Stacking Pennies . . .

I've made some financial mistakes in my past, but the single past decision that worries me the most is agreeing to cosign for my younger sisters student loans.

Why did I, a 21 year old sibling, have to cosign her student loans? There were several reasons. She needed a cosigner because she had once got a Victoria's Secret credit card, bought a few things, and didn't make payments. She was not eligible for federal loans (which never need a cosigner) due to poor grades the previous year. She had no money saved up because she didn't have a job (even in the summer!), though she did do a little work for my dad to earn some money to live on. Also, my parents were not eligible to cosign due to their own issues.

After listing those reasons, it seems incredibly obvious that I shouldn't have agreed to do this. At the time, I didn't understand the ramifications of my signature, and my parents assured me that if she ever neglected to make payments, they would take care of it. So I agreed, because if I hadn't, she wouldn't be able to go to college spring semester. My parents asked me to do this, and I trusted they wouldn't lead me wrong. I don't think they intended to, but I also don't think it was a wise move.

Since I was in a different city, I gave her permission just to sign my name for me to save the hassle of mailing back and forth. (I realize this is not appropriate, but it is what I did at the time.) She got the loan, took the classes, and did a little bit better in school. She still didn't get a job, but instead took summer classes, financed by a second student loan. I also cosigned that loan again letting her to sign my name. When fall came around and i was asked again, I was so busy with my college career that I said "sure, whatever", not even knowing the amount of the loans.

This January, I got a letter in the mail stating that a loan that I had cosigned for $6000 was approved. Not only did I not sign the loan papers (which admittedly was standard practice), but I wasn't even asked if this was okay with me! I pulled my credit report, tallied up the balance of her loans, and came up with over $23000. To put this in perspective, when I graduated, I had $27000 for myself. I had several scholarships, well paying internships, and worked through school, so it is understandable that she would have more.

Still, it set of huge alarm bells in my head. After complaining to my dad (who had told my sister she was required to call and ask me about this), I bit the bullet and called my sister directly. I said that I was no longer comfortable cosigning her loans, as she had me on the hook for almost as much as I had for myself. I said she was old enough that she should have her own credit established, and if she wasn't eligible for federal aid, she really needed to improve her grades. I told her I would allow this last loan to go through, but after that she was on her own, or she had to ask someone else. She didn't argue.

She is still in school. I have no idea how she is financing it. I don't need to know, because I'm no longer involved. That provides some relief. I wish I could get through to her the importance of being careful with the amount of money you borrow, even if it is for a good reason. I worry about it for her sake, and also for mine.

I do not doubt that my parents intend to take care of any issues, as promised. However, legally I'm responsible for it. Also, I am unfortunately aware from from past experience that it is a pain in the butt having to call my parents every month to collect a payment. It puts an unnecessary strain on the relationship.

I say that I regret this, but even knowing what I know now, I'm not convinced I would have said no for the first semester. Beyond that, I would have been more firm. But it is family, and it is money for education, and it is hard for me to turn my back on that.

I wish that I was a few years older and wiser when asked to do this. There is no way I can spare $6000 a semester to support her (and no reason that I should). However, I could offer a more reasonable (say, $1000) amount as a gift towards her education, with no expectations of payback. Perhaps on the condition she worked part time, and full time in the summers! It is more my parents place to do this than mine, but I feel very blessed to have a good job and could spare the money to further her education. She is family, and I only want the best for her.

How did I do in October on meeting my financial goals?

• Continue 401k and Roth contributions: Yes, but I'm considering reducing 401k back to 12% to flow extra into my savings. Most of my net worth increase is getting tied up in retirement accounts, and I need a little more in savings.
• Limit groceries to $30/wk and restaurants to $75: Well, I didn't track my spending this month.... Ooops... But I would venture a guess that this is true
• Contribute $400 to student loan payback account: I only contributed 300.
• Contribute $1000 to HYSA: I don't think this happened either....
  
• Finish writing post about student loans I volunteered to do for for Get Rich Slowly: Done

I really did quite poorly this month.... I need to set more realistic goals. I keep setting the bar too high, and then failing! I think that is better than setting the bar too low and always meeting them, but there has to be a happy medium!

To make myself feel better, here are some things that I did do in October:

• Found a new job in California and negotiated salary
• Had a performance review in my current job and was rated a 3-3 (it's a scale of 1 to 3 on two scales so 3-3 is the best)
• Booked my ticket for the holidays, convinced my friends to meet in a city where we can have free lodging
• Did decent on my graduate class midterm
• Bought much needed new black work shoes (I'm stretching here!)

Obviously, my first goal for next month is to resume tracking of my spending. I'll have to think about the other ones.

I spoke recently about how I got a job offer in California, making roughly 11k/yr more than I make in the Midwest. My company here pays pretty well for new graduates because there is a high demand for them. Even though they are located in a low cost of living area, starting salaries are not much lower than in high cost of living areas. Anyway, this raise will net me an extra $916 a month, which we will call $650 after taxes (optimistically?).

I've been doing a little math to see how this move will affect me. The biggest increase in monthly spending will undoubtedly be rent. I currently pay $575 for a small but relatively nice one bedroom apartment. I'm hoping to find something for $1000 (or less, but that seems unlikely) in California, probably equally small and not as nice. I'm secretly hoping that I'll have a roommate (my boyfriend) move in after several months, but this isn't something that has been discussed enough to count on, so I'm running the numbers without factoring that in. That is $425 per a month extra in expenses! That destroys a huge chunk of my "raise", making it an increase of a puny 2.7k/yr!

I will be able to take public transportation, but I doubt that'll save me any money since I currently live a 4 minute drive from my company and don't drive often. I suppose, one nice thing about a higher salary is that the company match of my 401k will be of a larger amount. If I want to go home, it'll cost me $300 for a plane ticket rather than $80 for a couple tanks of gas.

Luckily, the initial costs of relocating won't be too much of a burden on me. Not only do they give me $2000 for miscellaneous moving costs, they will pack and move my stuff, reimburse me for mileage and lodging and meals for the drive out there. With all of that, there still might be a bit of a hit to my savings, but not nearly as drastic as it could be.

I'm not making this move for financial reasons. It is for personal reasons, and for a desire to live in a big city, the dream of California living. But the impact to my finances is still there, and I hope that it won't slow my progress too far.

My parents took out a $15,000 HELOC loan sometime last year in order to make some updates and repairs on their house in preparation to sell it. I thought it was sort of a bad idea and thought they should just save up some cash and pay for it as they go. At least for part of it. I think I bit my tongue, because it isn't really my place to offer unsolicited 'advice' and judge the actions of my parents. I did suggest that while they were waiting to spend it, they put it into a high yield savings account rather than a normal account, but beyond that, I stifled my opinions.

My dad has a bit of a sordid financial past and has difficulty managing money, so my mom was the only one with access to the account. But the repairs didn't happen. My dad kept putting it off, and putting it off, and I was wondering what the hold up was.

Apparently, my mom used the same PIN that my dad uses for several of his accounts. He was borrowing money from the account to pay some other bills (and I still am confused as to what bills these are). He finally told my mom, and then went to Alaska (I know, bizarre) because there was a lot of work for him there making a lot of money in a short amount of time. In fact, he's been there less than a month and has paid back whatever he took (I'm not sure how much it was).

I finally found out today, from my sister. My dad was supposed to tell me himself, but he didn't. I understand him not wanting to tell me, but it makes me think I need to change my attitude. I don't want to be judgmental (though it can be hard to hold back at times), I want to be helpful.

It's hard to offer suggestions to your parents. Suggestions that seem so obvious to me. For example, if you can't pay your bills then you don't get to go on vacation to the Bahamas. (Yes, the really are going. Though the trip was planned before this came to head, and they NEVER go on vacation, it still seems extravagant.) Or, open a Roth IRA and make contributions automatic. Cut up your credit cards if you can't manage them. Track your spending, at least for a few months, just to see what is going on. These are the basics!

Secretly, I considered pulling their credit report without their knowledge. I know their SSN's. There generally are some security questions that I'm sure I couldn't answer, but besides that, it's just a horrible and evil idea. It just isn't my place, even though I want it to be.

Someday, they won't be able to work. What do they have saved? Is it enough? How would my dad ever manage his finances without my mom watching over? Is it too late for him to learn? These are things that I worry about. Maybe that is why I have a personal finance blog--so no one ever has to worry these things about me.

I've been cluttering up someone else's comments area on a post about Federal Aid for college students. Honestly, I've never heard anyone take the position that federal aid is a large factor in why college is so expensive. Then again, it isn't something I've discussed with many people, so it is may be a more common idea than I thought.

Rather than continuing to disagree with the overall point, I want to approach it from an entirely personal angle. One examples doesn't prove a darn thing, but I'm not out to prove anything, just to think and discuss.

I graduated high school without a penny saved for my college education. Yes, I could have saved something myself (I worked part time through high school), but I didn't. No one suggested it to me, and I didn't think of it myself. My friends were quite well off and their parents were planning on paying for college for them, so it wasn't "normal" to be saving for college.

Even though there wasn't any money set aside, the question of whether or not I would go to college wasn't raised. It was obvious that I would--I was a bright student who loved school and excelled in math. I couldn't imagine doing anything else. I went to the state school because it was relatively inexpensive. Even today, after yearly tuition increases (one year it was a 20% increase!) it is "only" $5000 for tuition, another $1000 for fees, and $6000 for room and board.

