The Free Money Is Just Rolling In…
Sunday, June 26th, 2005Over the weekend, I became over $241 richer. How?
1) I deposited my $93+ Dividend Check from my Citi Dividend Mastercard (click image to enlarge):
Archive for June, 2005
Modest Millionaire
Saturday, June 25th, 2005Saw this article on Fatwallet – Modest Millionaire, thought it’d be good to share. See more discussion here. I won’t judge the guy (who’s now deceased), but it’s an interesting story of how another person handled their money.
This reminds of when I was a little kid, I remember reading in the Guinness Book of World Records that the richest woman in the world ate gruel everyday and left hundreds of millions of dollars when she died. For some reason that stuck with me.
Blessed
Saturday, June 25th, 2005Sorry…didn’t mean to be so melodramatic. =) I just wanted to note it on the right date for posterity.
Yeah, I’ve somewhat unhappy with my job for a while, although I didn’t want to bring it to this blog. In the end, I couldn’t handle the monotony, the lack of upward mobility, and lack of challenges anymore. The company was great; I would actually use their product if I was their target market. But it just wasn’t for me. Some of you large corporate “consultants” out there might know what I mean. Of course, there are also some consulting positions that are great.
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What’s in MY wallet? My daily-use credit cards (Part 3 of 3)
Wednesday, June 22nd, 2005(Continued from Part 1 and Part 2.)
So last but definitely not least of my daily-use credit cards is the Starwood Preferred Guest Credit Card from American Express. I actually use this great card mostly for work, as I get reimbursed for travel expenses that I incur. Also, my work covers the $65 annual fee (which is waived for the 1st year anyways). Still, even if I had to pay the annual fee myself I’d keep this card. Why? There are two ways to take advantage of this card: as a very competitive frequent flyer card, or as a hotel rewards card.
As a Frequent Flyer Card
There are lots of airline-specific credit cards out there, for example Delta, American, United, etc. And some of these cards are alright, especially when they are giving out generous sign-up bonuses. But every one of them only earns 1 mile per dollar spent, and only for that specific airline. And they all charge an annual fee greater than this card’s $65!
Greater Flexibility. With this Starwood Card, you get StarPoints that are convertible to miles in lots of different airlines. You can also earn them by staying at Starwood Hotels. Just to list some of the domestic ones, they include Alaska, American, Northwest, America West, Continental, Delta, Hawaiian, and US Airways. I’ve used StarPoints to top off some balances of airlines I fly very rarely, and cash out that free ticket.
Potential 1.25 miles per $1 spent. For these airlines, the miles usually convert 1 to 1, like the other cards, except for one key difference – for every 20,000 points you transfer to one airline, they’ll give you a 5,000 mile bonus. That’s like getting 1.25 miles per $1 spent! Another way this card is better than other airline cards. (Seen another way, you can get a free lower-48 restricted domestic plane ticket for $20,000 in spending, or 20,000 points.)
Now, the “value” of a mile is greatly debated. But for my purposes I generalize this way: Cross-county domestic coach flight ~$350 or 25,000 points = 1.4 cents/mile. Like to fly business class or internationally? That can raise the worth to 4 cents/mile. So, this card can give you the equivalent of 1.75% to 5% cash back.
As a Hotel Rewards Card
Starwood Preferred Guest is the rewards program for Starwood hotels, which include Westin, Sheraton, Four Points by Sheraton, St. Regis
Luxury Collection, and W Hotels. I usually stay in either Four Points or Sheratons for work, although I have stayed in a Westin. Awesome beds.
Starting at just 2,000 StarPoints, you can get a free nights a lower tier hotel (usually a Four Points). That’s pretty nice – at 1% cash back you’d only get $20. And you get the room with no blackout dates and no restrictions, as with other programs (*cough* Hilton *cough*). If they have a room, you get it.
This can work out to be a great deal if you like to travel like me. Especially if you have expensive tastes. Let’s take a quick look at current hotel rates for a standard room in San Francisco for this Friday night for example:
Westin SF = $149 or 10,000 points. -> ~1.5cents/point or like 1.5% cash back.
W San Francisco = $209 or 10,000 points. -> 2.1% cash back
Four Points SF Airport = $89 or 3000 points. -> 3% cash back!
