There’s been some discussion on this site recently regarding disclosure of charitable donations. I can understand why some might wish to keep this information private but I’m not at all shy about telling you which organizations I choose to support.

This year, I made donations to the following charities:

• Oceana – The largest international ocean environmental advocacy group dedicated to protecting and restoring the world’s oceans and its sea turtles, sharks, dolphins, whales, endangered species, and marine ecosystems.
• Union of Concerned Scientists – The leading science-based nonprofit working for a healthy environment and a safer world. UCS combines independent scientific research and citizen action to develop innovative, practical solutions and to secure responsible changes in government policy, corporate practices, and consumer choices.
• Conservation International – Applies innovations in science, economics, policy, and community participation to protect the Earth’s richest regions of plant and animal diversity and demonstrate that human societies can live harmoniously with nature. Works in more than 40 countries on four continents to help people find economic alternatives without harming their natural environments.
• The National Multiple Sclerosis Society – Provides advocacy, professional education, research funding and support for those living with Multiple Sclerosis.
• The Raptor Trust – Provides care and assistance for injured wild birds and aims to educate the public about conservation issues related to birds, especially birds of prey.

  I also made material donations to the Military Order of the Purple Heart Service Foundation, which benefits wounded, disabled, and handicapped veterans.

  But there are a number of other types of donations I’ve made which may not count for tax purposes but count in myriad ways to me:

  I’m an avid Freecycler, and donated over 35 items this year to those who needed them, including a giant standing freezer I gave to a local school for underprivileged children. Apparently this donation will be keeping them in ice cream parties for a long time to come.

  I also save all my egg cartons for a local independent chicken farmer, and have brought over at least 100 cartons this year (I do a lot of baking). Since farmers in my area have a lot to contend with, this bit of recycling helps to keep at least one of the expenses down for a farm which appears to be barely breaking even.

  And then, as always, there’s the active practice of channeling my spending towards organizations and businesses I believe in, using my purchasing power to support their continued growth. For instance, in 2007, 71 percent of my total grocery budget went to support local agriculture and small businesses. I hope to grow this percentage even further in 2008.

  Today’s the last day to donate for the 2007 tax year; did you reach your giving goals?

On December 30, 2006 I officially announced my financial goals for 2007. Before I set new goals for 2008, I should take a look at my progress this year. Below, I’ll cite the goals I set a year ago and evaluate my progress.

Income: Generate $40,000 in revenue outside of my day job. I think this is attainable. My side income has seen fairly consistently growing and as long as I keep working hard, I should be able to reach this amount. One challenge related to the environment becoming increasingly competitive. Stretch goal: $60,000.

Income results: Passed with flying colors. Preliminary numbers show that I significantly exceeded my stretch goal. I’ll still have to make some adjustments as I received income for some other individuals that still needs to be distributed, but I should clear $70,000 in income related to internet publishing. Most of that comes from advertising on Consumerism Commentary, but an increasing portion comes from affiliate sales. While I am grateful for my success thus far, I am still blogging because I enjoy writing and building online communities. The satisfaction in blogging is generated by regular readers, but the income comes generally from passers-by who are generally looking for something else.

Spending: I’ve managed to keep my spending fairly low over the last few years, except for gift season and food expenses, like dining out and groceries. I’m fine with the spending on gifts but my goal for 2007 will be to create a budget for food and stick to it. This will involve buying smarter and healthier groceries, cooking more, and eating out less. If I can stick to $100 a month for groceries and $100 a month for dining out, it would be a big improvement. Stretch goal: $80 and $80.

Spending results: Failed. On average, I spent $117 per month on groceries and $167 per month on dining out. Both numbers are slightly up from last year, probably reflecting a higher cost of food rather than a change in behavior. If anything, I shopped more efficiently and ate out at restaurants less this year. Including both the “dining out” category and “convenience food” category (which includes lunch at work and snacks), I spent $190 per month this year compared with $230 last year.

However, spending in general has increased. Earlier this year, I moved into a new apartment that is larger, more comfortable, and more inviting than my old location. Over the last few months, I’ve purchased some things that make my time in said apartment more enjoyable, including a high-definition television, an HD DVD player, and an XBOX 360 game system. I don’t expect this type of spending to continue, however.

Investing in 401(k): I’m currently investing 12% of my day-job income into the 401(k) my company offers. The only reason I can afford this is through the help of my side business income. My goal for 2007 is to increase this to 15% by July. This should be possible with a little income bump. Stretch goal: max out the 401(k) with an investment of $15,000. That will be a significant stretch.

