Financial Planning

Personal Finance Interview with Cap of StopBuyingCrap.com

Name: Cap
Age: 24
Networth Range: $20K – $30K
Profession: Student / Blogger
Website: www.stopbuyingcrap.com

Current Financial Strategy:

Save and invest for the long term. Not necessarily a simple buy, hold and never look back strategy; at the very least, reconsider asset allocation every once in awhile to make sure accounts are in line with savings and retirement goals.

Best Financial Tip:

As with everything in life, when it comes to saving money, you can start getting off your ass and doing it now (which is incredibly easier when young), or getting off your ass twenty years later to do it. It’s not that you need to horde all of your penny pennies as if your future generations depends on it, but you need to realize that you can’t squander away all your pennies as if you have no future at all to speak of.

Worst Financial Move Ever:

Here’s a tip kids, don’t sleep through driver’s education class because you might miss a few important basic details such as the very important: not admitting fault after you have been involved in an accident. About six years ago when I was much more naive and stupid, I admitted fault to an accident — I thought that the insurance will take care of things without trouble (stupid), I assumed that nothing would go wrong if you just simply say sorry (naive), I felt that as long as no one is was seriously hurt (because no one was), it would all be okay (oh man, please give me a time machine so I can go back and punch myself in the face).

A year after the accident, I received a nice little letter in the mail, telling me I was being sued for $256,000. My maximum insurance liability coverage? $25,000.

Yay.

Of course, the amount slowly dropped through time, as all they wanted was to milk as much as they can could from the stupid kid. A few weeks later, a second letter arrived, reducing the amount to $125,000; then $65,600, then eventually $24,860 (just below my insurance liability amount). My lawyer from the insurance company lectured me. My mom was stressed out.  My friends told me that they should have woken me up that day in driver’s ed.  Insurance jumped up another $1,000 per 6 months for the next 4 years, and at the end I learned a very important and expensive lesson. It’s not that you should lie to get away with things when you’re at fault, it’s just that in this world, you can’t expect to carelessly say things without potential consequences. It’s important to know when to shut up and think carefully through your choices of actions before you make a move.

Financially, I need help with:

Understanding my investment goals and paths to reaching those goals.

Let’s face it, investing for your retirement is about as fun as watching paint dry — when done correctly.

It’s difficult to care a lot about your future as a young person (even though you’ve learned that it’s incredibly important to start now). And so, I still lump around and put things off when I should spend some extra time to read up more on the various tax advantage accounts that may be available to me. It would be awesome if there was a way for me to find out more easily what others in my income range, age group, and similar financial goals are doing to reach their investment goals (e.g., the percentage of stocks I should be owning at my age, percentage of bonds holding, etc.).

What personal finance tools do you currently use to track and manage your money?

I used to use MS Money (05 or 06?), but I find it painfully annoying when it won’t update my accounts correctly, or when it categorizes my transactions incorrectly. Worse, when you updated all of the your transactions,.. sometimes it’ll bug for whatever reason and default everything back. What an Incredible incredible waste of money. These days I simply log into my Yodlee account to check updates on my various accounts, and I generally take the time to log into each accounts to pay bills, transfer money, etc. I used to use Yahoo Finance’s CashEdge feature to transfer money between accounts, but after that went the ways of Yahoo’s DirectPay, I now use my HSBC Direct’s account to transfer money between accounts.

What are the problems in your personal finance tools?

As mentioned, MS Money is incredibly unstable. Even though it uses Yodlee to aggregate accounts, it still has trouble updating some accounts. Worse, a lot of the latest high-yield online savings accounts can’t be added into the account list, which makes for a funky- looking net worth graph (and pretty much makes every other tools that has to do with net worth worthless). My irks with Yodlee is that it can sometimes to be slow to update, and this seems to change when you use Yodlee through other providers (such as Bank of America’s My Portfolio). Lastly, although Cash is convenient to use to ACH money between accounts at different institutions, it can be incredibly slow at times (so you’ll need to pay attention to the cut-off time and transfer schedule).

How would your ideal personal finance tool work?

It would be as fast as possible without any of the sort of bugs that I’ve mentioned above. Whenever I press the update/refresh button, my accounts would all update without issue. If for some reason it doesn’t update, I would like that it gives me a reason why (like it can’t connect to account’s server, etc.). It would never inexplicably for some reason revert all the information back to a few statements ago, and it would always categorize my transactions correctly. Even better, it would categorize my transaction automatically in the future without me telling it what they are.

During account sign-up process, I should have to put in as less little information as possible. Besides filling in my account information, I shouldn’t have to provide anything else. Other things such as spending habits, my investing and saving goals should be optional. The perfect scenario would be, the tool will tell me what type of savings and investing goals I should aim for, based on my age and types of accounts I have. It should be able to know what kind of credit card rates I have, and be able to find me better rates, offers, and credit limit — especially if I provide it with my credit score (and yes, it’ll let me check my official FICO score too). Depending on what I spend my money on, from time to time it should also recommend to me from time to time if I’m using the best credit card, so that I can get the best usage rewards possible. Basically, it should have all the information available on the Internet pertaining to the accounts I have, without having me to do a single hour of research.

What more do you want to know about your personal finance?

Everything! Am I saving enough? Am I hoarding too much? Should I stop using this piece- of- crap credit card? Should I move my money to a higher- rate savings account? What’s the best type of IRA for someone in my shoes? It’s not that all I care about is money — it’s just that for now — this is my hobby. It’s always fun to learn a few things about personal finance and put it into practical use.

How much do you think you spend currently on eating out?

Not as much as before. Probably about a hundred or two per month. Back in the days when I was more of a pig and had less self control, I would spend double or triple that amount per month (sometimes over half of my monthly income goes to paying off the eating- out bills). It’s tough when you live in the LA/OC area, where all the goods in the world is are a quick drive away.

What’s in My Wallet?

  • Driver license. Insurance card. Health insurance in there somewhere.
  • Citi Dividend and Chase Freedom, along with Bank of America check/debit card.
  • Library card, student cards, Fat burger card (yum?). EZ Lube. AAA Membership.
  • Exxon gas card (you know, those freebies you get when you visit the casino too much).