The exact dollar figure in grants that I got is unknown, because I'm not a good record keeper. I estimate that it would be about $10,000. I got about $22,000 in subsidized government loans, which means the government paid my interest throughout school. I'm sure there is fancy math to figure out that cost to them, but I'm just going to round it to a cost of $1000/yr for four years. I'll also throw in the $5000 merit based scholarship I got to study abroad, because it was a government program and one qualifying factor was finiancial need. That puts the governments total investment in me at a whopping $19,000, a humbling number.

But, what will they get back on it? It is hard to quantify, because if I didn't go to college, I have no idea what I would have done. I would have stayed in my home state, and with hard work I might have been able to earn, say, 35k a year. This would make my tax bill (at 25%) be 8.7k a year, for 47 (65-18) years. I'm simplifying the math, but I'll do both calculations the same, so it should be a wash. Total lifetime taxes: $408,900

My first year out of school, I'm earning $56k. My oportunity for salary growth is much greater than if I had no degree. For simplicity, let's just say I make $67k (my salary offer for my new job) for my entire life. This is ridiculously unlikely, but so be it. My tax bill for this salary (at straight 25%) is $16.75k, for 42 years 65-23) that ammounts to an impressive $703,500.

The difference? $294,6000. It would take some more accounting to flat out demostrate that they made a good investment in me and I don't know finance. Yet it seems apparent to me that over my life I'll pay substansially more in taxes than that 19k investment in my education. Strictly based on taxes, I was a good investment. This isn't to mention the decrease in US students graduating in science and engineering, the need for us to stay up to date in technology, and the value I provide to my company and our economy.

The playing feild between the haves and the have nots will never be level, but government aid helps those of us who's parents don't have a pile of money saved up at least get ON the field and try to better our lives. When I have kids, they probably won't qualify for any sort of aid, but I'll be able to provide for them with money I'm able to save due to my education. Government aid can help one generation so that the next can do it without that help. It is sort of like the saying, "Light a man a fire, he'll be warm for the night. Light a man ON fire, and he'll be warm for the rest of his life." Or wait, maybe the saying was about fish.... :)

It is difficult for me to look at government aid as anything but good because my experience with it was good. It not only helped me, but it didn't go to waste on some student who frittered away they governments money while skipping class and getting wasted. I understand there is another side of it, but it is a side that I just will never be on.

This is a money making trick that doesn't work except in a very special circumstance--negotiating a job offer.

I'm in the process of relocating to California, primarily for personal reasons. I had an interview last week and received the official offer today. My current salary in a low cost of living midwestern city is about 56k. I was offered 65k to move to California (plus relocation costs!). I was excited to get the offer, but I immediately asked if that was negotiable. I had anticipated an offer in the 70-75k range. (Some random cost of living calculator states: To maintain the same standard of living, your salary of $56,000 in XXXX should increase to $103,122 in XXXXX, California. I think that is a bit high, and certainly less than I would expect them to offer me, but at least, a point of reference.)

The HR rep seemed surprised (which surprised me!), and said something like "Well, it is a 15% percent increase, but if you have justification, I can talk to the hiring manager."

Luckily, I wasn't negotiating for the sake of negotiating--I had my reasons ready to go:

• The position is typically entry level, I have 1.5 years of directly related experience and am on the verge of a raise/promotion at the end of the year
• I am 1/3 of the way done with my Masters Degree
• I already have my security clearance (something that costs them several thousand to get!)
• The cost of living is significantly different

The HR lady then called the hiring manager, and then called me back about 10 minutes later. She only could offer me an increase of salary to 67k, but they would throw in a 3k signing bonus. She reminded me that performance reviews happen early in the year, and that there would be tuition reimbursement.

The offer is much more attractive. I got enough money to fully fund a 2008 Roth IRA, just by listing a few reasons.

I have a phone interview tomorrow with another company for a different type of position. I think that the offer I already have seems like a more appealing job, but I want to see what this other position really entails.

This is the first time I've negotiated salary, and I'm quite proud of myself!

I haven't written a post at all this month. I thought I would have more time for this, but I haven't been making it a priority. I just finished writing an extensive entry on student loans for JD at Get Rich Slowly. It was very rewarding, and reminded me of why I started this blog in the first place.

I still am not sure if I will meet my year end money goals. If I don't, I'm not incredibly worried, because I still made a TON of progress this year. Since I graduated in May 2006, I've mostly been setting up the foundation of a good financial future. I am still in the beginning stages, and I've started to think about what might come next. Long term goals have eluded me, but once the foundation is built, I want to have a plan for what do to next.

First, I would like to max out my 401k. This year my personal contributions will be roughly $8,000, far short of the allowed $15,500. Next year, I should be relocated to a higher cost of living area. Ironically, I believe that will allow me to save more of my income, because I plan to leave the percentages the same. This also will mean my employer match will be higher. Still, it may take a couple years before maxing out my 401k and my Roth concurrently is possible.

Second, I'd like to start saving for a house downpayment. This is very much a long term goal. I don't expect to be purchasing for five years, maybe more. Someday though, I would like a house, and I would like to be prepared for it.

Last, I'd like to start out a non-retirement investment account. This won't be for "play" money, but for building wealth that I can access before I reach retirement age.

I can't make much progress on these goals while still building an efund, paying student loans, and saving up for a car, but it is nice to look and see what is on the horizon.

Sasha

Throughout my life, my sense of where I fit in financially has teeter tottered.

The early years
When I was young, we lived in a trailer court. Am I embarrassed of this? It depends. Some people really do look down on it, so I don't advertise that fact until I know a bit about a person's perspectives. As I get older, it seems to matter less.

I remember two things about the trailer court. First, I remember playing in our yard. We lived on a dead end street at the end of the lot, and my Dad was allowed to use whatever land he wanted to mow. So we had a huge yard with a homemade swing set, a sandbox, and a nice hill for our slip and slide. I remember the day my dad mowed his name in huge letters in the yard. We were delighted.

The other thing I remember is when a naked man was running through the trailer park. I don't specifically remember seeing him, I don't remember why he was running, why he was naked. But I do remember my dad taking him inside our trailer, giving him a shirt and some pants, and helping him on his way. He worked at a golf course and gave my dad free rounds after that.

When I was in third grade, we moved to the house my parents live in now. It is a big house, probably bigger than we needed, in a new development. They did a lot of the work themselves (my dad and his friends). For the rest of grade school and jr. high, I never felt that I lived in a somewhere "less" than my friends.

High school
I transfered to a private high school in ninth grade, and the insecurities were back. We had enough money, but definitely less than my classmates. I didn't have a nice car. Our house was less impressive than many others. Several of my classmates had pools (a big luxury in a northern midwest state!), everyone shopped at Abercrombie, and people had a lot of nice stuff.

Still, my parents didn't seem to deprive us. I almost wish they did, for their sake. We did have crappy cars, but were allowed to buy brand name clothes. My parents paid for a trip to Germany, not to mention the tuition for school (though there was a discount because my dad did some electrical work for them). Even though we had less than others, we still had enough.

The scary years
During this time, my dad borrowed a healthy sum of money to start his own electrical business. I still am not clear on the details, but it didn't work out as well as planned. There were some issues with him not getting paid for a large job, some issues with the person who lent him the money, and... well, starting a small business is hard. I'm not sure it was planned out very well. It was hard times, but I wasn't aware of it until a little later on. It ended with my parents working with someone to file a Chapter 13 bankruptcy. They got to keep their possessions, but had to pay a lot of money back to the creditors. I think the payments were something like 3000 a month for 5 or 7 years. My dad became responsible for those payments, and my mom paid the rest of the bills.

Surprisingly, I don't remember there being major cutbacks in my life. We continued to drive falling apart cars, but everything else seemed to go stay the same. Still, it was a scary time for me. Every so often, my dad would fall behind on the payments, and someone would come to our house with a certified letter. I must have opened one once, because I somehow knew they said something like "pay now, or we will be forced to reconsider this repayment plan." More than once, I cried about this, even once I was in college and not relying on them. I was scared for their sake and couldn't understand how they could have let this happen.

But they made it through, making their last payment sometime last year. It actually helped me out a lot, surprisingly. Because they were paying so much money towards the debt, I was able to qualify for actual GRANTS for my college for several years. Free money that I never had to pay back!! So, if you can't help your kids pay for college, consider going bankrupt right as they are entering. (No seriously, don't.)

The split
During college, you start to separate from your parents both emotionally and financially. They generously helped me get a decent car (about 3k from them and 1k from me), paid my car insurance and repairs, health insurance and helped out with some minor expenses on occasion. After living on my own for several years, they let me stay at home rent from for a few semesters so I could save money. But for everything else, I was on my own.

After graduation, the difference was even more marked. I'm completely financially independent from them. Now, I feel very "rich", even though I only have about 8k net worth. The feeling comes from knowing I'm doing the right things with my money and knowing my future looks bright. To me, feeling poor means being scared about money. I don't think I'll ever feel "poor" again.

As for my parents, they are doing pretty well these days, I think. I worry about their retirement. The bankruptcy involved an IRA rollover (I know this only because it affected my financial aid), and I know my dad has no retirement accounts as of today. He does have a pension plan through his union, but he also hasn't worked for the union regularly for about 10 years! I asked him about it, cautiously, and he said his house was his retirement. I commented I wasn't sure about that plan, but let the subject drop. I would assume my mom is still contributing to some sort of retirement plan, but I'm not sure of it. I hope to bring it up with them one of these days, but it is a hard step to take.

I don't think I was ever poor in the true sense of the word, but I don't feel that I was exceptionally privileged either.

