I’ve been tweaking our financial situation over the last few weeks following the suggestions in Elizabeth Warren’s All Your Worth, which I think I mentioned, but can’t find that post at the moment.  So, I started by tackling home and car insurance.  I’ve been actually talking to insurance agents, and I’ve been proud of myself for saying to more than one, “I’m sorry but buying from you is more expensive than what I have right now.  See ya.”  I think I have something good lined up, and will find out for sure sometime today, but it’s been a time-consuming process.  Most of us, I’d wager, don’t pay too much attention to total amounts paid for either of these pieces of insurance.  And I’ve found that people display their prices in weird ways–sometimes monthly, sometimes bi-annually, sometimes yearly–so it takes work to make sure you’re comparing apples to apples.  I don’t think I’m going to save thousands of dollars annually, but a few hundred, possibly.

I also transferred a balance from one credit card to another with a low interest rate.  All my cards, whether I’m carrying a balance or not, (I only have the one I transferred that has a significant balance) have interest rates approaching 30%.  Can we say loan shark? Cause seriously? This is crazy.  These people have made lots of money off of me over the years (I’m not proud of that fact, but it’s true).  We pay on time.  We’ve paid off most of them, but still use them on occasion, and we get no break whatsoever.  Thanks for being a great customer; we’re gonna raise your interest rate now.  I remember the days when they raised our limits and lowered our interest rates.  My plan is to pay these all off in the next few weeks.  It’s a pretty small amount, but not an amount I regularly have lying around, so it takes a bit of planning.

My next step was to deal with savings and investments.  As Warren points out (and nearly every financial adviser does), just paying off your credit card debt is a form of savings.  The money you were putting into paying that off can now be put into a savings account.  We have a basic savings account that is now earning us very, very little in interest.  The account serves as both an emergency fund (which we’ve used in the last couple of years) and a college savings account.  We can pay for about a week of college with it.  Besides our 401(k) accounts, we have no other investments.  I’m terrified of investing in anything, especially after what happened just a couple of years ago.  I lost something like 30-40% of my 401(k) account.  And since I can’t contribute to it anymore (need to roll that over–gah!), it will take a while (if I leave it where it is) for it to regain its value.  Same for Mr. Geeky, though at least he’s contributing to his account.  So, following Warren’s advice again, I decided to start a small investment account, investing in index funds.  So I did this all online, doing a lot of research to figure out what company to sign up with.  And then yesterday, the company called me to make sure I was doing okay and if I had any questions.  And I think I freaked out the guy because I was pretty clueless.  Unlike with the insurance, where I could just say, sorry you’re too expensive for what I want, I couldn’t just say, “Look, all I want to do is get a simple index fund.”  I did mention that, and he said they had plenty of those, but then he asked, “What are your financial plans?”  And I said, “Well, they’re kind of vague.”  And then he put me in touch with a financial planner, which I think we’re going to pay a visit to next week.  Mr. Geeky actually agreed to this. We’ve avoided it because we felt like our financial situation was too simple to require one.  But it’s getting more complicated by the day.  Retiring, paying for college, and other financial needs and wants are closer than ever.

I was telling Mr. Geeky that the guy on the phone seemed surprised about my financial uncertainty, and we both agreed that we didn’t really know anyone who seemed to be on top of their financial game plan.  Maybe this is a problem with academics, who often have salaries that don’t give them enough money to invest in anything outside of their retirement plan and who have pensions and other benefits that mean they don’t have to do a lot of the planning themselves.

The next semi-financial thing I’m doing is setting up a will.  And yes, I know I should have had one a long time ago.  I’m just now realizing I’m a real grownup.  Mr. Geeky even agreed to this move, something he, too, has avoided over the years.  So, hopefully, we’ll have an appointment for that next week as well.  It’s not exciting stuff, for sure, but it feels good to be taking care of some of these things.

We will never be perfect on the financial front.  We just don’t have the time or interest to invest in managing our money, but we can probably do a little better than we are currently, and maybe leave the kids with a little something and be better off to help them when they’re getting started in their own lives.  And yes, I feel old saying that.

7 Replies to “Money”

  1. Hey just a word of advice – be absolutely sure you are clear on who the “planner” is working for. If you are not paying him/her, then the company is, and their real focus will be at least partly on ensuring that you buy products from that company. Whether they meet your needs or not may be secondary (there are good and bad ones out there, but if the corporation is paying them, that’s where their loyalty will be – and they probably get some kind of bonus or commission for everything you buy into.)

    IMO it’s not a bad idea to meet with the corporate people but if you’re absolutely sure you want real advice, you need to meet with a planner who is independent and clearly works for you.

  2. Finances are so emotional draining to think about. We don’t really invest anything aside from retirement, either. Just thinking about it makes me tired. I’ve been reading a lot lately about investing, but I find it so confusing. (And so much easier to just pay down debt and keep money in a money market account and CDs, which don’t earn crap.)

    Make sure, too, that the planner is licensed and certified. They should charge you either a percentage of the money you invest or by the hour. Otherwise, they may have other motives for your money.

  3. I just learned from Suze Orman (on CBS Sunday Morning) that credit unions are legally not allowed to raise interest rates on credit cards above 18%. You might want to check that out since your interest rates are so high.

  4. Jenn and Anjali, they do work for a company, but I believe we will be paying them an hourly fee, so in essence, they should have our best interests at heart. They are also certified, so that seems to be a plus. I’ll be asking all those questions before making the appointment.

    Sam, I just switched to a zero interest card and then the interest rate goes up to 13%. My hope is that it will be moot since I won’t have a balance. Credit cards drive me nuts.

  5. We still don’t have a will. It’s on the to-do list for this spring. Gotta get on that….

    I was pretty shocked when I compared the fees on the index funds at Vanguard and Fidelity. I knew Vanguard advertised themselves as cheaper, but I hadn’t realized how MUCH the variation should be. It seems like they really prey on people’s confusion when it comes to investment funds. Grrr.

  6. If it helps, Charles Schwab has several index funds with no fees, and that was repeated to me by a consultant.

  7. I was in academia for a long time, but I was financially savvy and so were some of my friends.
    I opened my first IRA at age 23 and contributed to my 403b even on a grad student stipend.
    Several of my friends did the same. But, we were the ones who hung out at each others’ houses, potluck,
    while the others hung out at bars.

    I had some good mentors like the disabled lady for whom I ran errands.

    Now I am the disabled lady who hired a college student to run my errands.
    She wrote me a very nice note, thanking me for teaching her financial basics
    that her artist/teacher parents didn’t.

    You can make a simple will and save hundreds (perhaps thousands) by using
    Nolo software. You can save tens of thousands over a lifetime by using
    Vanguard instead of Schwab. Read Jane Bryant Quinn’s book. She just
    updated it.

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