I was walking through Costco today and saw that they starting to promote the Costco memberships as gifts for the holidays. I got one last year, and I thought it was a nice, practical gift idea for these frugal times. But hey, why not give them a $50 membership and $50 in coupons good towards free Costco stuff? Read on:

I am happy to be able to offer special Costco membership certificates again to MyMoneyBlog readers. Available only online, they are $50 each with free shipping, and are good towards new Gold Star memberships and also upgrades to Executive Membership. Just bring them into your local Costco to redeem.

This is exactly the same price as you would pay at a Costco store, but with each membership certificate you order, you will also receive a coupon booklet worth more than $50 by itself, including a FREE rotisserie chicken, FREE 100-print digital photo processing, a FREE Kirkland Signature™ 2 lb. bag of coffee, FREE Kirkland Signature 48 pk “AA” batteries – and more.

• Join as an Executive Member: Purchase two Membership Certificates at $50 each.
• To join as a Gold Star Member or upgrade your existing membership with one Membership Certificate at $50.
• Give the gift of Costco Membership Certficates for any occasion.

More details:

This offer is only valid online and is not available at Costco locations.

Restrictions: Valid for new memberships and upgrades to Executive Membership. See the Membership Certificate for details. Costco Membership Certificate orders are fulfilled by participating National Membership Program organizations. Please allow approximately 2 weeks for processing and shipping. Costco Wholesale Membership Certificates are not replaceable if lost, stolen or destroyed. Bring the certificates to your local Costco membership counter to activate.

Update: They added an initial front page verification system where you have to enter a captcha, but it still ends up at the same place and you can still read all the terms before buying. You can also read the reader comments from my older post with positive reviews.

Find more in Deals & Offers, Frugal Living | 11/20 | 1 Comment »

Still not much action in interest rate land, but here’s another update.

Reward Checking Accounts
These are checking accounts, usually through local credit unions, that pay a very high interest rate if you jump through some hoops each month. However, if you make a mistake you’ll forfeit virtually all your interest for that month, so it can be tricky. But for the very diligent, their rates are still averaging around 3-5% APY usually on balances up to $25,000. A current example is FAB&T Kasasa checking at 3.50% APY on up to $50k, which requires 10 check card purchases each month, a direct deposit/auto-withdrawal, must log into your account once a month, and online statements only.

For more, see my review of rewards checking accounts and also this list of accounts by state. I’d stick with small local credit unions with limited membership eligibility if possible, as the rates tend to be more stable.

Online Savings Accounts Rate Updates

• Everbank is offering 2.51% APY for the first 3 months for new accounts. This rate is higher than any 3-month certificates of deposit currently available.
• ShoreBank Direct is offering 1.95% APY on its online savings account with $1 to open and no monthly fees.
• Ally Bank Online Savings recently raised their “no fine print” savings account rate to 1.64% APY. No minimums, no monthly fees.

Certificates of Deposit
As stated above, for 3-months or less go with Everbank. In general, CD rates have been very low, and given how fast rates can rise as compared to how much further they might fall, I don’t see the benefit in locking up for money for a slightly longer period of time. For example, a top 1-Year CD might get you 2% APY, while stretching out to 3 years might bump you up to 2.80% APY, according to CD “auction” site MoneyAisle.

If you are in a high tax bracket and have a 5-6 year horizon, you may also want to research the Vanguard Intermediate-Term Tax-Exempt mutual fund (VWITX). It currently has an average duration of 5.5 years and an SEC yield of 3.01% that is exempt from federal income taxes. In the 35% tax bracket, that is a tax-equivalent yield of ~4.61%. A top 5-year CD from MoneyAisle yields 3.39% APY. VWITX is not FDIC-insured and invests in high-grade municipal bonds, so weigh your options carefully.

Remember, the new $250,000 FDIC & NCUA insurance limits per titled accounts are currently extended through 2013.

Find more in Banking, Deals & Offers | 11/19 | 13 Comments »

Just a quick note that Sprint conditional call forwarding is now free of charge. This means that Sprint customers can now forward all busy and unanswered phone calls to Google Voice without incurring the previous $.20/minute for conditional call forwarding – normal minutes usage still applies. Thanks to reader Matt G for the reminder.

