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My $10 Mistake and Articles of Interest

This article was written by Flexo in Link Sharing. 7 comments.

I overdrew my checking account about two weeks ago. It was a stupid mistake. I recently set up an automatic investment for my SEP IRA, $1,750 at the end of each month, transferred from my checking account at Wachovia to Vanguard, invested in VTSMX. On November 30, I checked my Vanguard account, and I didn’t see the purchase pending. Reviewing my automatic investment configuration, I saw the next transfer wasn’t scheduled until December 31.

I assumed I configured the investment incorrectly, so I initiated a transfer for that day, knowing I had a high enough balance in my checking account to cover the transfer. It turns out that although my automatic payment wasn’t visible anywhere, it was in fact scheduled for December 1, most likely due to November having only thirty days.

As a result, I transfered $1,750 twice to Vanguard within two days and overdrew my checking account. Wachovia pulled a few hundred dollars from my savings account to cover the transfer and charged me $10 for the privilege. $10 is more than the approximately $2 I’ve earned in interest from my Wachovia accounts over the past year, so that has been unsuccessful. It’s good that I leave hardly any savings in my Wachovia account.

Here are some articles of interest for this weekend.

My latest contribution to the TurboTax blog is an overview of the American Opportunity Tax Credit, a benefit for current and recently former students with expenses for tuition. While this credit is scheduled to end in 2010, President Obama has called for an extension of the credit for the next two years.

The Part-Time Money Podcast is a new audio show produced by PT Money. The first episode resonated with me, as it featured an interview with a freelance photographer, Justin. Justin, like me, is relatively new to photography and with his extra time, he has been able to build a business offering photography services for families. I’ve had a few clients so far, but my time for photography is still limited. Right now, I’m focusing on building Consumerism Commentary further, but in the future I may be at a point to slow down. At that time, I may be spending more time with photography — or some other interest that develops.

A while ago on Consumerism Commentary, I introduced what I’ve been calling the Debt Avalanche. Hacking the Bank looks at a comparison between the Debt Avalanche and the Debt Snowball popularized by Dave Ramsey. The method behind the Debt Avalanche has been around for a long time, and its strength is that opens the possibility to help followers of the method pay off credit card debt faster and with less interest over time. Any debt repayment plan needs to be tailored to an individual, however, but that’s only possible when they understand how the math works best.

Money Reasons offers the top ten reasons to telecommute during a snowy day. Some jobs don’t lend themselves to working remotely, but for those that do, stay home if the roads are dangerous. It’s as simple as that. You’ll save time, as well.

As of yesterday, Consumerism Commentary readers have surpassed last year’s tally for charitable contributions during the matching period! We still haven’t hit our initial target of $5,000, though. I’ve decided to extend the matching period for one more week, so if you’re waiting to donate to your favorite charity, do it this week to participate in our matching contribution. MoneyCrush will match donations between $5,000 and $6,000, so let’s aim for the higher target.

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New Graduates Facing Unemployment May Never Reach Income Potential

This article was written by Flexo in Career and Work. 12 comments.

The unemployment rate for young workers between the ages of 16 and 23 is 18%, and that is an increase of five points from a year ago. That age group includes high school drop-outs as well as college graduates, and for these people the future looks bleak. Adults are taking the minimum-wage jobs teenagers might be offered in other economic situations. Older workers, otherwise approaching retirement, are not leaving the workforce as quickly. The openings for younger workers aren’t there.

The bad news is starting your career in a recession is one of the worst things you can do for your long-term financial security. More bad news is that there is little any one person can do about the economy at large. Here are the numbers, from a study at Yale quoted in the cover story in today’s BusinessWeek:

For each percentage-point rise in the unemployment rate, those who graduated during the recession earned 6% to 7% less in their first year of employment than their more fortunate counterparts. Even 15 years out of school, the recession graduates earned 2.5% less than those who began working in more prosperous times.

Young adults might be destined to be a “lost generation.” Here are some suggestions for 16-to-23-year-olds who find themselves having a difficult time starting their career in this recession and want to mitigate its effects on long-term income.

1. Finish your education

It’s an issue of supply and demand. First, if you have not done so, completing your Bachelor’s degree will have two important effects. First, it will improve your marketability among entry-level employees when fewer open positions will create a competitiveness that ensures that the best qualified candidates will win. A Bachelor’s degree is a gateway to at least the middle class, and that’s going to be more important than ever.

Second, finishing college now will keep you out of the worst of the recession. This will allow you to stay out of the worst fight for jobs, but it has some drawbacks. Delaying the start of full-time income can also have detrimental effects on your long-term income — but if you wouldn’t be working anyway, this isn’t much of a disadvantage. Also, if you are relying on student loans, you will be amassing more debt that will require payoff down the road, perhaps shacking you to a job or career that is not best for you. New student loans have higher interest rates than they have in the past, adding to the pain of debt.

