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Mega commutes: painful but (somewhat) avoidable?

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megacommute Mega commutes: painful but (somewhat) avoidable?

Studies have long shown that a long commute is one of the most stressful experiences in a workers’ day. The unpredictability, the lack of control over the situation…it all contributes to deep unhappiness and/or severe road-rage that extreme commuters have all faced at one time or another. Slate just came out with an interactive graph that calculates average commute times by zip-code.

My most recent location is a mere 18 minutes in average commute time. My previous locations all clocked 20-30 minutes in average commute time, but I know from experience that I was – unfortunately – definitely above average in this aspect.

My longest commute was at my last job, where I drove 65 miles (more than 30 miles each way) to work every day. It was one of the most painful aspects of my job, as the commute would stretch from 40 minutes on a “good” traffic day to a mind-numbing hour-plus on a day with a few accidents or weather issues. Eventually I started working from home on Fridays, but the Monday to Thursday commute still took 7-8 hours of my life. (I couldn’t move closer to the office, because CB’s work was all the way at the other end of the county, and he had a 70 mile round-trip commute.)

Some commute, sometimes, is unavoidable, but I am hoping that I can structure my life to avoid the mega-commutes. At my next job, I hope to be able to live within a 15-20 minute drive of the office, maybe even closer. I do not know what kind of opportunity could make me a “megacommuter,” or someone who drives 90 minutes to work on a regular basis, but even if it’s an opportunity I can’t turn down, I would rather move than make a drive like that. A long commute is not just about the money you’d spend on transportation/increased housing prices, it’s about your quality of life.

What is the average commute time in your zip code? Is your own commute longer or shorter than that?

Marathon interview sessions: surviving the longest wait

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marathon interviews Marathon interview sessions: surviving the longest wait

The job search process can be trying, especially if the job interview you prepared so hard for doesn’t work out. But maybe getting a definitive “no” is better than waiting and interviewing for the 7th, 8th, or 9th time for the same position, and then getting the “no” months later. Unfortunately, because of a still stagnant labor market, employers’ uncertainty, and so many folks out of work and eager to find jobs, the interview process has been stretched longer and longer – the New York Times called them “marathon interview sessions.” According to the article  “With Positions to Fill, Employers Wait for Perfection”:

“There’s a fear that the economy is going to go down again, so the message you get from C.F.O.’s is to be careful about hiring someone,” said John Sullivan, a management professor at San Francisco State University who runs a human resources consulting business. “There’s this great fear of making a mistake, of wasting money in a tight economy.”

As a result, employers are bringing in large numbers of candidates for interview after interview after interview. Data from Glassdoor.com, a site that collects information on hiring at different companies, shows that the average duration of the interview process at major companies like Starbucks, General Mills and Southwest Airlines has roughly doubled since 2010.

I have recruited through a school twice: once in college, and once in business school. One of the best perks about interview through such a structured process is that students know they will get an answer – either good or bad – within a reasonable amount of time, sometimes as short as a few hours, but definitely within a couple of weeks. The hardest part about the job process is the wait, and I am so grateful when the wait is minimized to the extend it could be.

In college, a few positions I applied to took only one day of interview, but what a day that was: the interviews started at 8am or 9am and lasted 4-5 hours with 10-minute breaks in between.

During the MBA summer internship recruiting, my interview with a firm that shall go nameless lasted the longest in term of sheer hours: 2 hours for a first round interview, and then 4 hours for a final round interview. Fortunately, the turnaround time for most positions occurred very quickly – I had my final round of interviews with the company I will intern at during an afternoon and got a phone call with the good news just a couple of hours later.

The longest successful interview process I’ve had consisted of 4 rounds over a month: (phone screen with hiring manager, in-person round 1: interview with HR manager, hiring manager, and associate, in-person round 2: interview with director, in-person round 3: interview with CEO). It was a grueling process, but what made it easier was that the manager was actively trying to fill the role and gave – and followed through – on definite timelines when I would hear the results. I really appreciated the way the process was conducted, and thought it reflected well on the company that it treated candidates’ time with respect.

What was the longest interview process you had? Have you been through a marathon interview session with more than 6 or 7 separate interview rounds?

Improving Finances By Moving to Lower Cost of Living Area

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It’s amazing how much cost of living differs from locale to locale. A $100,000 salary would mean you are sitting pretty in Des Moine, Iowa. That same salary, while still substantial compared to the wider population, may leave you scrambling (if you are not careful) in Manhattan or San Francisco.

