Just got an e-mail from MicroPlace that they are running a gift certificate promotion where if you buy a $20 GC, you get another $20 GC free. The gift recipient can then lend out the money to a poor entrepreneur and receive interest + $20 back later. Since the person actually gets the money back (or at least most of it assuming some defaults), and thus isn’t the same as a “$XX has been donated in your name” gift, I think it’s a cool twist on gift cards.

Give a Gift that Keeps on Giving
Give a unique and special gift this holiday season. It is a gift of connection, a gift of hope, and a gift that believes that poor people can use their ingenuity and hard work to break out of the cycle of poverty.

Your gift can help fund loans to poor people who could start a business, save, and work their way out of poverty. And when you purchase a gift certificate of $20 or more on MicroPlace, we’ll give you a free gift certificate of $20 to send to someone else on your shopping list!

To learn more about Microplace check out these posts, including my last microlending update.

Find more in Deals & Offers, Giving Back | 11/6 | 6 Comments »

Here’s a nice credit card offer for those interested in international travel. The Chase British Airways Visa Signature card is offering 50,000 BA Executive Club miles for new cardmembers with first purchase, and another 50,000 BA miles after spending $2,000 within 3 months, for 100,000 miles total. Regular features include earning 1.25 miles per dollar spent. The card does have an annual fee of $75 as well.

50,000 British Airways miles is enough for an economy class transatlantic flight from USA to their “Europe Zone 1″, which includes the United Kingdom, Belgium, France, Germany, Ireland, Luxembourg, Netherlands and Switzerland. Note that “all reward flights are subject to taxes, fees, charges and surcharges, including airline surcharges.”, which can add up. I did a quick search and for a random San Francisco (SFO) to London (LHR) flight in March 2010 that cost $807, the taxes and fees alone were $387.

You’ll also need to fly out of a major city that BA services (see route map). Still, two free flights from US to London even for a few hundred dollars each is a big discount for those looking to buy such a ticket anyways.

What if you like to fly in style? 100,000 miles is good for a single business class ticket from USA to Europe Zone 1… and the fees are more reasonable on a relative basis. A business class flight from SFO to Paris (CDG) in March 2010 would have cost around $4,700 in cash, but the fees/taxes are only about $400 as well:

Finally, if you can manage to spend $30,000 a year on the card, you can even earn a 2-for-1 companion voucher. Time to buy some coins? Thanks to reader Paul for the tip.

Find more in Credit Cards, Deals & Offers | 11/6 | 8 Comments »

I recently watched the film Story of Stuff, which is a film about the lifecycle of material goods. While the video has its biases and has thus become politically controversial, I still think the video is worth viewing with a critical mind. There is some good debate on the film’s Wikipedia page, I don’t want to get into it here.

One thing that I did like was her discussion of planned vs. perceived obsolescence. Here are the definitions from the film glossary:

Planned obsolescence: designing and producing products in order for them to be used up (obsolete) within a specific time period. Products may be designed for obsolescence either through function, like a paper coffee cup or a machine with breakable parts, or through “desirability,” like a piece of clothing made for this year’s fashion and then replaced by something totally different next year. Planned obsolescence is also known as “design for the dump.”

Perceived obsolescence: the part of planned obsolescence that refers to “desirability”. In other words, an object may continue to be functional, but it is no longer perceived to be stylish or appropriate, so it is rendered obsolete by perception, rather than by function. Fashion is all about perceived obsolescence, and it could be said that perceived obsolescence is the number one “product” of the advertising industry.

Non-Consumer Alarm!
This made me think about how companies have made easy it is to identify “non-consumers”, which usually leads to them being mocked somehow. Let’s take cars. Models change very often, even if just slightly, so it’s very easy to tell that my car is 10 or 15 years old. My wife and I are often told by our friends and family that our cars don’t match our job titles/income levels. Same with cell phones. If your phone doesn’t have at least a QWERTY keyboard these days, it’s a freaking antique.

As for clothes, I’m always happy that I’m a guy because my closet of long-sleeved dress shirts, cotton polo shirts, slightly baggy jeans, and cargo shorts have managed to last me for over a decade now. Meanwhile, to be a mainstream woman, you went from flare jeans to low-ride jeans to the new thing - skinny jeans. I won’t even go into shoes (UGGs??).

Try it next time you’re in a crowded area, at work, or visit someone’s house. See if you can pick out who hasn’t bought the newest version of something in the last few years.

Read the rest of this entry…

Find more in Frugal Living, Simple Living | 11/5 | 21 Comments »

Click below or on the thumbnail above to see the whole thing.