If you don’t know what I’m talking about, see last month’s post on Using Google Voice To Enhance Your Cell Phone Voicemail.

I’ve been using it for the last few days, and I must say that I like it a lot. I can have unanswered phone calls to my cell phone number (not GV number) forwarded first to my home phone or office phone. Then, if still nobody picks up the Google Voicemail system kicks in, which records the message online and shoots me a transcribed text message about 30 seconds later. Transcription accuracy isn’t perfect, but for the most part it works well enough to get the point of the message.

Check out my post on Ways To Save Money With Google Voice for several other useful features! They seem to be giving out invites to everyone who asks right now.

Find more in Frugal Living | 11/19 | 8 Comments »

After having some more issues with our 15-year old car, we may be in the market for a new or lightly used car. We were looking at the Honda Fit (the newest gen looks even better than the previous one), and went to a local dealer for a test drive. I actually sat down to haggle prices for a bit (stupid me) and after being lied to about four different times, I just got up and left.

I went home, and remembered the Costco Auto Buying Program that offered a no-haggle pre-negotiated price. Ideally in true Costco style, they would offer a “good” deal as opposed to a rock-bottom pitted-six-dealers-against-each-other-in-a-deathmatch price. I figured, why not give them a try?

I filled out the form, and the person calls me back. I was surprised to hear that he was an employee of Costco, not of the dealership. He gives me the spiel about how Costco is all about volume so he can offer a better price than a salesperson. However, it turns out that my Costco-affiliated dealership is the same one I went to for a test drive, and since I met with a salesperson they were not allowed to talk specifics with me for a period of at least 2 weeks after last contact. If I start up negotiations again, the date resets. I’m not in a hurry, so I’m just waiting around because the original guy definitely isn’t earning a commission from me.

Has anyone out there used this program before? How did you like it? I found this link which offered a mix of experiences.

Find more in Frugal Living | 11/18 | 48 Comments »

Berkshire Hathaway’s (BRK) recent announcement that it was buying railroad Burlington Northern Santa Fe (BNI) also included a provision for a 50-for-1 stock split of B shares so that smaller shareholders of BNI would be able to be converted to Berkshire shares and avoid capital gains. Warren Buffett has been trying to avoid this for years, so after some random web surfing — I mean… research, I figured I’d share my findings.

At the end of trading yesterday 11/18, Berkshire’s A shares currently cost $103,100 apiece and B shares were $3,430. After a 50-to-1 split, a B share would cost about $69. Several news articles are talking about how this brings the share price down to the “common man”. For a $69 investment, you should able to attend the Berkshire Hathaway Annual Meeting in Omaha this May, although you could also buy tickets for $5 on eBay directly from BRK.

But wait, you may already own a piece of Berkshire… or you may soon.

S&P 500
Right now, Berkshire Hathaway is not part of the S&P 500. Many folks (including me in the past) thought the S&P 500 was simply the largest 500 companies in the US, but not quite. I’ve read that BRK is likely excluded due to inadequate trading volume of their high-priced shares. If the stock split occurs, it is possible that BRK will become part of the S&P 500 and thus be bought by every S&P 500 index fund out there. I’m sure Wall Street traders have already begun the speculating.

As of 1/18, the market cap of BRK was roughly $160 Billion. Looking at this chart of S&P 500 components sorted by size, BRK would actually be #9 on that list, as it is worth more than even Chevron or AT&T. If included, BRK would constitute about 1.65% of the index.

Total Stock Market
However, you may already own a piece of Berkshire if you own part of a mutual fund that tracks an index following the “total” US stock market. For example there’s the Vanguard Total Stock Market Index Fund (VTSMX), which is held within all of the Vanguard Target Retirement Funds. By my rough calculations, BRK is approximately 1.3% of the broad US market. So for every $10,000 of VTSMX or VTI you hold, you own $130 of BRK already.

