Category Archives: money

Twitter IPO and diversifying your portfolio

Good to GrrrrreatYay for the upcoming Twitter IPO and congrats to Buster for being a part of that story!

The stock market is the world’s most profitable money-making engine, and investing in it (as part of a diversified portfolio) is almost a prerequisite for the lazy early-retiree. But if you’re looking for riskier investments or unique ways to diversify, investing directly in early-stage companies seems lucrative.

And whenever a company goes public, or a major acquisition makes headlines, the idea becomes even more salient. For instance, Baylor3217 asks:

I’ve been a pretty avid [twitter] user the last 4 years or so. Had I wanted to invest $100,000 – $200,000 3-4 years ago, could I have done that as a nobody and what could it have entitled me to in the upcoming IPO?

At the $100k level, you’d be considered an angel investor in the tech world, meaning you are investing a relatively small amount of cash into a very-early-stage company. You’d be given equity and expected to advise the company, make connections to potential clients and Venture Capitalists, etc. To put this in perspective, by the end of 2009, Twitter had already raised over $100MM in venture capital, so a $100k investment would have been laughed at, to be honest.

VC rounds usually start at around $1MM. Like with angel investment, VC is not just a money/equity swap. Venture Capitalists sit on the boards of the companies they invest in, so they are expected/required to have decades of relevant business/entrepreneurship experience. Even more importantly, VC is about connections, as startup founders don’t only look at deal terms when comparing VC deals. Since money is the fuel that will propel their company out of “startup mode”, they want the highest octane fuel they can get, meaning a sharp VC who will give good advice, connect them to potential clients, and eventually help them through a liquidity event (acquisition, IPO). It’s called “smart money.”

The answer to “what could it have entitled me” would have been totally up to the terms of the investment deal you made with Twitter. These are some VERY complex arrangements, involving esoteric clauses like liquidation preference and “capped participation”. Google those terms and if you’re not falling asleep reading their definitions, you might make a good angel investor.

Lastly, it’s easy to look at Twitter’s IPO and say, “I should have invested 4 years ago.” What you should really ask yourself is “Do I know what will be making headlines in the business papers 4 years from now, and do I have access to these people?”

If all the above doesn’t deter you from angel investing, you still have that $100-200k, and you wouldn’t mind never seeing it again, you may have what it takes to become an angel investor.

[This content was originally published on the Mr Money Mustache forum]

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Just-Cash June 2013

Here's a guy who's never going to get robbed at the ATM

Oh, hey.

This is a short post to let y’all know that I’m doing Just-Cash June again this year. Join me if you feel motivated to try out a different way of spending. So far I’ve used nothing but cash in the first week of June.

The rules can be found here: https://foundryintheforest.wordpress.com/2012/05/18/just-cash-june/

One thing to add is that if you already use cash as your primary form of spending, try doing just Plastic this month. The goal isn’t cash in-and-of itself, but to stir the pot and give something new a try.

I’ll let you know how it goes throughout the month. So far, the most annoying thing has been entering cash spending in Mint. I use their app on my phone so I can do it from anywhere but it’s still a pain.

Your Credit Score

trivial pursuitWhen she read that I was talking about buying or building a house, Foundry reader Ethel mailed me and asked if she could write a guest post about an important elephant in the room when making a large purchase: your credit score. Ramit Sethi from I Will Teach You To Be Rich points out that a bad credit score will cost you tens of thousands of dollars over the course of even a modest mortgage.

Take it away, Ethel…

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Why it’s Frugal to Build a Better Credit Score

A good credit score can make it easier to secure loans and get better interest rates, but what many don’t realize is that a bad credit score can hit your wallet in ways you are not aware of. Besides having to pay higher interest rates on loans and mortgages, a poor credit rating can cause denial of employment, higher insurance premiums, or paying a higher security deposit when renting a house or apartment. Cell phone companies may even require those with a low credit score to pay a security deposit of as much as four or five hundred dollars before they can open an account.

What is a Good Credit Score?

Most credit reporting agencies use what is known as the FICO (Fair Isaac Corporation) model or a version of it to calculate your credit score. Various factors such as your bill payment history, the types of credit you have, the length of your credit history, and recent borrowings are considered in its calculation. A “good” credit score, according to Experian, one of the major credit reporting bureaus in America, depends on the system used by your lender. Most credit scores fall in the range of 600 – 750, and the average score for the United States is around 720. Generally they say, a score of 700 or above suggests that you manage credit well.

How to Improve Your Credit Score

There are several steps you can take to improve your credit score if it’s on the low side. One of the most effective methods is to pay off any outstanding bills and continue to pay them on time in the future. Your history of paying bills makes up 35% of your credit score, so making timely payments can raise it quite quickly.