If you have your Bachelor’s degree, consider spending a few years to earn your Master’s or Doctorate degree. Are you worried about being overqualified? Don’t be. As we’re seeing in the recession where many workers are competing for few jobs, anything that helps you stand above the rest will be an advantage rather than a disadvantage. You might want to consider adapting your desired career to one better suited for an advanced degree, however.

2. Become an apprentice

In general, apprentices earn more throughout their careers than those who don’t hone their skills in a formal training program. Traditionally, apprenticeships are common for certain crafts and trades. Electricians, plumbers, and carpenters often get their starts through apprenticeship and there is significant income potential in these fields.

One creative answer is to become an apprentice for a career that does not traditionally fit this profile. For example, if you have musical talent and would normally consider performing or teaching in a better economy, consider composing music for films or television. You can contact a professional currently in the field and contact them about becoming an apprentice. One key to successfully finding an apprenticeship is the willingness and the ability to work for free.

3. Start your own business

I’m not talking about selling your possessions on eBay, but padding your savings account with cash rather than padding your home with useless objects is never a bad idea. Everyone has at least one marketable skill. It may require some time brainstorming to determine exactly how you can turn your skills into a service you can offer people or other businesses.

A recession is perfect timing to start a business, particularly if you can dedicate all your time to making it work (that is, you are otherwise unemployed). Many new businesses suffer because the owner needs to devote his or her time to the day job, a spouse, and perhaps even children. For young workers, the time will likely never be better for starting a business with the ability of giving it your full attention.

4. Save money

As a recent graduate or drop-out, you may have the option to move back in with your parents for a short time. After all, there is a recession and being able to save money on rent or a house payment is worth the temporary shame you might feel for going home with your tail between your legs. This is most likely the biggest opportunity for savings, but you don’t want to take advantage of the situation. Show your parents that you’re working hard to make the recession work for you, and they’re more likely to give you a break. And don’t forget to express gratitude.

Consider frugality as a way of life. In an economy where you have less control over your income thanks to fewer employment options, you can still control your expenses to a point. Take the extra time to determine what you are willing to cut back in order to help your money go farther. Occasionally, generic brands and store brands are good compromises.

Creativity leads to success

Surviving in a recession where it’s difficult to find a job relies on creative thinking. Use the opportunity to rethink your career path. If the acquisition of money has been your ultimate goal, realize that money by itself is not a goal. You may use the opportunity to break into a less popular field with a lower income potential but with a greater satisfaction potential.

Accept that the odds are against you if you want to compare yourself and your bank account against people who began their careers in the height of the economy, people who, on average, will out-earn those entering the workforce right now.

Photo credits: CarbonNYC, roland
The Lost Generation, Peter Coy, BusinessWeek, October 8, 2009

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$52,050.74: A Farewell to Student Loans

This article was written by Sasha in Debt Reduction. 37 comments.

Ah, student loans. The things that remember you long after you’ve completely forgotten the entire college experience.

Although I finished college in 1997 and graduate school in 2000, loan payments to Sallie Mae have been a constant fixture ever since, like a little wound I’d nurse which just wouldn’t stop bleeding.

Even when making double or triple monthly payments, the amount I owed hardly seemed to diminish at all. I set up direct deposit, did everything I could to nudge that low interest rate down even further, and eventually consolidated my loans, but I was still frustrated, unable to see that light at the end of the tunnel.

Perhaps this was because (and I’m actually facing this number in its entirety for the first time ever right now): that tunnel was pretty darned long. $52,050.74 long. Looking at it actually makes me feel faint.

And that’s just the principal – that number doesn’t even take the interest payments into account. I’m afraid to figure that total out.

I won’t say for a second that my higher education wasn’t worth it – it was just a bit of a hard road to travel, despite my high level of motivation and desire to be self-sufficient. My parents either couldn’t (Mom) or didn’t (Dad) contribute to my college education, so I waited tables like crazy throughout highschool, washed dishes for a whopping $4.50 an hour within the work study program once at college, and got student loans, both subsidized and unsubsidized, to cover the rest.

I still wasn’t anywhere near paying off the 4 years of undergrad study when, after several years in the workforce making double loan payments each month, I decided to go to graduate school. Another $18,000 added to the sum, and that’s because I chose to complete my Masters degree overseas, where it was cheaper.

That loan amount kept swelling like an engorged tick, but because it was in a flurry of separate disbursements, I never really faced the total, just a few thousand here and ten more thousand there. My interest rates were pretty good, so I’d just been paying it down monthly ever since, hoping one day to reach the elusive endpoint.