I would know – I grew up in Southern California, land of perfect 75-degree weather, 300 days of sunshine, tons of delicious ethnic food, access to beautiful mountains and sandy beaches, and proximity to family and friends. The couple of years before I quit my job for school, I grossed around $80,000 to $90,000 annually. Not a shabby income, but it was still a struggle to save as much as I wanted or to get ahead financially as quickly as I wanted. After graduation, I plan to move to the Dallas-Fort Worth area for job-related reasons and a much more favorable cost of living (the weather, while not as great as SoCal’s, is good enough to keep this warm-weather gal happy).

home comparisons1 Improving Finances By Moving to Lower Cost of Living Area

A look at CNN’s Cost of Living calculator confirmed it: let’s say that I can make $125,000 in Texas after graduation. To achieve a comparable standard of living in Los Angeles, I would have to make $172,000, or an increase of almost $50,000! Or, put another way, a salary of $125,000 in Los Angeles gets me what $95,000 in Texas does. I understand the expensive locales are expensive for a reason. You’ll never find a dearth of people who will flock to New York City or San Francisco or Washington D.C. The older I get, however, the more I realize I don’t want to have to pay so much for my quality of life or have home ownership be so far out of reach. I am not afraid to work hard for the comforts I want, but it’s also nice if I can work hard, have my comforts, and then be able to save a lot more money for the future.

Many jobs in bigger cities offer a higher salary, although the difference is often not enough to make up for the increase in living costs. For instance the average annual salary in Sydney, Australia is close to $90,000 but this is offset by the high cost of living, especially in the real estate market. Many financial institutions (e.g. UBank) now offer mortgage refinancing. Once I started school, I realized that most post-MBA positions at big consulting firms and investment banks start at the same pay regardless of location. This means that an investment banker can make $225,000 in Charlotte or $225,000 in New York City and a consultant can make $130,000 in Chicago or San Francisco. Same paycheck, BIG difference in what a person can buy and how much he/she can save. Especially with student loans.

I used to think “I’d NEVER move out of Southern California.” Then I visited some other (cheaper) parts of the country and realized it wouldn’t be the end of the world if I moved out of SoCal for a while. Then I moved for business school and started paying $550 for rent while my friends at UCLA or Columbia are shelling out double that amount and realized it’s really great not having to spend so much money on housing, cars, etc. Living in a lower cost of living area makes one’s financial life so much smoother – to an extent that I haven’t quite realized until I’ve moved to such an area. I still love California so much, but I also realized that it’s beneficial to my career and my finances to go elsewhere, at least for the first few years after graduation.

Have you moved (or would you consider moving) to a lower cost of living area for primarily job-/finance-related reasons?

Job-Justified Purchases

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I justify a lot of purchases under the guise of work or career-related reasons.

A good friend of mine who landed an awesome consulting internship showed me his new gift to himself: a gorgeous Coach laptop bag with smooth dark brown leather and understated brass buckles. In return, I confessed my own splurge in celebration of my internship: a Briggs & Riley Baseline carry-on bag.

A few days ago, a sample site featured some discontinued Briggs & Riley luggage, and I managed to snatch one up for $230, more than 40% off its retail price. It was undeniably a luxury (I have a $35 bag from Marshall’s that has served me well for the past 2 years), but as I may travel weekly for my summer internship, a good piece of luggage is important. See, justification, right there.

I mostly justify clothing and shoe purchases and feel much better about buying something that is a little bit more expensive if it is work appropriate. I have also justified nice haircuts, facials, and even gym memberships under the work heading. During internship interview season, I took taxis to school almost every day, even though I could have conceivably woken up early, taken the bus, changed into my suit at school, and then headed to the interview. I chose not to and justified the $11 cab ride to school quite guiltlessly.

For many reasons, I feel that it’s OK to spend when it’s spending to help me do a better job at my job.

What purchases have you justified under the “it’s for work!” setting?

Dreaming Home Ownership Dreams

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Here’s a confession: I have already started dreaming about what life after business school would look like. In particular, I have been dreaming about home ownership, about buying my own little pieces of real estate.

Here are a few things that made this dream, while premature, firmly within the realm of possibility.

  • We will likely live in a state that has a reasonable cost of living and no state income tax. Yee-haw! Plus, there are actual 2-3 bedroom single family homes that can be had for under $400,000, within a few miles of downtown. As consummate real estate dreamer whose real estate clock has been ticking since 2009, I have already checked several realtor websites and listings. This gem of a house below, for example, is listed at $370,000.

house red door Dreaming Home Ownership Dreams

  • When I got my summer internship offer letters, I pulled out my calculator and crunched some numbers. These summer jobs are a pipeline to a full-time position, and a full-time salary would basically double my pre-MBA salary. Depending on how successful CB is at his job search in this new city, our gross household income could potentially hit the $200,000 mark, or even a little more, depending on bonuses. Again, no state income tax! Real estate we can actually afford! Tears of joy.
  • This realization has renewed my interest in personal finance and in saving aggressively. Because, c’mon, I really would love to own a house with a red door.

Here is what I envision for our path to homeownership:

(1) I work hard and do really well at summer internship and get full-time offer, (2) CB find new job in new city, hopefully one that helps him make the career transition he wants, or, (2b) CB goes to grad school and we try really hard to pay his tuition in cash, (3) I try really hard to graduate MBA without loans or only take on minimal amount necessary, (4) we save save save for a down payment, in addition to retirement, (5) I do really well at full-time job and get a promotion 2 years out, (6) we buy a house in 2016!

