Daily observations of my simple life.

Graphs and Things:

Years ago before I retired when I was in my fifties working and realizing that I was not thinking about what I'd do when I couldn't work, I suddenly woke up. I was working in the field of my education in a private facility, but decided I needed to go work for the state to get vested for a state retirement. So I did. I also read books like "Your Money Your Life" and Amy Dacyczyn's Tightwad series. That's when I got a bit facinated with money graphs and pictures. In "Your Money, Your Life" you have to account for every penny you spend and keep a graph as you work your way to financial freedom. This graph has a crossover line when your savings is earning what you need to live on. Amy's first book has a wonderful page on the snowball effect of savings. I love these things. I follow them only in a VERY moderate way but somehow the idea of attaining that financial freedom model is something my mind likes to play with.

Last week, I found some old slide rules I had been given as part of some kind of financial freedom class. One has the slide for Compound interest and the other has a slide rule for dollar cost averaging.  Well, thrilled at finding them in some papers I was going through I now have them on my computer desk.

I do a little investing as interest rates are really nasty right now. Who could possibly live on interest from savings unless it was huge sums of money. So doing my little system I found through several sites, stocks that pay dividends between 8 and 20%. Right after the dividend is paid the stock falls and just before the dividend is paid it rises. This is a pretty consistant pattern, so this is how I dollar cost average. (Dollar cost averaging is buying stock on a regular basis, monthly, quarterly, yearly. The price fluctuates so when you average the total sum of the stock if usually comes out better than any other savings method.) My plan: I'm sharing my little secret with you who read. When the stock plumets after the dividend I buy as many shares as I can,  then when the price raises to just above the amount of the dividend payout, I sell all but 10 -25 of the shares. The remaining 10 - 25 remain in my portfolio. Then I'm ready to look for another stock to buy doing the same thing. I am gradually building up a portfolio of good dividend stocks and I make some money each time I buy and sell. It's working for me. It satisfies that little urge in me to do the graph, watch the snowball grow and create security .

Yahoo has space for portfolios and good research. I put stocks I want to look at and research in my portfolios at Yahoo and watch what they are doing. I look at company financials, insiders buying, historical pricing.  In one portfolio I have a list of stocks that pay monthly dividends.

I find dividend due dates on http://www.Wallstreetview.com.

There is a calender at the top of the page. The ex dividend date means you have to have bought and had the stock registered in your name by that date.  You should allow at least 4 days for your stock to get registered so if the x dividend date is on the 19th you should purchase it by the 15th. But I don't usually buy stocks that close to the x date. If it is a monthly dividend I look at it's historical prices and see when the lowest price was during the month. Or sometimes I just put in an order at a limit price and when the stock is at the specified price the brokerage buys it. There is one brokerage that requires only $500 to start an account and it has $7 trade fees. My system requires you have a bit more to make it affective otherwise the trade fees eat up your profits.

Other ways I like to play with money graphs and things is low interst. I have a Citicard Platinum. It pays a dividend. Right now it's 5% for grocery's, gas, and pharmacy's and 1% for all other purchases. They also regularly send me checks that I can use like cash at 4 -5 % . The secret of using this credit card wisely is to pay it off every month because if you carry a balance you pay off the lowest rates first and highest rates last and that can eat up your savings. A grocery store here gives you a coupon for 10. cents off a gal if you buy $60. worth of grocery's so if you buy your grocery's on the card you get 5% off  and then go out and fill up on gas and save 10 cents off each gal plus if you use the card you get another 5% off. If you are a careful shopper and spend your $60. on sale items you'll save even more. I often leave the store with a 50% savings listed at the bottom of my ticket. I love doing this stuff. Am I cheap? Well I prefer thrifty. The less you spend the more you get for your money is the way I look at it.

My beautiful little 16 acre ranch cost me $56k. about the price of a Hummer and it's decent.

Am I being smug?  I hope not, but I do believe in looking for ways of getting what you want without putting a heavy burden on your shoulders.

So, I play with graphs and things.  

Posted by: cactusandquail at 19:53 | link | comments (4)

Comments:

#1  20 January 2005 - 22:32

 

You're not cheap or smug. You're smart.

InMyLife

#2  21 January 2005 - 19:07

 

I wish my accountant was as practical as you!

ChefNeal

#3  22 January 2005 - 16:27

 

I think it's a shame that the concept of financial freedom and money strategies aren't taught to young people. Money is a big issue in life and we all should have skills. Instead so many people are led to believe they must have experts handle their money. If young people started saving with the compound interest and dollar cost averaging concept, most would be millionaires by the time they retire.

cactusandquail

#4  23 January 2005 - 13:20

 

I like the way you handle your credit card. When I was a young man I could never handle my credit card. I just spent, especially when I go on trips overseas. As a result I had a runway credit card bills.
Now that I am retired, I have surrenderd all my credit cards (and charge cards). I have converted those runaway credit card bills to term loan. I am still paying through my nose but at less interest rate. The credit card interest rate in Malaysia is about 18% pa.

mylias

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