Another effective way to raise your credit score is through the responsible use of a credit card. If you charge only small amounts which you can pay off in full every month, your credit score will gradually rise. If you aren’t able to pay the full balance, maintaining one of less than 30% of your card’s limit is also effective. For instance, if you have a $1,000 limit on your credit card, make sure you keep the balance at around $300 or below. [ed: NEVER use a credit card if you can’t pay the balance in full each and every month.]

If you don’t qualify for a standard credit card, you can get a secured credit card. You simply deposit an amount of money with your bank, and they will issue you a card with a limit equal to the amount you deposit. You must follow the same practices as with a normal credit card, keeping your balance at below 30% of your limit, or paying it off in full every month when you can in order to increase your credit score.

Raising your credit score is really not that hard. It does require a focused plan and a bit of discipline, but it is well worth the effort it takes. Paying your bills and making loan payments on time can save you from costly penalties or late fees. For those seeking a mortgage, a healthy credit score can save you tens of thousands of dollars over the course of the loan. Why pay more of a security deposit than you need to? A little effort can go a long way, not only towards raising your credit score, but to raising the balance of your bank account as well.

Ethel Wilson is a financial and credit specialist with 12 years experience in the banking, credit scores, and financial industry.  She has advised countless clients on how to improve their credit score rating.  She now shares the best of her credit score rating information as a contributor and editor of creditscoreresource.com

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Thanks, Ethel! One thing I’d add is to check all 3 credit scores yearly. The official website for checking your scores is annualcreditreport.com. Do NOT use the websites that you see advertised, even if they say “free” they are for-pay services. You can also get your credit score checked for free by 3rd party sites like creditkarma.com. They “guess” your score so it isn’t 100% accurate, but it’s close enough to monitor if you’ve been the victim of identity theft, between your yearly official credit check-ups.

Cow Number 2

car full of meatLast weekend we bought our second full cow from 3 Sisters Farms. We kept 1/4 of it (about 150 lbs) and divvied the rest up between a few other families. The first one lasted us 18 months, which means we ate just over 1.5 pounds of beef per person per month. I’ve heard a healthy red meat portion is 6-oz, so if we were eating right-sized portions each time (I probably ate more than my fair share), that comes to 4 servings of meat, or once a week. That’s probably about the optimal frequency for consuming red meat. However, we often brought the meat to potlucks and entertained guests with red meat dishes, so not all of it was actually consumed by our family.

If you compare the picture above to the one I took for the blog post about our first cow purchase, you can see how much better I’ve gotten at efficiently loading up the back of the car with boxes:

18 months ago

You can also see the difference between an old camera-phone, and Mrs. Foundry’s nice DSLR.

This year, the farmers weren’t making trips into the city so we drove to Whidbey Island to pick up the meat. Originally, I thought it was going to be a hassle (and negate the savings of buying bulk meat), but we made it into a fun day trip with Rose from Our Lady of Second Helpings and her son who’s about the same age as our youngest. We had a picnic lunch at Deception Pass and rode the ferry, so even though we logged over 150 miles onto the car (more than I drive in 3 months) I think it was well worth it to meat…I mean meet the farmers and the future hamburgers. The animals were well treated, and seemed very happy. The pigs had an unobstructed view of Puget Sound, and as much as I love the view from our back deck, I must admit I was a little jealous of those porkers.

The price went up compared to 18 months ago ($4.25/lb vs $4.00/lb last time) but that’s about the pace of inflation. To make it an even better deal, they threw in the organ meat (heart and liver) along with some dog bones that we gave to the other families who have dogs (and kept some for ourselves to make soup stock…shhhh).

Maybe I should have put a warning at the beginning of this post for vegetarians to skip over it? Nah.

PS: Happy Birthday to my sister, Mindy! I won’t divulge her age, but as of today, it now ends in a zero!

MMMMM (Me Merrily Meeting Mr. Money Mustache)

mustache bearMonday afternoon I had the pleasure of meeting one of my favorite bloggers, Mr Money Mustache. Along with blogger pal Erica from Northwest Edible Life, he hosted a little get-together here in Seattle for his readers. There was even an offer of free beer if you rode your bike, but unfortunately I couldn’t take advantage of it as I rode the scooter to get home in time to take the Foundry Boys to Cub Scouts.

It was really fun to see MMM and watch him dish out advice face-to-face. I didn’t hear it all but the most commonly repeated refrain of his was that everybody should be riding a bike. I wholeheartedly agree! As I told someone there Monday night, replacing most car commuting with bike rides is the 2nd biggest improvement to my quality of life (marrying Mrs Foundry is #1 of course).

I knew I was among my own kind when someone in a group asked how many people love making spreadsheets, and everyone proudly agreed “I do!”

I got a warm feeling from being able to give some investing advice, based on the Gone Fishin’ In the Foundry portfolio.