I've made some financial mistakes in my past, but the single past decision that worries me the most is agreeing to cosign for my younger sisters student loans.

Why did I, a 21 year old sibling, have to cosign her student loans? There were several reasons. She needed a cosigner because she had once got a Victoria's Secret credit card, bought a few things, and didn't make payments. She was not eligible for federal loans (which never need a cosigner) due to poor grades the previous year. She had no money saved up because she didn't have a job (even in the summer!), though she did do a little work for my dad to earn some money to live on. Also, my parents were not eligible to cosign due to their own issues.

After listing those reasons, it seems incredibly obvious that I shouldn't have agreed to do this. At the time, I didn't understand the ramifications of my signature, and my parents assured me that if she ever neglected to make payments, they would take care of it. So I agreed, because if I hadn't, she wouldn't be able to go to college spring semester. My parents asked me to do this, and I trusted they wouldn't lead me wrong. I don't think they intended to, but I also don't think it was a wise move.

Since I was in a different city, I gave her permission just to sign my name for me to save the hassle of mailing back and forth. (I realize this is not appropriate, but it is what I did at the time.) She got the loan, took the classes, and did a little bit better in school. She still didn't get a job, but instead took summer classes, financed by a second student loan. I also cosigned that loan again letting her to sign my name. When fall came around and i was asked again, I was so busy with my college career that I said "sure, whatever", not even knowing the amount of the loans.

This January, I got a letter in the mail stating that a loan that I had cosigned for $6000 was approved. Not only did I not sign the loan papers (which admittedly was standard practice), but I wasn't even asked if this was okay with me! I pulled my credit report, tallied up the balance of her loans, and came up with over $23000. To put this in perspective, when I graduated, I had $27000 for myself. I had several scholarships, well paying internships, and worked through school, so it is understandable that she would have more.

Still, it set of huge alarm bells in my head. After complaining to my dad (who had told my sister she was required to call and ask me about this), I bit the bullet and called my sister directly. I said that I was no longer comfortable cosigning her loans, as she had me on the hook for almost as much as I had for myself. I said she was old enough that she should have her own credit established, and if she wasn't eligible for federal aid, she really needed to improve her grades. I told her I would allow this last loan to go through, but after that she was on her own, or she had to ask someone else. She didn't argue.

She is still in school. I have no idea how she is financing it. I don't need to know, because I'm no longer involved. That provides some relief. I wish I could get through to her the importance of being careful with the amount of money you borrow, even if it is for a good reason. I worry about it for her sake, and also for mine.

I do not doubt that my parents intend to take care of any issues, as promised. However, legally I'm responsible for it. Also, I am unfortunately aware from from past experience that it is a pain in the butt having to call my parents every month to collect a payment. It puts an unnecessary strain on the relationship.

I say that I regret this, but even knowing what I know now, I'm not convinced I would have said no for the first semester. Beyond that, I would have been more firm. But it is family, and it is money for education, and it is hard for me to turn my back on that.

I wish that I was a few years older and wiser when asked to do this. There is no way I can spare $6000 a semester to support her (and no reason that I should). However, I could offer a more reasonable (say, $1000) amount as a gift towards her education, with no expectations of payback. Perhaps on the condition she worked part time, and full time in the summers! It is more my parents place to do this than mine, but I feel very blessed to have a good job and could spare the money to further her education. She is family, and I only want the best for her.

How did I do in October on meeting my financial goals?

• Continue 401k and Roth contributions: Yes, but I'm considering reducing 401k back to 12% to flow extra into my savings. Most of my net worth increase is getting tied up in retirement accounts, and I need a little more in savings.
• Limit groceries to $30/wk and restaurants to $75: Well, I didn't track my spending this month.... Ooops... But I would venture a guess that this is true
• Contribute $400 to student loan payback account: I only contributed 300.
• Contribute $1000 to HYSA: I don't think this happened either....
  
• Finish writing post about student loans I volunteered to do for for Get Rich Slowly: Done

I really did quite poorly this month.... I need to set more realistic goals. I keep setting the bar too high, and then failing! I think that is better than setting the bar too low and always meeting them, but there has to be a happy medium!

To make myself feel better, here are some things that I did do in October:

• Found a new job in California and negotiated salary
• Had a performance review in my current job and was rated a 3-3 (it's a scale of 1 to 3 on two scales so 3-3 is the best)
• Booked my ticket for the holidays, convinced my friends to meet in a city where we can have free lodging
• Did decent on my graduate class midterm
• Bought much needed new black work shoes (I'm stretching here!)

Obviously, my first goal for next month is to resume tracking of my spending. I'll have to think about the other ones.

I spoke recently about how I got a job offer in California, making roughly 11k/yr more than I make in the Midwest. My company here pays pretty well for new graduates because there is a high demand for them. Even though they are located in a low cost of living area, starting salaries are not much lower than in high cost of living areas. Anyway, this raise will net me an extra $916 a month, which we will call $650 after taxes (optimistically?).

I've been doing a little math to see how this move will affect me. The biggest increase in monthly spending will undoubtedly be rent. I currently pay $575 for a small but relatively nice one bedroom apartment. I'm hoping to find something for $1000 (or less, but that seems unlikely) in California, probably equally small and not as nice. I'm secretly hoping that I'll have a roommate (my boyfriend) move in after several months, but this isn't something that has been discussed enough to count on, so I'm running the numbers without factoring that in. That is $425 per a month extra in expenses! That destroys a huge chunk of my "raise", making it an increase of a puny 2.7k/yr!

I will be able to take public transportation, but I doubt that'll save me any money since I currently live a 4 minute drive from my company and don't drive often. I suppose, one nice thing about a higher salary is that the company match of my 401k will be of a larger amount. If I want to go home, it'll cost me $300 for a plane ticket rather than $80 for a couple tanks of gas.

Luckily, the initial costs of relocating won't be too much of a burden on me. Not only do they give me $2000 for miscellaneous moving costs, they will pack and move my stuff, reimburse me for mileage and lodging and meals for the drive out there. With all of that, there still might be a bit of a hit to my savings, but not nearly as drastic as it could be.

I'm not making this move for financial reasons. It is for personal reasons, and for a desire to live in a big city, the dream of California living. But the impact to my finances is still there, and I hope that it won't slow my progress too far.

My parents took out a $15,000 HELOC loan sometime last year in order to make some updates and repairs on their house in preparation to sell it. I thought it was sort of a bad idea and thought they should just save up some cash and pay for it as they go. At least for part of it. I think I bit my tongue, because it isn't really my place to offer unsolicited 'advice' and judge the actions of my parents. I did suggest that while they were waiting to spend it, they put it into a high yield savings account rather than a normal account, but beyond that, I stifled my opinions.

My dad has a bit of a sordid financial past and has difficulty managing money, so my mom was the only one with access to the account. But the repairs didn't happen. My dad kept putting it off, and putting it off, and I was wondering what the hold up was.

Apparently, my mom used the same PIN that my dad uses for several of his accounts. He was borrowing money from the account to pay some other bills (and I still am confused as to what bills these are). He finally told my mom, and then went to Alaska (I know, bizarre) because there was a lot of work for him there making a lot of money in a short amount of time. In fact, he's been there less than a month and has paid back whatever he took (I'm not sure how much it was).

I finally found out today, from my sister. My dad was supposed to tell me himself, but he didn't. I understand him not wanting to tell me, but it makes me think I need to change my attitude. I don't want to be judgmental (though it can be hard to hold back at times), I want to be helpful.

It's hard to offer suggestions to your parents. Suggestions that seem so obvious to me. For example, if you can't pay your bills then you don't get to go on vacation to the Bahamas. (Yes, the really are going. Though the trip was planned before this came to head, and they NEVER go on vacation, it still seems extravagant.) Or, open a Roth IRA and make contributions automatic. Cut up your credit cards if you can't manage them. Track your spending, at least for a few months, just to see what is going on. These are the basics!

Secretly, I considered pulling their credit report without their knowledge. I know their SSN's. There generally are some security questions that I'm sure I couldn't answer, but besides that, it's just a horrible and evil idea. It just isn't my place, even though I want it to be.

Someday, they won't be able to work. What do they have saved? Is it enough? How would my dad ever manage his finances without my mom watching over? Is it too late for him to learn? These are things that I worry about. Maybe that is why I have a personal finance blog--so no one ever has to worry these things about me.

I've been cluttering up someone else's comments area on a post about Federal Aid for college students. Honestly, I've never heard anyone take the position that federal aid is a large factor in why college is so expensive. Then again, it isn't something I've discussed with many people, so it is may be a more common idea than I thought.

Rather than continuing to disagree with the overall point, I want to approach it from an entirely personal angle. One examples doesn't prove a darn thing, but I'm not out to prove anything, just to think and discuss.

I graduated high school without a penny saved for my college education. Yes, I could have saved something myself (I worked part time through high school), but I didn't. No one suggested it to me, and I didn't think of it myself. My friends were quite well off and their parents were planning on paying for college for them, so it wasn't "normal" to be saving for college.

Even though there wasn't any money set aside, the question of whether or not I would go to college wasn't raised. It was obvious that I would--I was a bright student who loved school and excelled in math. I couldn't imagine doing anything else. I went to the state school because it was relatively inexpensive. Even today, after yearly tuition increases (one year it was a 20% increase!) it is "only" $5000 for tuition, another $1000 for fees, and $6000 for room and board.