It is going to happen.

Getting The Job

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Back in July, I decided to spend essentially my life savings and borrow from family to get an MBA from a well-ranked, full-time program. 90% of the reason was so I can make a career transition. Recruiting started in September – industry conferences, corporate presentations, informational interviews, invitation-only dinners and receptions, women’s career panels,  etc., etc. Then applications, first round interviews, nail-biting days or weeks, then second round interviews, then finally, a decision.we

Here’s what the process looked liked for me, in numbers:

  • Applied to over 30 jobs, 90% of which recruited “on campus”
  • Got over 20 first round interviews
  • Was invited to 14 second round interviews
  • Came out on the other side with 5 awesome offers that I am so grateful to have!!!

This recruiting process has been so stressful, both emotionally (information flies at 90 miles a minute at school so I tried extra hard not to be pulled in to the “she got that interview and I didn’t and now I will never find a job” death spiral) and physically (I have spent the last SIX weeks fighting a stubborn cold, cough, sinus infection, and other joys). Looking back, I probably applied to more jobs than I needed to. But the Career Management Center did a very good job of scaring me about the perils of not applying to enough jobs and then having to scramble once February ended. So I raised my fist like Scarlett at the end of Gone with the Wind and vowed, I am NEVER going to scramble for an internship! and then applied to, well, a lot of jobs. Which resulted in many, many hours of networking and interview preparation.

But with the help of many awesome alumni and a good dose of luck, I made it and I’m very very happy and excited about the results. Now comes the process of deciding which of these offers I am going to take. I look at the summer internship as a springboard into full-time employment after MBA (please, I can’t go through recruiting again!), so this decision takes on an extra weight. But again, so happy to have the option of choosing, and to be choosing among options that are such great opportunities.

In the meantime, I desperately need to catch up in class. Good-lookin’ GPA… good-bye.

Stories of the Unemployed

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Got 10 minutes? These unemployment stories from Gawker are definitely worth a read.

Unemployment Stories Vol I: Hello from the Underclass

Unemployment Stories Vol II: We are the Unseen

As someone who has experienced a layoff, I’ve realized how important a career is to me, not only for financial reasons but also for personal and identity reasons. Unemployment is a huge shock to the system, and it’s a shock that many people have to overcome while they are wrestling with questions of self-worth, with the feeling of being forgotten, along with the more practical problems of how to pay rent, buy food, and see a doctor.

I will never, ever take for granted my ability to support myself financially, and I will never, ever look down on people who have gone through long-term unemployment (or even short-term unemployment).

Long Distance Relationship & Getting Ahead Financially

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long distance relationship Long Distance Relationship & Getting Ahead FinanciallyIn an ideal world, I doubt many people would move 3,000 miles away from their husband or wife a month after saying their wedding vows. But in the real world, that’s the situation CB and I are faced with, a move can save us some serious cash. That makes me wonder: would you enter into a long-distance relationship with your significant other because of financial reasons? Minimizing loans, attending a better school, securing a job, or winning a bigger promotion are all admirable goals, but what if they can only happen if you commit to living apart for hundreds or thousands of miles?

Long distance relationships and marriages and becoming more common, to the point that the US Department of State has coined a new term, “geographic singles.” Another term is “commuter marriage” or “weekend marriage,” representing folks who work too far apart to see each other during the week. During tough economic times, many couples are willing to live apart for a paycheck. Then there are the super LDRers who engage in transcontinental relationships and arrange for romantic weekends in Europe when one partner lives in the U.S. and another lives in Asia.

CB and I have always knew that a long-distance marriage would be in our future, for at least a few years. But we are now considering going from same-coast long distance (2 hour direct flight) to opposite-coast long distance (6 hour flight + layover = 8+ hours of travel). This is a move that could save us up to $50,000 in students loans. Is NOT having to repay $50,000 in loans (which would cost us $60,000 of net income once taxes and interest are factored in) worth putting 3,000 miles between the two of us for a year?

Long distance relationships and getting ahead financially: would you do it sometimes, always, or never?

“Women should have the choice to stay home or work.”

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When I read articles and blogs that discuss stay-at-home parenthood, I often come across something like this line: “Women should have the choice to stay home or work.”

Now, that line has always disconcerted me, though probably not for the reasons you think. I believe caregiving should be recognized as a very real and very important contribution. And instead of each side fighting the other, we’d be happier if we focused on being guiltless moms (and dads!). But that line is disconcerting because of how our discussion of working vs. caring at home is framed. Think about it. The first thing that jumps out at me is “women.” If only women have the choice to be the primary caregiver or do paid work, then it presupposes that their partners (typically men) do not have that choice. After all, unless there is independent wealth, a family needs to work to sustain itself. I have never heard the corollary: “men should have the choice to stay home or work outside.” Even though there are very dedicated stay-at-home dads out there, and their ranks have been increasing for the past decade.

