Author Archive for andrewknight

Foundation #9: Your retirement is YOUR responsibility

Published
by
andrewknight
on May 25, 2008
in Purely Personal
. 2 Comments

I am counting on absolutely nothing from the federal government during retirement. If they figure out how to save social security it will be a nice bonus but until then I am not counting on it! :)

This post had to follow foundation #8 because it is one of the great examples where the numbers are dead simple but behavior always gets in the way. Saving for your retirement is really very simple you need to just DO IT! I recommend people put 20% away for retirement and here is how I suggest you do it

Step 1: If you have a 401k availiable, contribute up to your company match.

Step 2: Max out your Roth IRA, which is $5k in 2008.

Step 3: Increase your 401k contribution so that the total of all 3 steps equals 20% of your total income. The max 401k contribution for 2008 is ($15,500).

So let’s have a little fun and play with some numbers to see what kind of nest egg you can have with 3 simple steps:
Start contributing: 25
Single Income 50K:
401K 3% = $1500 + $1500 company match
Max Single Roth: $5k
Additional 401k %: 4% / $2,000
Yearly Retirement Savings: 20% / $10,000
40 years @ 10% = 5.3 Million!

Start contributing: 25
Household income 100K:
401K 3% = $3000 + $3000 company match
Max 2 Roth’s: $10k
Additional 401k %: 4%
Yearly Retirement Savings: 20% or $20k
If you start this at 25 and grow it 40 years @ 10% = 10.6 Million!

Start contributing: 30
Household income 150K:
401K 3% = $4500 + $4500 company match
Max 2 Roth’s: $10k
Additional 401k %: 7% ($11k)
Yearly Retirement Savings: 20% or $30k
If you start this at 30 and grow it 35 years @ 10% = 9.5 Million!

Notice how the 100k income that starts 5 years earlier will outrun the $150k income! Starting earlier is key but either way you will have 10 Million! And the real kicker - half of that is not taxable as a reult of the Roth contribution. I did not start maxing out my 401k and Roth IRA until a few years ago and it was one of the few financial regrets I have!

Let’s take a different angle. Maybe you don’t have access to a 401k. As long as you make less than $99k (single ) $156k (married) you can contribut to the Roth IRA. If you did just that, the numbers would look like this:

Start contributing: 25
Single Income 50K:
Max Single Roth: $5k
40 years @ 10% = 2.6 Million!

With just the Roth you can have $2.6 million at retirement that is TAX FREE! A 4% draw on $2.6 million equals $100k a year TAX FREE! So the bottom line in all this: you need to find $416 in your monthly budget to max out your Roth IRA and fund your retirement. This is right around the average car payment in America!

Foundation #8: 80% of personal finance is behavior 20% is knowledge and the numbers

Published
by
andrewknight
on May 24, 2008
in Personal Finance
. 0 Comments

All the personal finace foundations build on each other - #8 continues with the concept that personal finance is much more about behavior than it is about the numbers. Figuring out the basic principles that put you on the right path to financial success is the easy part! It is following through with the behaviors and habits that is the hard part. Most people know that contributing to a 401k is a good idea but so many don’t follow through with the behavior to make it happen. How many people this year blew right past April 15th and did not fund their 2007 Roth IRA? How many people spend more than they make? If I had to pick who was to be better off financially: a CPA with bad financial habits and a recent college grad with good financial habits I am always going to pick the recent college grad! You can’t make up for bad habits with better financial knowledge.

Foundation #7: Live Almost Debt Free

Published
by
andrewknight
on May 23, 2008
in Personal Finance
. 0 Comments

We have had a little bit of a hiatus on the 10 foundations of personal finance that I started writing about last year but I wanted to finish it off. So here is #7!

I started listening to Dave Ramsey in 2006 but followed many of his principles before I had ever heard of him or the daily radio show. Dave’s view of debt is spot on: You will never find financial freedom or success if you continue to have “payments”. Credit is so easy to come by today, (although it has tightened up recently) that it is easy to pile up all kinds of stuff on credit from cars to clothes to even air conditioners (heard that on the radio today!)