But mostly it was great meeting others who share a passion for frugality, finances, and good beer. Hope to see you again next time!

Last-Minute Frugal Date Night Ideas

Items from a frugal date night As if she was reading my mind, Foundry follower Sally Ashley asked if she could do a guest post on Frugal Date Nights. Just in time for Valentine’s Day! When she’s not reading this blog, Sally writes about romance and personal finance. Her most recent work focuses on how to pick the best finance schools.

So if you don’t have anything planned for your sweetie tonight, and you want to keep it frugal, read on…

How to Plan a Frugal Date Night
Planning a date doesn’t always have to be expensive, and you can have just as much fun on a frugal date as you can on an expensive date. Below are some great ways you can plan a frugal date night and still have a great time!

Hangout at Home
You can plan a fun but cheap date night in your very own home. You probably have food there, so look up some recipes online and cook a great meal for you and your date. More than likely, you have some good entertainment in your home as well. A stereo, television, computer, video game system or just some good old-fashioned board games can be fun on a date. Simply invite your date over to hangout and listen to music, watch a movie and share a meal, or play some fun games.

Attending Local Events
Most every city has local newspapers that list local events and happenings that will be going on in the next few weeks. Some cities have their own websites that list these events. Look in those papers or Internet sites, and search for some local events that you and your date can attend. When you see something that looks fun, and go out and have some fun. Most of the time, these events are relatively cheap or even free.

Visit the Park
A romantic AND cheap date that can be a lot of fun is going to the park. If you or your date has a dog, take your pet along. You can pack a nice picnic lunch and a blanket and sit under the trees and enjoy good conversation while eating lunch. Some parks host events and activities as well. They might have a swimming pool, walking/jogging trails or some secluded areas to get some privacy. If it’s winter, there might be somewhere to go ice skating.

Cheap Movie 
Going out to the movies on a date is ridiculously expensive, and more often than not, boring. Staring at a screen and being silent for over two hours can make it tough to get back into the vibe after the movie is over. However, if there is a movie you both want to see and it is available by rental, check it out and watch it at home. You can pop your own popcorn, have your own drinks and sit down and share a movie together. Every now and again, you can stop the movie to enjoy some conversation or refresh your beverages. If you know your date pretty well, take advantage of the cheaper movie specials during the daytime, or visit the dollar movie to catch a really cheap one. [ed: Even cheaper, borrow a movie from the library for free!]

Cheap Coffee Dates

Meeting up for coffee can be a good idea if you know your date pretty well. If so, you can engage in good conversation the entire time you are there. If you do not know your date well, a coffee shop can be intimidating – trying to find something to say for a couple of hours. If you have a nice coffee maker or cappuccino machine at home, ask your date over for some homebrew, and make your own coffee at home while enjoying conversation, a meal or just watching television together. First dates at a coffee shop are easier if you go on a double-date to help break the ice. Afterwards, you can go to a cozier place alone if things go as planned.

Hopefully, you can use some of these frugal date ideas for yourself. They are easy on the wallet, and they will allow you the opportunity to get to know your date better. You can learn a lot about a person by using one of these cheap date ideas over the more expensive options.
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Thanks, Sally! Readers, how are you spending your Valentine’s Day (frugally or otherwise)? In our family, we exchange hand-made cards for each other, and Mrs Foundry usually bakes a treat for the family. This year I splurged and got her a bouquet of her favorite flowers (even though we agreed on no gifts). Oops!

Save Bling with Ting

tingEven a well-oiled machine like the Foundry’s finances need some tuning every once in a while.

One big offender in our budget was the mobile phone plan. We were paying $150 a month for 2 phones with data plans. I knew we could do better. Pre-paid plans look cheaper on paper, but I didn’t want the hassle of recharging minutes (or worse, forgetting to recharge and finding my phone out of service).

Ting to the rescue! They run on the Sprint network (so you can bring your Sprint phone over), and use a tiered plan. At the end of every month you only pay for what you used, in terms of minutes, text messages, and megabytes of data. For instance: less than 100 minutes is $3, 100 – 500 minutes is $6, and so on.

You can see the dashboard in the image above (that was my usage for last month), but they also have alerts you can set up. “You’re about to go into the next level of text messages,” for instance.

Here’s the best part: without changing my phone habits much, my phone plan went from $75 (my half of the family plan) to $25! I use Google Voice for long calls (or when I know I’m going to be on hold) and for outgoing text messages. And I’m almost always near a wi-fi signal.

I highly recommend taking a look at Ting to see how much money they’ll save you. Especially if you already have a Sprint phone, since your existing phone will work.

Here’s a promotion code for $25 off: https://z2qhtq7rd1.ting.com/

NB: The links on this post are referral links, that get each of us $25 off. Please click on them! It’s a nice and fully optional way to help out this blog if you choose to do so.