Moving My Eggs Around

Since my previous post on diversification, I have remained committed to finding ways to diversify my savings. Having all of my wealth in the stock market no longer makes sense to me for several reasons ... (1) I'm not truly diversified, (2) while I'm not freakin out about the current downward spiral of the market, I am paying closer attention to how my investments are structured and (3) I do not want my long term savings to be solely based on speculative investments.

Investopedia defines diversification as a risk management technique that mixes a variety of investments within a portfolio. The idea here is to reduce your exposure to risk because investments are unlikely to move in the same direction at the same time. When one investment is down, the other investment should be up or at least stable. Needless to say, we are currently in unprecedented times when everything, stocks, bonds and real estate are all moving in the same direction, down! So can I really achieve diversification? Yes, I think so. Here are a few investment ideas that I plan on adding to my portofolio, in addition to paper investments (i.e. stocks & bonds):

• Pay of my mortgage! Yes, this is already a goal but I have taken steps to increase the amount I'm sending each month as extra principal payments. The way I see it, a paid off mortgage will fit in quite nicely with my long term savings plan. Unless I have some life changing circumstances, I am in my house for the foreseeable future so why not expedite the payoff. Certainly we all know the benefits of not having a mortgage.
• Small Business - I have an investment in a small business and it's actually in the black! I will continue to monitor the business and maintain my investments as long as it's a viable option. One of my long-term goals is to invest in more small businesses. Perhaps I'll post more about this later because this goal gets me pretty hype!
• Rental Real Estate - At some point I plan to include rental real estate in my portfolio. I have no plans on taking the plunge until I have enough cash to make a hefty down payment. Actually I would prefer multi-units or commercial properties. I have little to no interest in managing single family homes.

Now that I have specific investments identified, I am feeling better about being diversified. Am I risk adverse, absolutely not, I just don't want all of my eggs in one basket. Aah, it feels good to have a plan ;-).

Financial Nugget 12

I must admit, I am trying everything I possibly can to avoid blogging about politics because frankly, I did not start this blog to be political or voice my political views. While I have zero interest in chatting about politics, this week's nugget was definitely inspired by recent political events. I'm not sure who said it, where it came from or when it was first said but it's definitely worth repeating ....

You cannot borrow your way out of debt, period.
~author unknown

FREE Training in Metro Atlanta

This info was passed on to me by a fellow reader. If you are currently unemployed, CED Solutions is offering a free 5 day Microsoft Office Training in the Atlanta area. You can find out more by clicking here.

According to their website, CED Solutions is the largest training and testing center in North America. Since they have classes all over, it's possible that free training is being offered in other states as well. Please pass this information on to anyone who may find it useful.

Thanks!

Financial Nugget 11

Never invest in any idea you can't illustrate with a crayon.
~Peter Lynch

If only we had listened to the simple wisdom in this week's nugget, just maybe we could have avoided or at least softened the pain of this self-inflicted wound that our economy is feeling today. An economy that grows exponentially as a result of creative financing, derivatives, hedge instruments and securitizations backed by sub prime lending cannot sustain itself for very long. The market will eventually have no choice but to self correct, and that my dear readers is where we are today.

Mondays

Are you one of the many people who dread Monday mornings? When I was a member of that group I used to get the downers around 6:00 pm every Sunday evening. I remember dreading Monday mornings and the start of another work week. Today I don't feel that way. The heaviness that used to settle in the pit of my stomach every Sunday evening no longer comes to visit. After I became consumer debt free I made some life adjustments that allowed me to rearrange my work schedule so my Mondays became much better ... however there is a new threat lurking.

Nearly 2.6 million jobs were lost over the course of 2008, the highest yearly job-loss total since 1945. The job-loss reports continued to climb in January, which saw over 200,000 job losses. January 26th was the day that some labeled as Bloody Monday because several fortune 500 companies announced over 65,000 job cuts combined. Those companies included Caterpillar (20,000 jobs), Pfizer (20,000 jobs), Sprint (7,000 jobs) and Home Depot (7,000 jobs).

Monday February 2 - Macy's announced that they will cut 7,000 jobs. Other companies announced job cuts later that week (Panasonic 15,000 jobs, and PNC Financial 5,800 jobs).

Monday February 9 - Japanese automaker Nissan announced 20,000 job cuts (technically it was announced Sunday but it hit US mainstream news Monday).

Flag on the play! Who wants to start the week hearing about the infinite number of jobs being lost everyday? And why on Monday? If there has to be a weekly announcement I suggest that companies do it on Friday when most of us are floating high at the anticipation of the weekend;-). I shall not be recruited back into the Monday morning blues. I know we're in a recession, I know the economy is shaky, I know the markets are extremely volatile, yes, I know all of these things. I also know that I do not want to begin each week with Monday's gloom and doom report so effective immediately, I am replacing Monday morning news with Curious George and Clifford the Big Red Dog.

No Spend Week - Pass or Fail?

Several of my fellow pf bloggers have challenged themselves to no spend days, weeks and even months. Since I'm always up for a challenge, I decided to try a no spend work week to see if I could in fact go 5 days without spending any money. I almost made it through the week but something happened today ... I packed too light of a lunch and by 2:30 p.m I was quite hungry! As fate would have it, Chick-Fil-A was having a Receipt Day. Have you ever heard of Receipt Day? Yeah, me either. Well Receipt Day works like this - purchase anything today and bring your receipt back any day next month and get that exact order for FREE!. Woo Hoo.

Honestly, I think I could have made it through the week but the temptation from Chick-Fil-A was too much for me to handle. Fast food is not my thing but Chick-Fil-A kinda gets a pass. They have pretty good food for a fast food joint. Those waffle fries are just so delicious, oh and that polynesian sauce, just wonderful on the fries. How about that lemonade? Yum Yum. So not only do I enjoy their food, but they offered an opportunity to eat now for regular price and eat later for free. Yep, I was sold.

So, did I pass or fail? I'm not sure. It was an interesting challenge but I'm not sure that I will do it again - not without a real reason. Minus the $5.95 meal today, I have all of my blow money from this week plus the blow money that I get today. Yippee.

Financial Nugget 10

It seems that we tend to fall into one of two spending categories ... the person who spends big or the person who nickles and dimes their finances away. More than likely person B is prone to ask, "where is all of my money going?" If you are person B, Ben Franklin has something to say to you;-)

Beware of little expenses; a small leak will sink a great ship.
~Benjamin Franklin

Catch 22

The metro area I live in experienced somewhat of a severe water drought over the last couple of years. Some of the measures taken by local and state officials included water restrictions (i.e. only being able to water your lawn on certain days), incentives for companies and households to install low flow toilets, legal battles with two neighboring states over water from a shared lake, etc. During the most severe times there was no shortage of information and tips on how each person could help to preserve water.

Apparently the message got through to many of the citizens. Even now I'm very cognizant about leaving water on while brushing my teeth, waiting until I have a full load of clothes to run the washing machine and other little tidbits to do my part with conserving water. Sounds good right, well here is the catch 22. All of this water conservation has no doubt dipped into the revenue stream of the water companies (ran by municipalities). So guess what, they are raising rates to make up for the loss of revenue due to consumption! Are you kidding me? Maybe we should inundate them with information on how they can better manage their money, how to spend less than they make and how to budget accordingly.