Like Dave Ramsey, I subscribe to there being only one kind of debt that is part of a solid financial plan: mortgage debt. This is the “almost” part of living debt free. With that said, you need to be smart about your mortgage debt. The banks will approve you for well over what you can afford. Remember, the banks are looking to maximize profit not look out for your best interests. It takes a lot of discipline to not spend what the bank will approve you for but in the long run it is one of the most important financial decisions you can make. In my view your mortgage should not exceed 2.5 times your house hold income. Why does that number work?

Household income: $50k
Purchase Price: $150k
Downpayment: $25k
Mortgage: $125k
15 year Mortgage Payment + Taxes ($1250) & Insurance ($500) @ 6% ~ $1200 month
Monthly Take home ~$2900
Housing to Income ratio 40%.

You might balk at the 15 year mortgage but I can’t emphasize how important that is. Forget the interest savings for a minute, the number one reason to go with a 15 year mortgage is it will force you to keep your housing purchase within your means! I have had a mortgage for 5 years now on two different houses and both have been 15 year notes. If you start out with a 15 you will never miss the 30 :)

The 40% housing to income is on the high side but if you have yourself on a budget you should be able to swing that. Dave Ramsey recommends 25% and that should be the goal but up to 40% is ok with a household income of $50k

If you double the numbers they look like this:

Household income: $100k
Purchase Price: $250k
Downpayment: $50k
Mortgage: $200k
15 year Mortgage Payment + Taxes ($2500) & Insurance ($1000) @ 6% ~ $2000 month
Monthly Take home ~$5400
Housing to Income ratio 35%.

In addition to the 2.5 times rule I also like to use the rule that your down payment should be half of your household income. Again, it forces you to make a housing purchase you can afford.

Astral Update

Published
by
andrewknight
on May 23, 2008
in Astral Brands and Ecommerce
. 0 Comments

So far the new job is going well. I have been busy getting up to speed on all things cosmetics and skin care which my family and friends find highly amusing! We just launched the new Pur Minerals website last week:

PurMinerals.com

It is a custom built Ruby on Rails eCommerce platform!

If you have not tried Pur Minerals head over to PurMinerals.com and order a starter kit. All the women in my family have converted! We also have a free shipping promotion for Memorial Day right now!

Wedding Video’s on Vimeo

Published
by
andrewknight
on May 23, 2008
in Purely Personal
. 0 Comments

We have posted a few wedding video’s on Vimeo.

The Rehersal Dinner DVD slideshow:

The Ceremony:

Our First Dance:

Andrew & Crystal’s Wedding…

Published
by
andrewknight
on May 23, 2008
in Purely Personal
. 0 Comments

This post is a little late but 5 weeks ago Crystal and I finally tied the knot! After being together over 9 years it was about time ;) We had an amazing weekend and everything went really well. It was great to spend time with lots of friends and family that we don’t usually see. We don’t have the official photos from the photographer yet but we do have lots of friends & family photos on Smugmug.

Here are a few favorites:

The ring was a little bit of a tight fit! :)

The wedding party:

Blogging updates…

Published
by
andrewknight
on May 23, 2008
in Purely Personal
. 0 Comments

It has been rather quiet around here. No good excuses other than the wedding! :) Time to get some posts going here!

Switching Webhosting to Steadfast.net

Published
by
andrewknight
on March 8, 2008
in Technology and Web Applications
. 2 Comments

After a short stint with Dreamhost I am moving over to Steadfast Networks for hosting my sites. I really liked the Dreamhost control panel and getting my sites setup and configured was easy but the server I was running on was sooooooooo slow! The billing disaster in January also did not help things! So I headed over to Web Hosting Talk to read some of the reviews and look for a new host. The hosting business is full of “fly by night” kind of folks so it was important to get some objective 3rd party opinions. The wealth of information on WHT is awesome! I decided to go in a different direction and look for a smaller well respected company that does not offer 1 million Terabytes of space for $10 a month. After reading the reviews I settled on a shared hosting plan from Steadfast. So far I have been really impressed.  The sites are much faster and the support tickets I submitted were handled almost instantly with 100% resolution! For a simple blog like this speed is not all that important but when you are playing around with a resource hog like Magento it makes a big difference!

I just switched the DNS so we should be live on the new server shortly!

Leaving Home Depot

Published
by
andrewknight
on January 27, 2008
in Astral Brands, Home Depot and Purely Personal
. 2 Comments

I just updated my LinkedIn profile so I thought I had better get a post up on the blog!