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Find more in Frugal Living, Funny | 11/5 | 2 Comments »

Prosper.com was the first big name in the person-to-person lending space. Things have been quiet recently, as they took a while getting SEC approval for their investment notes. In addition, the problems with “old” Prosper included the fact that they let just about anyone apply for a loan in the beginning, including people with horrible credit who had been basically turned down everywhere else. Many lenders thought charging a 35% interest rate was enough - it wasn’t. But as this recent Washington Post article outlines, things are picking up in the P2P space.

The way I see it, LendingClub (review, $25 bonus, performance update) basically looked at all the problems that Prosper had and tried their best to fix them. So now, Prosper is back, and in turn looks a lot like LendingClub. For example, LC requires a 660 minimum credit score to qualify for their lowest grade loan (amongst other things), and now Prosper requires a new borrower to have at least a 640 credit score with their new ratings system. With both, you can have them automatically construct a portfolio for you based on your risk/return preference, and you can buy/sell notes before maturity on a open trading market.

Prosper still has their “reverse auction” eBay-style method of determining the interest rate, but lenders are now are restricted to a specific range of interest rates. (LendingClub simply sets the interest rates for you.)

In order to stimulate lending activity, they have a few incentives going on. If you sign up as a lender and bid on two loans (minimum total investment of $50), they will provide you a free $50 bonus. Click here and on the orange “Invest Now” button and you’ll see it. You must reinvest this $50 by the end of 2009. On top of that, Prosper is also offering a 1% or 2% “rebate” back if you invest at least $1,000 or $5,000, which would help juice your returns. Details:

Starting on October 12 if you invest $1,000 - $4,999 you will receive a 1% cash rebate into your Prosper account or, invest $5,000 or more and receive a 2% cash rebate into your Prosper account. Lenders must invest the funds during the promotional period of October 12 through November 15 by being a winning bidder on loan listings that result in funded loans. Notes purchased through the trading platform are excluded from the promotion. Once you have bid and invested on the loan listings your 1% or 2% cash rebate will be deposited into your Prosper account by December 4.

Find more in Deals & Offers, Investing | 11/4 | 10 Comments »

The new fixed rate for Series I Savings Bonds (”I Bonds”) was announced on Monday to be 0.3%. This is a follow-up to the ~3.07% inflation rate previously calculated based on CPI-U data.

As a long-term investment, a 0.3% real yield makes I-Bonds a slightly worse choice than Inflation-Protected Treasury Bonds (TIPS). As of yesterday, a 5-year TIPS had a 0.73% real yield.

As a short-term investment, it depends on how you think inflation will turn out in the near future. If you buy a new I-Bond in November, you will earn 0.3% fixed + 3.06% based on inflation = 3.36% for the first 6 months. The second 6-month rate will be 0.3% + a variable rate based on inflation from September 2009 to March 2010.

(Savings Bond Reminders: You must hold for at least a year (or 11 months and a day if you buy on the last day of the month). If you hold for less than 5 years, there is a penalty of the last 3-months interest. Savings bond interest is exempt from state income taxes, and all taxes can be deferred until the time of bond redemption.)

Worst case scenario, there is deflation of worse than 0.3% which makes the total rate zero for the 2nd six months. Earning 3.36% for 6 months with an 11-month holding period gives you an effective rate of approximately 1.83% APY. This is only slightly lower than the top yields for a 12-month CD. If the annualized inflation rate over the 2nd 6 months is just 1%, your effective rate after the 3-month interest penalty rises to 2.00%. It’s not a screaming buy, but if you are looking for 1+ year safe investment and haven’t exceed your annual purchase limits, I would personally buy them over a bank CD since you do well in cases of rising inflation and okay otherwise.

For more background, see the rest of my posts on savings bonds.

Find more in Savings Bonds | 11/4 | 6 Comments »

Here’s a timely offer, at least for me. New-ish online broker OptionsHouse is offering 100 free trades when you open a new account with at least $3,000 with the promo code FREE100. The 100 free trades work for both stock and options trades, and are good for 60 days after funding. On top of that, their regular price for stock trades is only $2.95, while their options trades cost a flat $9.95 with no additional contract fees. Finally, there are no monthly minimum balances and no maintenance fees. Not a bad price structure.

