Credit Card Victory, Part 1

The big news of the day is that Shiner and I can get married now.

Longtime readers know that last year, shortly after Shiner and I decided to get hitched, he added up all his credit card debt at my request and was (understatement) surprised and alarmed to see that it totalled almost $42,000. That was more than his annual salary.

So I freaked out about getting married to someone with so much debt, he freaked out about how freaked out I was, the wedding was off, there was much crying and angsting and a not insignificant amount of swearing at the supreme suckiness of the situation. Finally we reached an understanding. He rejiggered his cards so that he had $13,797 on two 0% APR cards and $28,138 on his American Express card. I told him I wanted the interest-accruing debt, all of it now crowded together on his AmEx, paid off by the time we got married in January 2009. Otherwise we'd postpone, vendor deposits be damned.

Some people will tell you ultimatums are passive aggressive, but I believe they are neither passive nor aggressive. Saying "this is what I need in order to feel safe and good about myself, and even though I love you I cannot sit right with less" is just about the most heart-twistingly honest thing I have ever said to anybody.

As of this morning, his AmEx debt is no more.

We are getting married, really and truly for real.

Drama In Real Life: Inadvertent Market Timing

For the last couple of years, I have made my IRA contributions in a lump sum rather than dollar-cost averaging them over the course of a year. When I first started working, I was making a high enough salary that I wouldn't know until December, when my firm distributes year-end bonuses, whether my Adjusted Gross Income (AGI) was too high to be able to contribute to a Roth IRA. Last year, my AGI ended up being too high for a Roth so I opened a traditional IRA, with an eye to converting it to a Roth in 2010.

I started off 2008 knowing my income would once again be too high to contibute to a Roth, but I held off on contributing for two reasons.

The first reason was habit: ever since I opened my Roth when I was in high school, I've contributed in a lump sum at the end of the year. Every year when I walked through my income taxes with my Dad, he'd ask me how much I had to contribute to my Roth, and he'd top it off. I think it was just less of a logisitcal headache for him that way and made the look-back accounting easier, and it never occurred to me to contribute over the course of the year.

But the second reason I held off was that my IRAs, both the Roth and the traditional, are with Vanguard, which has somewhat hefty minimum initial investments. Last year I put my total $4,000 contribution into the Vanguard 500 Index (VFINX--I love calling it that, it sounds so minxy), Vanguard's S&P 500 Index. That fund has a minimum initial investment of $3,000, as did several of the other funds I was looking at. I planned to put my 2008 contribution into another fund, probably Vanguard's Total Stock Market Fund, and depending on how much money I had in VFINX, potentially spread that money a little thinner into three funds, with the third being an overseas market fund.

That won't happen now, since VFINX has lost so much money this year. As of yesterday, my initial $4,000 investment has become $2,755. But c'est la vie. I'm in my twenties, baby.

So I waited until I had at least $3,000 set aside to make a 2008 contribution. That happened with my September paycheck, since I didn't set any money aside in the early part of the year until I could build up the emergency fund again after my emergency furnace purchase. As of October 1, I had $3,160 set aside for an IRA contribution. I'll continue setting money aside, and I plan to contribute the whole $5,000 I'm eligible for.

But it just so happened that acheiving my $3,000 benchmark roughly coincided with the stockmarket going up in flames. It is, so I hear, a great time to buy.

So of course, I didn't buy. I sat on it for about a week, dithering about whether I should go ahead and throw down or sit on my liquidity. Just in case. And I could do a single lump contribution at the last minute. But it's such a good time to buy! But I like my big fat savings account balance! But it's such a good time to buy! You know: My mother! My sister! My mother! My sister!

Anyway, I pulled the trigger today. $3,160 is now floating somewhere on the internet between HSBC and Vanguard. We'll see how my reluctant run at market timing shakes out. I am left with a soggy feeling that no matter which route I chose I would have ended up feeling stupid and regretful about it later on. Better or stupid, regretful, and bold. (Yes, I tolerate risk somwhat well, why do you ask?)

Boys v. Girls, Allowance Edition

MSN offers anecdotes and sterotypes to prove that boys are savers and girls are spenders. Look, kids! It's science!

The article muddles the nature and the nurture aspects of trait development in a way that is really not useful, but the underlying point makes sense: kids whose parents talk to them about money in an age-appropriate way and who model good financial decisionmaking are more comfortable with money management as they get older. And if parents treat boys and girls differently in how they address these issues, then of course their boys and girls will learn different lessons about money. What a revelation.

I owe much of my confidence, financial and otherwise, to my dad. I was an aggravatingly independent kid, and he tapped into that to educate me about money. I had a passbook account when I was a kid that I could put my allowance and birthday money into, I understood how interest and delayed gratification worked. I got to make decisions about what spend on and what to save for. As you might imagine, I was a big saver, but oh how I loved the She-Ra castle I bought with my own money. As I got older, I got a set amount of money to cover back to school clothes. I went shopping at thrift stores and spent the difference on CDs and concert tickets. When I started babysitting and later working at Wendy's, he started talking to me about retirement accounts and helped me set up a Roth IRA. The last time I saw my dad, a month or so ago, he buttonholed me about the need for Shiner and me to get life insurance after we get married. My brother is about a decade older than I am, which means we were never getting the same financial advice from my dad at the same time. We just weren't in the same circumstances--my brother was dealing with student loans when I was saving up for my She-Ra castle. But my dad has always expected both of us to be independent, financially responsible people. I never got a pass for being a girl. Thanks, dad.