Sharebuilder
Of course, for years now you could own $1 or $50 or $500 of BRKB by buying partial shares of BRKB through Sharebuilder ($25 bonus). You wouldn’t want to go too small as the $1 to $4 commission would take too big a bite, but it can be one way to gradually accumulate BRK shares. I think I have about $45 worth right now, myself, mainly due to an opening bonus.

Find more in Investing | 11/18 | 9 Comments »

I’ve written about Kiva before - They allows individuals to make loans starting at $25 to low-income entrepreneurs in the developing world, also known as microcredit. By doing so, you can provide affordable working capital for the poor (money to buy a sewing machine, livestock, etc.), hopefully empowering them to earn their way out of poverty.

However, Kiva may not work exactly like it suggests on their website. You’ll notice that they post up pictures and stories of people needing loans, and you get to pick the exact person you want to lend to. Back in 2007, I thought I loaned $25 to Vitolina:

Vitolina owns a set of beach fales that she rents out to back-packers or picnickers passing through the village and works hard to keep the structures in good condition. Fales are simple, small open huts with thatched roofs built in the style of the traditional Samoan house. Vitolina?s fales are situated on a white sandy beach on the Samoan coast. She readily welcomes guests and provides them with a simple roof, unbeatable views, and home-cooked meals. She will use the loan to renovate the beach fales.

However, chances are that the person you clicked on already got the loan months ago. Your money is simply going to the microfinance institution (MFI) who already lent to that person, and will use that money to lend to another future person or general project. The direct “person-to-person” link does not exist like it does, for example, at LendingClub.

There is a lot of recent discussion on the web on this issue. Thanks to the commenter who made me aware of it. Check out this NY Times article and the blog post by David Roodman that started it all.

After reading the posts and several follow-ups, it does make practical sense that Kiva can’t actually match a lender to a specific borrower - it would take too long for the borrower to get the loan. However, it does show that “good stories” do matter. Remember those “Save The Children” commercials where you’d get a letter from the child you helped? Same deal. Your money goes to the general organization, not any specific child.

As a result, Kiva has changed how it explains their loans and their homepage tagline went from “Kiva lets you lend to a specific entrepreneur, empowering them to lift themselves out of poverty.” to the more generalized “Kiva connects people through lending to alleviate poverty.”

The other common variable that is somewhat hidden away to new visitors is that while you loan money at 0%, the actual MFI will likely go on to loan money to the entrepreneur at around 30% APR. The difference pays the operational expenses of the MFI and may partially subsidize defaults in order to maintain the advertised tiny 0-2% default rates.

None of this means Kiva or microcredit is bad. Sure, it’d be nice if I could lend at 0% instantly to a borrower in Cambodia who could pay 0% interest too, but right now that’s not possible. I still plan on lending at both Kiva, but will no longer get the “warm fuzzy connection” feeling from Kiva and may direct more funds towards Microplace or Grameen Foundation.

Find more in Giving Back | 11/17 | 7 Comments »

Speaking of LendingClub, I saw that they now offer a IRA with no opening fees and no annual maintenance fees. Previously, there was a $250 annual fee. However, it does now require an increased $15,000 minimum opening balance, which essentially restricts it to a 401k rollover or the transfer of existing IRA funds.

Since P2P loan interest is taxed at ordinary income rates like interest from savings accounts, the ability to place them in a tax-deferred account is attractive. But since person-to-person lending is such a new asset class, I would hesitate to make it larger than say 5% of my portfolio, which would require a total portfolio size of $300,000. So, I’m out.

It is interesting that the custodian EntrustCAMA allows a lot of options in their Self-Directed IRAs like holding physical precious metals, investing in private small businesses, and investing directly in real estate. I’m not sure if you can only hold LC notes in this free IRA.

Find more in Investing | 11/17 | No Comments »

Over at Bogleheads there was an interesting thread which explored how finance professor Moshe Milevsky has been pushing the concept of human capital as an additional variable to the traditional ideas of net worth, portfolio construction, and asset allocation. These are explored in this this trade magazine article for financial advisors, this draft academic paper, and also in his book Are You a Stock or a Bond?.

