Pretty Good Paycheck Calculation Site

I recently stumbled across www.paycheckcity.com, a nifty little site that lets you calculate your paycheck. It's good if you're trying to figure out what your take-home pay would be if your pay increased or declined. You can fill in state, city and local taxes, payroll deductions, etc... and it does the calculations for you. Just figured I would pass it along. Again: this is not a paid post, just something I've used!

Job Hunter Tip

Let me make this very clear. You can never be too well prepared for an interview. You can never can know too much about the company and the position you're applying for. I am famous for overpreparing for interviews. Read every keyword in the job description and know what it means. The Internet is your friend. I'm going to assume you know how to do the basics, which include at the very least:


-look up the company on google

-find out what it sells

-read the 10-Ks and 10Qs if it is a public company

-understand how it makes money/where most of its profit comes from

-visit the company's websites and read as many press releases as you can

-look up the job function on google

-google every keyword in the job description


You can take this to the next level by doing things like:

-Looking up SEC filings on Edgar.

-looking up recent sell-side analyst reports on the company if it is a public company. I can't tell you how great these reports are as a resource. Most management teams read these things, and the reports usually address some of the most important issues facing that company.

-doing all of the above for every one of the company's competitors

-purchasing the company's product or service



But if you really want to go the extra distance, it will sometimes cost you money.

For example, let's say you get an interview at a well-known financial firm for a job that involves, among other things, working on fairness opinions. "What the heck is a fairness opinion?" you might ask. Well, the definition of fairness opinion is easy enough to find.

But what if you could find a fairness opinion written by the company you're looking to join? Wouldn't that give you a leg up?

That's where a company like The Consus Group comes in. Browsing through the site, you can find a fairness opinion written by a well-known financial firm (in this case, Sandler O'Neill Partners). It will cost you $42, but you have to ask yourself... is it worth it if it means coming off as more knowledgeable in an interview? If you have any shot at getting the job, the answer is most likely yes. There are a number of sites like this. I guess the moral of the story is don't be afraid to pay a little if it means giving you an advantage in a job interview.

ING Direct Lowers Rates

I figured it would happen sometime after the Fed cut rates, but I wasn't sure when it actually did happen, but I happened to check the rates being credited to my ING Direct accounts this morning and they were lowered.

My 100k+ balance in my Electric Orange checking account is only getting 5% APY now, vs. the 5.30% I was getting previously. My savings account is now getting 4.30% APY vs the previous rate which gave me a 4.50% APY.

This is another reason why I'm not such a big fan of the rather large recent rate cut. Less interest income on my down payment savings.

I'll look around at options such as Certificates of Deposit and other potential alternatives as I decide where I should be keeping my money, but the difference isn't huge and chances are the alternative rates have declined as well so I probably won't do anything in response to the cut (except collect less interest every month).

On the positive side, the rate cut provided a pretty good boost to my 401(k) account, so at least "I got that going for me."

What if the doom and gloom scenarios come true?

If you're an American and you've read the newspaper, or Web sites, or heard people talking lately, chances are you're aware of the major "doom and gloom" economic themes that have surfaced over the past couple of years, and in many cases, intensified over the past few months.


I would put them into three broad categories, which are all interrelated. The first is the housing market collapse, the second is turmoil in the credit markets affecting the international financial markets, and the third is the decline of the dollar (which many say is caused by the budget deficit).


As I was driving home from Dunkin Donuts on a cool Sunday morning in New York City, I passed a bank and recalled a story I'd read the previous Friday describing an old fashioned "run on the bank" that happened in England last week. I thought to myself "What if all of these dire predictions come true?"


I don't think everything is going to collapse like everyone says it will. The US economy has survived a huge number of similar scares in the past and over time our standard of living has increased, stocks have gone up, and people who have worked hard and had some luck have been able to become successful. I consider myself one of these people. For as much as I feel like I'm priced out of the home buying market, I am fortunate enough to have worked my way through college and grad school and into a relatively high paying job as compared to average salaries thorughout the country as a whole.


However, as a thought exercise, I wondered, if someone knew now that all of these things were going to come to fruition, what could they do in advance of the coming crash?

Problem: The declining value of the US dollar.

Fallout: USD paper money is nearly worthless. As confidence in the dollar declines, it will take more dollars to buy the same amount of goods and stores will raise prices to the extent that it would take a barrel full of them to buy a loaf of bread. The government will print up even more dollars and compound the problem. Your bank accounts and 401(k)s, which are denominated in dollars, are worth nothing. Banks fail and depositors lose their life savings.

What you can do now: Put half of your savings in non-USD denominated accounts and buy gold and other assets that will not depreciate along with the dollar. One place to open up an account denominated in a foreign currency is Everbank. Research the economies of different countries, but if I was going to put money into 3 currencies right now, I would probably pick the Canadian dollar, the Australian dollar, and Japanese yen, with other candidates being the Euro and the New Zealand dollar. Put another portion of your savings into gold. I did an entire post about buying gold that you might want to take a look at.

This Motley Fool article has another suggestion- buying stock in companies whose earnings are denominated in foreign currencies in order to squeeze more gains out of the weakening dollar.

Problem: The rising price of oil.


Fallout: It becomes prohibitively expensive to use oil. You won't be able to heat your house in the winter. You won't be able to afford to drive a car.

What you can do now: Investigate moving to a more temperate climate, such as the southern part of the country, where you won't need heating oil. Start riding your bike to work to strengthen your leg muscles and increase your aerobic capacity. Buy shares in an oil company, oil futures or oil HLDRS, so that when the price of the commodity increases, the value of your holdings also increases. Explore the use of solar power (which looks expensive now, but won't when oil doubles or triples). Maybe give one of these solar showers a shot.