The exact dollar figure in grants that I got is unknown, because I'm not a good record keeper. I estimate that it would be about $10,000. I got about $22,000 in subsidized government loans, which means the government paid my interest throughout school. I'm sure there is fancy math to figure out that cost to them, but I'm just going to round it to a cost of $1000/yr for four years. I'll also throw in the $5000 merit based scholarship I got to study abroad, because it was a government program and one qualifying factor was finiancial need. That puts the governments total investment in me at a whopping $19,000, a humbling number.

But, what will they get back on it? It is hard to quantify, because if I didn't go to college, I have no idea what I would have done. I would have stayed in my home state, and with hard work I might have been able to earn, say, 35k a year. This would make my tax bill (at 25%) be 8.7k a year, for 47 (65-18) years. I'm simplifying the math, but I'll do both calculations the same, so it should be a wash. Total lifetime taxes: $408,900

My first year out of school, I'm earning $56k. My oportunity for salary growth is much greater than if I had no degree. For simplicity, let's just say I make $67k (my salary offer for my new job) for my entire life. This is ridiculously unlikely, but so be it. My tax bill for this salary (at straight 25%) is $16.75k, for 42 years 65-23) that ammounts to an impressive $703,500.

The difference? $294,6000. It would take some more accounting to flat out demostrate that they made a good investment in me and I don't know finance. Yet it seems apparent to me that over my life I'll pay substansially more in taxes than that 19k investment in my education. Strictly based on taxes, I was a good investment. This isn't to mention the decrease in US students graduating in science and engineering, the need for us to stay up to date in technology, and the value I provide to my company and our economy.

The playing feild between the haves and the have nots will never be level, but government aid helps those of us who's parents don't have a pile of money saved up at least get ON the field and try to better our lives. When I have kids, they probably won't qualify for any sort of aid, but I'll be able to provide for them with money I'm able to save due to my education. Government aid can help one generation so that the next can do it without that help. It is sort of like the saying, "Light a man a fire, he'll be warm for the night. Light a man ON fire, and he'll be warm for the rest of his life." Or wait, maybe the saying was about fish.... :)

It is difficult for me to look at government aid as anything but good because my experience with it was good. It not only helped me, but it didn't go to waste on some student who frittered away they governments money while skipping class and getting wasted. I understand there is another side of it, but it is a side that I just will never be on.

This is a money making trick that doesn't work except in a very special circumstance--negotiating a job offer.

I'm in the process of relocating to California, primarily for personal reasons. I had an interview last week and received the official offer today. My current salary in a low cost of living midwestern city is about 56k. I was offered 65k to move to California (plus relocation costs!). I was excited to get the offer, but I immediately asked if that was negotiable. I had anticipated an offer in the 70-75k range. (Some random cost of living calculator states: To maintain the same standard of living, your salary of $56,000 in XXXX should increase to $103,122 in XXXXX, California. I think that is a bit high, and certainly less than I would expect them to offer me, but at least, a point of reference.)

The HR rep seemed surprised (which surprised me!), and said something like "Well, it is a 15% percent increase, but if you have justification, I can talk to the hiring manager."

Luckily, I wasn't negotiating for the sake of negotiating--I had my reasons ready to go:

• The position is typically entry level, I have 1.5 years of directly related experience and am on the verge of a raise/promotion at the end of the year
• I am 1/3 of the way done with my Masters Degree
• I already have my security clearance (something that costs them several thousand to get!)
• The cost of living is significantly different

The HR lady then called the hiring manager, and then called me back about 10 minutes later. She only could offer me an increase of salary to 67k, but they would throw in a 3k signing bonus. She reminded me that performance reviews happen early in the year, and that there would be tuition reimbursement.

The offer is much more attractive. I got enough money to fully fund a 2008 Roth IRA, just by listing a few reasons.

I have a phone interview tomorrow with another company for a different type of position. I think that the offer I already have seems like a more appealing job, but I want to see what this other position really entails.

This is the first time I've negotiated salary, and I'm quite proud of myself!

I haven't written a post at all this month. I thought I would have more time for this, but I haven't been making it a priority. I just finished writing an extensive entry on student loans for JD at Get Rich Slowly. It was very rewarding, and reminded me of why I started this blog in the first place.

I still am not sure if I will meet my year end money goals. If I don't, I'm not incredibly worried, because I still made a TON of progress this year. Since I graduated in May 2006, I've mostly been setting up the foundation of a good financial future. I am still in the beginning stages, and I've started to think about what might come next. Long term goals have eluded me, but once the foundation is built, I want to have a plan for what do to next.

First, I would like to max out my 401k. This year my personal contributions will be roughly $8,000, far short of the allowed $15,500. Next year, I should be relocated to a higher cost of living area. Ironically, I believe that will allow me to save more of my income, because I plan to leave the percentages the same. This also will mean my employer match will be higher. Still, it may take a couple years before maxing out my 401k and my Roth concurrently is possible.

Second, I'd like to start saving for a house downpayment. This is very much a long term goal. I don't expect to be purchasing for five years, maybe more. Someday though, I would like a house, and I would like to be prepared for it.

Last, I'd like to start out a non-retirement investment account. This won't be for "play" money, but for building wealth that I can access before I reach retirement age.

I can't make much progress on these goals while still building an efund, paying student loans, and saving up for a car, but it is nice to look and see what is on the horizon.

Sasha

Throughout my life, my sense of where I fit in financially has teeter tottered.

The early years
When I was young, we lived in a trailer court. Am I embarrassed of this? It depends. Some people really do look down on it, so I don't advertise that fact until I know a bit about a person's perspectives. As I get older, it seems to matter less.

I remember two things about the trailer court. First, I remember playing in our yard. We lived on a dead end street at the end of the lot, and my Dad was allowed to use whatever land he wanted to mow. So we had a huge yard with a homemade swing set, a sandbox, and a nice hill for our slip and slide. I remember the day my dad mowed his name in huge letters in the yard. We were delighted.

The other thing I remember is when a naked man was running through the trailer park. I don't specifically remember seeing him, I don't remember why he was running, why he was naked. But I do remember my dad taking him inside our trailer, giving him a shirt and some pants, and helping him on his way. He worked at a golf course and gave my dad free rounds after that.

When I was in third grade, we moved to the house my parents live in now. It is a big house, probably bigger than we needed, in a new development. They did a lot of the work themselves (my dad and his friends). For the rest of grade school and jr. high, I never felt that I lived in a somewhere "less" than my friends.

High school
I transfered to a private high school in ninth grade, and the insecurities were back. We had enough money, but definitely less than my classmates. I didn't have a nice car. Our house was less impressive than many others. Several of my classmates had pools (a big luxury in a northern midwest state!), everyone shopped at Abercrombie, and people had a lot of nice stuff.

Still, my parents didn't seem to deprive us. I almost wish they did, for their sake. We did have crappy cars, but were allowed to buy brand name clothes. My parents paid for a trip to Germany, not to mention the tuition for school (though there was a discount because my dad did some electrical work for them). Even though we had less than others, we still had enough.

The scary years
During this time, my dad borrowed a healthy sum of money to start his own electrical business. I still am not clear on the details, but it didn't work out as well as planned. There were some issues with him not getting paid for a large job, some issues with the person who lent him the money, and... well, starting a small business is hard. I'm not sure it was planned out very well. It was hard times, but I wasn't aware of it until a little later on. It ended with my parents working with someone to file a Chapter 13 bankruptcy. They got to keep their possessions, but had to pay a lot of money back to the creditors. I think the payments were something like 3000 a month for 5 or 7 years. My dad became responsible for those payments, and my mom paid the rest of the bills.

Surprisingly, I don't remember there being major cutbacks in my life. We continued to drive falling apart cars, but everything else seemed to go stay the same. Still, it was a scary time for me. Every so often, my dad would fall behind on the payments, and someone would come to our house with a certified letter. I must have opened one once, because I somehow knew they said something like "pay now, or we will be forced to reconsider this repayment plan." More than once, I cried about this, even once I was in college and not relying on them. I was scared for their sake and couldn't understand how they could have let this happen.

But they made it through, making their last payment sometime last year. It actually helped me out a lot, surprisingly. Because they were paying so much money towards the debt, I was able to qualify for actual GRANTS for my college for several years. Free money that I never had to pay back!! So, if you can't help your kids pay for college, consider going bankrupt right as they are entering. (No seriously, don't.)

The split
During college, you start to separate from your parents both emotionally and financially. They generously helped me get a decent car (about 3k from them and 1k from me), paid my car insurance and repairs, health insurance and helped out with some minor expenses on occasion. After living on my own for several years, they let me stay at home rent from for a few semesters so I could save money. But for everything else, I was on my own.

After graduation, the difference was even more marked. I'm completely financially independent from them. Now, I feel very "rich", even though I only have about 8k net worth. The feeling comes from knowing I'm doing the right things with my money and knowing my future looks bright. To me, feeling poor means being scared about money. I don't think I'll ever feel "poor" again.

As for my parents, they are doing pretty well these days, I think. I worry about their retirement. The bankruptcy involved an IRA rollover (I know this only because it affected my financial aid), and I know my dad has no retirement accounts as of today. He does have a pension plan through his union, but he also hasn't worked for the union regularly for about 10 years! I asked him about it, cautiously, and he said his house was his retirement. I commented I wasn't sure about that plan, but let the subject drop. I would assume my mom is still contributing to some sort of retirement plan, but I'm not sure of it. I hope to bring it up with them one of these days, but it is a hard step to take.

I don't think I was ever poor in the true sense of the word, but I don't feel that I was exceptionally privileged either.

