Tales from the Wallet: The Best Books and Sites for Financial Advice For Newbies

best personal finance booksWhich are the best personal finance books for newbies?  Reader E had a great question:

I absolutely love your Tales from the Wallet series, but I find a lot of the lingo is a little over my head. I do understand that most of your readers are lawyers and professionals with sizable incomes, but I was wondering if you had any book recommendations for readers like myself. I didn’t invest in a 401K through my employer because I didn’t understand it. The idea of having money deducted from my account for a stranger to manage and crossing my fingers for the best didn’t sound very appealing to me. After reading some of the comments, it looks like there’s more to it. I currently don’t have any investments and want to start to learn about vehicles to put my money in. Please share absolutely any resources for new investors! Thanks!

Everyone has to start somewhere, so I think this is a great question. We’ve talked about tax-savvy investments on here, of course (and may answer some of your 401K specific questions), but in general it can seem daunting to learn about personal finance. (Pictured: Kate Spade New York ‘Popsicle’ Coin Purse, $78 at Nordstrom — according to the reviews it’s surprisingly functional!)  I’ve read a bunch of personal finance books over the years; these are the best ones that I would recommend for newbies: [Read more...]

Tales from the Wallet: Tackling Big Debt

how to pay big debtHow do you pay off big student loans?  Can you manage your debt when you’re facing huge numbers, such as six figures? We’ve talked about when to save versus when to pay down debt before, but a number of readers have asked for a post on Really Big Debt, so let’s discuss (particularly since the interest rate just doubled on new Stafford loans!).  I polled some friends to ask who had a plan or success story that didn’t involve inheritance/lottery, and thought I’d round up their stories, anonymously, below — but readers, please share your own! Have you paid off major debt (student loans or otherwise)?  What is your plan to pay it off? (Pictured: one of Nordstrom’s top rated wallets: Hobo  ‘Lauren’ Double Frame Clutch, with 95 positive reviews. Available in six colors for $110.)

M’s Story: Some repayment assistance / A whole lot of payment discipline

So, on my loans: the total between grad and law school was about $130k. I was fortunate to go to a law school with a repayment assistance program for graduates working in non-profit organizations… which requires the 10-year repayment plan. I bit the bullet and went for it, feeling like I’d rather suck it up for ten years and be FREE than have student loans following me into my 50s. Consolidated all the loans (with super-low interest rates, hooray), signed up for repayment assistance, and made sure to sign up for auto-pay on the loans to make non-payment/paying less not an option. [Read more...]

Tales from the Wallet: Asset Allocation and Rebalancing Your Investments

asset-allocationWhat does it mean to have balanced investments, and how do you do it? What is a proper asset allocation?  I first tried to answer these questions about six months ago (maybe longer) and finally think I’ve got it figured out… kind of.  Still, do note: this is not intended as a tutorial, just a jumping off point for a discussion. (Pictured: Kate Spade New York Carmine Street – Lacey Wallet, available at Nordstrom for $158 in green, pink, and black.)

Why You Should Balance Your Investments

First — why should you balance your investments, or allocate your assets?  I read Ramit Sethi’s I Will Teach You To Be Rich a while ago — a great introductory book if you’re new to financial stuff, and definitely a quick read.  One of the only things that was new to me was his explanation of how and why to balance your investments, which I’d heard about through the years but never really focused on.  (To be honest, I kind of thought all I needed to know was that bit about subtracting your age from 100 and putting that percentage in stocks, which roughly translated to me as “invest mostly in stock index funds.”)  In Sethi’s book, he talks about how you should have a target asset allocation (also quoted on his website) of something like 15% TIPS, 15% Government bonds, 20% REITs, 5% emerging-market equities, 30% domestic equities, and 15% developed world international equities.  Whoa! That’s a bit different than “mostly stocks.”  But I suppose it’s easy enough to figure out, at least if you’re just setting up your investments for the first time.  So, let’s say you invest accordingly, and in that first year, domestic equities do AMAZING and emerging-market equities have a lousy year — so at the end of the year you may end up with 60% of your holdings in domestic equities and only 2% in emerging-market equities.  So, Sethi says, at the end of each year you should figure out what your target allocation is and then readjust so that you’re putting something like 20% into emerging-market equities and only 10% into domestic market equities.  Uh huh. Ok.  Simple! [Read more...]

Tales From the Wallet: How Much to Save For Retirement

women-savings-retirementHow much should you be saving for retirement? Are there savings benchmarks by ages? Is saving different for women? These are all questions that come up frequently (and no one really has all the answers) that I thought we should talk about them today. (Pictured:  Marc by Marc Jacobs Wallet, on sale at Bloomingdale’s — was $148, now $103.60.)

A few notes from poking around the Internet:

– According to the Department of Labor, on average women live longer than men, invest more conservatively, work fewer years (or work part-time/freelance jobs without access to a retirement plan).  Joy! MoneyLiving notes that women also have higher health care expenses, in part due to maternity expenses, but also higher premiums. [Read more...]

Tales from the Wallet: Setting Financial Goals

You always see personal finance articles advising you what to do at the end of the year — but I see far fewer of them advising what to do financially in the beginning of the year. Personally, I like to do two things around now:
a) I take a “financial snapshot,” and
b) I make three or four financial goals for the year.

(Pictured:  FOLLI FOLLIE Blue Stripes Wallet, available at Lord & Taylor (having awesome sales of up to 80% off today) — was $85, now $51.)  

The “snapshot” was inspired by the Excel spreadsheet that I started when we were looking to buy the apartment.  It’s just a listing of all of our accounts, investments, debts, and property — and it lists the current value for each of those line items.  Big deal, you say — [Read more...]

Tales from the Wallet: How to Manage Many Financial Accounts

kate spade new york 'signature spade - quilted lacey' zip around walletHow do you manage your money without getting stressed out with a million accounts? When we talked about automatic investments a few weeks ago, some readers noted that having too many accounts was stressful to them. So let’s talk about some easier ways to manage the money, how to get a bird’s eye view of your holdings, and some tips to make your general financial life easier. [Read more...]