Problem: Falling Housing Prices


Fallout: The value of your home drops. The value of your investment property drops. You don't want to live there anymore, and nobody wants to buy it from you. You can't sell it for enough money to pay off your mortgage.

What you can do now: First of all, let me just say that if you bought a house you couldn't afford, you're dumb. If you're fortunate enough to be able to keep up the payments and just live there, then don't worry about the value of your house declining. If you're not selling or buying something, you don't care about what its value is, you care about the cost of ownership. So, ignore the news about home prices if you like living there and can make your payments.

If you have to sell for some reason, I can't really think of anything special beyond the basic real estate ideas to increase your home's curb appeal and stage it etc...

The other thing you can do now is to carefully evaluate real estate prices and mortgage options BEFORE you buy a house. Don't pay the ridiculous prices. Don't get an adjustable-rate mortgage that can reset to a rate that will be unaffordable for you. Put simply: don't buy something you can't afford.

Those are just some brief thoughts I had. Of course you can also just go the direct route of shorting the dollar, buying oil and gold, buying credit default swaps (if you have enough money- these products are more for institutional investors), and shorting the stocks of home builders and mortgage lenders. I'm sure there are a ton of other options. If you think of any good ones, or disagree with the above feel add comments on this post.

Cut Your Grocery Bill

I usually don't just pass along links, but sometimes I do, so here's a link from MSN Diet and Fitness about cheap eating. If you spend hundreds a month on groceries and you're looking to cut back, maybe you'll find some ideas in there.

Gold Rush!

Have you noticed how gold prices have been moving this month? The chart on the left comes from kitco.com, my favorite web source for gold pricing. Gold responds to weakness in the dollar, and man has the dollar been getting weaker lately. (Aside: when people say the dollar is "getting weaker," they are talking about foreign exchange rates. A weaker dollar means it takes more dollars to buy one unit of another currency, such as the Canadian dollar or the Euro). This weakness sent the price of gold up from $670 an ounce on Sept 3 to about $740 an ounce today.

When I was a kid, we would always make fun of someone who got a Canadian dime as change from the store because, as the joke went, Canadian money was basically worthless as compared to American money.

Well, not anymore. Here's a five year chart (courtesy of yahoo finance) showing how many Canadian dollars you could buy with one American dollar. As you can see, as of today, the US Dollar and the Canadian dollar are basically at parity, meaning one US Dollar is worth as much as one Canadian dollar.

So... is this bad news? My answer is "I don't know." Even with all of my education and having read as much as I can on the topic, I still don't know if the current decline is such a bad thing. It's not like I'm buying groceries priced in Euros. I live within the dollar system. I'm paid in dollars and I buy things for dollars, and I haven't noticed much of an impact from this on my daily life.

For the broader economy, a weaker dollar makes American goods look more attractive to foreign buyers because now a Canadian can spend fewer Canadian dollars to buy a pair of American shoes than he spent last month. The American company didn't change the price of the shoes, but the exchange rate turned in the buyer's favor. This should in theory help our exporters be more competitive in global markets and help to reduce our nation's massive trade imbalance. However, if it persists in the long run, I think it is bad news. If the US is competing in the global economy only because our prices are low, our companies won't have as much incentive to innovate and create fantastic products and services. The reduction in competition will reduce our need to increase productivity, and American industry will get fat and bloated.

I'm not running for the hills, but the situation does not look very good.

If you're interested on reading more about the dollar's weakness, the big buzz on wall street today was the story about Saudi Arabia potentially ending its peg to the US Dollar. This was one of the main catalysts for what we saw happening in the currency and metals markets today.

Double Digit Housing Price Declines

Seems like a lot of people have finally decided that it is possible for home prices to decline. Moody's economy.com says it sees a national average decline of 7.7%, as some areas see declines in the double-digit percentage range. Unfortunately, New York City is not one of those areas.

Congratulations to Young and Broke

Congratulations to Amanda at Young and Broke... her blog recently turned 2. I only link to blogs I read, and hers is a good one so check it out if you get a chance. She aims her posts mainly at younger people just out of college.

Education Stats from the Economist and Personal Finance Carnival

The Economist has an interesting chart comparing graduation rates for college students in different countries. I thought it was interesting that over 80% of young people in Australia entered school, with somewhere around 60% graduating. In the US, the number is something like 65% entering school and 35% graduating.

Also wanted to point out that one of my previous posts shows up in the carnival of personal finance over at The Tao Of Making Money, along with some other great posts to check out. I personally enjoyed this post at Ravi Vora's blog.

Fed Cuts Discount Rate

The Federal reserve cut the discount rate by a surprising 50 basis points today (most people were only expecting 25 basis points). You can see more detail on bankrate.com's fedwatch page. I was sitting front of a live market feed when the announcement came out. I highly recommend this if you follow the market at all. It's one of the few things you're pretty sure will make stocks move, happens in the middle of the day, and you know well in advance that a rate decision (one way or another) is coming at that time. Stocks soared and volume took off.

I don't have strong feelings one way or another. I thought they might cut 50 basis points due to all of the doom and gloom financial stories that have been going around lately. I hoped they wouldn't lower the rate at all because it seems like people have this crazy expectation that investments they own shouldn't have to go down in value and that Fed rate cuts exist to protect them from losses.

Anyway, my advice doesn't change: keep contributing to your retirement accounts.