Category Archives: Economy

Called on the Carpet

Published / by Annie / 4 Comments on Called on the Carpet

The other day I was scanning a customer’s items at work when one of my managers approached me.

“You’re due for your break now, aren’t you?” she asked.

“Whenever!” I chirped.

“Would you mind coming to the office before you clock out for it? We have something to discuss with you,” my manager asked.

“Um, sure.” I watched her block off my line, intrigued. The last time I had been called into the office had been to share that we did indeed have contactless payment options on our registers. My register had spit out an unusual slip so I had showed it to them and asked questions about that being a possible reason.

The faces of my two main managers were serious when I knocked on the door. “Have a seat.” They positioned a chair in the “hot spot” –an area directly between their two desks.

I frowned at the unexpected gesture. We aren’t normally invited to sit down in the office; we’re usually too busy. Had they discovered that I was looking for another job? I wondered. Glancing at the looks on their faces I reasoned that the conversation was not going to be a pleasant one as I waited for my managers to explain what was going on.

“First off, we want to thank you for all of the hard work you put in,” my manager began. “We really appreciate everything that you do.” She paused to give the other manager a look.

I began making a list of jobs I could apply for fast and quick in my head. Conversations that begin like that usually don’t end well. Something very not good had happened, I was certain. I didn’t know what it was, but the odds of me getting the axe were growing stronger the more my managers talked. Serious talk, on payday no less? I was fired. I didn’t know what I’d done, but I was definitely fired I realized.

I nodded politely, compiling my lists in my head, berating myself for allowing myself the luxury of running my bank account lower than normal while calculating the financial changes I’d have to make until I scored another job. The gears in my head were spinning so fast I’m surprised that I didn’t create a breeze.

Finally my boss dropped the bombshell. “…as a result, we’ve been discussing your performance with the owners for several weeks, and we’ve finally gotten permission to give you a fifty-cent raise. I’ll turn in the paperwork for it on Monday.”

I blinked. I had to replay her words in my head three times for the information to click. I looked between the two managers in surprise, certain I’d misheard.

They were both smiling.

I tossed my mental lists aside and smiled. “Thank you,” I responded quietly. “I hadn’t been expecting that.”

I was bemused as we finished up the conversation. I shook both of their hands formally in gratitude at the unexpected windfall and left to take my break.

That fifty cents doesn’t seem like much but it’s an extra $12.50 on a normal week before taxes. I can do a lot with $12.50. If I pick up extra shifts when people call in and hustle on this blog, I can make it when the kid moves out. It might be tighter than I like, but I can make it.

I’ll even be able to invest a little.

Let this be a lesson, folks. When times seem rough, when you don’t see any light at the end of the tunnel, something positive is invariably around the bend. With this pay increase I no longer need to worry about actively searching for a full-time position. I can use the time instead to focus on this website and my studies.

Life is good.

Have you received any positive news lately? Please share your stories in the comments below.

 

The Fear of Being Wrong

Published / by Annie / 2 Comments on The Fear of Being Wrong

I ran my bank account a bit lower than I like at the end of August. It was a deliberate choice; not only did I want to give my daughter one last, really nice birthday in light of the fact it may be the last one I spend with her, it was the last time I would have free trading on my investment account. That said, at the end of the month I took my book royalties, chipped in a bit more from my checking account to round it out, and sent the money to Merrill Edge.

And I choked. I completely choked. I didn’t break down and sob like a baby but I had to force myself to sit back, close my eyes, and breathe for several minutes to slow my heart rate before I made my monthly stock purchase.

I mean, what if I’m wrong? What if the criteria I’m using to invest is completely incorrect? What if I lose every penny of the money I’ve scrimped and saved? I’m blinking tears from my eyes right now as I think about it. I don’t know if it’s just hormones. I don’t know if it’s simply the fear of doing something new. I don’t know what is causing this.

All I know is that, right now, the thought is scary.

But I’m not going to stop. I’ve started this path. I’ve set my goal and by golly I’m going to see this through to the bitter end. If I lose it all I’ll just start over. If I don’t do this, if I don’t at least try I know for a fact that I will be doomed to working a public job for the rest of my life, and I don’t want that. What’s the point in struggling so hard if you don’t have at least the hope of a better life in the future?

There is no point if I don’t have hope. I am going to do whatever it takes to achieve financial freedom.

Regardless of my demons.

Investment Update

Published / by Annie / 2 Comments on Investment Update

The other day I closed out my books for the month of August. Here are the numbers:

Beginning Balance: $1,340.61

Dividends received: $20.46
Personal Investment: $286.00
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Total Invested in the stock market: $1,647.07

August was a tight month. I had to set aside some funds to celebrate my daughter’s 19th birthday. Since this very well might be the last chance that I have to spoil her I wanted to do something memorable, so in addition to her birthday gifts I treated her to a meal out and consented to get my nails done with her. She’d never had her nails professionally done before and didn’t want to go through the experience alone.

It was a first for me as well. Never in my life have I splurged on those fancy nail coatings so while I choked on the $35 fee it was worth it, not only to make my daughter happy but to see what all of the fuss was about. As long-time readers are well aware, I’ve always been a bit vain when it comes to nail care. It didn’t hurt to try it once, especially since it made my daughter so happy.

Even with the birthday splurge I was able to chip in a bit more than just my book royalties towards my investment goal. It wasn’t much but every little bit counts. As soon as the funds hit my account I will make my next stock purchase.

I am looking forward to it.

Maybe one of these days I’ll be able to get my nails done without having to choke at the price. I’ll have enough money coming in on a regular basis so that I can afford to treat myself to the occasional manicure. Who knows? Regardless, it was a fun experience to check off of my bucket list.

In the meantime I only have $58,352.93 to go in order to attain my goal of investing $60,000 into the stock market. I am quite pleased with my progress.

Did you make any progress towards your goals last month? Please share your stories in the comments below.