Last year, I started becoming more financially aware and contributing to my savings account. I was so happy that I had finally amassed some money in savings that was earning 5.25%, but then I noticed that my consolidated student loans were still costing me more than that in interest at a rate of 5.38%. And because of my salary, I don’t get to deduct a single penny of that interest from my taxes.

Because I was just paying under $200 a month, it didn’t seem that bad, but once I really got into crunching the numbers, I realized that I’d been paying around $75 a month in student loan interest, which turned into a big ouch when I looked at the cost annually. And despite all my extra piecemeal payments, nearly ten years later I still owed around $22,000 to my old friend Sallie Mae.

I sought the help of a financial advisor. She explained that although some of my residential and rental property mortgage rates appeared at first to be higher, after tax deductions, my student loans were hands-down the most expensive of all my loans.

Based on her advice, I decided to grab some cash out of my coveted savings account and start hacking away at the remaining loan amount, paying as much as I could whenever I found I had uncommitted funds at my disposal.

My tax refund and all my savings except my emergency fund went right to Sallie Mae, knocking off $10,000 from the total. I moved my emergency fund to a high-yield savings account earning 6% at FNBO Direct, and started funneling every extra penny into that account, elated each time I was able to transfer money in. The interest was a nice bonus, giving me more incentive to store funds at FNBO Direct before surrendering them, never to be seen again. Once there were sufficient funds in the account, I’d do yet another payment to Sallie Mae, $500 or $1000 at a time.

It felt like the wound was hemorrhaging, and I dreamt of having a nice big savings or investment account instead, but I remained committed to reducing that total.

And around 2 months ago, I finally got that total just under $4,000. The end was in sight! I started bringing more lunches, buying less clothing, socking away funds just a little bit more – anything to finish that final lap.

And today, I did it. I sent my final payment of $3,880, and bid my old friend Sallie Mae goodbye with a cheer.

The number was $52,050.74. It was outright terrifying, a giant monster that wouldn’t fit beneath the bed. And as of tomorrow, that number will be zero.

In ten years, I have paid off $52,050.74 in principal, and still more in interest. I say it again because now I like that number; now I’m very, very proud.

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My eBay Account Was Hacked!

This article was written by Flexo in Internet. 13 comments.

Yesterday I received an email apparently from eBay, informing that my account was used for malicious purposes, and I should change my password post-haste. I’m very skeptical of emails apparently from eBay. Normally I delete them without thinking. But this email managed to catch my attention. Here’s a portion of the text:

It appears your account was accessed by an unauthorized third party and used to send unsolicited emails to other community members, including email offers to sell items outside of eBay. It does not appear that your account was used to list or bid on any items. Additionally, the email address on your account may have been tampered with, which is why you may not have received any emails about this activity.

At this time we have taken several steps to secure your eBay account. Rest assured that your credit card and banking information is safe on the eBay site. This information is kept encrypted on a secure server and cannot be viewed by anyone.

Click on the screenshot to see that the email is authentic looking. I’ve removed all the naughty bits to protect my identity. To check the email’s authenticity, I tried to log into eBay in a new browser window — not by clicking on any links in the email.

I was unable to log in, as the email explained further. eBay had changed my password after it detected malicious activity. I reset my password after verifying my identity and logged in. In my message inbox was the same email I received externally. Apparently, my account had been used to send “questions” to the hosts of a variety of auctions pointing them to some external website. I checked my sent messages folder within eBay, and I saw 25 messages sent on July 2 to a number of other eBay users.

The account was not used to bid on any items, so I didn’t have to worry about that. I did go through and change all of my passwords as the message from eBay suggested. I’m not happy with this situation, and after being conditioned that all email appearing to be from eBay is most likely spam or someone trying to trick me into entering my password somewhere, I could easily have overlooked this warning.

There are several ways my password could have been used by a hacker. There’s the slight possibility I clicked on one of those fake eBay emails. I find that really hard to believe as I am very careful about such things. One of my computers may have a keylogging program installed on it. My home computer is protected by AVG, which has never discovered any malicious programs running, so either that’s not the answer, or AVG Anti-Virus Free has failed.

Most likely, the password was guessed through software designed to do such hacking. I could have chosen a stronger password to use.

If there’s anything to take away from my experience, it’s that not every email from eBay is fake, strong passwords aren’t strong enough, and even rarely-used accounts with unimpressive stats are targets.

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Hacking BusinessWire and Making Millions

by Flexo

Two Estonian traders have been charged by the US Securities and Exchange Commission for hacking into the computer system of a business news service and stealing PR announcements before release. The SEC claims the hackers used the stolen information to make $7.8 million through illegal trading. The SEC charged Lohmus Haavel & Viisemann with fraud ... Continue reading this article…

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