401(k) results: Exceeded my goal. In May this year, I increased my 401(k) deferral from to 25% after an earlier increase from 12% to 16%. That’s not quite enough to max out the 401(k) in my low-paying job. According to my last pay stub of the year, I contributed about $10,000 to the 401(k). My employer matched some of that contribution, as well. Investing this much for retirement is only possible due to the additional income mentioned above.

Investing in Roth IRA: I already max out my Roth IRA investment. My goal for this is for nothing to change.

Roth IRA results: As expected. It’s no surprise, but I fully contributed to my Roth IRA this year. Doing so may have some unintended consequences, unfortunately. I’ll have to check after preparing my 2007 tax return, but I may have to withdraw a portio of my Roth IRA contributions. For 2007, if modified adjusted gross income exceeds $99,000 then the IRS won’t allow a full contribution to a Roth IRA. With an income above $114,000, the Roth IRA is completely unavailable. At this point, it’s too early for me to tell whether I’ll have to withdraw funds from my 2007 Roth IRA at the last minute.

Saving: The account I have marked for emergencies would cover one month of my current expenses. If I were to be in an emergency situation (i.e., no job) for longer than a month, I still have other cash I could use before resorting to credit, but that would involve borrowing from other savings goals. I’d like to double the size of my emergency fund by the end of the year. I’d also like to double the percentages of my day-job income I devote to long term savings goals, like relocation (a house, hopefully). Stretch goal: triple the percentages.

Saving results: Succeeded. I have doubled the balance in the savings account earmarked for emergencies, which now would last about two months without income from either my day job or my side business. I still have various savings accounts earmarked for other goals that can be tapped if necessary. Unfortunately, with income coming from various sources and going to various accounts, it’s been a bit difficult for me to track the percentages. It’s safe to say that on average throughout the year, I saved or invested a larger percentage of my total income than I spent.

Debt: If I follow my schedule, I will pay off my car loan (at 2% interest from a relative) by September. The interest rate is favorable enough I’d rather keep the money in savings, so I’m not going to speed this up. On the other hand, I have about $18,000 in student loans remaining to be paid. The interest rate isn’t as favorable at 4.25%, but the interest paid is tax-deductible.

Debt results: Achieved the goal ahead of time. I paid the remaining balance of my car loan off in July. While 2% interest wasn’t hurting, and I was earning more from interest in savings than paying in interest on the loan, I still wanted to rid myself of that debt as soon as possible. The money to buy the car was lent to me by a family member, so I felt like the right thing to do was pay it off as soon as possible. He could have been earning higher interest with that money in a savings account.

I still have a balance on student loans, a combination of money used for undergraduate studies and my MBA. My masters degree was 90% paid for by my employer, but I didn’t always use the reimbursements to pay down the loan. When I originally started the MBA, the financial adviser for the university suggested I get a loan anyway and use reimbursements to pay back the loan. Looking back, I probably should have used the reimbursements to pay the school directly, avoiding any involvement of debt.

Charity: The non-profit organizations I’ve worked with in the past appreciate volunteers who give their time, and this is the approach I generally take. I like that 100% of the time I give affects the organization. When you give money, a portion is kept by the organization for administrative expenses and will never make it to the programs sponsored by that organization. While I understand that administrative expenses need to be paid for, I believe I have more of an effect by directly involving myself. Despite this, my goal for 2007 is to select an organization that means something to me, one that I cannot spend time with and one I know the money will be put directly to its purpose, and donate $1,000. Stretch goal: $2,000.

Charity results: Met, with explanation. On my expense sheet, I donated $5,127 to charity this year. This includes an arts organization that supports youth musical education and performance, the pfblogs.org Financial Literacy Challenge at DonorsChoose and a charitable gift fund. Since I did not yet choose a recipient for the $5,000, it’s hard to say that I fully met the goal. I’ve written several times about my difficulty in choosing recipients for charitable giving. I’ll have to perform some deeper research and get involved with something new next year.

Soon I will decide and post my goals for 2008, which is sure to be an exciting year.

Image credit: Daquella manera

In the interest of further consolidating my finances, this past week I cashed in a small collection of 1988 series EE bonds which I’d kept hidden away ever since. All had reached and surpassed their maturity dates long ago, so they were worth their face value and then some.

Here’s what mine were worth, which should give you an idea of what to expect if you’ve got some series EE bonds of that vintage hidden away as well:

1 $500 bond = $684.00
1 $100 bond = $131.52
3 $50 bonds = $68.40 each

All in all, I had $1,020.72 in cash, which I put directly into my savings account to reinvest. This does mean I’ll have to account for $645.72 in interest when I do my 2007 taxes, but I’ve got lots of charitable donations this year to offset this so I think it’ll be okay.