For reasons I can’t quite articulate the emphasis on women’s choice to stay home vs. work has always bugged me. I guess it’s because it frames parenting and career in such a gendered way. It seems unfair to both women and men. It is unfair to women because it assumes that only women will be struggling with this decision, and that if anyone quits it will be the wives because of their sex. It is unfair to men because it assumes that men leaving paid employment for caregiving is not a choice that is open to them or their family.

Furthermore, only a dual-income family have the choice to downshift into a stay-at-home parent / one working parent. Both partners/spouses cannot choose to both NOT work and stay home. Single parents, unless they are, again, independently wealthy or have significant financial support from outside parties, do not have that choice at all.

I am certainly not an expert on work, life, and family (for those, I encourage you to visit the blogs of these fine folks), but I’d like to propose that instead of defaulting to “women should have the choice to stay home or do paid work,” why don’t we talk about how “families should do what is best for their situation.” Sometimes that means both spouses work hard at big careers, sometimes that means one parent holds down the long hours and one parent has a more flexible schedule, sometimes that means one parent work and one parent stays home, and sometimes that means both parents work part-time. Over the course of a lifetime, these roles can change and emphasis on career-building vs. family time may change as well.

What do you think? Should we be talking about caregiving and work in less gendered terms?

Save Money or Quit Job, End Lease, and Travel to China for 3 Weeks?

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Once I found out about business school, my plan was to work until the end of June, give myself a few weeks to relax and move, and then head back to school in July/August. Last night, however, I started thinking that maybe… for this time in my life, I can afford to be a little irresponsible.

I am considering quitting my job at the beginning of May, ending the lease on our apartment, and packing up to travel China for 3 weeks. Should I do it?

YES, because:

  • CB and I will not have 3 weeks to just go travel for the next few years. After graduate school we will be busy working, paying off student loans, being “adults.”
  • It would be nice to see and introduce CB to part of my extended family. Plus, China is part of my heritage and I’d REALLY want to go back beyond simply wanting a vacation.
  • We are willing to stay in hostels and take night trains to stay on budget, and for part of the trip we will be guests of my uncle and aunt, who will undoubtedly insist on paying for most of our expenses. The whole trip, including international airfare from LAX to Beijing, will probably cost $4,500 for 3 weeks. If we only go for 2 weeks, we can probably swing it for $4,000.
  • Ahhh! China!! THREE WEEKS! (can you sense the excitement?)

NO, because:

  • That $4,500 we’ll be spending could go to graduate school tuition… which will be sorely appreciated by our Future Indebted Selves.
  • Quitting almost two months early means that we will be cutting our 401K contributions by $3,500+. Not a small figure. We will also have to front our own insurance (COBRA or buy a temporary insurance) once we stop receiving employer-sponsored coverage.
  • It will be much more challenging to max out our Roth IRAs (we will still do it, just might have to take some money out of savings to do so).
  • We won’t be, you know, making money.

I talked to several of my friends, and they all said that I should go travel. In my heart of hearts, that’s what I want to do. From past experience, trips deferred just don’t happen. My girlfriends and I had planned on a Mexican cruise in 2009. But we kept pushing it further and further down the schedule, until no one even talk about it anymore. I do not want CB and my China trip to suffer the same fate. But the money. Ouch.

If you were in my situation, what would you do? Or would you strike for a compromise – taking a 2-week vacation in May and quitting in June as planned?

How to increase your chances of landing your dream job

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This post is sponsored by RBS Insurance, a leading British general insurer.

Despite the doom and gloom in the media about how jobs are increasingly hard to come by, the fact remains that if you maintain a positive outlook and take the necessary steps to stand out from the crowd, you’ll find the right opportunity sooner rather than later.

There are a number of simple, logical moves you can make to increase your employability — things that will help you rise from the mass of identical applicants and straight to the top of the pile.

Tailor your covering letter

Having one well-written ‘catch all’ covering letter will put you ahead of a lot of the field — but to really stand out you’ll need to tailor a new covering letter for each application. The effort won’t go unnoticed and it’s an easy way to score a few vital points before your prospective employer has even got to your CV.

Preen your CV

It’s good to talk yourself up and demonstrate any relevant experience but it’s also important to be concise. Recruiters have a lot on their plate on any given day, so if they come across a four-page CV you can bet they won’t make it through all of it. Try and get yours down to a single page if possible or a couple of pages at most — that’s still enough to entice potential employers with the pertinent information.

Get smart

It might sound like a no-brainer, but if you manage to land an interview dress smartly for the occasion. You may well feel like ‘smart casual’ will be good enough but unless you’ve been told that specifically by the recruiter themselves, don’t take any chances. Don’t turn down a great chance to make a good impression from the off.

Read up

If you’re heading to an interview, don’t expect to be able to just turn up and dazzle them with your natural wit and charm. It’s vitally important that you’re able to demonstrate knowledge of the company that you claim to want to work for. An early question is likely to be: ‘Why do you want to work here?’ If you can’t answer that well, then you may as well not turn up at all.