Human Capital
There are some differing definitions, but below is a brief explanation (taken from the magazine article above) of what is meant by human capital here:

Human capital is a measure of the present value of your client’s future wages, income and salary (net of any future income taxes and expenses). For example, if she is a doctor, lawyer, engineer or even a professor, she has probably invested an enormous amount of time, effort and money to finance her education. That investment will hopefully pay off over many future years of productive labour income in the form of job dividends over the next 10, 20 or even 30 years. Sure, clients can’t really touch, feel or see human capital, but like an oil reserve deep under the sands of Alberta, it will eventually be extracted and so it’s definitely worth something now.

Milevsky likes to talk about people as businesses and thus includes human capital on the balance sheet of “Me, Inc.”:

When you’re young, your human capital may very well dwarf your 401k balance. With this in mind, it may make you feel better about any short-term losses.

Your human capital can be viewed as a hedge against the losses in your financial capital. So, as a 50-, 40-, or especially 30-year old, you should be willing to take more chances with your total portfolio, perhaps even borrow to invest or leverage into the stock market, because you have the ability to mine more human capital if needed.

Am I a Stock or a Bond?
One characteristic of your human capital to think about is if it tends to act like a stock or a bond. As a tenured university professor, Milevsky offers himself up as a good example of a bond that offers a reliable and steady coupon (paycheck). However, an small business owner, investment banker, or even a car salesman would have an income that is much more correlated with current economic conditions - much like a stock would.

A common piece of advice that relates to this is when people are told not to hold too much of their employer’s company’s stock (often in 401k plans). Since your salary is already tied to that company, it would be wise to add some diversification so that all your eggs aren’t in one basket.

Along the same diversification argument, if you are a “bond” then you may be able to take more equity risk in your retirement portfolio. On the other hand, if you are a “stock” then you may want to reduce your exposure to stock market swings. “Your invested assets should zig when your salary zags… tilt your financial portfolio away from your human capital.”

Thoughts
Unfortunately, rarely are things so simple. Human capital is at best a guess of the future, and you could be really far off. And just because your income isn’t tied to the stock market, doesn’t necessarily mean you can stomach the swings of a highly risky portfolio. If you’re the type to panic and sell at the bottom, perhaps increasing stocks would only hurt your long-term investment returns.

I like to imagine a good financial couple as one that pairs up a stock and bond. Perhaps one person holds a steady government job with a pension and healthcare benefits into retirement, while the other is an entrepreneur that takes some risks and tries to strike it big.

Also, what if I don’t want take advantage of all my human capital? Sure I could work for another 35 years and consider a big chunk of human capital in my net worth, but I’d really rather not.

What do you think of this concept?

Find more in Investing, Retirement | 11/16 | 11 Comments »

Need to check your credit score? Here’s a new coupon for 26% off real FICO scores and all other credit products at myFico.com. Use the promotional code NOVEMBER26 to get 26% off and a FICO score for less than $12, the best discount currently available:

The code is good until November 30th (although try it anyways and see if it works after that date), so be quick about it. For the Equifax credit score only, you can get it for $10.95 using the code SW94608, which is over 30% off. You enter the promo code relatively late in the buying process, right before entering your credit card information. Look for this:

Experian no longer allows Fair Isaac to sell FICO scores to consumers at all (even though lenders still buy and use them). They sell their own “FAKE-O” version now. Lenders almost always use FICO scores in their decisions, so those are the only ones you should pay for if at all.

For the diligent, a cheaper alternative is to sign up for a free 30-day trial of Scorewatch, which includes two free Equifax scores and reports. Just remember to cancel as soon as you decide you don’t need it anymore. You are allowed to cancel online, without having to even call in.

You can always request your credit reports (not scores) once every 12 months at AnnualCreditReport.com. If you’ve already done that, you can still try these other direct methods for the unemployed, those denied credit, and victims of identity theft.