I've made some financial mistakes in my past, but the single past decision that worries me the most is agreeing to cosign for my younger sisters student loans.

Why did I, a 21 year old sibling, have to cosign her student loans? There were several reasons. She needed a cosigner because she had once got a Victoria's Secret credit card, bought a few things, and didn't make payments. She was not eligible for federal loans (which never need a cosigner) due to poor grades the previous year. She had no money saved up because she didn't have a job (even in the summer!), though she did do a little work for my dad to earn some money to live on. Also, my parents were not eligible to cosign due to their own issues.

After listing those reasons, it seems incredibly obvious that I shouldn't have agreed to do this. At the time, I didn't understand the ramifications of my signature, and my parents assured me that if she ever neglected to make payments, they would take care of it. So I agreed, because if I hadn't, she wouldn't be able to go to college spring semester. My parents asked me to do this, and I trusted they wouldn't lead me wrong. I don't think they intended to, but I also don't think it was a wise move.

Since I was in a different city, I gave her permission just to sign my name for me to save the hassle of mailing back and forth. (I realize this is not appropriate, but it is what I did at the time.) She got the loan, took the classes, and did a little bit better in school. She still didn't get a job, but instead took summer classes, financed by a second student loan. I also cosigned that loan again letting her to sign my name. When fall came around and i was asked again, I was so busy with my college career that I said "sure, whatever", not even knowing the amount of the loans.

This January, I got a letter in the mail stating that a loan that I had cosigned for $6000 was approved. Not only did I not sign the loan papers (which admittedly was standard practice), but I wasn't even asked if this was okay with me! I pulled my credit report, tallied up the balance of her loans, and came up with over $23000. To put this in perspective, when I graduated, I had $27000 for myself. I had several scholarships, well paying internships, and worked through school, so it is understandable that she would have more.

Still, it set of huge alarm bells in my head. After complaining to my dad (who had told my sister she was required to call and ask me about this), I bit the bullet and called my sister directly. I said that I was no longer comfortable cosigning her loans, as she had me on the hook for almost as much as I had for myself. I said she was old enough that she should have her own credit established, and if she wasn't eligible for federal aid, she really needed to improve her grades. I told her I would allow this last loan to go through, but after that she was on her own, or she had to ask someone else. She didn't argue.

She is still in school. I have no idea how she is financing it. I don't need to know, because I'm no longer involved. That provides some relief. I wish I could get through to her the importance of being careful with the amount of money you borrow, even if it is for a good reason. I worry about it for her sake, and also for mine.

I do not doubt that my parents intend to take care of any issues, as promised. However, legally I'm responsible for it. Also, I am unfortunately aware from from past experience that it is a pain in the butt having to call my parents every month to collect a payment. It puts an unnecessary strain on the relationship.

I say that I regret this, but even knowing what I know now, I'm not convinced I would have said no for the first semester. Beyond that, I would have been more firm. But it is family, and it is money for education, and it is hard for me to turn my back on that.

I wish that I was a few years older and wiser when asked to do this. There is no way I can spare $6000 a semester to support her (and no reason that I should). However, I could offer a more reasonable (say, $1000) amount as a gift towards her education, with no expectations of payback. Perhaps on the condition she worked part time, and full time in the summers! It is more my parents place to do this than mine, but I feel very blessed to have a good job and could spare the money to further her education. She is family, and I only want the best for her.

How did I do in October on meeting my financial goals?

• Continue 401k and Roth contributions: Yes, but I'm considering reducing 401k back to 12% to flow extra into my savings. Most of my net worth increase is getting tied up in retirement accounts, and I need a little more in savings.
• Limit groceries to $30/wk and restaurants to $75: Well, I didn't track my spending this month.... Ooops... But I would venture a guess that this is true
• Contribute $400 to student loan payback account: I only contributed 300.
• Contribute $1000 to HYSA: I don't think this happened either....
  
• Finish writing post about student loans I volunteered to do for for Get Rich Slowly: Done

I really did quite poorly this month.... I need to set more realistic goals. I keep setting the bar too high, and then failing! I think that is better than setting the bar too low and always meeting them, but there has to be a happy medium!

To make myself feel better, here are some things that I did do in October:

• Found a new job in California and negotiated salary
• Had a performance review in my current job and was rated a 3-3 (it's a scale of 1 to 3 on two scales so 3-3 is the best)
• Booked my ticket for the holidays, convinced my friends to meet in a city where we can have free lodging
• Did decent on my graduate class midterm
• Bought much needed new black work shoes (I'm stretching here!)

Obviously, my first goal for next month is to resume tracking of my spending. I'll have to think about the other ones.

I spoke recently about how I got a job offer in California, making roughly 11k/yr more than I make in the Midwest. My company here pays pretty well for new graduates because there is a high demand for them. Even though they are located in a low cost of living area, starting salaries are not much lower than in high cost of living areas. Anyway, this raise will net me an extra $916 a month, which we will call $650 after taxes (optimistically?).

I've been doing a little math to see how this move will affect me. The biggest increase in monthly spending will undoubtedly be rent. I currently pay $575 for a small but relatively nice one bedroom apartment. I'm hoping to find something for $1000 (or less, but that seems unlikely) in California, probably equally small and not as nice. I'm secretly hoping that I'll have a roommate (my boyfriend) move in after several months, but this isn't something that has been discussed enough to count on, so I'm running the numbers without factoring that in. That is $425 per a month extra in expenses! That destroys a huge chunk of my "raise", making it an increase of a puny 2.7k/yr!

I will be able to take public transportation, but I doubt that'll save me any money since I currently live a 4 minute drive from my company and don't drive often. I suppose, one nice thing about a higher salary is that the company match of my 401k will be of a larger amount. If I want to go home, it'll cost me $300 for a plane ticket rather than $80 for a couple tanks of gas.

Luckily, the initial costs of relocating won't be too much of a burden on me. Not only do they give me $2000 for miscellaneous moving costs, they will pack and move my stuff, reimburse me for mileage and lodging and meals for the drive out there. With all of that, there still might be a bit of a hit to my savings, but not nearly as drastic as it could be.

I'm not making this move for financial reasons. It is for personal reasons, and for a desire to live in a big city, the dream of California living. But the impact to my finances is still there, and I hope that it won't slow my progress too far.

My parents took out a $15,000 HELOC loan sometime last year in order to make some updates and repairs on their house in preparation to sell it. I thought it was sort of a bad idea and thought they should just save up some cash and pay for it as they go. At least for part of it. I think I bit my tongue, because it isn't really my place to offer unsolicited 'advice' and judge the actions of my parents. I did suggest that while they were waiting to spend it, they put it into a high yield savings account rather than a normal account, but beyond that, I stifled my opinions.

My dad has a bit of a sordid financial past and has difficulty managing money, so my mom was the only one with access to the account. But the repairs didn't happen. My dad kept putting it off, and putting it off, and I was wondering what the hold up was.

Apparently, my mom used the same PIN that my dad uses for several of his accounts. He was borrowing money from the account to pay some other bills (and I still am confused as to what bills these are). He finally told my mom, and then went to Alaska (I know, bizarre) because there was a lot of work for him there making a lot of money in a short amount of time. In fact, he's been there less than a month and has paid back whatever he took (I'm not sure how much it was).

I finally found out today, from my sister. My dad was supposed to tell me himself, but he didn't. I understand him not wanting to tell me, but it makes me think I need to change my attitude. I don't want to be judgmental (though it can be hard to hold back at times), I want to be helpful.

It's hard to offer suggestions to your parents. Suggestions that seem so obvious to me. For example, if you can't pay your bills then you don't get to go on vacation to the Bahamas. (Yes, the really are going. Though the trip was planned before this came to head, and they NEVER go on vacation, it still seems extravagant.) Or, open a Roth IRA and make contributions automatic. Cut up your credit cards if you can't manage them. Track your spending, at least for a few months, just to see what is going on. These are the basics!

Secretly, I considered pulling their credit report without their knowledge. I know their SSN's. There generally are some security questions that I'm sure I couldn't answer, but besides that, it's just a horrible and evil idea. It just isn't my place, even though I want it to be.

Someday, they won't be able to work. What do they have saved? Is it enough? How would my dad ever manage his finances without my mom watching over? Is it too late for him to learn? These are things that I worry about. Maybe that is why I have a personal finance blog--so no one ever has to worry these things about me.

I've been cluttering up someone else's comments area on a post about Federal Aid for college students. Honestly, I've never heard anyone take the position that federal aid is a large factor in why college is so expensive. Then again, it isn't something I've discussed with many people, so it is may be a more common idea than I thought.

Rather than continuing to disagree with the overall point, I want to approach it from an entirely personal angle. One examples doesn't prove a darn thing, but I'm not out to prove anything, just to think and discuss.

I graduated high school without a penny saved for my college education. Yes, I could have saved something myself (I worked part time through high school), but I didn't. No one suggested it to me, and I didn't think of it myself. My friends were quite well off and their parents were planning on paying for college for them, so it wasn't "normal" to be saving for college.

Even though there wasn't any money set aside, the question of whether or not I would go to college wasn't raised. It was obvious that I would--I was a bright student who loved school and excelled in math. I couldn't imagine doing anything else. I went to the state school because it was relatively inexpensive. Even today, after yearly tuition increases (one year it was a 20% increase!) it is "only" $5000 for tuition, another $1000 for fees, and $6000 for room and board.

