" contains a red widget, a blue widget and a green widget.  If the widgets are expensive, then the package price is high--I've seen some over $1,000.  If the widgets are inexpensive, so are the packages.

For someone like me who prefers to invest a little money in a lot of projects, this concept has made me reconsider my investment strategy.  The question is how many offers will have inexpensive packages, and how many will have expensive ones.  When Kickfurther first changed, it seemed that all of the packages were over $100.  Right now there are three live offers; one is over $200 per package, the other two are  under $30.  There are three preview offers as I write.  One is over $200, one is over $100 and one is under $100.

The Kickfurther Store has long been a part of the site and investors are given a 5% commission on any sales.  Kickfurther has further sweetened that pot by saying that the inventory we sell in our Kickfurther store is first considered to be part of the inventory we bought, such that the profit from it pays us back.  If I invested in that pack of widgets and 50% of the cost of the widget was to go to repay backers, then if I sell a widget in my store, I not only get the 5% commission, I also get the 50% of the cost credited toward repayment on that deal.  Also, recently users had to verify some personal information and we had to acknowlege that we were expected to help market the products in which we invest.  Right now my Kickfurther store has some organic skin care products, some healthy snacks and some tools, but it looks like only the skin care sticks are available for purchase at  this moment.

Kickfurther is trying to strengthen the consignment concept with vendors as well.  They are expected to report sales monthly and to pay back as sales are made.  Some use Shopify which automatically reports sales.  It should be interesting to see how it all shakes out in the end.

Conclusion

Kickfurther is still working out the kinks and going through growing pains.  I think strengthening the consignment concept is a good idea, though I wish they would break these large orders into multiple packages to get the cost per package closer to $20.  In other words, to use my widget example, rather than offering packages of red, green, blue and yellow widgets for $100, I wish they would offer, as part of the same consignment offer, red widgets for $25, green widgets for $25 etc.  I think requiring accurate reporting of sales will help investors by providing more early paybacks and by letting us know that product didn't sell well, in case the vendor wants to do another offer.  

If you think that investing with Kickfurther is a good idea, use my link and  you get $5.00 toward your first offer.  If you have a business that needs money, use this link and I get a commission.  If you want organic skincare sticks, shop my Kickfurther store.