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You can download Suze Orman's new book Suze Orman's 2009 Action Plan for free at this website. You can do it until next Thursday, January 15, 2009, so don't delay! Save yourself $9.99 and get some advice on what you should do in 2009!

Tightening the Financial Belt

I have been completely avoiding looking at my Vanguard account because I knew that my stocks must be down. I invest mainly in index funds, so I've been positive they would be down, down, down... I finally logged in to check on them and sure enough, they're so low that it's almost enough to make my stomach turn! I haven't stopped my regular contributions though. I'm gonna struggle through the emotional side and just keep plugging away at it. It did really help me resolve to buckle down on cutting my spending.

Which brings me to the next big thing that I've put off and off... trying to make a budget! Or I should say: MAKING a budget. I guess the even tougher part will be STICKING to it.

That is one of my goals this weekend. To figure out how much I am spending on the essentials and then how much I want to spend. I'm dedicated to eating food out of my pantry and freezer though, so that should get me through a lot of December. I have a lot of food in there!

I am pretty certain that my biggest expenditures are traveling (one of the downfalls of having a long-distance boyfriend) and eating out (foodie friends will kill you in that department!). So, I'm going to institute the Envelope System for the eating out and maybe groceries. I have no idea how much I actually spend on going out to eat each month, but should I be spending more than $200? I think not, so I'm gonna stick $200 in an envelope and every time I eat out, I'll take it out of the envelope. If I run out of money, I won't go out to eat. Luckily, so far, I only have two times this month that I KNOW I'm going out. I may adjust this amount if I come up with some data while making the budget that makes sense.

How much to budget for groceries? I'm a single woman who entertains often... $150 a month? Hmmm... that's a toughie. Maybe research is required on that one. I guess I could try $150 a month and see how it goes. December has the danger of being more expensive with New Year's and Christmas dinner thrown in there. Meat's expensive!

As far as traveling goes, most of my traveling can be broken down into: going to see Greg and gaming conventions. Gulf Games is coming up in February and I really don't want to miss it. I have a roommate lined up and maybe I could use a free ticket I got from United for being bumped on my white water rafting trip. That would make it more affordable for sure! *sigh*

OK - I can do this. Deep breaths...

Vanguard is still awesome

I originally opened up my Roth IRA account with Vanguard in mid-2002. In September 2006, I opened up an investment account with them. Both times I was very happy with how easy it is to open an account and how easy it is to get a customer service rep on the phone to help with questions.

So naturally, when I decided to rollover my 401(k) account that I have at my old company, I chose to roll it over into Vanguard. They have a very easy-to-find phone number on their website and I was promptly connected to a live person who helped me set-up an account online. It took all of about five minutes.

I wish all companies were like Vanguard. They really make everything SO easy! I highly recommend them!

Vanguard account opened!

After much contemplation, I finally opened up a Vanguard account today for investing purposes. It was hard to decide to do it, especially after receiving an email from my credit union that let me know about a 7 month CD that pays 5.6% APY. 5.6% guaranteed vs. trying to do better with a Vanguard account? Well, I did say that I wanted to gamble more in my life, right? So here goes!

I put an equal amount of money in the following seven index funds:

• Total stock market index
• Small-cap index
• Value index
• Mid-cap value index
• Small-cap value index
• European stock market index
• REIT

Other than this, I'm going to keep a reasonable amount in my EmigrantDirect account for easy access and put the rest in that 7 month CD at Lockheed.

We'll see how things progress!

The Coffeehouse Investor

I finished reading this book while sitting in a beach chair in my front lawn this past weekend. The sun was out, but it was chilly and I loved it!

The book has basic information about investing and the author, Bill Schultheis, makes a very good case for indexing. So, I changed my 401k to index funds and I'm going to stop worrying so much about it. I would highly recommend this book. His advice makes a lot of sense and it's an easy read. It encourages being informed. I agree with that. I think too many people make financial decisions without looking at all towards the future. He doesn't recommend not living your life now to save, he just wants you to recognize that decisions now do affect your future and to what extent.

A few facts and figures stuck out to me... A 25 year old starts saving $300 per month vs. someone who starts saving $300 per month at age 35. Those extra 10 years (and $36,000) end up making a difference of about $457,000. Wow!! Don't cash out those 401ks when you switch jobs. Hang on to them because time is on your side!

There is a retirement worksheet and based on my current savings and age, I need to save $927 - $1,003 per month (depending on if I count my Roth IRA). So, I'm right on track! Perfect! His worksheet assumes 7% return which I think is a fairly good number. Only time will tell, but it's not too conservative or too agressive. It's just right!