The exact dollar figure in grants that I got is unknown, because I'm not a good record keeper. I estimate that it would be about $10,000. I got about $22,000 in subsidized government loans, which means the government paid my interest throughout school. I'm sure there is fancy math to figure out that cost to them, but I'm just going to round it to a cost of $1000/yr for four years. I'll also throw in the $5000 merit based scholarship I got to study abroad, because it was a government program and one qualifying factor was finiancial need. That puts the governments total investment in me at a whopping $19,000, a humbling number.

But, what will they get back on it? It is hard to quantify, because if I didn't go to college, I have no idea what I would have done. I would have stayed in my home state, and with hard work I might have been able to earn, say, 35k a year. This would make my tax bill (at 25%) be 8.7k a year, for 47 (65-18) years. I'm simplifying the math, but I'll do both calculations the same, so it should be a wash. Total lifetime taxes: $408,900

My first year out of school, I'm earning $56k. My oportunity for salary growth is much greater than if I had no degree. For simplicity, let's just say I make $67k (my salary offer for my new job) for my entire life. This is ridiculously unlikely, but so be it. My tax bill for this salary (at straight 25%) is $16.75k, for 42 years 65-23) that ammounts to an impressive $703,500.

The difference? $294,6000. It would take some more accounting to flat out demostrate that they made a good investment in me and I don't know finance. Yet it seems apparent to me that over my life I'll pay substansially more in taxes than that 19k investment in my education. Strictly based on taxes, I was a good investment. This isn't to mention the decrease in US students graduating in science and engineering, the need for us to stay up to date in technology, and the value I provide to my company and our economy.

The playing feild between the haves and the have nots will never be level, but government aid helps those of us who's parents don't have a pile of money saved up at least get ON the field and try to better our lives. When I have kids, they probably won't qualify for any sort of aid, but I'll be able to provide for them with money I'm able to save due to my education. Government aid can help one generation so that the next can do it without that help. It is sort of like the saying, "Light a man a fire, he'll be warm for the night. Light a man ON fire, and he'll be warm for the rest of his life." Or wait, maybe the saying was about fish.... :)

It is difficult for me to look at government aid as anything but good because my experience with it was good. It not only helped me, but it didn't go to waste on some student who frittered away they governments money while skipping class and getting wasted. I understand there is another side of it, but it is a side that I just will never be on.

This is a money making trick that doesn't work except in a very special circumstance--negotiating a job offer.

I'm in the process of relocating to California, primarily for personal reasons. I had an interview last week and received the official offer today. My current salary in a low cost of living midwestern city is about 56k. I was offered 65k to move to California (plus relocation costs!). I was excited to get the offer, but I immediately asked if that was negotiable. I had anticipated an offer in the 70-75k range. (Some random cost of living calculator states: To maintain the same standard of living, your salary of $56,000 in XXXX should increase to $103,122 in XXXXX, California. I think that is a bit high, and certainly less than I would expect them to offer me, but at least, a point of reference.)

The HR rep seemed surprised (which surprised me!), and said something like "Well, it is a 15% percent increase, but if you have justification, I can talk to the hiring manager."

Luckily, I wasn't negotiating for the sake of negotiating--I had my reasons ready to go:

• The position is typically entry level, I have 1.5 years of directly related experience and am on the verge of a raise/promotion at the end of the year
• I am 1/3 of the way done with my Masters Degree
• I already have my security clearance (something that costs them several thousand to get!)
• The cost of living is significantly different

The HR lady then called the hiring manager, and then called me back about 10 minutes later. She only could offer me an increase of salary to 67k, but they would throw in a 3k signing bonus. She reminded me that performance reviews happen early in the year, and that there would be tuition reimbursement.

The offer is much more attractive. I got enough money to fully fund a 2008 Roth IRA, just by listing a few reasons.

I have a phone interview tomorrow with another company for a different type of position. I think that the offer I already have seems like a more appealing job, but I want to see what this other position really entails.

This is the first time I've negotiated salary, and I'm quite proud of myself!

I haven't written a post at all this month. I thought I would have more time for this, but I haven't been making it a priority. I just finished writing an extensive entry on student loans for JD at Get Rich Slowly. It was very rewarding, and reminded me of why I started this blog in the first place.

I still am not sure if I will meet my year end money goals. If I don't, I'm not incredibly worried, because I still made a TON of progress this year. Since I graduated in May 2006, I've mostly been setting up the foundation of a good financial future. I am still in the beginning stages, and I've started to think about what might come next. Long term goals have eluded me, but once the foundation is built, I want to have a plan for what do to next.

First, I would like to max out my 401k. This year my personal contributions will be roughly $8,000, far short of the allowed $15,500. Next year, I should be relocated to a higher cost of living area. Ironically, I believe that will allow me to save more of my income, because I plan to leave the percentages the same. This also will mean my employer match will be higher. Still, it may take a couple years before maxing out my 401k and my Roth concurrently is possible.

Second, I'd like to start saving for a house downpayment. This is very much a long term goal. I don't expect to be purchasing for five years, maybe more. Someday though, I would like a house, and I would like to be prepared for it.

Last, I'd like to start out a non-retirement investment account. This won't be for "play" money, but for building wealth that I can access before I reach retirement age.

I can't make much progress on these goals while still building an efund, paying student loans, and saving up for a car, but it is nice to look and see what is on the horizon.

Sasha

Throughout my life, my sense of where I fit in financially has teeter tottered.

The early years
When I was young, we lived in a trailer court. Am I embarrassed of this? It depends. Some people really do look down on it, so I don't advertise that fact until I know a bit about a person's perspectives. As I get older, it seems to matter less.

I remember two things about the trailer court. First, I remember playing in our yard. We lived on a dead end street at the end of the lot, and my Dad was allowed to use whatever land he wanted to mow. So we had a huge yard with a homemade swing set, a sandbox, and a nice hill for our slip and slide. I remember the day my dad mowed his name in huge letters in the yard. We were delighted.

The other thing I remember is when a naked man was running through the trailer park. I don't specifically remember seeing him, I don't remember why he was running, why he was naked. But I do remember my dad taking him inside our trailer, giving him a shirt and some pants, and helping him on his way. He worked at a golf course and gave my dad free rounds after that.

When I was in third grade, we moved to the house my parents live in now. It is a big house, probably bigger than we needed, in a new development. They did a lot of the work themselves (my dad and his friends). For the rest of grade school and jr. high, I never felt that I lived in a somewhere "less" than my friends.

High school
I transfered to a private high school in ninth grade, and the insecurities were back. We had enough money, but definitely less than my classmates. I didn't have a nice car. Our house was less impressive than many others. Several of my classmates had pools (a big luxury in a northern midwest state!), everyone shopped at Abercrombie, and people had a lot of nice stuff.

Still, my parents didn't seem to deprive us. I almost wish they did, for their sake. We did have crappy cars, but were allowed to buy brand name clothes. My parents paid for a trip to Germany, not to mention the tuition for school (though there was a discount because my dad did some electrical work for them). Even though we had less than others, we still had enough.

The scary years
During this time, my dad borrowed a healthy sum of money to start his own electrical business. I still am not clear on the details, but it didn't work out as well as planned. There were some issues with him not getting paid for a large job, some issues with the person who lent him the money, and... well, starting a small business is hard. I'm not sure it was planned out very well. It was hard times, but I wasn't aware of it until a little later on. It ended with my parents working with someone to file a Chapter 13 bankruptcy. They got to keep their possessions, but had to pay a lot of money back to the creditors. I think the payments were something like 3000 a month for 5 or 7 years. My dad became responsible for those payments, and my mom paid the rest of the bills.

Surprisingly, I don't remember there being major cutbacks in my life. We continued to drive falling apart cars, but everything else seemed to go stay the same. Still, it was a scary time for me. Every so often, my dad would fall behind on the payments, and someone would come to our house with a certified letter. I must have opened one once, because I somehow knew they said something like "pay now, or we will be forced to reconsider this repayment plan." More than once, I cried about this, even once I was in college and not relying on them. I was scared for their sake and couldn't understand how they could have let this happen.

But they made it through, making their last payment sometime last year. It actually helped me out a lot, surprisingly. Because they were paying so much money towards the debt, I was able to qualify for actual GRANTS for my college for several years. Free money that I never had to pay back!! So, if you can't help your kids pay for college, consider going bankrupt right as they are entering. (No seriously, don't.)

The split
During college, you start to separate from your parents both emotionally and financially. They generously helped me get a decent car (about 3k from them and 1k from me), paid my car insurance and repairs, health insurance and helped out with some minor expenses on occasion. After living on my own for several years, they let me stay at home rent from for a few semesters so I could save money. But for everything else, I was on my own.

After graduation, the difference was even more marked. I'm completely financially independent from them. Now, I feel very "rich", even though I only have about 8k net worth. The feeling comes from knowing I'm doing the right things with my money and knowing my future looks bright. To me, feeling poor means being scared about money. I don't think I'll ever feel "poor" again.

As for my parents, they are doing pretty well these days, I think. I worry about their retirement. The bankruptcy involved an IRA rollover (I know this only because it affected my financial aid), and I know my dad has no retirement accounts as of today. He does have a pension plan through his union, but he also hasn't worked for the union regularly for about 10 years! I asked him about it, cautiously, and he said his house was his retirement. I commented I wasn't sure about that plan, but let the subject drop. I would assume my mom is still contributing to some sort of retirement plan, but I'm not sure of it. I hope to bring it up with them one of these days, but it is a hard step to take.

I don't think I was ever poor in the true sense of the word, but I don't feel that I was exceptionally privileged either.

