Good personal budget tracking tool

This personal budget excel spreadsheet helps one track where does all the money go? It's really easy to use and takes the work out of trying to come up with a personal budget.

International Relations, OC-style

Ladies and Gentlemen, this is the smartest link of the day from 1linkwonder.com. May I present International Relations, OC-style.

Looking out for number one...California, here we come, right back where we started from!

Like many of you I'm saving for retirement, and like many of you I want my money to grow faster and work smarter. As I'm looking at rolling over my old Yahoo 401k to an IRA, I'm looking at the funds that I'm currently invested in and an interesting topic came to mind.

How many of you are investing in something like the Vanguard 500 Index fund (VFINX) or another like ETF or mutual fund that tracks the performance of the S&P 500?

If you're like me you're like me then you probably have some money in this, and after looking into it closer I realized I had a lot of money in this fund, and it wasn't doing terrible but it was doing great. The only reason I had money in it is because as a young man I blindly invested in what I thought was safe and sounded familiar. Investing in the S&P 500 or an index fund was the easiest, safest decision someone who didn't know what they are doing could make.

I'm still a young man but a slightly wiser young man and a different investment that focuses more closely on the highest yielding S&P 500 companies rather than an index of the whole S&P 500 has been getting a lot more press recently.

iShares Dow Jones Select Dividend Index (DVY) is a fund that invests in securities exhibiting positive dividend-per-share growth rates over the past five years and dividend payout ratios below 60%. In other words companies that return shareholder value consistently are companies that are selected for this ETF.

From the Fool:

Standard & Poor's study found that from 1980 to 2002, dividend-paying stocks returned an annual compounded 2.7% more than non-payers did. In 2004, the spread was more pronounced: The dividend-payers of the S&P 500 outperformed non-payers 18.35% to 13.65%.

The reason for this market-thumping performance is that dividend-paying stocks tend to be quality companies with defensible moats that generate growing free cash flow.

So long story short, 22 years of history tell us there is a better alternative to tracking the S&P 500, and maybe many of you should reconsider where your money is and where it should be.

Renting vs. Buying in New York City circa 2006

A friend of mine posed this question recently:

april 1 my current lease is up. my girl and i are moving in.
probably plan on staying in the city 2-3 more years, then out. what's
your opinion, in the nyc market, of buy vs. rent? someone was telling
me that i really shouldn't consider it if i'm not planning on staying
more then 3 years.

Why rent and how much can you really afford for rent:
If you're only staying in the city for another 3 years or less, then I'd keep renting if I were you. In fact i'd find the best place I could find that I could really stand living in for 3 years so you don't have to move. I've had to move 5 times in 8 years and it's probably cost me about $1500 each time I moved based on brokers fees, moving costs, set-up costs, furniture costs, etc.

If you say to yourself I can afford $2000 for rent, but then you factor in that I want a place that I won't have to move from for 3 years, then you have an extra $125/month more that you're really willing to put out cause you're not using it toward moving expenses that year (I used $1500/12 to come up with that number), so really you could afford $2125 for rent


Why you shouldn't buy:
If you were to buy, you're bank fees for the loan would cost you about $3000 grand, but if you sell an apartment many buildings charge a fee of 2% as a "flip tax". You are essentially paying the building 2% of the value of your home for the right to sell your home. So for example a $500,000 apt results in a $10,000 flip tax fee. Now maybe if you bought a home back in 2002 and are selling it now you'd still be making a profit. But all economic indicators point to the fact that the real estate market is probably not going to see double digit growth rates in price and it will likely be flat. So buying a home now and holding on to it for 3 years may get you a tax break but will cost you more in bank fees, state taxes related to the sale, broker fees because they usually require 6% of the home value (which in this example is another $30,000).

So it makes no sense for you to buy if you expect to only live in the apt. for a 3 yr. timeframe because based on real estate market performance it's unlikely you'll buy something that will actually appreciate the required 16% for you to break even. Your domicile would have to appreciate at least that much, since half would of that value would probably go to the government, and the other half would have to cover your broker fees and flip tax.