The Art of Definite Action

Published / by Annie / 17 Comments on The Art of Definite Action

As I mentioned in a previous post I am concerned about my finances for the upcoming winter. Rather than allow the fear to eat at me I decided to take some definite action and meet the concern head-on.

Up the street from my home is a gas station that happens to be hiring, not only for cashiers but for management as well. The work is full-time. Cashiers start out at $9 an hour so while I’ve no idea how much management earns it is safe to say they make even more.

I turned in my resume the other day. Should I receive just the cashier’s position at their starting wage I will have increased my weekly income by close to $100 a week. It will go up even more should I net a management position.

I will have to make some adjustments if this comes to pass. I’ll be working at least 15 more hours a week at a public job than I do currently so I will have to reduce my posting frequency. That said, based on my monthly expenses here I should be able to invest close to a week’s wage every month towards my goal of financial freedom even during the winter months in addition to investing my book royalties. That will cut down the amount of time needed to save up $60,000 by over half.

If other jobs come available within walking distance to my home I will apply for them as well. Something will come up. While I’m not thrilled at the thought of going back to full-time, the thought of gaining my freedom is driving me forward. I am going to do whatever it takes to achieve financial freedom again. I want the option of not having to work, whether I choose to exercise it or not.

What steps are you taking to work towards your future? Please share your stories in the comments below.

Winter Worries

Published / by Annie / 10 Comments on Winter Worries

The kid will be moving out this winter. She plans to get married once her fiancée graduates BASIC training and move on base with him once he gets things sorted. Here’s a picture of him in training:

The demon Fear has raised its ugly head since I’ve received this notice. She will probably move out mid-winter when the bills are at their highest. Should this come to pass I might have to suspend my investment plan until spring returns just to survive.

Sometimes working for minimum wage sucks.

I’ve gotten rather spoiled with her sharing our household expenses. As a result I’ll have to limit my spending just to make the bills. Since I only bring home about $600 a month from my public job I’ll have less than $100 a month to buy food and supplies while I wait for spring to come back around. I might have to use my book royalties to make things easier, at the cost of my future.

I don’t like that thought. Every penny that I invest takes me that much closer to achieving financial freedom. I miss my freedom. I also don’t like the thought of having to tighten my belt once more. The memory of those two lean years still haunts me.

But that’s okay. I know I can make ends meet regardless. It might be tight but it’s not impossible. Some way, somehow I’ll not only scrape through, I’ll figure out how to continue investing at least a little bit towards my future.

One bright spot: I’ll be able to sleep in a bedroom for the first time in over seven years once the kid moves out. I’ll even be able to rearrange a bit to make this place more usable.

Look on the bright side Annie. 

Maybe I’ll stumble across a way to increase my income so things won’t be so tight. Who knows? Anything can happen. In the meantime I am thankful that my daughter is on the verge of a brand-new adventure. I am also thankful that I know how to live extremely cheap. It allows me to survive in situations that would make the average person choke, so despite my fears I know that I will be just fine. I just have to ride the emotional wave.

How do you encourage yourself when fear raises its head? Please share your stories in the comments below.

Bedtime Routine

Published / by Annie / 4 Comments on Bedtime Routine

Time is the one thing I never seem to have enough of. Between my public job, caring for my home, and writing I never seem to have enough time to pursue my self-education goals.

While I read on my days off and on my breaks at work my progress was annoyingly slow. It took weeks to finish a single book and I watched my reading list grow longer with frustration.

One evening I collapsed into bed, exhausted from my shift at work. It was one of those nights where you desperately need sleep but your mind refuses to allow you the luxury. I snagged my current book off the shelf in hopes of settling my mind. As I snuggled down to read a memory from my childhood surfaced.

While I was in the second grade I ended up with a copy of The Wizard of Oz thanks to the local RIF program. I adored that book. Every night I would snuggle in bed and read several chapters before I fell asleep. I probably re-read that book a dozen times before I moved on to another.

Filled with warm fuzzies from the memory I read a couple of chapters in my current book before Morpheus began tapping on my shoulder. I ended up dozing easily and woke up refreshed the next morning.

Since then I have altered my bedtime routine. Instead of checking my email and trying to write a bit more before bed I now turn on some relaxing music and snuggle up with my current book. My reading progress has skyrocketed as a result.

Not only have I managed to increase the amount of reading I do my sleep quality has improved with the change in routine. Instead of tossing and turning restlessly, I now fall asleep easily and wake up refreshed.

Do you have a bedtime routine? Please share your stories in the comments below.

Frugality and the Pareto Principle

Published / by Annie / 2 Comments on Frugality and the Pareto Principle

According to the 80/20 Principle, 20 percent of actions will provide 80 percent of results. This is especially true when it comes to frugality.

When you break it down the majority of money I personally save falls into two main categories: housing and auto. By renting a one-bedroom house in a less than ideal area, I saved $200 a month back when I first moved here in 2011. Since rental prices have went up slightly since then I’ve saved even more.

By allowing my daughter to become my roommate instead of simply encouraging her to move into her own place I increased my savings even more by halving my already low expenses. While this also has the added benefit of providing my daughter with a safe place to live at a price she can definitely afford (while teaching her how to manage money), that is simply an added bonus.

Eliminating my vehicle saved me another thousand dollars a year. While I didn’t have the burden of a car payment (or the cost of the full-coverage insurance that comes along with it), that savings has added up as well.

I manage to save $5,000 a year on just these two expenses alone. The other little frugal decisions I’ve made pale in comparision. To be blunt, I would either have to take a second job (I would need to work an additional 34 weeks a year at my current $150 a week public job income) or locate a position that paid twice the hourly wage that I currently earn if it were not for the money I save in these two areas if I didn’t want to reduce my standard of living.

If you are serious about saving money I urge you to give these numbers serious consideration. While eating out less, eliminating phone service, cancelling subscription services, and other things do save money, you will receive higher savings if you focus on just these two areas of your life.