Quality-wise, they promote the fact that Barron’s rated them #1 in Trade Experience and in the top tier overall in their March 2009 broker review. Although not a big name yet, they do seem like they are ready for serious traders. Here’s a snippet of the review:

Pros: As its name suggests, Options House has a lot of great tools for the options trader. Backed by market maker Peak6, this broker lets its retail customers use quite a few professional-level tools. Building a spread is very intuitive on this system, as is rolling a call or put from one strike to another. The site’s motto is “Fast matters,” and that goes for everything from finding possible trades to populating an order ticket to executing the trade itself.

Portfolio-analysis tools are top-notch here, too. The Risk Viewer includes a what-if calculator showing what could happen based on various market scenarios.

Options House also offers the Maxit tax-management tool for free. Although this is a Web-based platform, it has the flexibility and power of many of the software platforms.

Cons: No mobile access yet. However, the company says it is coming later this year. Limited fixed-income and mutual-fund offerings.

As noted I am starting to invest in some ETFs, so I might give these guys a spin. After looking through their fee schedule I noticed that they all partial outgoing ACAT transfers for free, which means that it won’t cost very much for me to move my holdings out if I need to. (Just transfer the important holdings out, keep one unimportant holding, and then sell it later.) I hope their free tax-management tools does my Schedule D for me.

Update: I just applied - relatively straightforward application, at the end you need to fax/mail in a signature page and a copy of your driver’s license or utility bill. They allow ACH funding online.

Find more in Deals & Offers, Investing | 11/3 | 4 Comments »

Schwab just sent me a press release announcing their new series of exchange-traded funds (ETFs) that have low operating expense ratios and passively track indexes.

The most commonly-noted drawback of ETFs is that you must buy them like a stock and thus pay trade commissions. However, if you buy these within a Schwab brokerage account, there are no commissions charged. Here is a chart comparing the new Schwab ETFs and their corresponding competitor from Vanguard. The ETFs don’t necessarily track the exact same index, but they are pretty similar.

This is definitely worth a second look. A possible criticism is that Schwab may increase expenses and reinstate trading fees in the future, which may lead to tax hits if you wish to switch back to other ETFs. Meanwhile, Vanguard has a long track record of rock-bottom expense ratios. However, it may also be that increased competition in this area by others like Fidelity and E-Trade will prevent this from happening.

Find more in Investing | 11/2 | 9 Comments »

Credit Card Debt
In the past, I have taken money from credit cards at 0% APR and placed it into online savings accounts, bank CDs, or savings bonds that earn 4-5% interest (much less recently), and keeping the difference as profit. I even put together a series of step-by-step posts on how to make money off of credit cards in this way.

However, given the current lack of great no fee 0% APR balance transfer offers, I am no longer playing this “game” and have just paid off my last 0% offer for now. This makes the net worth chart a bit funny, but it should clear up next month.

Retirement and Brokerage accounts
Our total investment portfolio increased by a few thousand dollars since last month. DW’s 401k was already maxed out at $16,500. I made another $1,000 contribution to my Solo 401k, for a total of $16,500 contributed in 2009 as well. (I forgot the limit was $16,500 and not $15,500 last month…) This makes us done with our goal of maxing out both our 401k salary contributions for 2009.

I am starting to build up too much cash, and have started investing for retirement in a taxable brokerage account as well. In the interest of tax efficiency, I’ll have to move around some investments in order to keep bonds in the tax-advantaged IRAs/401k and the “extra” stocks in taxable. I expect to finish investing $20,000 this week.

Taking that additional 20k into account, our total retirement portfolio is now $211,095, or on an estimated after-tax basis, $170,047. At a 4% withdrawal rate, this would provide $567 per month in tax-free retirement income, which brings me to 23% of my long-term goal of $2,500 per month.

Cash Savings and Emergency Funds
We keep a year’s worth of expenses in our emergency fund. Another $10,000 is earmarked for upcoming home improvement projects that I keep putting off (minor roof repair and solar water heating).

Home Value
I am no longer using any internet home valuation tools to track home value. Some people have suggested using my tax assessed value, but I also think that is too high. I simply picked what I felt is a conservative number based on recent comparables, $480,000, and keep it for at least 6 months if not a year. (Currently on month 2 out of 6.) For the most part I am concerned about mortgage payoff, which I still plan to accomplish in 20 years at most.

You can view previous net worth updates here.

Find more in Goals, Investing, Real Estate, Retirement | 11/2 | 15 Comments »

The Chase Sapphire Card is a new rewards credit card that is offering 10,000 bonus points after your first purchase on the credit card, which can be redeemed for $100 cash. No annual fee.

As a rewards card, it offers 1 point for every dollar in purchases (100 points = $1, or the usual 1% back). The nice part is that redemptions are easy - you can even redeem in $1 increments as long as above $25, so you could cash out $27 or $113 without anything left over. There are no earning caps, or points expiration dates.