Theses numbers don’t even take into account hotel taxes! I usually just stay at Four Points for leisure since they are pretty decent business-oriented hotels, and are pretty popular in major cities. Starwood Preferred Guest has been voted Best Hotel Program of the year by the Freddie Awards for many years now.
Current Sign-up Bonuses
According to the application you can get currently get 10,000 bonus points after your first purchase. And another 15,000 bonus points for spending $5,000 in the first six months of card ownership. Not bad, that can be more than three free hotel nights!
Whew! I’m done. Remember, these are the best cards I’ve found for myself, although I think they are solid cards overall. Please feel free to ask questions and leave comments about cards that you like.
What’s in MY wallet? My daily-use credit cards (Part 2 of 3)
Tuesday, June 21st, 2005(Continued from Part 1: Citi Dividend Platinum Select MasterCard)
Some of you may have noticed in my Net Worth Updates that I have a 529 account. Yet, I have no kids! The MBNA/Fidelity Investments 529 College Rewards Card is why.
Like I mentioned in Part 1, I buy everything I can with the Citi Dividend Card to get 5% back. Everything else I use this card or the Amex Starwood. This card also has no annual fee, and gives you 2% cash back on all your purchases (up to $1500 annually) which can only be transferred to a Fidelity 529 account. (You can be the beneficiary, no need to procreate.) 2% is a very generous amount of cash back, very few cards offer 2% straight cash back on everything, and those that do are usually invitation-only. This is not straight cash back, but very close!
(If you do have kids, this may be a great way to save for their education, I’m ignoring this scenario for the next few paragraphs)
So you have to open a Fidelity-managed 529 account. I chose the Unique Plan as it’s offered as the “National Plan”. You get to pick how your money is invested, either in an Age-Based plan, a Static Plan ranging from 100% bonds & money market to 100% stocks, or a custom mix of both. I chose the 2009 Portfolio, designed for people starting college in 2009 (50% stocks, 40% bonds, 10% cash). I just picked it as a more conservative option as I’m my only beneficiary for now and I didn’t want to risk my principal much.
(edited) Per the rules, you can withdraw the principal without penalty, even if not used for college. There are penalties on earnings withdrawn not for college, since one of the perks of the 529 is that earnings grow tax-free. Any earnings on nonqualified distributions will be subject to federal income taxes at the distributee’s (me) rate as well as a 10% federal penalty tax. When you withdraw, the amount withdrawn is always the same percentage principal and earnings.
Let’s say you put in $100, and it grew to $110. If you take out all $110, then you have to pay tax + penalties on the $10. No or penalties tax on the $100. Now let’s say you just take out $55. In this case, $5 is considered earnings and is subject to tax + penalties. $50 is not taxed or penalized. So, you only get penalized on any growth in your principal.
What does this mean? Short version: With this card you can get basically 2% cash back on all your purchases!
Long version: Ok, say you spend about $750 per month on your credit card. Over a year, you’d get $180 at 2% back in the 529. Say it grows 4% to $187.20. You want to cash out, no problem, just call up Fidelity and ask for ask for a check. You are the one responsible for making sure you pay taxes for unqualified purchases. Got kids? Keep it in there and let it grow tax-free! Your new $5,000 home audio set-up just added $100 to their college fund!
So you get the check. Your penalty on the $180? Zip. Your penalty on the $7.20? Assuming a 25% tax rate + the 10% penalty, you’ll keep $4.68. Net? $184.68, or 2.05% cash back! If your investments lost 4%, you just get the $172.8, or 1.92% cash back. Still almost double the 1% you get from most other cards.
Ok, there are some catches. You must open the 529 with either $1000 or a $0 and a $50 automatic monthly deposit. I went with the $50 monthly deposit. Also, there is a $30 annual fee if you don’t meet this or other certain requirements. The easiest way to get around this is to keep up the automatic deposits. Remember, you can get all your money back out with no penalty. Personally, I’ve chose to leave all my money in there for my future kids, I think this is a great way to save.
Does this sound like too much of a pain in the butt? Try the Fidelity Investment Rewards MasterCard. You can get 1.5% cash back into a Fidelity Brokerage account. The key? There are no minimum balances if you get online statements! So, when the cash comes in, just transfer it back to your checking account. Voila! 1.5% cash back, still better than 1%.