Get ahead

A sure fire way to stay two steps ahead of the majority of your competition is to gain relevant experience in your chosen field. For instance, if you’re having trouble landing insurance jobs, scour the internet for news of work placement opportunities or internships within insurance companies. Not only will it look fantastic on your CV, but you’ll also make valuable contacts or even put yourself in the frame for permanent work at the company that takes you under its wing.

Does It Matter Who Makes More Money in a Relationship?

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The progressive, egalitarian answer to the question “does it matter who makes more money in a relationship” would be “no,” right? It doesn’t matter because we should love people for who they are and not how much money they make. It doesn’t matter because money doesn’t define a person’s worth nor his/her contributions to a relationship. It doesn’t matter if it’s the man who makes more or the woman who makes more because we are beyond such gendered roles. Oh if it were only that simple!

Historically, men have done the lion’s share of bringing in income. Our current tax code is based on the assumption that there is one breadwinner in the household. Couples who make wildly disparate incomes often have a “marriage benefit” (i.e. they would pay less in taxes than if they were unmarried), while couples who make roughly similar amounts suffer from a “marriage penalty.”

There are research and anecdotal evidence that says men prefer women who make less money and women prefer men who make more money. When I was young I thought that was silly – especially men who wanted their spouse who makes less money. Why would you want LESS money if married folks combined all their money anyway? (Keep in mind that my understanding of “married folks and money”was based on a sample of 1: my parents). But in fact, my mother once told me that a marriage would be function more smoothly if the man made more money, even if it’s just a little bit more. Now my mother is a very wise woman, and life has proven her right time and time again. But I am hoping she isn’t that right on this issue.

My Personal Take

CB and I met in high school, so we were both as broke as a joke when we started going out. The highlight of those early days of courtship was Krispy Kreme’s free donut hour when the staff passed out complimentary glazed donuts. In teenage girl parlance, I heart delicious fried dough. (Still do!)

When we dated after college, we took turns paying when we went out. When we moved in, we split the rent according to our incomes and divided everything else down the middle, but we never kept very close accounting of who owes whom. Once we are married, we (and the State of California) are going to treat whatever we bring in as ours, not his or hers. Right now I make around 6o% of our income and CB makes 40%, but that hasn’t caused any friction so far.

I’d like to think this is the bottom line: I don’t care much if I make more money or CB makes more money – I just want our little economic/love unit to make more money, period! Haha. In other words, we’re playing on the same team. There will be times when I make more and times when he makes more, but it shouldn’t matter that much as long as we are both doing our best. I can definitely see conflicts, though, if one of us is out of a job without trying hard to find a new one or if our financial situation drastically worsens. Even though things are going fine, sometimes I think about what my mother has said. Am I too much of a Pollyanna? Is there something that my mom foresee that I can’t quite grasp right now?

What My Friends Say

One of my girlfriends said that she looks for a man who will make more money than she does, because she wants to feel that sense of financial security of NOT being the breadwinner. She also wants the option of staying home with kids later on, which would be easier if her income was a smaller portion of the family pie. Her reasoning makes perfect sense. In fact, I think it’s brave and self-aware of her to understand that about herself, because I know many women have conflicted feelings about this issue, but it can be difficult to say that you want your husband to make more money without sounding superficial or materialistic.

I have another friend of mine who has an MBA from a top school and a job making $100,000-plus. One evening, over a bottle of wine, she laid out this dilemma. She said that when she writes her Match.com dating profile, she is torn between three choices: (1) leave the field blank – but she doesn’t want to be excluded from search results that specify an income range, (2) write down her true salary range – but she has found that many men would not contact her because her salary is higher, and (3) lie about her salary, maybe put down a $40,000 instead – but that also feels wrong. What should she do?

Then again, I also talked to a guy friend who says that his ideal woman is gorgeous, thin, and rich as heck so he can enjoy a life of luxury filled with exotic cars and nice vacations. I’m pretty sure he was half-joking, but if a beautiful sugar mama dropped in to his life I doubt he would protest!

I haven’t talked to many men who said that they would view a women taking home a bigger paycheck as a negative. I’d like to think it’s a case of us all being more progressive, but just as it may be hard for women to admit that they want a man who makes more money, it may be difficult for men to admit that they want to be the breadwinner.

I’d like to know what you all think about this topic.

Do you make more than your significant other? How does that affect your relationship or marriage? For the women: do you want a man who makes more money? For the men: does it matter if your wife or girlfriend makes more? Would you prefer to be the breadwinner?

What Companies Can Do To Help Employee’s Retirement Preparedness

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Most employees are not ready for retirement.