In addition, you can get double points on airfare booked through their Ultimate Rewards website. It also promotes a “premium, dedicated service line that gives you access to a live person anytime, 24/7.” Fine print:

10,000 bonus points
You will qualify for and receive your bonus after your first purchase/first use of the card. First purchase/first use includes purchases, balance transfers, or any checks that are used to access your account, and excludes cash advances. After qualifying, please allow 6 to 8 weeks for bonus points to post to your account. This one-time bonus offer is valid only for first-time cardmembers with new accounts.

Find more in Credit Cards, Deals & Offers | 10/31 | 7 Comments »

This is a reminder that the Ohio CollegeAdvantage 529 Plan is offering some excellent incentives for those looking to start putting some money aside for college. Open to residents of any state, the best part is that this is one of the nation’s best 529 plans for those looking for low-cost investment options and a good customer experience. Here’s an example of how a couple can earn a free $150 jumpstart on their college fund. While I use the term “parent”, this would work for any two people - grandparents, aunts, brothers, friends, etc.

• Parent #1 opens a new Ohio 529 account using a referral from an existing user (details below). They list the child’s name as beneficiary. Parent #1 earns $25 incentive.
• Parent #2 open a new Ohio 529 account as well, using a referral from Person #1. This account can also list the child’s name as beneficiary. Parent #1 earns $50, and Parent #2 earns $25.
• Both people also start a automatic savings plan with just a $25 minimum monthly deposit (details below). This earns another $25 each.
• Add them all up, and that amounts to $150 in free money towards college. All the applications and deposits are done electronically quickly and with minimal hassle. Keep up the automatic deposits, and make saving for college easy.

Refer-A-Friend Bonus
If you open a new account and enter the referral code of an existing member, the new member will get a $25 bonus into their account. The referring member will get $50. My referral code is 2439350. This current promotion expires December 15, 2009. Many more details here.

$25 Systematic Savings Bonus
If you start a new recurring electronic funds transfer (EFT) from your bank account into your 529 account of at least $25 per month for 3 months, you will receive a separate bonus of $25. This recurring transfer must be started by January 31, 2010. Many more details here.

Find more in College & Education, Deals & Offers | 10/30 | 11 Comments »

Have you heard of this? A network of dentists will buy back your Halloween candy for $1 to $2 per pound at HalloweenCandyBuyBack.com. After a few zip code searches, there actually does seem to be a few dentists in many metro areas. They are then encouraged to donate the candy to be sent to troops overseas.

Seems like an idea with good intentions, but somehow seems funny to me. Candy is bought by my neighbors, which is given out free to kids in costume, which gets sold to dentists for cash, and then is finally donated?

As a kid, the best part was trading candy between friends afterward. (I’ll add that I was always made to brush regularly and have never had a cavity in my life.) What was your favorite Halloween candy? I still love Dum-Dum lollipops.

Find more in Funny | 10/30 | 9 Comments »

Here’s another good reader question about crappy 401k plans. Reader Robert saves enough to max out his 401k each year if he wanted to, in addition to maxing out his Roth IRA every year which he already does. However, his 401k plan is filled with expensive actively-managed mutual funds. He has no company match. Should he contribute to his 401k anyway, or invest outside in a taxable account?

Factor #1: How Long Will You Keep Your Job?
Even if you have a bad 401k plan, remember that as soon as you leave that company, you can roll over those tax-advantaged funds into a Rollover IRA at the company of your choice! You may or may not have a good idea of how long you’ll stay there, but the fact is most of my friends have not worked at any company longer than 5 years or so.

(A few plans offer what is called in-service withdrawals, where you can roll over your 401k fund into a IRA without leaving your employer. These are rare, but it’s worth asking about.)

Factor #2: Can You Help Your HR Department Make A Change?
The reason why expensive 401k plans exist is because they tend to be cheap for the employer. Essentially, the administrative costs for running the plan are shifted to the employees. Big companies tend to have better plans because they offer enough assets for companies like Vanguard to jump in.

Still, you might be able to enact some change. Print out some material about how high plan expenses can really hurt performance and thus people’s retirements. Talk to your co-workers, and make it an worker attraction/retention issue. You may not need to switch providers, but perhaps they’ll at least offer a better option or two. I’ve even read about Congress considering a law requiring all 401k plan administrators offering at least one index fund option.