Running the numbers has shown me that making your own laundry detergent and simply living on less is not enough if you want and need to save serious money. It’s the big expenses that really destroy your budget. However, if you are interested in paring your expenses even further, I urge you to check out my books The Shoestring Girl and The Minimalist Cleaning Method.

Have you ever analyzed where the bulk of your money goes? Please share your stories in the comments below.

Why Bother Saving Money?

Published / by Annie / 4 Comments on Why Bother Saving Money?

A common question I receive from family and friends is “why bother to save money?” Their reasoning is that, if they can afford it, they should enjoy every penny they have to spend.

There’s nothing wrong with this logic on the surface. We’ve been trained to believe that we no longer really need to save for retirement or for protection in the event we become seriously ill or injured. Social Security was created to take care of us in those cases.

The truth is far different. Social Security was designed to replace only half of our earnings. My $600 a month employment income translates into roughly a $300 Social Security retirement benefit. While programs like SSI are in place to raise your monthly income to a more livable wage, in order to qualify you can’t have much at all in assets like money in the bank. For instance, a family member was recently informed that she had X amount of time to spend down the $5,000 she had managed to save before she would lose her benefits. She had been so proud of her savings! She had scrimped and saved in order to afford a down payment on a house but the government didn’t care. She was forced to give up her dream of home ownership and bought a car with the money since she couldn’t qualify for a mortgage with such a low down payment in her area.

If you are injured it can take years for you to qualify for Social Security Disability benefits if you qualify at all. The odds of being able to survive financially during this time are slim without extensive support from friends and family.

This is the reality that we live in. The safety nets we have been taught to believe in are not as safe as we believe them to be. As a result, we need to save money not only to survive while we recover from an injury but to supplement the limited retirement benefit that Social Security provides.

It is not always fun to scrimp and save when everyone around us spends money like mad. It’s not fun to turn down invitations to spend time with friends or catch their condescending looks when they show off the things that you know you can’t afford.

It’s not fun being poor, period. If your assets and finances are so low that you qualify for public assistance people judge you for every move that you make. I cannot count how many times I’ve heard someone behind a person on food benefits remark negatively about the fact that a mother purchased snacks for her kids or bought some microwave meals to eat at work, and I’ll never forget the time a worker at a dental office commented on my daughter’s brand-new shoes.

They were the first pair of brand new shoes my daughter had owned in years.

I’ve lived an extremely frugal life for over 20 years. I deliberately worked lower-paying jobs and saved my money so that I could take periods of time off and savor the fleeting childhood of my children or be home for them when they got off the bus after school. While I have no regrets, I didn’t always enjoy the experience.

So why save money?

You need to have money to live on in the event you get hurt. You need to have money if your roof springs a leak or your car needs repaired. You definitely need to have money saved up when it comes time to retire unless you want your income sliced in half.

Most importantly, you need to save money if you want to have any hope of escaping poverty. There are a number of ways to invest your savings that will help you climb the financial ladder but that option is completely closed to you if you don’t have any money to invest. While you may have to hit the books in order to learn how, it is possible to escape poverty by learning how to invest in precious metals, the stock market, opening a small business, or other areas. You might not get rich but you’ll end up making a lot more than you would by leaving the money in savings at current interest rates. Ask Chris Gardner if you don’t believe me. He was homeless when he started out.

If you want to survive in this world you need to save. If you want to improve your lot in this world, you need to save. If you want to have any hope for a better future, you definitely need to start saving.

Starting now.

If you are new to saving money, check out my book The Shoestring Girl. I’m one of the few frugality experts who actually knows what they’re talking about when it comes to saving money

The Magic of Time

Published / by Annie / 2 Comments on The Magic of Time

I moved to this house in April 2011. In the fence row of the front yard was a little sapling beside my front gate.

My friend Mr. A wanted to chop it down. I told him to leave it; it would grow into a fence post eventually. That sapling was so insignificant that I never even bothered to photograph it. I finally located a photo of it I snapped a year later when we acquired Lilly. You can see it on the right-hand side if you look closely. It’s growing alongside the post that the front gate is attached to.

I’ve never really thought much about that sapling over the years; it was just there. A few neighbors have commented on how shady my yard stays, how private it is now but that’s about it.

Until this morning.

I woke up, and as is my habit I brewed my morning coffee and sat on the porch sipping the first cup while my dogs had their morning sniff/potty break.

That was when I finally saw it, I raced inside to grab my camera:

That tiny little inconsequential sapling is now a luxurious tree.

A small insignificant incident in my life culminated in this moment. More than anything that has happened in the seven years I’ve lived in this tiny home, that tree represents the changes I’ve experienced in my life.

It wasn’t the only sapling I saved over the years. I propped up the tiny survivor of a hollyhock bush on the left corner of my yard after the local water company decimated the primary bush in my neighbor’s front yard. A year or so after that a child of that bush appeared near the area where I keep my trash can. A sapling I preserved that doesn’t appear in this photo grew into a mulberry tree. The squirrels are grateful for that one since it feeds them. They hop from the branches of the one I photographed into the branches of the mulberry tree whenever they want a snack.

Maybe this is why I’ve grown so attached to this little house over the years. I’ve established roots. For the first time in my life I can sit on my porch and say “that tree was just a sapling when I moved here.” For the first time in my life I can look out and actually, physically see the fruits of my labor.

The magic of it is that I really didn’t do much. I just let it grow, and now look at it!

There is a lesson in that tree. Small actions can have a huge impact on our lives over time. A blog I created on a lark developed into a business. A book I wrote for my aunt became another and another until the royalties grew enough to support us for several years.

The royalties from those books, as I invest the money, will support me again in the future as my hair continues to grey.

Baby steps. It works.

The College Path

Published / by Annie / 2 Comments on The College Path

Last year a friend of mine decided to attend college. He wants to increase his education so that he can get a better paying job. I’ve encouraged him in this endeavor by assisting him with technical difficulties when his computer messed up and by acting as a sounding board when he doubts his ability to continue.