Find more in Credit Cards, Deals & Offers | 11/14 | 2 Comments »

Benjamin Roth was a lawyer in Youngstown, Ohio during the Great Depression and kept a regular diary of his impressions during the era. The diary was required reading for his son who also became a lawyer at the firm he started, in order to understand what their clients went through. After the recent crash, it has now been published as a book called The Great Depression: A Diary.

The book is primarily a straight transcription of the original handwritten journal, with a few editor’s notes to provide a little additional background when needed. Each entry is dated, and it is very interesting to see the first-person perspective unfold over time. Indeed, imagine a “blog” back then and you’d get this. Roth was not an economist or historian, and simply wrote down what he saw.

Historical Similarities
It is easy to find many similarities between the recession back then and now. The stock market and real estate market boomed, speculation was rampant, and then it all collapsed. Banks were stuck with mortgages that nobody could afford to keep up with, and foreclosures were everywhere. Unemployment was very high, although it was 25% back then as compared to 10% now.

[9/19/32] It looks as tho the Democrats will win because everybody wants a “change”.

Sound familiar?

Roth considered himself a Republican, and did worry a lot about “a shift towards socialism” and inflation always being around the corner. The government did end up spending a lot of money to stimulate the economy, although not exactly the same way as now. On the other hand, many things that seemed like radical changes back then are things that we almost take for granted today - including new institutions like the FDIC to provide bank deposit insurance, the SEC to regulate investments, and even Social Security.

Historical Differences
Throughout the diary, Roth is always talking about how numerous banks failed or re-opened temporarily only to close again due to rapid withdrawals. This led to even the strongest banks putting very tight restrictions on withdrawals (i.e. max 5% of deposits). Without something like the FDIC, people ended up selling their account balances for 40 cents on the dollar because they needed the money immediately or were afraid they’d never see it again.

Personal Finance & Investing
Roth often wrote about personal finance and investing as well. He really like the idea of saving up a lot of cash during boom times, and then investing it all at the “bottom” after a crash, although he gradually seemed to realize that predicting the exact bottom was impossible and that simply holding it for the long term might be more reasonable.

In normal times the average professional man makes just a living and lives up to the limit of his income because he must dress well, etc. In times of depression he not only fails to make a living but has no surplus capital to buy stocks and real estate. I see now how important it is for the professional man to build up a surplus in normal times. [...] His practice suffers and he has no chance of rising above the level of the ordinary practitioner who lives from day to day and from hand to mouth.

[5/9/1932] Those men who were wise enough to sell during the boom and then keep their funds liquid in the form of government bonds, etc. were not farsighted enough or patient enough to wait almost three years to re-invest. Most of them re-invested a year or more ago and now find stock prices have sagged to 1/3 of what they were when they thought they were buying bargains.

Of course, back then there was still the CNBC equivalent of various economists and business leaders sharing their “future economic outlook”. Roth recorded their predictions and always seemed to come back with a later follow-up note “…the predictions were wrong.” Some things never change!

If I were to levy a criticism of this book, it would be that it is more of a list of his observations, as opposed to his personal actions. For example, he often mentions how local Bank A or Bank B has failed or is restricting withdrawals. But Roth doesn’t actually share where he keeps his money, if he has moved it due to fear, or if he has had problems withdrawing his own deposits. He doesn’t share his personal investments, even though he records the share prices of many companies regularly. This ends up making the trip to the past a bit more dry than it could have been, but it was still a fun and enlightening trip to take.

Find more in Book Reviews | 11/13 | 7 Comments »

Coin-changing machine operator CoinStar is running a promotion where if you change $40 in coins into a gift card, you can receive an additional $10 gift card by mail. They offer to exchange coins into gift cards with no fee for several stores, the most popular probably being Amazon.com followed by CVS, Starbucks, Lowe’s, and iTunes.

Perhaps empty out that coin jar and cross someone off your gift list and well? Below is selected fine print from the official rules:

Obtain an official claim form when you convert in a single transaction at least 40 U.S. dollars (in coins only) into a gift card or eCertificate at participating Coinstar Centers. The claim form will be displayed at the end of qualified Coinstar® receipts.