I might have saved cashing these until after I retired to gain a better tax advantage, but was eager to consolidate these gift monies into the rest of my savings to better leverage them for other, more immediate investments.

Do you own bonds? What’s your savings bond strategy?

I played Rock Band last night at a friend’s house for the first time, and everyone is still talking about my vocal rendition of Roxanne by The Police. I’m not sure whether that is a good thing or not. For those who have no interest in video games and who may not know, Rock Band is a game that allows you to form a band and compete by “covering” classic rock songs with simplified musical instruments. It’s a great game.

Here are a few articles from around the web that readers might enjoy.

Mighty Bargain Hunter has an interesting perspective on how to place a value on your time. Is it fair to place the value of all of one’s time based on an equivalent hourly wage at a 40-hour-per-week job? Mighty Bargain Hunter says no and offers an alternative suggestion.

Did you receive unwanted gift cards this holiday season? If so, Mrs. Micah has some tips for you. Like Mrs. Micah, all the gift cards I received were for places I normally shop. Now my challenge is to make the best use of them by finding good deals and discounts for things that I’d like to have.

How Much House Can You Afford? The Digerati Life has ten steps to determine how much you should spend when buying a house. The ten steps seem to focus on the entire process leading up to purchasing a house. The process is much simpler if all you’re looking to determine is how much you should spend on a house. There are some rules of thumb about mortgage payments as a certain percentage of after-tax income (no more than 35%) and total home value as a multiple of your income (perhaps three times your annual gross income). Of course, regional differences and personal preferences mean that rules of thumb are nothing more than guidelines. Here’s a helpful affordability calculator.

Each month, I take a look at the source of visitors to Consumerism Commentary. While an increasing number of readers use RSS (subscription options) to stay up-to-date and I can’t always see where everyone is coming from, I can thank other blogs or websites that have sent visitors our way. Not including search engines, RSS readers, and social link sharing websites, the following sent the most visitors to Consumerism Commentary during December, according to the statistics tracked:

1. Get Rich Slowly
2. The Simple Dollar
3. MoneyBlogNetwork
4. AllFinancialMatters
5. Free Money Finance
6. No Credit Needed
7. Blueprint for Financial Prosperity
8. Five Cent Nickel
9. pfblogs.org
10. Consumerist
11. My Open Wallet

1. Lazy Man and Money

   Here are the top 10 visited articles from the past month, including the last few days of November. This only counts web visitors to each page; I don’t have any way of knowing how many people have read these articles via RSS.

2. 8 Tips for an Unsuccessful Office Holiday Party
3. Overspending for the Kids
4. Compact Fluorescent to Become Mainstream
5. 3 Things You Need to Know Before Giving to Charity
6. Retirement Income Rule of Thumb Debunked
7. Livin’ it Up in Philly: Young Couple Charged With Identity Theft
8. 2008 Roth IRA: Lump Sum or Dollar Cost Average?
9. $1,000,000 in Pennies in New York City
10. The New Quicken Online: A New Direction for Money Management

1. State Farm to Pay Dividend to NJ Policyholders

Trying to beat the market through trading based on impressions of short-term trends has the opposite effect.

There’s a new study assembled by researchers from three university that shows that those who invest in index funds have better investment returns than those who invest in managed funds. In fact, those who invest in no-load index funds have better returns than those who invest in load index funds (which have additional fees).

The investment results are compared with their own funds. Index fund investors beat the stated returns of their funds.

Investors in no-load (that is, no-commission) index funds actually beat the returns of the funds they hold by 0.42 percentage point annually… Those active-fund investors lag the returns of their funds by an average 1.86 percentage points annually.

To explain further, the 5 year average annual return of VFINX, the Vanguard 500 Index matching the S&P 500 Large-Cap Index, is 11.48%. The average index fund investor, according to this research, actually earns 11.90%. The average investor in AIVSX, a large-cap managed fund with a 5 year average annual return of 12.08% with a 5.75% front-end load, actually earns 10.22% annually.

This is attributed to trading behaviors. Index fund investors are less likely to enter and leave the stock market at the wrong time.

The study was sponsored by Zero Alpha Group, an organization that holds the philosophy that the best investment strategy is passive investing. “Zero alpha” refers to the idea that active management of a fund provides no benefit over a benchmark like an index.

Index-Fund Tortoises Are Long-Term Winners [Wall Street Journal]
Press Release from Zero Alpha Group
Investor Timing and Fund Distribution Channels [pdf Report]

Yesterday, I overheard a co-worker talk about her coin jar. She and her husband throw all their change at the end of the day into a job. Once a year, before taking a vacation, they open the coin jar and find about $500. The small change certainly adds up. My girlfriend and I throw our excess change into jars as well. I don’t use cash very often, so it’s rare for me to come home with change. We visit our banks more frequently, so we’re not finding such large sums.