He stopped in at my job the other day filled with news about his latest semester. I listened, happily enraptured at the sheer excitement he displayed. His eyes sparkled, his voice resonated; his whole being reflected a new power and confidence as he shared his journey with me that day.

“You should go to college too,” he finally admonished me. “You’re not dumb yet you’re wasting your life for minimum wage. You can do so much better than that. Just think of the job you could get with a degree!”

I gave him a secret smile. “I might not be in college but I am increasing my education,” I shared. “However, my goal doesn’t require a degree at the moment. If that ever changes, I’ll definitely give it some serious consideration.”

What my friend doesn’t realize is that my goal is a bit different than his. While he wants a better paying job, I simply want financial freedom. I’ve worked out a way to achieve that and started taking definitive steps in that direction. He’d probably be surprised if he discovered that my personal course of study includes college textbooks such as these:

 

 

 

 

 

 

 

I have no issues against going to college; I feel that it is a very laudable goal to have. I’ve even written here that I’d like to graduate college at some point in my lifetime but the fact is that I prefer to achieve my freedom more.

I can do that without an official college education.

I am very thankful of the fact that my friend thinks enough of me to actively encourage me to better myself. While I wish that he understood that I’m already in the process of doing just that (by taking a different path), his concern warmed my heart as I finished my shift that night.

Do you have any friends who care for you enough to encourage you to better yourself? Please share your stories in the comments below.

The Art of Staying Motivated

Published / by Annie / 4 Comments on The Art of Staying Motivated

The other night I came home after an exhausting shift at work. I plopped down in front of my computer to check my emails before engaging in my nightly habit of reading a bit before I went to bed.

As I sat there I thought “what’s the point?” What was the point in reading more when I was so drained? It’s going to take years for me to achieve my goal, so what would be the harm in skipping a single night?

That’s when I realized I had a problem. I was losing my motivation.

It’s easy to lose motivation when all you can make are baby steps. When you have to wait days and weeks before you can take another step forward. But that is the reality of my life. I can’t afford to plunk down thousands of dollars and then wait to reap the profits. I have to invest in stages while working to increase my knowledge during my downtime. While I know that every few months I will receive a small payoff in dividends it is a cold hard fact that this project is going to take a while to really begin to pay off.

So how do I stay motivated? What can I do to encourage myself to move forward on the nights when I’m too tired to think, much less move?

With a heavy heart as I considered this I skipped my nightly reading and went to bed. I’d have to find a solution soon or risk giving up.

A few days later I walked to the store to purchase supplies. On a whim I headed to the school supplies section, thinking that a new pencil or ink pen would be a treat. I didn’t need one but sometimes it’s the little things that encourage us to continue moving forward. I found this:

Meet my new Goal Journal. I photographed it with the little piece of inspiration I carry with me daily, one of the silver rounds from my very first investment.

On the very first page I wrote down my goal. I wanted to see it every single time I opened the notebook.

Once that was completed I was stumped. Do I use the journal to chronicle all of my thoughts or to keep track of specifics? I decided to dedicate a single page each month to a cold, hard summary of my progress. I’ve decided to share it with you now.

I didn’t tell you at the time but I began this journey on my birthday earlier this year. I was hesitant to share because the idea sounded stupid even to me. Seriously, an old woman working part time for minimum wage who wants to enter the financial ring with the Big Dogs? The idea was laughable! Who the hell do I think I am, even considering this? Because of my inner demons I kept quiet until I became comfortable enough with the idea to have the courage to share.

The next month I decided to jump in with both feet. I scraped together every single penny I could spare from my book royalties and my income tax refund, took a deep breath, and kissed that money goodbye. I knew that I didn’t know much; I could very well lose it all, but I had to at least try, you know? Wishing wasn’t going to get me anywhere without definite action:

I managed to score free trading from my brokerage until August 8th. Sometimes it pays to ask plenty of questions. I took advantage of the blessing to make a few experimental trades so that I could figure out just how this stock market thing worked. I was completely clueless and I knew it. To my surprise I did pretty well. Not only did I manage to profit from my trades, I even received my very first round of dividends. I was chuffed!

July was the last full month that I qualified for free trading. I’m sure I drove the workers at my brokerage batty with all of my questions that month! I discovered the difference between exchanges, the fact that my brokerage will not allow anyone with a balance of less than $25,000 to trade on certain exchanges “to protect them,” and lodged a formal complaint about not being allowed to invest in the real “penny stocks” — those whose shares trade for literal pennies. A worker there actually called me to apologize personally for the limitation after that stunt and he helped me figure out exactly what I was allowed to invest in through the brokerage. I modified my search criteria appropriately, albeit grudgingly. As I explained, the five or ten bucks I’d planned to toss towards those particular purchases would not be near enough to budge the stock prices and I was well aware of the risk I was taking. By this point I was literally kissing my money goodbye as I transferred it to my brokerage account, and I STILL feel that my brokerage should eliminate that limitation.

When August is over I’ll add another page to my journal as I continue to chronicle my adventure. This will allow me to look back and see a visual reminder of just how far I’ve come. Due to the fact that I don’t require much to live on I’ve managed to accomplish quite a bit over these past few months. When you add the money I invested in early August I’ve managed to top $1,500 invested in the stock market–most of which came from my minimum-wage day job.

I’m not sure if I should be proud or terrified at the fact that I’ve hit it so hard. Fifteen hundred dollars isn’t exactly chump change for me. That’s three months’ worth of living expenses in my world. I guess time will tell as I continue this journey. In the meantime I have a physical reminder of my progress for those nights when I wonder why I’m even trying.

In addition to my goal notebook I carry that silver round in my pocket as I move through my day. Whenever things get tough at work I dig it out, turn it over in my hands, and repeat my goal:

I will do whatever it takes to invest $60,000 in the stock market.

I hope it’s enough.