Factor #3: How Expensive Is It?
Unfortunately for Robert, he shared his available investment options along with their annual expense ratios, and they are the worst I’ve seen yet:

Blackrock Fundamental Growth C MCFGX 1.94%
Blackrock Global Allocation C MCLOX 1.88%
Blackrock Government Income Portfolio C1 BGIEX 1.53%
Blackrock International Value C MCIVX 2.60%
Blackrock Large Cap Core C MCLRX 1.97%
Blackrock Large Cap Value C MCLVX 2.00%
Blackrock Value Opportunities C MCSPX 2.34%
Davis New York Venture C NYVCX 1.71%
Evergreen Core Bond C ESBCX 1.45%
J P Morgan Dynamic Small Cap Growth C VSCCX 2.12%
Mfs Total Return C MTRCX 1.52%

It may be tempting to think “well, no matter how bad the plan is, it will still be better than a taxable account, right?” Wrong. Actually, given current tax rates, it can be better to keep your money in a taxable brokerage account than in a 401(k) plan if the options are expensive enough. Here are some quick and dirty examples.

Let’s say you put in $10,000 in a taxable account. You invest in an index fund with 0.20% expense ratio. The broad US stock market earns 8% per year. Since you get the gains minus expenses, you get 7.8% per year. You get a 15% tax hit at the end for long-term capital gains. Your final after-tax balance after 30 years is $80,906. (Yes, I’m ignoring the annual taxation of dividends for now.)

Let’s say you put in $10,000 of after-tax money in a Roth 401(k). You buy a Blackrock fund with 2% expense ratio. Again, on average, all mutual funds that invest in the broad US stock market will earn the market returns (8%) minus expenses (2%), giving you a 6% return per year. However, you have no tax hit at the end since it is a Roth. (You’d get the same result with pre-tax money in a Traditional 401k.) Your final after-tax balance is only $57,434.

The above is a very simplified comparison, but the point is that the gradual annual hit of a high expense ratio can overcome the tax break advantage. Usually this takes an expense ratio above 1% and a long time horizon.

Recap / WWMMBD
If you think that your current plan options will continue to be this bad for the next 10 years or more, and you don’t think you’ll leave your company before then, then it may indeed be better to just invest outside a 401k plan. (Keep up the IRA contributions!) However, I think that soon 401k plans will be more tightly regulated, and the trend is for plans to at least offer a few low-cost options. I know my plan seems to get a little better every year. If it were me, I’d probably suck it up and still tuck money away in the 401k in the hopes of a brighter future.

Find more in Investing, Retirement | 10/29 | 33 Comments »

I’ve spent the last few hours browsing on Swaptree, which is a website that allows you to swap your books, CDs, DVDs, and video games with other members. You just list the items that you want to trade and the items that you want, and Swaptree sets up trades for you. You can also view a big list of other things you could get in trade. If you see a swap you like, you just pay for shipping your items out, the site does not charge any fees. (It appears to be ad-supported.)

You can list items you want to trade quickly by entering the UPC or ISBN code on the item. Everything is one-for-one. For example, one book is traded for one video game. The site tries to create more possibilities by figuring out 3-way and even 4-way trades between members. Trust is gained by an eBay-like rating system. There is also a postage-printing service that makes it easy to make postage labels and drop your package off without waiting in lines.

I kind of view Swaptree as the $3 store:

1. You list all your old books/CDs/DVDs/games you don’t want and aren’t using. Good weekend project.
2. You now have a store in which everything is essentially priced at $2-$3, the cost of shipping your stuff out. Just listing a few books can offer up hundreds of options.
3. If you want something specific, list it on your Want list so others have a greater opportunity to create a working swap.
4. Be quick though, as some of the good items get snapped up fast!

I know, this doesn’t take into account the value of your media, but I would say this is best for things that have been sitting around for a while. Why list a bunch of items that might be worth a few bucks on eBay and be subject to $1 in eBay/PayPal fees, not to mention paying listing fees for each item that doesn’t sell.

You are allowed to ship via Media Mail, which is based on weight (ex. $3.16 for a 3 lb. package). However, if you ship in a padded envelope and it is under 9 ounces, shipping via First Class is both cheaper and faster.

Find more in Frugal Living | 10/28 | 17 Comments »

This might be cool for kids. The Spend Save Bank randomly deposits coins into either the ‘Save’ or ‘Spend’ section. It’d be even better if there was a option to set what percentages you want to split between spend and save, but I guess that would be a lot more complicated than a swiveling tray. Via Gizmodo via bookofjoe.

“Like a slot machine that never loses.” Ha! Here are some more funny piggy banks I’ve ran across.

Find more in Funny | 10/27 | 5 Comments »