General terms and conditions: the $10 holiday bonus offer ends 12/6/09. Offer valid in the U.S. only and excludes Puerto Rico. Offer good on qualified coin transactions made between 11/9/09 and 12/6/09. Transactions occurring before or after these dates are not eligible for this offer. Limit 1 per name, address, or household.

Find more in Deals & Offers | 11/13 | 10 Comments »

BBVA Compass Bank is offering a free 8gb iPod Touch when you open a checking account with $100 and set up direct deposit for 6 months. Unfortunately, there are a lot of restrictions. For one, you must reside in Alabama, Arizona, Colorado, Florida, New Mexico, or Texas. Secondly, the iPod is offered through a third-party fulfillment company (think mail-in rebates…) to which you actually have to pay the shipping and handling. Thanks to reader Susan for the tip. Selected fine print:

*To qualify for this offer, you must (1) by December 15, 2009, open a new BBVA Compass Build-to-Order consumer checking account with a minimum deposit of at least $100, (2) within 6 weeks of account opening, your paychecks must begin to be directly deposited into your new checking account at least once each statement cycle. At 6 months your account will be verified again to confirm you are still meeting the payroll direct deposit requirement. If not, BBVA Compass will debit $180 (the approximate cost of the iPod touch) from your checking account.

Find more in Deals & Offers | 11/13 | 12 Comments »

California has come up with another “creative” way to get some money from its residents. First, I had to figure out how to redeem my California IOU. Now starting back on November 1st, the state increased the income tax withholding on regular wages by 10%. There is no actual accompanying tax increase, they are just looking for an interest-free loan from now to when you file your income taxes.

According to the Franchise Tax Board, previously a single taxpayer making $51,000 a year and claiming one withholding allowance would have had $40.58 a week withheld from his or her paycheck. After Nov. 1, withholding increased to $44.64 a week, an increase of $4.06. Taking an extra $20 a month from someone making $51,000 a year seems more annoying in principal than anything else.

If you want to “undo” this gimmick, you can increase the number of withholding exemptions you claim on form DE-4, Employee’s Withholding Allowance Certificate, from your payroll department. You can also increase the exemptions on your W-4 form as well, but that just decreases the amount of federal tax withheld.

Fool around with the calculator at PayCheckCity and see how changing the number of allowances changes things (I don’t know if they’ve updated their calculators to include this change, but you’ll get the general idea). Just be sure that you’re paying enough income taxes to avoid underpayment penalties.

A much more detailed (and long-winded) article can be found at SacBee.com. Thanks to reader Sharon for the heads up.

Find more in Taxes | 11/11 | 23 Comments »

Hawaiian Airlines is celebrating their 80th anniversary by giving out 80 free miles to anyone who registers, or every 80th person will get an $80 eCertificate. As usual, this is a free way to reset miles expiration. Ends today (11/11)! Register here.

All of us here at Hawaiian Airlines are grateful to you — our HawaiianMiles members — whose loyalty has made our 80th anniversary possible.

To celebrate, as we near the big day, we’re giving every HawaiianMiles member 80 free miles or an $80 eCertificate towards a flight between Hawaii and the Mainland U.S. Everyone will receive 80 miles just for registering and every 80th person to register will receive an $80 eCertificate in place of the miles.

Find more in Deals & Offers | 11/11 | 1 Comment »

In case you missed this on the front page of Google today, they are offering free WiFi at 47 participating airports and on every Virgin America flight from now until January 15, 2010. Many other airports already offer free internet, so give it a try when traveling. From their FAQ:

Q. What are you announcing?
In addition to working with Virgin America, Google has partnered with over 45 airports across the country to offer complimentary WiFi to travelers passing through these cities this holiday season (November 10, 2009 through January 15, 2010).

Q. Why is Google doing this?
We’d like to make the holiday travel crunch a little easier and more pleasant – and what better way to do it than with what we know best: the Internet?

Q. Who is powering this service?
We are working with Boingo, Advanced Wireless Group, Time Warner Cable, Electronic Media Systems, Lilypad as well as numerous airports that provide wireless services themselves.

Find more in Deals & Offers | 11/10 | 5 Comments »