Saturday, February 16, 2008

A Meaningful Valentine's Day

Valentine's Day doesn't have to be about cards, chocolates or flowers to be memorable.

Last week, as Mr. Savvy Working Guy left to purchase a birthday card for his niece, I remarked, "I don't want a Valentine’s Day card this year. What I really want is a “music night”, a night where each of us takes a turn playing one of our favorite love songs." I came up with this idea after reading Florinda’s post where she writes about liking love stories best in a song.

We both had lots of fun with this; trying to guess each others selection, etc. Mr. SWG selected The Beatles "And I Love Her” from his Ipod. I had two selections, first I played Florinda's favorite, Bruce Springsteen's "If I Should Fall Behind” from Lucky Town, which we own. I also played Bob Dylan "Love minus Zero/No Limit which I found here:

We both really enjoyed our Valentine's Day. With a little creativity it can be easy to celebrate a Hallmark Holiday without spending a lot of money.

Saturday, February 02, 2008

Don't forget to keep your beneficiary forms updated

Along with an annual review of my financial accounts, it was also time to update my IRA account beneficiaries. Two years ago I was blessed with two new nephews that I would hate to leave out. It was very easy to request, fill out and submit a new beneficiary designation form.

Many important assets (pensions, IRAs, and annuities) have beneficiary designations. Those forms mean that after your death, the assets go directly to the people or trusts you've named. You can't determine otherwise in your will. So it is important keep your forms updated.

Our Experience with a Financial Advisor

Why a financial advisor?
We decided to seek the services of a financial adviser after our 401(k) accounts, still with our previous employer, had lost 35% of their account value during the last recession. Neither of us had the time or the inclination to do our own research. We wanted someone to advise us on investing these monies, then monitor our accounts and alert us when it is time to buy, sell or rebalance our funds.

How we found him?
We selected an independent agency who had been hosting a money show on a prominent local radio station. We were intrigued by the firm's goal to provide objective, unbiased investment advice. Plus, they offered a free consultation with one of their independent brokers. An independent broker researches the whole market to find the most suitable products for your situation. A non-independent broker sells only the products provided by his/her employer, usually a bank or insurer. Many of these products are sold with big commissions and have high expense ratios.

What we learned?
The broker assigned to us compiled our most recent 401(k) statements into a spreadsheet providing us with an overview of our portfolio. To our surprise, we were not nearly as diversified as we had thought. Even though, we owned many different funds, the majority of our money was not only invested in high growth stocks, but almost entirely invested in the information sector. He recommended that we roll our 401(k)'s into IRA's keeping them with the Putnam family of funds to save money on fees. We could further diversify by rolling money into additional Putnam funds not accessible through our 401(k) plans. He explained his fee structure; we would be charged 1% on the total balance of our portfolio. He also asked several questions to determine our risk tolerance and explained his insistence on at least annual client reviews.

What happened next?
We decided to go with his services, and rolled our money into Putnam IRA accounts through his firm. We could have taken his free advice and rolled our 401(k) money into Putnam accounts on our own, but we still wanted the comfort of knowing someone with more knowledge than us would be keeping an eye on our money. This ended up being a wise decision.

Were there follow up recommendations?
After a year or so he called us; we needed to move all our money out of Putnam where a scandal was brewing. Six of Putnam’s investment professionals were under investigation for illegal trading. The outlook for keeping our money with Putnam was not good. He also suggested perhaps we should think about opening Roth accounts. We took all of his advice. Moved our money out of Putnam, reduced our current 401(k) contributions (investing just enough to still take advantage of the company match), and placed the extra money into Roth IRA accounts.

What about 2008?
I recently called to have our monthly Roth contributions increased to take advantage of the new 2008 maximum contribution limits:
$5000 for those under 50
$6000 for those over

He took this as an opportunity to insist on another client account review. January of 2008 had the worst stock performance start since 1978. As soon as the market stabilizes, possibly by summer, we need to begin rebalancing our funds and scaling down our investment in stocks by 3 to 5 percent each year. He will call us when it is time to do this.

What are our overall thoughts?
We could invest our own money and save the 1% fee; many financial experts recommend doing so using only index funds. There are also plenty of reputable web sights (Clark Howard's for example) that recommend low cost quality funds for your Roth IRA. I still like a little hand holding and feel we receive value from our independent, unbiased adviser. He keeps us on track; preventing panic sales during down times and alerting us when it is time to sell, keeps us diversified and on track to achieve our long term goals.

I hate to admit it; but Time Warner Cable is growing on me

Over the past several years, I have had a love/hate relationship with Time Warner Cable, our local cable company. This is primarily due to the inadequate customer service I have received when we have service issues and their ever increasing prices. A couple of years ago, we did upgrade to one of their combination packages that includes high-speed internet, cable and digital phone service. The total cost of the package is cheaper than buying the services separately. Overall, we’ve been happy with this move, despite initial misgivings about Time Warner Cable in general and our doubts as to whether a landline phone was even needed.

This past week, my husband actually read the advertising fliers included with our monthly Time Warner bill. According to him, we could save $10 a month if we cancelled our free domestic long distance service in all states accept Wisconsin. We would still have access to local domestic calling outside of Wisconsin at 5¢ a minute. We decided to take advantage of this deal. Unfortunately, when he called to make the change, he was told the special was good for digital phone customers only; we were ineligible because our phone service was part of a package.

Here is the part where they start to grow on me:
The customer service rep then offered to give us $10 off anyway since we had been long-term customers. How about that for service; we still save $10 a month and can continue to call anyone in the United States and Canada for free.

Also, they have added a new feature:
Our TV now has an option for caller ID display at no extra charge. For old-fashioned folks like me who don't have a phone with caller id capabilities, we can now screen our calls while watching TV without ever leaving the couch. When the phone rings, the caller’s name and phone number are shown in the top left hand corner of our television screen.