That’s the conclusion from Retirement Preparedness Report, a study by the financial education firm Financial Finesse. According to the report:

  • Most employees have never run a retirement projection despite their income or age. Fifty-seven percent of employees at pre-retirement age, between 55 and 64, said they had not run a calculation to estimate whether or not they were on track to replace 80% of their income annually (or their goal) in retirement. This number grew with younger generations: 68% of employees age 45-54, 67% of employees age 30-44, and 73% of employees under 30 indicated they had not run a retirement projection and didn’t know if they were on track to retire.
  • Employees who don’t know if they are on track to retire don’t fare much better than those who know they are not on track. Employees who are on track to retire have an average financial wellness score of 7.2 out of 10, and have sound money management skills. Those who are not on track scored far lower with a 4.2 financial wellness score and those who don’t know whether they are on track or not scored only slightly higher with a 4.7 financial wellness score.
  • Basic money management skills are essential to employees’ retirement preparedness. There are significant correlations between retirement preparedness and having an emergency fund, having a plan to pay off debt, and paying credit card bills in full.

Companies can definitely help employees along that road to retirement.

  • Offer an retirement plan, whether it be a defined-contribution plan such as 401K, a SIMPLE IRA, or a SEP IRA, or a defined benefit pension plan. 
  • Have an opt-out instead of an opt-in retirement contribution system. Instead of having employees joining a 401K, set up the system so that everyone is automatically enrolled unless they chose not to. Studies have shown that people tend to follow the path of least resistance. 
  • Provide a matching contribution. This will further incentivize (or it should!) employees to contribute to their retirement fund.
  • Select a 401K provider who offers low-cost index funds or managed funds with reasonable fees. High fees eat into performance, and most adversely affect long-time employees.
  • Teach employees about the benefits the company offers, such as any financial counseling, health spending funds, or discounted entertainment options. This action will not only help employees take advantage of these benefits, but also help them appreciate the full scope of their compensation.

I am very grateful that both my employer and CB’s employer offers defined contribution plans for us, so we can partake in tax-advantaged savings. CB’s employer also makes a significant contribution to his retirement plan every month, which is an added bonus. The days of an employee working for the same firm for 30 years and then retiring with a good pension and a gold watch is over. We both know that despite the fact our companies are helping us towards retirement – saving is ultimately our responsibility. That’s not to say companies can’t help their employees along, though!

Are We Forgetting Our Unemployed?

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In the best of times, it’s tough being unemployed. Today, unemployment is long, discouraging, and financially devastating experience for many Americans. As I read the newspaper and hear talking heads discuss the jobs market and the economy at large, though, I am struck by the fact that most of the conversations glides over the 9.1% unemployment rate; the plight of the individual seem to be missing from the national discourse.

It’s as if… most of the us has moved on. The ones who kept their jobs or found jobs after the 2008-2009 period are busy working, and the ones who didn’t watched the number of their remaining unemployment checks dwindle. To add insult to injury, unemployed folks are not considered an influential voting bloc, so politicians don’t have an incentive to even count the them as an important constituent.

Are we forgetting the unemployed Americans? The unemployment rate dropped to a still sky-high 9.1%, partly because many folks have simply given up hope of finding a job in a dismal market. In fact, the percentage of Americans who are working is the lowest in almost 30 years – only 45% of people over 16 are had a job in 2010. The 99 weeks of unemployment insurance has run out for a lot of people, leaving them to get burn through their savings, cash out retirement funds, move in with family members, or taking early Social Security payments.

Now, unlike in 2008 and 2009, the massive layouts seem to have ended (knock on wood). I remember that several of my friends were laid off in those years. One girl I knew was out of a job for 18 months. I remember the frustration and self-doubt after I went on interview after interview without an offer. Fortunately, though, my friends and I found jobs again.

But what about those people who didn’t find jobs? The longer you are unemployed, the more difficult it is regain employment. Many recruiters and HR managers prefer currently working or recently-employed candidates. Workers lose skills, confidence, and contacts the longer they have been out of the market. If you are older than 55, the cards are even more stacked against you.

I don’t know what the exact prescription is, but I think we need to do more to help our unemployed folks, especially the long-term unemployed.

Thoughts? Do you think the unemployed has been neglected?

5 Great Ways to Spend a Raise

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Congratulations, you got a raise! Now what?

At my annual performance review, I received a good-sized raise that translates to $200-$300 a month, depending on how 401K and taxes shake out. While the raise was a couple of percentage points lower than what I had asked for, I am appreciative and happy about it all things considered. I am happy that I got this raise and I am happy that my contributions at work are being recognized. On the personal finance front, this raise will go a long way in helping me meet my goals for 2011.

Now, what to do about this extra money? No matter what I do, I don’t want to fritter this raise away. I worked really hard this past year to earn this raise, and I want the extra money to work hard for me too.

Here are 5 great ways to spend a raise:

1. Save the raise for a retirement

If I weren’t already contributing the maximum to my 401K or Roth IRA, retirement is the first place I’d look. Banking the raise is a relatively painless form of saving (after all, you’ve already managed to live without it, right?), and even if you only increase your current contribution levels by a percentage or two, your retirement fund will still reap benefits down the road. New York Times has a nifty tool called The 1% More Savings Calculator to show the fantastic effects of increasing savings by just one more percentage point (or even better, another percentage point a year up to 16%).