What do you do to keep motivated about your goals? Please share your stories in the comments below.

A Goal of Freedom

Published / by Annie / 9 Comments on A Goal of Freedom

With all of the work I’ve put in to learn about investing and the stock market I’ve allowed one important piece to fall to the wayside. I need a concrete long-term goal to focus on in order to not only have a measuring stick of my progress but to inspire me during the dark hours.

I woke up this morning with that question burning in my mind. Just what do I intend to accomplish here? It’s not that I want to become rich, though to my current mindset it certainly feels that way. Studying the financial markets, investing in the stock market–those are actions that rich people take when viewed from the eyes of the poor.

And let’s face it: I’ve been poor my entire life. While there have been times of both feast and famine, overall I’ve spent my existence hanging out at the bottom of the food chain. There’s no sin in that but it does color my perceptions.

With the question of my goal in mind I sat down with a cup of coffee this morning. I turned my lucky coin over in my hands as I considered what I want to achieve here. I think I’ve finally figured it out.

I want to achieve financial freedom. I want to get to the point financially where I can work if I want to but I no longer need to in order to make ends meet with some money to spare. The taste of freedom I experienced for those years I lived on my book royalties was beautiful and I want to recapture that. More importantly, I want to do it in a way that can be duplicated by others who want to achieve freedom as well.

The next question is: how do I measure my goal? I can’t just say I want to achieve financial freedom and leave it at that. I need something concrete to work towards and in this case I need a number with dollar signs in front of it to aim for.

I know for a fact that I can live on $500 a month but to be honest I want to aim higher than that. To be truly comfortable living on my own I would really like to have $1,000 a month in passive income but that’s where I run into a problem with my mindset. Every time I run the numbers for the amount I have to invest to achieve that return I choke. It is simply too much money for me to comprehend having personally at this point in my life.

I need a number that I can actually visualize myself being able to achieve within the next twenty years–the time I would like to completely retire. A low number, one that I can actually conceive of to use as a starting point. I can always aim higher later.

If I am able to receive a 10% return in the stock market (which is doable if I’m careful with my investments), it would take a minimum of $60,000 invested to receive a $6,000 annual return.

That’s a number I can work with. Sixty thousand dollars is the price of a nice house. I can conceive of $60,000. I can’t conceive of how I’ll come up with $60,000 at the moment but that’s okay. I know I’ll reach that number eventually if I just keep doing what I’m currently doing–invest my book royalties and any extra money I can afford to invest. I have a workable plan with simple steps to focus on as I move forward.

I’ve currently managed to invest $1,500 into the stock market so far this year. Due to my mis-step with the one stock I’m not up to my 10% return yet but that’s okay. There will be times that I hit, times that I miss, and times that I stumble upon a stock that doesn’t currently issue dividends that is too beautiful to pass up. It won’t be an exact science, especially as I’m learning and I’m comfortable with that. I have no doubts that I’ll work out the kinks as I focus on acquiring that initial $60,000.

I’ve got $58,500 to go. Not bad when you consider the fact that I’m bringing in around $600 a month from my minimum-wage job and under $100 a month (average) in book royalties. It looks even better when I point out to myself that I only started this project in May of this year and I’m not even factoring in the dividends I’ve reinvested so far. While not a huge amount, it’s still a start.

Now that I have a concrete goal it is time to work out the details. How in heaven’s name am I going to come up with $58,500 more to invest in the next few years?

I’ll let you know when I figure it out.

Frugality is Essential for Success

Published / by Annie / 2 Comments on Frugality is Essential for Success

Everywhere you turn these days one can find ads touting this investment or that business as the way to “get rich quick.” Just buy this course or whatever and money will flow into your life like a raging river.

Bull crap. There’s no such thing as “get rich quick.” It’s all a scam to part us with our hard-earned money.  Study the success stories of others and you will discover the truth: it can take years for one to achieve success.

After doing a lot of research I decided to invest in the stock market in order to increase my wealth and financial freedom. This avenue appealed to me because it doesn’t care about your race, your gender, your education–or even how much money you have to spend.

You can literally start from anywhere in the stock market.

The hardest part to any type of investing is acquiring the money to invest. This is especially hard for those of use who live on minimum wage. How can you save up any money to invest if you’re living at your financial limit?

The truth is that you can’t. If you want to buy a house, invest in the stock market, or just save up for a rainy day you must live beneath your means.

Frugality is essential if you want to improve your financial status. You need seed money in order to save or invest; the only way to get that is to live on less.

You can save money no matter what your income level. So far I’ve managed to invest around $1,200 into the stock market and I make less than $800 a month between my royalties and my day job. If I can do it, you can too. I managed this by watching my expenses like a hawk and making savings my primary goal because I know that, in time, I’ll be able to loosen the purse strings a bit as my investments start to pay off.

In summary, know that you don’t have to be wealthy in order to save and invest. You can start right now with what you have. Financial Freedom is accessible to all of us if we learn how to play the game.

If you want to learn how I personally save money read the older posts on this website or buy my book The Shoestring Girl.  I don’t want to bore you here by repeating myself.

Missing the Boat

Published / by Annie / 2 Comments on Missing the Boat

One of the first stocks I researched happened to be the company that originally owned the store I work in. Since they had sold my company off I decided not to buy, but since the owners of my franchise happened to also own another store that was involved in the company, I set up some news alerts just to keep abreast of how they were doing.

The other day my inbox started buzzing. The trading volume on this stock was insane! I loaded a live chart of the action and watched the price of the stock climb higher as new 52-week highs were reached. This stock that originally traded for around $13 in March at their 52-week low was now selling for over $20 a share and going higher!

By the time it was done the company in question had been bought out by another company at over $32 a share. If I had purchased 100 shares of this company at its 52-week low, I would have netted a $1,900 profit.

But I missed the boat.

So what have I learned so far with these two experiences? I’ve learned to always wait to make sure that a stock has bottomed in price before investing. I’ve learned that, while cutting dividends to pay down debt or grow a company may be a good thing that investors don’t agree and the price drops drastically as a result.

