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The Simple Dollar

Lost $30,000 in stock market. Should I reinvest?

First foray into stock market led to a 90 percent loss. What's a better way to invest in the stock market? Question No. 1 in this reader mailbag.

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Q6: Credit card strategies
I’ve got a question regarding my credit card debt. It is currently at $7,500 and has a 11.79% interest rate, but is interest free for 55 days after purchasing items. My current strategy is that every time I get paid I transfer the bulk of my salary (apart from 10% which goes into a high yield savings account, and roughly 300 dollars which I keep in case something comes up that I might need cash for) onto my credit card, and then pay for everything using my credit card. I then try and spend frugally, so that I’m spending less than what I’ve paid off, slowly chipping away at my debt. My logic is that by doing this I’m avoiding having to pay off interest for my purchases, and in fact I very rarely get charged interest, because I’m constantly paying (most) things off within 55 days.

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What do you think about this strategy? Is it better to just accept that I will be charged interest and begin just paying off the minimum amount each month? Or should I keep doing what I’m doing, but work harder at trimming the fat out of my spending habits?
- Serena

The idea of using a credit card for purchases but keeping the balance at zero to avoid interest is a good one. Credit card interest rates are usually painfully high.

Your best approach for this – which might be what you’re doing, I can’t tell – is to simply have online access to your credit card account. Each time you get paid, log onto that account and then issue a payment either equal to the balance or equal to as much of the balance as you can pay. If this leaves money in your checking account, good. Ferret most of that off to your savings account.

Beyond that, I’d start looking at goals so that you can start doing something sensible with your savings. What are you hoping to achieve with that savings?

Q7: SAHM transitioning to career
I’ve been a stay at home mom (SAHM) for 5 years, and am starting to think about planning to get back to work (yes you read that right – I’m taking this slow!).

My background: before kids, I worked in IT, mostly on the support side. I did tech support (+ some business analysis, training & site implementations) for a specific system for several years. When the time came to replace this system, I was on the project team to design, develop, test, implement, and roll out the new system. I was very involved in the design and test phases, with some involvement in the other aspects.

Throughout my career, I had an interest in programming. The “puzzle solving” and “create something” aspects of programming appeal to me, plus I have some natural aptitude for it. I took some community college classes, and did some study with mentors and on my own, but didn’t get beyond a basic learning level before kiddos came and I stopped working.

As I think about returning to work in a couple years (my kids are still in pre-school), programming still has my interest, and I’m seriously considering pursuing it. I would like to start learning and preparing now, as my full-time Mom schedule allows. My issue is that I don’t know where to start. There are so many specialties in programming, and I have no idea what direction makes the most sense – what skills will be the most marketable? Two areas that interest me are web development and ipad/iphone development, but really, I’m pretty open here! The style of job I’ll be looking for is one that is flexible when it comes to schedule. I want to be home when my kids get home from school, and probably won’t want full time hours.

Do you think it’s even possible to learn programming on a “part time” schedule, rather than in college classes or on the job? Is it ridiculous to think of taking on such a technical career at this stage of my life (I’m nearly 40)? Other advice? Knowing you’ve been in a programming career before, and you totally get life-with-young-kids, I really value your input.
- Katie

My suggestion to you would be to pick out an area of programming that interests you and dive in at home with the goal being to produce a product that you can show to potential employers.

Let’s say, for example, that you’re looking at iPhone app development. Start learning that at home. Get the dev kit and start making applications on your own. Come up with a project that you think people might actually want, code it, then get it listed in the iTunes store.

If you build a small portfolio of these types of things – and you can do the same thing with websites, etc. – you can not only use that as part of your resume to demonstrate current skills, they may become revenue generators on their own.

Q8: Investing with risk
Where do you find a “high-risk” place to invest? Please do a newsletter on risk opportunies. I saw what you said about index funds. Did you mean that?
- Clay

“High risk” is a relative term. Loaning my deadbeat cousin $50 is an extremely high risk investment.

If you’re looking at investments that investors typically make that are considered high risk, you’d probably be looking at things like stocks in individual companies (which you can buy at online brokerages like E*Trade), index funds of stocks from emerging markets (which you can also buy at such brokerages, but also from low-cost investment houses like Vanguard), or precious metals. All of these things are extremely volatile. All of these things can see 50% returns in a single year – or 90% losses in a single year.

Usually, when you buy such items, they’re balanced by lower-risk items. You might buy an index fund of a huge range of domestic stocks (which might have a 20% return possibility or a 40% loss possibility in a single year, with the upturns being more likely) or simply keep money in cash (always returns about 1%).

If you have, say, 50% of your money in cash, 20% of your money in domestic stocks, and 30% in foreign stocks, you are hedging your risk while also being on board for any periods of exceptional returns.

Q9: Organizing tax-deductible expenses
How do you track your tax-deductible expenses during the year, to make things easier in filing your taxes? I tuck relevant receipts in a folder during the year, but at tax time it takes a few days and lots of piles in the living room floor, to organize and itemize everything. Our itemized expenses include things on our charge statement, checks written, automatic bill payments through our bank, direct deductions from our checking account, etc. Also, I’m self-employed, so have office expenses, and more to track and deduct.

I’ve bought Quicken and installed it, but haven’t taken the time to figure out how to make it work for me. Do you use Quicken? Or how do you organize your expenses to make tax time easier?
- Ann

I usually use envelopes to track my tax-deductible expenses. I keep all of the receipts in a big manila envelope so I have them all in one spot when I do taxes the following spring.

If I need special notes with anything, I just write the note and attach it to the receipt with a paper clip.

I don’t use Quicken at all. I use Microsoft Excel for budgeting and use TurboTax for tax filing purposes.

Q10: Meetups
I noticed that in a recent reader mailbag you seemed to be avoiding an obvious opportunity for a reader meetup at that convention you’re going to. This seems to me to be either really egotistical or really poor self-promotion. Why wouldn’t you do this?
- Kevin

For starters, I’m not really a self-promoter. I’m not into doing this to make myself into some sort of guru who sells people on stuff or that people follow blindly and angrily defend no matter what.

So why don’t I do meetups and the like? The biggest reason is that most of the interactions I have with people are one-on-one interactions. They tell me some very private things about their lives and because of that, I’m able to help them. The mailbags are a taste of this, but they’re anonymized. You can’t replicate that kind of relationship in a face-to-face group setting with people you don’t know. I regularly meet up with people one-on-one for various reasons and I’m doing so at that convention. I just don’t think what The Simple Dollar talks about translates well to a room full of strangers.

I do sometimes meet readers one-on-one. I do this because I know that usually they’ve got something that they’re trying to work through or else they wouldn’t be trying to meet up with me, and in a one-on-one meeting at a coffee shop or something, they’re likely to spill the beans and talk through it.

I can actually help someone else that way. At a big meetup, the only person I might help is myself, and that’s arguable.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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