2. Pay down debt

If you have high-interest rate debt such as credit card debt, use this raise to accelerate your payment. The interest offered by banks and credit unions are so low right now that whatever money you can put to debt will probably save you money in the long run. Mortgage, credit card, student loans, car note- a raise can help get rid of these debts faster and save you hundreds or thousands of dollars in interest payments. I still have $12,000+ in student loans, but because they are zero-interest loans, it doesn’t make sense for me to pay them back early.

3. Bulk up cash savings / emergency fund

It’s rare that you will find yourself in an emergency and say, d’oh! I have too much cash. (If you are that person, then please, I’d like to have your problem). So I could put the raise into my general cash fund (i.e. my Freedom Fund) which is basically earmarked for graduate school. A few hundred dollars a month can add up quickly, especially if I am consistent with the saving.

4. Save the raise for a big-ticket purchase

I could start putting more money into the Galapagos Fund. Once I get engaged, I might want to start saving for a wedding. But I don’t want many big-ticket item (not even a wedding) that much, other than expensive and glorious adventure travel.

5. Invest in yourself

If there are workshops, coaching, or materials that will help you become more successful, take some of that hard-earned raise and reward yourself. If you need to update your wardrobe, do so (even though it’s not strictly a monetary investment!).

Admin Appreciation Week Giveaway: $50 Gift Card for 5 Lucky Winners!

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thankyouamex Admin Appreciation Week Giveaway: $50 Gift Card for 5 Lucky Winners!Administrative Professionals Week is April 24-30. To celebrate support staff for all of their hard work, American Express has created a Recognize and Reward Sweepstakes at ForEverythingYouDo.com, where professionals can recognize a standout administrative professional, colleague or peer and enter them to win Gift Card prizes.

Thanks to the generous sponsorship of American Express, I will be giving away FIVE $50 gift cards  with a winner for each day Monday to Friday. The contest will conclude on Saturday April 30 12 midnight PST.

Five lucky winners will be announced at the end of this week, on Sunday May 1. So… get set, go!

To enter:

You must leave a blog comment about the most memorable “thank you” that they received from a colleague, manager or supervisor.

Additional entries:

1. Twitter: Tweet this post (you can tweet once per day, up to 5 entries): @WellHeeledBlog is giving away 5 $50 AmEx Gift Cards for Admin Appreciation Week http://tinyurl.com/amexgiveaway

2. Facebook: One entry for a post on your wall with a link to this giveaway (you can post once per day, up to 5 entries): WellHeeledBlog is giving away 5 $50 AmEx Gift Cards for Admin Appreciation Week http://tinyurl.com/amexgiveaway

3. Blog: One entry for a post about this giveaway (you can post once per day, up to 5 entries).

Please leave the links with the additional entries in the comment so I can count them.

In addition, separate from this blog contest, you can also help your administrative professional win BIG prizes from American Express. Supervisors, bosses and business-professionals can express gratitude by nominating an administrative professional, peer or colleague from their LinkedIn Network into ForEverythingYouDo.com. The person with the most nominations will receive a $2,500 Gift Card and 100 others will be randomly selected to win $25 Gift Cards.

Becoming a Full-Time Work-At-Home Mom

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This is a guest post from Saving in CO, who has really inspired me with her tale of how she managed to design a lifestyle that fits her priorities, career, and family.

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Thanks Well-Heeled for the opportunity to guest post.  I’ve received a lot of great money lessons and would love a chance to share with others how I went from planning to be a SAHM to becoming a full-time work-at-home-mom and loving it.

The story starts with a “we”.  My husband (DH) and I have been a team regarding money and planning since close to the beginning 10 years ago.  Neither of us grew up with money.  I used to spend money in the mere anticipation of receiving some.  Luckily, at the age of 20, my now DH taught me the real value of money- that is the ability to make your own decisions in life (such as – not being stuck with a boss you hate or a retirement that’s depressing because of money wasted earlier in life).

The SAH decision was really a being-in-the-drivers-seat-of-our-lives-decision.  Neither of us wanted to be forced into raising children in a situation we didn’t like, because of money.

We prepared for a SAH situation with our first jobs out of college.  We continued to live like college students for the first years, meanwhile maxing 401k, Roth IRA and saving one income for a housing down payment fund.  Our first house was easily affordable living on one salary.  That has continued from $60,000 combined 10 years ago to a much bigger combined salary of $250,000 today.

Well it took us a lot longer than hoped for to have our first child (born spring of last year).  Once pregnant we realized the most important thing at that time was to leave the high-stress, commuter, east-coast lifestyle we were living.  We wanted to move back West.  My job was the stable one we could make this move with, DH had to quit and pursuit options once we moved (granted he had good leads).

This meant I couldn’t be a SAHM and have stability while our family settled in a new location.  So I kept working (but from home once baby arrived) and we interviewed nannies.  At first it was 3 days/week and we found someone we love.  DH’s career took off immediately after the move and we are now having a nanny in our home 5 days a week (24k after taxes/year).