I've made some financial mistakes in my past, but the single past decision that worries me the most is agreeing to cosign for my younger sisters student loans.

Why did I, a 21 year old sibling, have to cosign her student loans? There were several reasons. She needed a cosigner because she had once got a Victoria's Secret credit card, bought a few things, and didn't make payments. She was not eligible for federal loans (which never need a cosigner) due to poor grades the previous year. She had no money saved up because she didn't have a job (even in the summer!), though she did do a little work for my dad to earn some money to live on. Also, my parents were not eligible to cosign due to their own issues.

After listing those reasons, it seems incredibly obvious that I shouldn't have agreed to do this. At the time, I didn't understand the ramifications of my signature, and my parents assured me that if she ever neglected to make payments, they would take care of it. So I agreed, because if I hadn't, she wouldn't be able to go to college spring semester. My parents asked me to do this, and I trusted they wouldn't lead me wrong. I don't think they intended to, but I also don't think it was a wise move.

Since I was in a different city, I gave her permission just to sign my name for me to save the hassle of mailing back and forth. (I realize this is not appropriate, but it is what I did at the time.) She got the loan, took the classes, and did a little bit better in school. She still didn't get a job, but instead took summer classes, financed by a second student loan. I also cosigned that loan again letting her to sign my name. When fall came around and i was asked again, I was so busy with my college career that I said "sure, whatever", not even knowing the amount of the loans.

This January, I got a letter in the mail stating that a loan that I had cosigned for $6000 was approved. Not only did I not sign the loan papers (which admittedly was standard practice), but I wasn't even asked if this was okay with me! I pulled my credit report, tallied up the balance of her loans, and came up with over $23000. To put this in perspective, when I graduated, I had $27000 for myself. I had several scholarships, well paying internships, and worked through school, so it is understandable that she would have more.

Still, it set of huge alarm bells in my head. After complaining to my dad (who had told my sister she was required to call and ask me about this), I bit the bullet and called my sister directly. I said that I was no longer comfortable cosigning her loans, as she had me on the hook for almost as much as I had for myself. I said she was old enough that she should have her own credit established, and if she wasn't eligible for federal aid, she really needed to improve her grades. I told her I would allow this last loan to go through, but after that she was on her own, or she had to ask someone else. She didn't argue.

She is still in school. I have no idea how she is financing it. I don't need to know, because I'm no longer involved. That provides some relief. I wish I could get through to her the importance of being careful with the amount of money you borrow, even if it is for a good reason. I worry about it for her sake, and also for mine.

I do not doubt that my parents intend to take care of any issues, as promised. However, legally I'm responsible for it. Also, I am unfortunately aware from from past experience that it is a pain in the butt having to call my parents every month to collect a payment. It puts an unnecessary strain on the relationship.

I say that I regret this, but even knowing what I know now, I'm not convinced I would have said no for the first semester. Beyond that, I would have been more firm. But it is family, and it is money for education, and it is hard for me to turn my back on that.

I wish that I was a few years older and wiser when asked to do this. There is no way I can spare $6000 a semester to support her (and no reason that I should). However, I could offer a more reasonable (say, $1000) amount as a gift towards her education, with no expectations of payback. Perhaps on the condition she worked part time, and full time in the summers! It is more my parents place to do this than mine, but I feel very blessed to have a good job and could spare the money to further her education. She is family, and I only want the best for her.

How did I do in October on meeting my financial goals?

• Continue 401k and Roth contributions: Yes, but I'm considering reducing 401k back to 12% to flow extra into my savings. Most of my net worth increase is getting tied up in retirement accounts, and I need a little more in savings.
• Limit groceries to $30/wk and restaurants to $75: Well, I didn't track my spending this month.... Ooops... But I would venture a guess that this is true
• Contribute $400 to student loan payback account: I only contributed 300.
• Contribute $1000 to HYSA: I don't think this happened either....
  
• Finish writing post about student loans I volunteered to do for for Get Rich Slowly: Done

I really did quite poorly this month.... I need to set more realistic goals. I keep setting the bar too high, and then failing! I think that is better than setting the bar too low and always meeting them, but there has to be a happy medium!

To make myself feel better, here are some things that I did do in October:

• Found a new job in California and negotiated salary
• Had a performance review in my current job and was rated a 3-3 (it's a scale of 1 to 3 on two scales so 3-3 is the best)
• Booked my ticket for the holidays, convinced my friends to meet in a city where we can have free lodging
• Did decent on my graduate class midterm
• Bought much needed new black work shoes (I'm stretching here!)

Obviously, my first goal for next month is to resume tracking of my spending. I'll have to think about the other ones.

I spoke recently about how I got a job offer in California, making roughly 11k/yr more than I make in the Midwest. My company here pays pretty well for new graduates because there is a high demand for them. Even though they are located in a low cost of living area, starting salaries are not much lower than in high cost of living areas. Anyway, this raise will net me an extra $916 a month, which we will call $650 after taxes (optimistically?).

I've been doing a little math to see how this move will affect me. The biggest increase in monthly spending will undoubtedly be rent. I currently pay $575 for a small but relatively nice one bedroom apartment. I'm hoping to find something for $1000 (or less, but that seems unlikely) in California, probably equally small and not as nice. I'm secretly hoping that I'll have a roommate (my boyfriend) move in after several months, but this isn't something that has been discussed enough to count on, so I'm running the numbers without factoring that in. That is $425 per a month extra in expenses! That destroys a huge chunk of my "raise", making it an increase of a puny 2.7k/yr!

I will be able to take public transportation, but I doubt that'll save me any money since I currently live a 4 minute drive from my company and don't drive often. I suppose, one nice thing about a higher salary is that the company match of my 401k will be of a larger amount. If I want to go home, it'll cost me $300 for a plane ticket rather than $80 for a couple tanks of gas.

Luckily, the initial costs of relocating won't be too much of a burden on me. Not only do they give me $2000 for miscellaneous moving costs, they will pack and move my stuff, reimburse me for mileage and lodging and meals for the drive out there. With all of that, there still might be a bit of a hit to my savings, but not nearly as drastic as it could be.

I'm not making this move for financial reasons. It is for personal reasons, and for a desire to live in a big city, the dream of California living. But the impact to my finances is still there, and I hope that it won't slow my progress too far.

My parents took out a $15,000 HELOC loan sometime last year in order to make some updates and repairs on their house in preparation to sell it. I thought it was sort of a bad idea and thought they should just save up some cash and pay for it as they go. At least for part of it. I think I bit my tongue, because it isn't really my place to offer unsolicited 'advice' and judge the actions of my parents. I did suggest that while they were waiting to spend it, they put it into a high yield savings account rather than a normal account, but beyond that, I stifled my opinions.

My dad has a bit of a sordid financial past and has difficulty managing money, so my mom was the only one with access to the account. But the repairs didn't happen. My dad kept putting it off, and putting it off, and I was wondering what the hold up was.

Apparently, my mom used the same PIN that my dad uses for several of his accounts. He was borrowing money from the account to pay some other bills (and I still am confused as to what bills these are). He finally told my mom, and then went to Alaska (I know, bizarre) because there was a lot of work for him there making a lot of money in a short amount of time. In fact, he's been there less than a month and has paid back whatever he took (I'm not sure how much it was).

I finally found out today, from my sister. My dad was supposed to tell me himself, but he didn't. I understand him not wanting to tell me, but it makes me think I need to change my attitude. I don't want to be judgmental (though it can be hard to hold back at times), I want to be helpful.

It's hard to offer suggestions to your parents. Suggestions that seem so obvious to me. For example, if you can't pay your bills then you don't get to go on vacation to the Bahamas. (Yes, the really are going. Though the trip was planned before this came to head, and they NEVER go on vacation, it still seems extravagant.) Or, open a Roth IRA and make contributions automatic. Cut up your credit cards if you can't manage them. Track your spending, at least for a few months, just to see what is going on. These are the basics!

Secretly, I considered pulling their credit report without their knowledge. I know their SSN's. There generally are some security questions that I'm sure I couldn't answer, but besides that, it's just a horrible and evil idea. It just isn't my place, even though I want it to be.

Someday, they won't be able to work. What do they have saved? Is it enough? How would my dad ever manage his finances without my mom watching over? Is it too late for him to learn? These are things that I worry about. Maybe that is why I have a personal finance blog--so no one ever has to worry these things about me.

I've been cluttering up someone else's comments area on a post about Federal Aid for college students. Honestly, I've never heard anyone take the position that federal aid is a large factor in why college is so expensive. Then again, it isn't something I've discussed with many people, so it is may be a more common idea than I thought.

Rather than continuing to disagree with the overall point, I want to approach it from an entirely personal angle. One examples doesn't prove a darn thing, but I'm not out to prove anything, just to think and discuss.

I graduated high school without a penny saved for my college education. Yes, I could have saved something myself (I worked part time through high school), but I didn't. No one suggested it to me, and I didn't think of it myself. My friends were quite well off and their parents were planning on paying for college for them, so it wasn't "normal" to be saving for college.

Even though there wasn't any money set aside, the question of whether or not I would go to college wasn't raised. It was obvious that I would--I was a bright student who loved school and excelled in math. I couldn't imagine doing anything else. I went to the state school because it was relatively inexpensive. Even today, after yearly tuition increases (one year it was a 20% increase!) it is "only" $5000 for tuition, another $1000 for fees, and $6000 for room and board.