I have learned the value of patience and research.

I’ve also learned that I am on the right track. I can invest in dividend-producing companies at their 52-week lows (after checking into why the stock dropped to make sure it is a good investment), hold onto the stock until it reaches a new 52-week high then sell at a profit, receiving dividends while I wait.

I’ve also learned that there is an odd chance that I might get very lucky and make a mint like the one I lost out on. I’m not going to count on that, however. Stumbling upon a coup like that is kinda like winning the lottery, in my opinion.

I’m finally starting to form a game plan. The proof will be in the pudding, however. It will take about a year before I learn if this method will work or not.

I can wait.

A Stock Market Ouchie

Published / by Annie / 3 Comments on A Stock Market Ouchie

While I was digging through the bargain bin at the Stock Market I stumbled across a company with a LOT of potential. This media company, while it has its fingers stuck in traditional media sources like television and radio stations, not only creates its own content but has been slowly transitioning to embrace the new way people receive media. I dug through their financials. They had a lot of debt but were otherwise doing okay. Even better, they had realized that the times were changing and, unlike other companies I’ve researched, they were adapting.

Due to the significant dip in their stock price, the dividend was very attractive, enough so that I continued digging. I realized that this company had something in the works to not only reduce its debt but to continue the transition that I’d discovered. I didn’t know what the plan was but I decided to buy in. I scrounged up every penny I could and bought 191 shares, planning to round it out to 200 shares as my finances allowed.

This stock was trading around $5 a share. I ended up investing close to $1,000 in it. Satisfied, I sat back to see what would happen next. Considering that this company, in the years it had been on the exchanges rarely traded for less than $9 a share I figured I could hold it a couple of years and then sell for a tidy profit while receiving dividends for my trouble.

I woke up one morning a couple of weeks later to discover the stock price completely tanking. My pulse went through the roof as I stared. What the hell? I hit the news feeds. As I had predicted, this company had taken some drastic steps to reduce its debt. It had not only written down the value of some assets in order to save money on taxes by reporting a loss for the quarter, it had used that legal jiggery-pokery as an excuse to slash the dividend payout. The money saved would be used to aggressively pay down its debt.

Oh, the financial reporters were screaming! I could almost see them shaking with rage as they ranted against the dividend cut online. This stock had been considered a staple in dividend portfolios yet the company had the nerve to actually slash it–how dare they! Retirees had been counting on that dividend!

As I watched the value of my investment tank I ran the numbers on the new dividend amount. At the price I paid for the stock the return was still a reasonable 5%, yet people were ditching the stock in droves. I watched as the value of the stock dipped lower and lower, debating. Should I sell and then re-buy when it finally bottomed? I’d already lost over $150 in value when I’d discovered the mess. What should I do?

I sat back, took a deep breath, and let it fall. When last I looked the stock was trading at $3.49 a share. It has lost almost $250 in value since I purchased it. I’ll finish up my lot and perhaps buy even more once it hits bottom, if only because I can tell even now that the company is a scrapper. They are paying down their debt while they work out the best way to navigate the challenging media landscape. While I’ve no idea how this will pan out I’ve got faith.

I cannot believe that I am taking this so calmly. Maybe I have what it takes to be an investor after all.

stop button

Moratorium

Published / by Annie / 1 Comment on Moratorium

Everyone’s needs change over time. You may slow down or stop using an item, or you may start to use something else instead. It’s just a part of life.

For instance, I was a big fan of pencil and paper. I not only write copious lists, I also composed my book/blog drafts and kept a journal in paper format. To save money I stocked up on pencils and notebooks the other year when I caught them on sale.

Since then my needs have changed. My journals are now stored electronically, written in plain text format and stashed on my computer. I save photos, scanned papers, and other relevant items in an annual folder with the file names sorted by date. While I still use pencil and paper for my lists, my usage of these items has went down drastically.

While I’m delighted at the lower cost of maintaining electronic records, the change in my habits left me with a small stockpile of pencils, pens, and notebooks. Instead of having a year’s supply on hand as per my plan, I have a tote of supplies now that won’t get used up for several years.

Since the items will get used eventually it doesn’t make financial sense to eliminate them. In fact, I’m sure my daughter and grandchildren will make a dent in them over time even if I don’t. Even so, it would be stupid for me to add to my stockpile this year. A stockpile is only worth the time and expense when it actually gets used in a reasonable amount of time.

As a result I have now instituted a spending moratorium on certain office supplies. No more paper, pencils, or similar items will be purchased until we use up what we have.

Period.

It doesn’t matter if we stumble upon a cute little notebook with a funny little saying or a crazy-cheap sale during Back To School Season. I refuse to buy what I don’t actually need.

Spending moratoriums can apply to all areas of your life. If you have a sizeable collection of books, music, movies, video games, or whatnot that you haven’t used, it makes sense not to purchase any more until you’ve actually enjoyed what you already have.

If you have food in your pantry that is in danger of going bad, don’t buy more until you use it up.

If your closet is overflowing, stop buying more clothes!

That’s why we stay broke, folks. We spend money on crap we don’t need when we have more than enough already. It’s one thing to stock up on stuff we need and actually use, but when it gets to the point where we have more on hand than we can use up in a reasonable amount of time, we need to stop.

Buying for the sake of buying is stupid.

What areas of your life do you need to impose a moratorium on? Please share your stories in the comments below.

Why I Won’t Invest in Index Funds

Published / by Annie / 8 Comments on Why I Won’t Invest in Index Funds

I’ve had a lot of recommendations concerning Index Funds as of late. It seems that many people believe that they are the way to go.

I happen to disagree, especially with current market trends.

An Index fund is a business that buys shares in some (weighted funds) or all of the companies listed on the stock market. As a result, the value of your investment goes up and down in relative sync with the stock market itself. These have become famous in recent years as Warren Buffett and others began recommending them for folks who don’t know much about the stock market.

