Throwing around the idea of writing a personal finance book

I’ve mentioned the idea about writing a personal finance book to a couple people, but I thought I’d get some feedback from all of you. I’ve become a bit of a personal finance nut over the past year and it took me a while to figure out what was relevant to me as a 20-something and young investor. I sifted through a lot of information and found things that I think people coming out of college or starting a career would want to hear. I want to write what I wish I had a couple of years ago: a book that explores important personal finance topics in an easy to understand way.

The outlining I’ve done so far has the book broken into one part on saving for retirement and a second part on more general personal finance topics. There’s a lot of ground to cover, but each topic discussion would be concise and useful. For example, I would cover Roth and Traditional IRAs, the differences between the two and then provide enough analysis to help the reader figure out which fits them best. I think a big goal of the book would be to help people get a grasp on their financial situation and make smart, informed decisions with their money and about their future.

At this point I think a book would be the best option to contain everything I’m planning to cover. I thought about writing a running series of blog posts, but the topics are going to be tied together enough where it would be annoying to have to constantly say “remember what I talked about in this other post”. In a book format I’d know exactly what the reader has already read. I’d be able to build upon previous ideas and really tie things together when it comes to talking about strategies and the bigger picture.

So I guess my question is, would you be interested in reading a book about personal finance and investing targeted at a younger crowd who still has 30-40 years until retirement?

My comment on a post about checkbook balancing

I left this comment on the Your Money Relationship site in response to this post and the Mrs. A comments, Do You Still Balance Your Checkbook? I Sure Don’t

I’m one of the “young’uns” Mrs. A is referring to. I was balancing my checkbook right out of high school while I was working part-time during college, but I eventually stopped because it served no purpose for me. During college I was writing a few more checks, but now I only write 1 or 2 a month. 80% of my transactions go on credit (payed off every month and I never ever use debit) and the rest are electronic bank transfers. Those transactions get pumped into Yodlee Moneycenter and are categorized so I can see how I’m doing against my budget throughout the month and track spending with almost zero effort on my end.

So I could theoretically balance my checkbook and write every single electronic transfer down, but why? I’m already reviewing every single transaction the day after it posts to my checking account. Do I need to look at my monthly statement just to say “Yup I spent all that money.”?

Like Adam I don’t even look at my monthly statements, I just have to check in at Yodlee Moneycenter every couple days and see what’s posted to my accounts.

I don’t run my finances like a business because I don’t need to account for my expenses. How much did I spend on groceries last month? Was I under budget? Great, that’s all I need to know.

Does anyone still write everything down and balance their checkbook? I can’t imagine doing that with the number of electronic transactions I’ve got going.

Expensive Car Month

July is a huge reminder about just how much money we spend on automobile transportation. The planets seem to align when insurance and registration for both of us come in at about the same time. This year I got the added joy of renewing my drivers license and smogging the RSX for the first time (I kid you not it took about 3 minutes for them to test it). All that on top of two car payments is a nice little sum of money vanishing in a short period of time. The monthly cost might not seem bad, but it all adds up to a significant portion of our income.

I’m one step closer to my bike commute though. I bought locks, rear rack and trunk bag last night which means I might be ready to make the switch in a couple weeks. The Topeak rack and bag are pretty sweet since they have a slide on mechanism for easy installation and removal. Ordered from Tree Fort Bikes which had everything I wanted at very competitive prices. Still contemplating if I want to put fenders on.

Revolution Money Exchange – PayPal’s new competitor

I despise PayPal because monopolies are bad for the consumer. PayPal has become the defacto method of sending money across the Internet and paying for eBay auctions. I just sold an extra CPU on eBay for $60 and PayPal took their $2 cut (don’t get me started on the $5.41 eBay got). Google Checkout was suppose to be a big PayPal competitor for retail sales, but peer to peer transactions are stuck using PayPal. There might be a viable contender in town now.

Revolution Money Exchange is part of Revolution, LLC, founded by AOL co-founder Steve Case. The board of directors is filled with former CEOs: David Pottruck from Charles Schwab; David Golden from JP Morgan; Franklin Raines from Fannie Mae; and Russell Hogg from MasterCard International. This definetely isn’t some homegrown Web 2.0 project coming out of some guy’s garage.

Here are some of the differences between Revolution Money Exchange and Paypal:

  • No fees for receiving and sending funds
  • Only checking accounts are used, cutting credit cards out of the picture is what reduces the costs so drastically
  • No business services or eBay integration
  • Simple interface, PayPal has become a nightmare to use

Sending money person to person is Money Exchange’s focus and it shows in the account creation process which is very straightforward. They’ve got a $25 sign up bonus going on until May 15th so I thought I would try it out. If I don’t end up using it then I got some free money. If you sign up for the $25 bonus through the link below I’ll get a $10 and then you can refer people.

Give it a try; it would make transactions like going in on a gift together or selling things on Craigslist a lot easier. There is some real potential here and I hope it starts growing in popularity.

Refer A Friend using Revolution Money Exchange

Putting my money where my mouth is: opened a Roth IRA

I’ve been blabbing on about finances for a little bit now and up to this point I haven’t been very aggressive about saving for retirement. Saving for retirement is good and dandy, but right now is the most important time for us to put away money (if you are wondering why see this post on compound interest). Both of us have a little money in SIMPLE IRAs, I pay 5% into LACERA (county pension) and get 3% matched going into a 457(b). Not enough to meet our goals, but definitely better than 0%.

For over a year now I’ve been talking about starting a Roth IRA and never did. With April 15th just a few days away, I went ahead and started a Roth IRA at Vanguard. What’s important about April 15th besides taxes being due? It’s the last day to make IRA contributions for 2007. I maxed out my 2007 contributions which leaves me another year to work towards maxing out my 2008 contributions.

My entire investment strategy revolves around starting young and investing for the long term (30 years). I also wanted a strategy that would require very little effort on my part. I knew index funds were the way to go, but there are ton out there and needed to narrow it down. I was also taking asset allocation and fees into consideration.

After some research I found Vanguard’s Target Retirement Funds. They are funds of funds and include indexes of US and international markets along with bonds. The 2045 Retirement Fund has an asset allocation of about 90% stocks and 10% bonds right now and will gradually reverse those numbers as 2045 grows closer. Since I’m starting young I’m comfortable with an aggressive allocation and the automatic reallocation will save me time down the road. The expense ratio is a low .25% which can really impact savings over the long term.

Opening the account was really easy and everything is done online. Funds were transferred straight out of my checking account and I avoided a $20 annual maintenance fee by opting for paperless statements. I also like the fact that Vanguard is client-owned and is there to serve the investor, not outside shareholders. You’ll never see TV ads for Vanguard since that’s money coming out of their investors pockets. With $1.3 trillion in holdings they must be doing something right.

My strategy will probably evolve as our income and tax situation change, but the essential idea is to put away a steady amount over the years in tax advantaged accounts and let compound interest do its job.