The exact dollar figure in grants that I got is unknown, because I'm not a good record keeper. I estimate that it would be about $10,000. I got about $22,000 in subsidized government loans, which means the government paid my interest throughout school. I'm sure there is fancy math to figure out that cost to them, but I'm just going to round it to a cost of $1000/yr for four years. I'll also throw in the $5000 merit based scholarship I got to study abroad, because it was a government program and one qualifying factor was finiancial need. That puts the governments total investment in me at a whopping $19,000, a humbling number.

But, what will they get back on it? It is hard to quantify, because if I didn't go to college, I have no idea what I would have done. I would have stayed in my home state, and with hard work I might have been able to earn, say, 35k a year. This would make my tax bill (at 25%) be 8.7k a year, for 47 (65-18) years. I'm simplifying the math, but I'll do both calculations the same, so it should be a wash. Total lifetime taxes: $408,900

My first year out of school, I'm earning $56k. My oportunity for salary growth is much greater than if I had no degree. For simplicity, let's just say I make $67k (my salary offer for my new job) for my entire life. This is ridiculously unlikely, but so be it. My tax bill for this salary (at straight 25%) is $16.75k, for 42 years 65-23) that ammounts to an impressive $703,500.

The difference? $294,6000. It would take some more accounting to flat out demostrate that they made a good investment in me and I don't know finance. Yet it seems apparent to me that over my life I'll pay substansially more in taxes than that 19k investment in my education. Strictly based on taxes, I was a good investment. This isn't to mention the decrease in US students graduating in science and engineering, the need for us to stay up to date in technology, and the value I provide to my company and our economy.

The playing feild between the haves and the have nots will never be level, but government aid helps those of us who's parents don't have a pile of money saved up at least get ON the field and try to better our lives. When I have kids, they probably won't qualify for any sort of aid, but I'll be able to provide for them with money I'm able to save due to my education. Government aid can help one generation so that the next can do it without that help. It is sort of like the saying, "Light a man a fire, he'll be warm for the night. Light a man ON fire, and he'll be warm for the rest of his life." Or wait, maybe the saying was about fish.... :)

It is difficult for me to look at government aid as anything but good because my experience with it was good. It not only helped me, but it didn't go to waste on some student who frittered away they governments money while skipping class and getting wasted. I understand there is another side of it, but it is a side that I just will never be on.

This is a money making trick that doesn't work except in a very special circumstance--negotiating a job offer.

I'm in the process of relocating to California, primarily for personal reasons. I had an interview last week and received the official offer today. My current salary in a low cost of living midwestern city is about 56k. I was offered 65k to move to California (plus relocation costs!). I was excited to get the offer, but I immediately asked if that was negotiable. I had anticipated an offer in the 70-75k range. (Some random cost of living calculator states: To maintain the same standard of living, your salary of $56,000 in XXXX should increase to $103,122 in XXXXX, California. I think that is a bit high, and certainly less than I would expect them to offer me, but at least, a point of reference.)

The HR rep seemed surprised (which surprised me!), and said something like "Well, it is a 15% percent increase, but if you have justification, I can talk to the hiring manager."

Luckily, I wasn't negotiating for the sake of negotiating--I had my reasons ready to go:

• The position is typically entry level, I have 1.5 years of directly related experience and am on the verge of a raise/promotion at the end of the year
• I am 1/3 of the way done with my Masters Degree
• I already have my security clearance (something that costs them several thousand to get!)
• The cost of living is significantly different

The HR lady then called the hiring manager, and then called me back about 10 minutes later. She only could offer me an increase of salary to 67k, but they would throw in a 3k signing bonus. She reminded me that performance reviews happen early in the year, and that there would be tuition reimbursement.

The offer is much more attractive. I got enough money to fully fund a 2008 Roth IRA, just by listing a few reasons.

I have a phone interview tomorrow with another company for a different type of position. I think that the offer I already have seems like a more appealing job, but I want to see what this other position really entails.

This is the first time I've negotiated salary, and I'm quite proud of myself!

I haven't written a post at all this month. I thought I would have more time for this, but I haven't been making it a priority. I just finished writing an extensive entry on student loans for JD at Get Rich Slowly. It was very rewarding, and reminded me of why I started this blog in the first place.

I still am not sure if I will meet my year end money goals. If I don't, I'm not incredibly worried, because I still made a TON of progress this year. Since I graduated in May 2006, I've mostly been setting up the foundation of a good financial future. I am still in the beginning stages, and I've started to think about what might come next. Long term goals have eluded me, but once the foundation is built, I want to have a plan for what do to next.

First, I would like to max out my 401k. This year my personal contributions will be roughly $8,000, far short of the allowed $15,500. Next year, I should be relocated to a higher cost of living area. Ironically, I believe that will allow me to save more of my income, because I plan to leave the percentages the same. This also will mean my employer match will be higher. Still, it may take a couple years before maxing out my 401k and my Roth concurrently is possible.

Second, I'd like to start saving for a house downpayment. This is very much a long term goal. I don't expect to be purchasing for five years, maybe more. Someday though, I would like a house, and I would like to be prepared for it.

Last, I'd like to start out a non-retirement investment account. This won't be for "play" money, but for building wealth that I can access before I reach retirement age.

I can't make much progress on these goals while still building an efund, paying student loans, and saving up for a car, but it is nice to look and see what is on the horizon.

Sasha

Throughout my life, my sense of where I fit in financially has teeter tottered.

The early years
When I was young, we lived in a trailer court. Am I embarrassed of this? It depends. Some people really do look down on it, so I don't advertise that fact until I know a bit about a person's perspectives. As I get older, it seems to matter less.

I remember two things about the trailer court. First, I remember playing in our yard. We lived on a dead end street at the end of the lot, and my Dad was allowed to use whatever land he wanted to mow. So we had a huge yard with a homemade swing set, a sandbox, and a nice hill for our slip and slide. I remember the day my dad mowed his name in huge letters in the yard. We were delighted.

The other thing I remember is when a naked man was running through the trailer park. I don't specifically remember seeing him, I don't remember why he was running, why he was naked. But I do remember my dad taking him inside our trailer, giving him a shirt and some pants, and helping him on his way. He worked at a golf course and gave my dad free rounds after that.

When I was in third grade, we moved to the house my parents live in now. It is a big house, probably bigger than we needed, in a new development. They did a lot of the work themselves (my dad and his friends). For the rest of grade school and jr. high, I never felt that I lived in a somewhere "less" than my friends.

High school
I transfered to a private high school in ninth grade, and the insecurities were back. We had enough money, but definitely less than my classmates. I didn't have a nice car. Our house was less impressive than many others. Several of my classmates had pools (a big luxury in a northern midwest state!), everyone shopped at Abercrombie, and people had a lot of nice stuff.

Still, my parents didn't seem to deprive us. I almost wish they did, for their sake. We did have crappy cars, but were allowed to buy brand name clothes. My parents paid for a trip to Germany, not to mention the tuition for school (though there was a discount because my dad did some electrical work for them). Even though we had less than others, we still had enough.

The scary years
During this time, my dad borrowed a healthy sum of money to start his own electrical business. I still am not clear on the details, but it didn't work out as well as planned. There were some issues with him not getting paid for a large job, some issues with the person who lent him the money, and... well, starting a small business is hard. I'm not sure it was planned out very well. It was hard times, but I wasn't aware of it until a little later on. It ended with my parents working with someone to file a Chapter 13 bankruptcy. They got to keep their possessions, but had to pay a lot of money back to the creditors. I think the payments were something like 3000 a month for 5 or 7 years. My dad became responsible for those payments, and my mom paid the rest of the bills.

Surprisingly, I don't remember there being major cutbacks in my life. We continued to drive falling apart cars, but everything else seemed to go stay the same. Still, it was a scary time for me. Every so often, my dad would fall behind on the payments, and someone would come to our house with a certified letter. I must have opened one once, because I somehow knew they said something like "pay now, or we will be forced to reconsider this repayment plan." More than once, I cried about this, even once I was in college and not relying on them. I was scared for their sake and couldn't understand how they could have let this happen.

But they made it through, making their last payment sometime last year. It actually helped me out a lot, surprisingly. Because they were paying so much money towards the debt, I was able to qualify for actual GRANTS for my college for several years. Free money that I never had to pay back!! So, if you can't help your kids pay for college, consider going bankrupt right as they are entering. (No seriously, don't.)

The split
During college, you start to separate from your parents both emotionally and financially. They generously helped me get a decent car (about 3k from them and 1k from me), paid my car insurance and repairs, health insurance and helped out with some minor expenses on occasion. After living on my own for several years, they let me stay at home rent from for a few semesters so I could save money. But for everything else, I was on my own.

After graduation, the difference was even more marked. I'm completely financially independent from them. Now, I feel very "rich", even though I only have about 8k net worth. The feeling comes from knowing I'm doing the right things with my money and knowing my future looks bright. To me, feeling poor means being scared about money. I don't think I'll ever feel "poor" again.

As for my parents, they are doing pretty well these days, I think. I worry about their retirement. The bankruptcy involved an IRA rollover (I know this only because it affected my financial aid), and I know my dad has no retirement accounts as of today. He does have a pension plan through his union, but he also hasn't worked for the union regularly for about 10 years! I asked him about it, cautiously, and he said his house was his retirement. I commented I wasn't sure about that plan, but let the subject drop. I would assume my mom is still contributing to some sort of retirement plan, but I'm not sure of it. I hope to bring it up with them one of these days, but it is a hard step to take.

I don't think I was ever poor in the true sense of the word, but I don't feel that I was exceptionally privileged either.