I have a big bone to pick with them, however. When you purchase shares in an Index fund, you don’t own a piece of the individual companies. Instead, you own a piece of a company (or fund, whatever you want to call it) that happens to own pieces of individual companies. You don’t actually own a bit of the individual companies themselves.

I prefer to cut out the middle man because I’m ornery like that. Why pay someone else big bucks so they can buy and benefit from the stocks? If I wanted to go that route, I’d simply start collecting shares on my own (which I might do someday).

My primary concern at the moment isn’t quite that nitpicky, however. My concern is with the fact that the stock market seems to be on the verge of a bear market. As a result, the value of Index Funds could drop dramatically. It’s gotten to the point that Vanguard no longer allows its employees to invest in their own product, the S&P 500 Index Fund.

When a cook refuses to eat their own cooking you need to run for the hills because something is seriously wrong.

I believe I know what it is. Here is a screenshot of the S&P 500 Index:

See that slow, downwards trend? That’s the value of an S&P 500 Index Fund starting to go down around mid-January of this year.

Here’s another one:

This is the Dow Jones Industrial Average. It’s been trending downwards as well this year. Like the S&P 500, the trend is gradual, but it’s still there. In fact, the only major one still trending upwards this year is the Nasdaq:

The Nasdaq is very tech-oriented, so its gains are doubtless tied to the FANG stocks (Facebook, Amazon, Netflix, and Google). I suspect that upwards trend is about to change. Look at this:

This is a long-term view of Amazon’s stock rise. See how steep the trend is? If there is one thing I’ve learned during my research, the steeper the trend, the less sustainable it is. Amazon is the darling of the stock market but you can bet your buttons it won’t be able to sustain that momentum forever. It will tank, and tank hard. The only question is when. If you look very closely at the chart (just click on the image to see it full-size), you can see that the top is already beginning to round out. This may very well signal that the price is about to drop, though it is a bit too early to tell at this point.

I read somewhere (I really wish I had saved the link), that it is the FANG stocks currently supporting the stock market averages. Facebook, Amazon, Netflix, Google (now called Alphabet), and by extension Apple, Microsoft, and Intel are providing around 85% of current gains on the stock market. As a whole, over 60% of the stock market is down, so when the FANG stocks plunge, those invested in Index funds will see their nest eggs wiped out.

The worst part is, that plunge is already starting. Here is a screenshot from Facebook’s stock:

See that big drop, like the stock fell off of a cliff? It will take them months, if not years, to recover. I suspect that the price of the stock will fall even lower before it’s done since they usually do.

Here is Netflix:

Netflix is on its own roller coaster ride downwards.

Google (Alphabet) is the only one of the primary FANG stocks that seems to be in a stable trend upwards:


So out of the four primary stocks fueling market gains, only one of them seems to have the ability to continue to move upwards for the long term.

In addition to this, as I look through what I call the “bargain bin” I am noticing that many of the stocks there began a major downtrend in January, coinciding with the start of the downward S&P 500 trend that’s starting to appear. My guess is that these companies are the “canaries in the mineshaft”–more sensitive to change than the overall market. I’m seeing stocks that traded for $5, $10,  or more a share prior to that time taking a sudden drop–and staying down despite the fact that nothing within the company has really changed.

I may be far from an expert but to me the warning signs are significant enough to pay attention. We may not be in what is called a Bear Market right now (I don’t even think they are calling it a correction yet) but I highly suspect that one is coming. Those who are heavily invested in high-flying stocks like the FANG group or so-called “safe” Index Funds will be hurt the most if I’m correct. Vanguard has apparently seen the writing on the wall but since they will make money on their Index Funds regardless of how well (or poorly) they do, they will continue to market them to the unsuspecting general public as they protect their employees by not allowing them to invest in it.

In conclusion, as a result of my research, my answer is a firm no. No, I will not invest in Index Funds at this time. If Vanguard doesn’t even recommend for its own employees to invest in their product, I refuse to touch it with a ten-foot pole.

I hope you understand my reasoning now. This is why I firmly believe that my best bet is to scrounge around the “bargain bin” for companies already suffering from the downtrend. For the record, all of this could very well blow over–if it does and my concerns are eased, I will consider the investment.

For Further Reading:

Top Economist: Get Ready for a Stock Market Drop

Why the 1929 Stock Crash Could Happen in 2018

‘A storm is brewing’ in the US economy, says economist Diane Swonk

The Challenge of Investing in the Stock Market

Published / by Annie / 17 Comments on The Challenge of Investing in the Stock Market

One of the major challenges of entering the stock market on a shoestring is brokerage fees. These are fees that you have to pay any time you buy or sell a stock. While there are a number of discount brokerages out there, many of them require that you open an account with anywhere from $500, $1,000, or even more. When you live on minimum wage, saving up that sort of money can be daunting!

Once you open a brokerage account the challenge doesn’t stop there. In order to reap a profit you have to factor in those fees. For instance, the last I checked, a popular Dividend Aristocrat, Proctor and Gamble (PG) was trading at $79.28 a share with a quarterly dividend of $0.717.

Think about this. You work minimum wage. If you’re lucky, you might be able to save up $100 to invest every month or so. That means you will only be able to purchase a single share of the stock at a time. Using my brokerage fee of $6.95 as a guideline, in order to purchase a single share of Proctor and Gamble at $79.28 a person would actually have to spend $86.24 for the privilege. If you were just investing for dividends, it would take you over 27 months just to recoup the fee you paid to buy the stock! I’m not including the potentially increased value of the share itself since appreciation is not guaranteed. In fact, the value of your stock can tank overnight so in reality, when one invests for dividends the safest attitude to have is that you might very well lose the entire price you paid for a stock if the market turns. Even if the market didn’t turn against you, in order to receive a profit from that single share you would have to wait until the stock sold for over $93.19 simply to recoup the amount you paid to buy and sell it!

