Contributed by Larissa Peltier
Tax time. Entering the tax office, I lead my toddler to the kid friendly corner. By the time I sat down, my husband and the tax preparer were already through the basics, my husband’s W2 form and the kid’s social security numbers. Then on to my investing paperwork, the numbers were added and subtracted. When the preparer announced the capital gains from the previous year it was a surprise for both me and my husband - $36,000.
I’m not gonna lie, I was pleased. It took me three years after I got my degree to find a job that paid at least $30,000 a year. I sat up straighter in my chair. Suddenly, my black yoga pants were more reminiscent of black tailored slacks. With more authority in my voice I asked how that would affect our married filing jointly income tax bracket. It moved us up to the next bracket, we were informed. My husband let out a sigh. I peered at him through my glasses like a librarian to errant school children and gently chided him, “You can’t be afraid of making money just because you have to pay taxes on it.”
Then the next year, same tax office, and there it was again. The capital gains earning. I knew I made a bad trade and was expecting a loss of $10,000 to report. The accountant looked up and refuted my claim that I was sure I had lost money. “No,” she said. “I’m actually showing a gain of $14,000.” Again, my husband’s exasperated sigh, he was looking forward to writing off a loss on the taxes. I didn’t have anything glib to say, I wasn’t expecting a gain. I’ll have to rehearse something smart and sassy, and wait a whole year to use it, if I’m ever so lucky again.
I began investing in stocks years before I married and had children. After college, I landed a job as a lab technician. I wasn’t making a lot of money, but enough to invest. I went to my laptop and researched. While E-Trade charged $14 per trade at the time, Scottrade only charged $7 per trade. So I set up an account on Scottrade and after work I drove to their office and wrote a check for $2,000. Afterwards, I made my first trade. Here are the fundamentals that I’ve learned:
Step 1: Save Your Money
There are the essentials that we need: Food, clothing, shelter and in our society, toiletries and transportation. We don’t need movies, DVDs, Blu-ray discs, expensive jewelry or clothes, manicures, pedicures and frequent trips to the salon or restaurants. If it is difficult to abstain from spending, think of it this way, would you rather buy that diamond ring or a house? And over time, the house will be a reality.
Step 2: Make Money
Now as a Stay-At-Home Mom, you may already be a secondhand hustler or a coupon queen, most moms are with the cost of raising kids. But there are ways to make money from home.
By offering childcare you can make money while staying at home with your own child or children. Another way to bring in some extra cash is by renting any available space you have in your home. I surf local Craigslist ads and often come across an ad for international students seeking a room, even a shared room for $400 each, which they would need for the summer. If you’re not comfortable housing students, then there are people simply looking for space to rent for their vehicles. There was a person on Craigslist looking to keep three cars garage-parked over the winter for $750 per car.
So keep an eye out for opportunity. Once there are funds, set up a trading account. And remember to always buy stocks on limit orders, where you set the exact price that the stock sells or buys at. Do not use market orders. If a computer glitch sends that real time price grossly high or grossly low, it won’t matter. A stock is bought or sold once the order goes through. In Scottrade, when I buy or sell a number of shares of stock, I always mark the option, All of None, so the brokerage doesn’t buy 100 shares of stock in sets of 10, only all 100 at the same time.
Step 3: Don’t Panic
If you buy a stock and the price decreases, don’t sell the stock. Wait until the price goes higher than the price the stock was at when you bought it. Now this may seem common sense, but it is incredibly hard for some, if not most people, to watch a stock decrease in value and not sell it to prevent losing more money. Stocks go down and then back up, constantly. If a particular stock value goes down, unless there’s an imminent bankruptcy of the company, hold it and wait.
Step 4: Panic
When Etsy, a website that sells handmade items became public, I bought it at $24 a share. Just a few days later, Amazon announced its new handmade selection, virtually the same marketplace as Etsy. It took me a year to accept that the $20,000 I had invested in Etsy was now worth less than half that, and I sold it in defeat. And if investments don’t work out, at least we have each other.
Step 5: Support Each Other
When I wrote a fantasy story, I asked my friend to read it and offer any comments or constructive criticism. Even though my friend had two children by then, she still read the copy I sent her, edited it with a pen and mailed it back, helping improve my novel before I self-published it on Amazon. When she started her sewing business, I made sure to share any announcements for her business on Facebook. Her business has taken-off, and she is busy filling orders. So be brave, and take a risk.