Not Broke

Okay. Nobody said I had to get it right the first time.  

Possible mistake 1: Sharebuilder. I think Sharebuilder is frustrating. But I still may stick it out, because I don’t know if the other companies will let me build shares by putting a little money in like 25 or 50 dollars a month towards an ETF or something.

Zecco.com is offering $0 trades. ZERO! The catch is that I have to have a balance of 2,500 in my account with them. But that’s doable… for now. 

Possible mistake 2: Investing before clearing out the credit cards. I know from the wise Suze Orman, that when faced between paying off credit cards and investing in 401k – go with the 401k. But I’m not investing in a 401K. I’m just investing. In something.  Glah.

I don’t know what I’m doing.

A good thing I did: getting my FICO Score. It helped me put reality back into my life. I mean, today I almost charged my Discover card to buy the Weeds Seasons 1-3 Box Set.  Wtf. I already saw each of those episodes. AND they’re all online.   Still. The temptation was real. But I got over it. That stupid score kept flashing in my head. I have to get it up. I have to.

All the talk about the financial crisis made me look up how much of a crisis I was currently in. I knew it was bad, but I guess I never realized how freaking bad it was. I mean, when you log on to your little credit card account and see that you owe them 3,000 dollars – you think, bad… but not scary-bad, right?

Wrong. I did an assessment of all the money that I owe to various credit cards and student loans. My knees buckled. Here’s a summary of the damage:

• I have $20,886 in college loans and payments begin in November.
• I have a balance of $910.00 on a Master Card, and $3,385 on a Discover Card.
• Now here’s the best part: There is only $1,151.86 in my checking account.   
• This makes my total debt a whopping $24,029.14 – yes, I almost cried.

So I woke up this morning and immediately took action:

1. Opened an Automatic Investment Account. Okay, so this first move I made was probably not the wisest, because the whole point is to pay down my debt, not buy more stuff. But here’s the deal – yesterday the market plummeted almost 800 points! How could it NOT go up? I realize I have no knowledge of the stock market, but after watching it crash, and all the news media going nuts over it, and commentators talking about how small businesses are going to suffer – I figured congress would eventually get their act together. That, coupled with the fact that both presidential canidates want to see some legislation go through, meant that investors would have SOME confidence about the markey… and it would rally. I was right.

But here’s the thing. I have no money, as I mentioned. So I only bought 2 shares. 1 share of the S&P 500 and 1 share of JP Morgan. I bought the S&P one because everyone says it’s a reliable investment overtime. And JP Morgan seemed like a good idea because they bought out WaMu. I don’t really know how that makes sense but it felt right.  So that cost around 180 with commission.

Then, I realized, that with Sharebuilder, I didn’t have to buy a whole share. I can invest as little as 50 dollars and invest in a percentage of a share. For example, the S&P 500 was around 114 this morning. Instead of buying a whole share, it allows you to buy as little as five dollars, or about 28% of 1 share.

Anyway. So The PortfolioBuilder tool suggested I invest in iShares Lehman Aggregate Bond and SPDR Trust, Series 1 – which is actually one of the shares I bought. Sort of amazing that a girl who doesn’t know anything picked the same stock that the ING Direct Sharebuilder tool thing did.  Or maybe not so much amazing as it is scary…

2. Found out my FICO Score  – this is one of those things that I knew would be hard to look at, so I never bothered to figure out what it was. But I decided to just do it. I was right, it was bad. The last time I looked a few years ago it was around 730. Now? My three-report-avg is 613.  *sigh*

The good news about looking at the reports was that I noticed about four or five errors. So maybe once I send out some dispute letters to various reporting companies, my score might go up. I was also able to figure out when I can see the light at the end of tunnel for my FICO score.   Sadly, if I only put down 200 a month towards it, my socre will only be okay around 2010.   TWENTYTEN. That’s pretty rough.  But that’s really I can do for now.

3. Opened up a high-yield Automatic Savings Account. I went with ING Direct (Sharebuilder) here too. Not because they have the highest yield, but because they seemed like the least amount of hassle. With an “Orange Savings Account” I don’t have have to pay the extra five dollars in real trade commissions if I don’t have the money in my MMA. 

Oh -and if you are even slightly thinking of getting a Orange Savings or Checking Account – please email me. I can give you a referral link that will give you 25 dollars if you open an account with 250 dollars.  I get 10 bucks, you get 25. It’s free money. !