Tips: Got grandparents or other relatives that aren’t as interested in credit card rewards? You can get them to sign up for this card for themselves, yet the rewards go to (you or) your kid’s 529 account. I bet that could really add up. Again, don’t bother with the 2.9% balance transfer offer, you can do better elsewhere.
Ok, there are more little details to this card, but this post is running really long. Check out the site, and if you have questions, please post a comment!
Next: Starwood Preferred Guest American Express Card (Great rewards card, could be worth >3% cash back!)
What’s in MY wallet? My daily-use credit cards (Part 1 of 3)
Monday, June 20th, 2005Yeah, earning free money off 0% balance transfers is great, but those cards go straight from the envelope to the lockbox. So what’s in MY wallet? Only the best rewards cards, of course:
This entry used to be about the Citi Dividend Card, but since it is no longer available I have replacing it with the Citi Driver’s Edge MasterCard (discussed here) which has a similar but not identical rewards structure.
Also in my wallet are the MBNA/Fidelity Investments 529 College Rewards Card with 2% cashback towards a 529, and the Starwood Preferred Guest American Express Card, which is a great airline/hotel rewards card.
The Other Side of Tipping: Waiter Rant
Monday, June 20th, 2005Man, I ran across this hilarious and witty blog called Waiter Rant today, and I’ve already wasted way too much time reading it. My entire lunch (brown-bagged) actually, and then some.
Check out this post called Cheap Bastards, and you can see what waiters have to deal with. It’s the other side of tipping. It reminded me of my post on tipping guidelines. Just because you have a gift certificate doesn’t mean you don’t have to tip!!! And don’t be like Dr. Zamir. Anyways, watch out, it’s addictive reading.
30 Days: Living on Minimum Wage on FX
Sunday, June 19th, 2005Jim over at Blueprint for Financial Prosperity wrote a great entry on the first episode of Morgan Spurlock’s (the Super Size Me guy) new show on FX, 30 Days. It focused on him and his fiancee living on minimum wage for 30 days and trying to get by. Very powerful, and reminiscent of Nickel and Dimed: On (Not) Getting By in America by Barbara Ehrenreich, which I own and read a while back. If you get FX, I highly recommend it. It’s on tonight at 11 Pacific (schedule). If you like it, I recommend the book even more.
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4.16% APY 7-month CD at World Savings Bank
Sunday, June 19th, 2005A reader (Thanks Johns) just pointed out that World Savings Bank is offering a promotional 4.16% APY 7-month CD, with a minimum opening balance of $10,000 (max $100,000) [more discussion here]. Offer ends July 9th. This is a great rate, and I really doubt any online savings account such as ING (now 3%)or Emigrant-Direct (review) (now 3.25%) will be able to beat it over a 7 month period even with future rate hikes.
World Savings is a pretty good-sized bank, I’ve walked past their branches, but they are not everywhere (branch locator). However, there are no residency requirements to open an account. You can open an account right online. The 4.16% CD is the very first option to open. They have a 3-star “Performing” Safe & Sound Rating from BankRate.com.
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Book Review: Free Gulliver – Six Swift Lessons in Life Planning
Sunday, June 19th, 2005
At first, this book sounded like another Rich Dad Poor Dad-style vague-finance-tips-rehash. But as I read more about it, it really intrigued me. As is mentioned directly in the title, Free Gulliver by Tripp Friedler is more life planning than necessarily financial planning. There is very little emphasis on how much you need to retire, or exactly what you should invest in. In fact, instead of trying to scare you into saving by talking about how destitute you might be when you retire, he suggests that if you are truly happy in what you are doing – why retire? I guess this is to suggest that some people are suffering and stressing out too much now, simply in order to retire to some magical place sometime in the future.
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Get $25 from Bank of America for opening a Savings Account
Friday, June 17th, 2005Already have a Bank of America checking account? Next time you log in, look for this $25 Savings Account offer from Bank of America. You just have to open a Regular Savings Account with them with an opening deposit of at least $100, and then also make one transfer from your checking account to your savings account online.
Note that according to the BofA fee schedule, you’ll need to either keep a $300 minimum daily balance or have an automatic monthly transfer of $25 into your savings from checking to avoid a $3 monthly maintenance fee. So, I’m transfering in $300, making another transfer for $25, and then waiting the 45 days 90 days to avoid a $5 early closure fee for my $25, then closing the account most likely. Total time spent: ~10 minutes.
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