Before the roundup, pfblogs.org is now indexing 1,000 blogs. Now, here are some recent personal finance articles.

Social Security Taxes in 2008. FiveCentNickel presents some interesting information about the phase-out of Social Security tax due if your income is over certain amounts. Also, self-employed individuals have to pay twice as much as employees of someone else’s company (unless their earnings are over the limit).

How Vanguard Avoided the Subprime Mess. Jim from Blueprint for Financial Prosperity has some ideas why Vanguard has not been harmed in the recent credit meltdown. They avoided risky investments, looking deeper than credit rating agencies. I’m happy to be a customer.

Asking for a Better Financial Future. Guest author Daiko on Get Rich Slowly presents ten suggestions for pinching some extra cash. Sometimes simply asking will do the trick. For example, ask for fee reductions and discounts. You may receive.

You Only Need $40,000 to Be Happy. Free Money Finance quotes an excerpt from Penelope Trunk’s Brazen Careerist: The New Rules for Success. Research evidently shows that levels of happiness increase as one earns up to $40,000, then happiness levels off as one earns more.

Last week, I mentioned I met my goal for charitable giving for 2007. The modest goal, which I set for myself at the end of last year, was to provide $1,000 in support of an organization meaningful to me. This year, I decided to separate myself further from the organization I normally support, which also happens to be a former employer. It’s not that I don’t believe in what they do, but I have some issues with their methods.

I want to make sure my money helps an organization reach its stated goal, and I will only give to an organization whose goals, mission statement, and vision match my own values. In addition, it helps to have a strong knowledge of the inner workings of the organization. Unfortunately, it’s this strong knowledge that has turned away from the group I formerly supported.

This past year, I’ve had difficulty coming up with a replacement besides the pfblogs.org Financial Literacy Challenge. This has been a frustration for me, particularly because I wouldn’t mind managing an arts education foundation of some sort. While researching methods for starting a foundation—an endeavor better attempted by someone with millions of dollars ready to be dedicated and willingness to spend a lot of money just to run the foundation—I came across the idea of the charitable gift fund.

The charitable gift fund allows me to make a contribution to a general fund now without specifying a direct recipient. That also allows me to take a tax deduction for the contribution this year while taking my time to decide where the money should go. In the mean time, the funds are invested and presumably appreciated along with the rest of the stock market.

Charitable gift funds, or more specifically donor-advised funds, are organized by several brokerages and public charities. I chose the Fidelity Charitable Gift Fund thanks to its low barrier of entry (only $5,000 to open an account and subsequent investments must be at least $1,000) and its relatively low fees (0.6% including the underlying expense ratios, with a minimum of $100).

In return for the ability to take the tax deduction now, I give up my ability to manage and distribute the funds directly. However, I can recommend grants to charities as long as they are registered under regulation 401©3, and therefore legal non-profit entities. It would be very rare for Fidelity or any other custodian to reject a donee suggested by the donor as long as the organizations are not-for-profit and the donor doesn’t directly benefit from the organization’s receipt of the funds.

When I sent in my $5,000 to establish my donor-advised fund, I selected to invest the money in Fidelity’s Spartan 500 Index Fund (FSMKX), which carries an expense ratio of 0.1%. I could have transferred securities or other assets to the fund, but I opted to send cash. Unfortunately, they don’t support ACH transfers, so I had to write a check. A wire would have cost extra money.

Now that the fund is established, I can suggest grants at any time in amounts of $100 or more. The $5,000 I sent to the Fidelity Charitable Gift Fund is irrevocable, so it can only be used for charity. I’ve surpassed my “stretch goal” of $2,000 for 2007. In the process of establishing the fund, I sort of circumvented the most important part, getting that money into the hands of organizations for their use towards their missions. However, I’ve ensured that once I select recipients I will be contributing more than I would have otherwise.

If you’re interested in starting your own philanthropic endeavors through a charitable gift fund, here are some resources to get you started.

• Fidelity Charitable Gift Fund (minimum of $5,000 to establish an account)
• Vangard Charitable Endowment Program: Donor-Advised Funds (minimum of $25,000 to establish an account)
• National Philanthropic Trust: Independent Charitable Gift Fund (minimum of $25,000 to establish an account)
• Charitable Gift Trusts at The Motley Fool

• You Can Be Your Own Charitable Foundation at MSN Money

  photo credit: johntrainor