I never thought I would want this arrangement.  Now in it, I couldn’t be happier.  I get to work downstairs (no commute, no business clothes) and pop up to see my baby having fun at any point during the day.  Once the work day is done, I miss my baby and can’t wait to spend quality time with him all evening.  For me it is the best of both worlds.  I can be a mom and have a career that allows me to make decisions based on my family’s needs (including quitting if need be in the future).

So how did we get to this situation…

  1. DH and I work in fields at the cross-section of science and industry.  We picked careers based on our interests and demand (tip: look at job postings in areas of interest to see what they require and be realistic about the compensation).  We have moved jobs over the years to become experienced in specific roles that would increase the demand for our skills (and allow us to work from anywhere).
  2. We set up our fixed expenses (things like rent/mortgage, utilities, cell phone plans, food, etc.) off one salary.
  3. We have quarterly household meetings (whatever your family is- yourself, couple, etc) to discuss our goals.  We identify short term goals (like saving for a vacation), mid-term goals (like buying a house) and long term goals (like retirement) during these meetings and set up a plan for meeting them.
  4. We only spend on what really matters to us (like a wonderful nanny).
  5. We re-evaluate our goals and plans as life happens!

My Advice to a Future Stay-At-Home Parent

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A reader asked me what advice I would have if she wanted to stay home after she has children. The whole working-parent vs. non-wage-earning-but-still-working parent can be a touchy subject, and there is a potential for misunderstanding and hurt feelings on both side of the debate. But I think it’s GREAT that this reader is thinking ahead and trying to make a plan to minimize her risk and give her plan the best possible chance of success.

Given that I am not a mother and that I don’t personally know any stay-at-home parents, I am not quite sure I am qualified to give advice (I just want to be a guiltless mom). So I decided to make my answer into a post, and get all of your feedback on what advice you would have for someone who wants to become a stay-at-home parent. If I have any stay-at-home mom’s or dad’s out there, please chime in!

1. Make sure that your position at home is equally respected as that of an outside wage earner

The decision for one person to stay home requires sacrifices from (and of course, brings rewards to) everyone. So it’s a decision that needs buy-in from both partners. There has to be mutual respect for the different but equally-important roles that both partners play. There is nothing like resentment and money to eat away at even the strongest relationships. And unfortunately, the  stay-at-home partner’s financial situation tends to be more precarious if the relationship fails (unless, of course, the SAH parent has independent financial resources).

2. Live on partner’s income and save your income for 6 months (ideally 12 months)

I am ONE person living on one income and even I find it hard sometimes! Okay, all kidding aside, I can only imagine how difficult it would be to have a family -especially a large family- and live on one income. Before you take that big step, make sure you understand what you would have to do to make it possible. Plus, the 6-months or 12-months of saving 1 salary will result in a nice emergency fund when you do make the transition from paid work to just plain work.

3. Make a plan to stay engaged in the workforce

I think the time of when someone (historically a woman) who leaves the workforce permanently at age 30 to raise a family is probably over. Some people step out of the workforce for 5 years, some for 10, some for 15. But at some point, most stay-at-home parents will have to seek paid work again because of financial reasons or because their children are grown and they want to reenter the workplace. It’s important to stay engaged in the workforce by maintaining your network of professional contacts (alumni associations, volunteer organizations, professional groups), perhaps doing some consulting or freelance work, or taking on some pro bono work. Keep an updated resume and be sure to take some time to go out for informational interviews to keep your toes in the market.

4. Spousal IRAs: Insist on them so you don’t neglect your own retirement

A stay-at-home mom or dad’s ability to contribute to tax-advantaged retirement funds are drastically diminished (unless you have self-employment income, but then in which case you wouldn’t be a non-wage-earning spouse).

One way the IRS allows spouses to save for retirement is with the existence of Spousal IRAs. A Spousal IRA allows a stay-at-home spouse contribute the full amount ($5,000 or $6,000 for those older than 50) in a year as long as their spouse earns enough to cover that contribution. The money in a Spousal IRA belongs to the stay-at-home spouse and can be an important way to save for retirement. This is so important, in fact, I will advocate that the Spousal IRA should be funded as a first priority after saving enough for the employer 401K match.

If you are a stay-at-home partner, insist on Spousal IRAs.

Note 1: Even though traditionally the stay-at-home parent has been a mother, I tried to make this post gender-neutral, because I think these are things that both men and women should think about before they decide to step out of the workforce, and because I don’t think there is any reason why one partner should be automatically viewed as the stay-at-home parent just because of the gender.

Note 2: I realize that I have used the terms “stay-at-home” and “non-wage-earning” interchangeably. They are obviously not the same thing as many people work from home full-time or part-time. However, in general I take the term “stay-at-home” to mean a parent/spouse whose primary responsibilities are to run the household / take care of children and has little or no responsibility for generating income. I wouldn’t think of a consultant who works 60 hours a week from home as a “stay-at-home” parent, even though she may be technically “at home.”

What advice do you have for a stay-at-home mom/dad? If you are planning to stay at home, what steps are you taking right now?