After two and a half years I am leaving Home Depot this Friday to be the Director of Ecommerce for www.astralbrands.com.

So who is Astral Brands?

” Astral Brands is an innovator in the creation and management of consumer lifestyle brands with a business offering that is focused on two core sectors: Astral Health and Beauty and Astral Foods (featuring gourmet food items and large-scale perishable shipping). The Company was established in 1978 and operated as a public company until it was acquired and privatized in 1999 by Christie and Robert Cohen. Headquartered in Atlanta, Georgia, Astral Brands has 350 employees in North America”

I am going to be heading up the Ecommerce operations for the Health and Beauty division:

www.aloette.com
www.purminerals.com
www.cosmedix.com

I now have Cosmetics to add to the lineup of Snowboards, Gardening Equipment, and Tools on my resume! I start on February 4th!

Craigslist Rocks!

Published
by
andrewknight
on January 14, 2008
in Personal Finance and Web Applications
. 0 Comments

I started using Craigslist when I was in Burlington but had limited success in buying/selling as the community was pretty small. You had a lot of college students using it so the apartment and furniture threads were pretty active but that was about it.

When I moved to Atlanta I quickly realized that the size of the Craigslist community here is HUGE. I have had great success in selling stuff on the Atlanta Craiglsist board and have actually found myself using it a lot more that Ebay. There is something to be said for how simple they keep things. It is easy to post, does not cost anything, no shipping to deal with, and people pay you in cash! Compare that with the hassles of Ebay and you can quickly see why Craigslist has taken off. I still use Ebay for niche items that don’t have mass market appeal but for most items it’s Craiglist!

Manage your Money with Mint.com

Published
by
andrewknight
on January 13, 2008
in Personal Finance and Web Applications
. 1 Comment

Mint.com Logo

Following up on my WaMu review I wanted to take a minute and review a new money management tool called Mint.com. Mint is an account aggregation service. The concept of financial account aggregation is not a new concept as Yodlee has been offering this service to banks for a number of years. As a basic concept Mint.com is not all that different. They even use the Yodlee service to run the back end of their application.

What makes Mint.com interesting is the customer experience they deliver. I do user experience for a living and can tell Mint has invested heavily in this area. I signed up for an account and was up and running in less than 5 minutes. From sign up to seeing 7 accounts aggregated in one screen took 5 minutes! Now granted, I am an advanced user who already had all my online accounts setup, but still 5 minutes is impressive. I do need to run this through the “Mom” test and see how long it would take my mom to go through and sign up.

Mint’s business model is an interesting one: they sell space to financial institutions that make offers to help you save money. They know the interest rate on your accounts and will make offers from competing banks that offer you a lower interest rate. Since I carry no consumer debt and already have a high yield savings account this feature has no value to me but for some it might be useful. I just hope they can make this model profitable.

Right now Mint only has bank accounts and credit cards included in the aggregation service but they claim to be adding mortgages and others soons. Brokerages and mortgaes would be a great addition!

Categorization is a key concept in all money management software. You want to be able to quickly see at the end of the month where all your money went. They have a super simple interface for categorizing transactions and even putting rules in place so that the same transaction next time is automatically categorized. However, they have one fundamental flaw that really reduces the usefulness of mint: you can’t create custom categories! Hopefully they will add this soon, because after playing with my accounts for 10 minutes I quickly ran into problems with the pre set categories.

Mint also has a simple budgeting system where you can set your budget each month and then track your spending against it. I do my simple budgeting in Excel but I will have to see how usefull this aspect of the service is.

Overall I am impressed so far. I think with a few changes this will really become a great little web app for managing your money.

Victoria’s Secret Drops N2N Commerce

Published
by
andrewknight
on January 3, 2008
in Ecommerce
. 0 Comments

Techcrunch is reporting that Victoria Secret has dropped N2N commerce. Wow! This is big news as N2N had made a huge push in the last year to gain a footing in the competitive ecommerce platform space. I even think they were the lead sponsor at Shop.org or Internet-Retailer this year!

This is really disappointing as I thought they had a good idea with this model. I helped implement Demandware at Gardener’s Supply which was the underlying technology behind N2N. I hope this decision will not have a ripple effect with Demandware as I think they still have a great offering.