With that sobering reality, it would be better for the shoestring investor to stash their cash in a savings account.

So how do these big dog investors make money then? They buy in bulk, that’s what they do. It costs the same whether you buy one share or 100 shares so they leverage that to reduce their trading fees to an acceptable level.

Using Proctor and Gamble as an example, if a person bought 100 shares of the company the trading fee works out to seven cents a share to buy, or fourteen cents a share to both buy and sell. The first round of dividends would be $71.70, an amount that completely covers the brokerage fee to purchase the stock and netting a $64.75 profit. Every quarter after that would be pure profit. When the stock increased in price just fourteen cents a share, the brokerage fees would be covered even if you didn’t hold the stock long enough to receive a dividend.

There’s one major problem with that scenario, however. Folks on minimum wage generally don’t have $7,928 to invest at one time. While you can adjust the numbers to accommodate purchasing a smaller amount of shares, one has to be very careful. The goal here is to make a profit–not give it all to the brokerage firms!

My goal here is not to just feather my nest. I want to work out a way that an average person on minimum wage can invest in the stock market and receive a profit. With that in mind I am going to rule out the big dogs as an investment option. While I’m good at saving money I have no desire to save up an entire year’s wage before I could invest.

There has got to be a better way. I have noticed that there are a lot of companies who have seen their stock prices tank starting back in January of this year. I am going to sift through this “bargain bin,” searching for quality companies to invest in. To minimize my trading fees I intend to purchase no less than 50 shares at once, though if at all possible I want to be able to acquire a minimum of 100 shares per purchase.

Is this risky? Yes, it is. I could very well lose every single penny I invest in the stock market using this method but that’s okay. The very worst that can happen is that I have to continue working until I die. Considering the fact that I’d have to do that anyway, the fear doesn’t bother me.

This isn’t the first time I’ve risked everything. When I left my husband, all I had to my name was a ratty old mobile home. I didn’t even have a job when I started but I made it work. I risked it all again when I decided to become a full-time writer. I managed to live on my royalties for several years as a result of that leap.

As for this? This is about more than just me. If I can pull this off, if I can figure out how to play this game and make a profit, I can figure out a way to distil what I’ve learned and teach others how to escape the rat race. I’ll not only achieve my own personal financial freedom, but I’ll be able to help others do it as well.

I’ve got to try.

 

How I Made an 82.82% Investment Return on $7.56

Published / by Annie / 4 Comments on How I Made an 82.824 Investment Return on $7.56

One of the smartest decisions I have ever made was to take business classes in high school. I learned how businesses save a fortune simply by buying the items they use in larger quantities instead of as they use them. Unfortunately, this teaching runs counter to how many people manage their finances. They only have so much money until payday that they need to spend on A, B, and C. While they’re at it, they also want to eat out a time or two so instead of stockpiling something they use every day (like bathroom tissue) they purchase just enough to last until their next paycheck arrives.

This is why so many people stay broke. They think short-term instead of long-term in regards to their purchases.

The truth is this: when you purchase items in bulk you can save a small fortune. It doesn’t take a lot of money to do this, either. All you have to do is select a single item that you use regularly and purchase a larger quantity when you run low. Eventually you will amass a stockpile that will save you a LOT of money in the long run.

For instance, I am a big fan of melamine sponges (magic erasers). Add a little water to these beauties and you can clean almost anything without a lot of scrubbing or unhealthy chemicals. Despite the fact that they tear up easily, these little sponges are an essential part of my cleaning arsenal since my time is limited these days due to working a public job, volunteering, and writing.

A two-pack of these sponges costs $1 if you purchase the generic brand at my local Family Dollar so I usually stock up whenever I make it to WalMart since they cost 88 cents for a two-pack there. I realized that I might be able to apply the bulk buying principle to these erasers. I went online and discovered that I could purchase 100 of these sponges at Amazon for $7.59 with free shipping.

I saved almost a day’s wage just by buying them in bulk! If I were to purchase 100 of these sponges at my local Family Dollar I would have spent $50 before tax. If I had bought them at WalMart I would have spent $44. I saved $42.44 and $36.44 respectively as a result.

I don’t know about you but I love having an extra forty dollars in my pocket. I would rather have that money to spend on other items instead of spending it on a single item. This one purchase earned a whopping 82.82% return on my initial investment. Considering that you’re lucky to receive 1% interest on a savings account these days I consider this a major win!

While it might take several years for me to use up that supply of sponges they neither eat nor drink so they will cost nothing to store on my shelf. Even better, I won’t have to worry about the cost of these sponges going up for some time in the future.

Today I have a challenge for you. Instead of spending seven bucks at your local fast food dive for a bunch of unhealthy junk food, why not invest that money by buying something in bulk that you use on a regular basis instead? Shop around for a good deal on an item you use regularly and stock up to maximize your savings. When you’re done, calculate how much money you saved and share it in the comments below.

You will save a fortune.

Bargain Food

Published / by Annie / 1 Comment on Bargain Food

One of the ways I stretch my dollars is by taking advantage of the fact that I work in a grocery store. Every single shift I look around for good deals and take advantage when I can. For instance, when my employer issued coupons for a free 24-pack of bottled water with a purchase a while back, I bought some groceries and squirreled away the water in our assigned area so I would have something to drink on my breaks–completely free.

One major way I save money is on milk. I wait until we mark down the ones that are nearing the expiration date to buy as much as possible. Since a gallon of milk costs $2.49 here that saves us quite a bit! I keep our refrigerator on the coldest setting so that the milk doesn’t spoil before we use it.

We do the same with eggs and other items. 

This is one reason why I am very thankful that my daughter and I work in grocery stores. We both do this routinely in order to save money. While I’ve not calculated exactly how much we save doing this, I’ve no doubt that we manage to pare down our expenses by a couple hour’s wage at the least. Over time that adds up.

Does your current situation allow you to save money on things you need and use? Please share your stories in the comments below.