Archives for July 2012

Babies R Us + Baby Registry Experience

The baby shower is over and we’re on the home stretch. As a follow-up to my baby registry comparison, here’s our experience using both the Babies R Us and baby registries at the same time. We are blessed with lots of generous friends and family, and as a result have more stuff than we ever imagine a baby really needing! 😉 Baby Girl MMB isn’t even born and has more clothes than I do already.

Babies R Us (BRU) Baby Registry

We chose BRU since we have one of their big box locations nearby and it was best for people who wanted to buy something at a physical store.

Ease of use. We went to the store and used their “gun” to scan all the items we wanted, and then we could go online to edit the registry further. Overall, the process went smoothly. However, the only way to discover if someone bought an item off the registry is to check the website regularly. You don’t get any notification e-mails, and you don’t get told who bought the gift until it arrives.

Returns. If the item is on your baby registry, then they take it back for store credit without a receipt or questions. If the item is not on the registry, then a gift receipt is required. If you don’t have a gift receipt, then I believe you get credit for the lowest price on that item for the last 30 or 60 days. With items like clothing that goes on sale frequently, that can result in a greatly reduced refund.

(Tip: You can add things on the baby registry at any time. Since we were juggling two registries, to avoid duplicates we would have to delete things on the other registry. However, sometimes we weren’t fast enough or someone bought it without removing it from the registry. Therefore, we just made sure we added the item back onto the registry again before our BRU return run and that minimized any potential hassles.)

Completion Discount. We received the 10% off completion coupon in the snail mail as promised. It works on only one purchase, so make sure to bring a list of everything else you wanted. You can also use the 10% discount online the same day you used the physical coupon. Baby Registry

We chose Amazon as it had lower prices, wider selection, and free shipping on most items.

Ease of use. Adding items to the registry was easy, but Amazon can be quirky as the default buying option isn’t always the cheapest after you factor in the free shipping. I noticed that some friends paid too much for shipping, even though we always looked for items “sold by”. They don’t offer notification e-mails either, but if you check online they do tell you who bought what. It’s even condensed into a handy “Thank You list”.

Returns. Even though they offer free prepaid shipping labels, we didn’t return anything to Amazon. Whenever we had a duplicate, we just returned the one from Babies R Us. However, looking back I think I might have preferred credit since we really have too much baby stuff.

Completion Discount. When you become eligible (30 days before event date), the 10% completion discount option shows up on your registry page. The fine print was pretty vague, but didn’t really list any specific restrictions. However, we discovered that even though you could add anything to the baby registry at any time, only items that were deemed baby-related were eligible for the 10% discount. So no 10% off Macbook Pros or power tools (I tried).

Baby showers and the baby gift-giving custom is a nice cultural tool to help expectant parents defer the cost of babies. Really, you can view it as a payment plan of sorts since instead of one big lump sum we just have to continue giving baby gifts for the rest of our lives. 🙂

Stable Value Funds Safe In Rising Rate Environment?

If you have a 401(k) or other tax-sheltered retirement plan, one of the investment options may be a stable value (SV) fund. In today’s low interest rate environment, stable value funds have been popular as they offer the stable price of a money market fund but with a higher yield. This is due to the fact that they are basically intermediate-term bond funds wrapped in an insurance contract that guarantees it maintains a “stable value”. This means the book value that you see can differ from the actual market value.

In my case, I invest some money in them because they offer a 3% yield on previous contributions (current contributions earn 1.25% on which I passed). Compare that with a money market fund earning 0.01%, or the Vanguard Intermediate Bond fund with a 6.4 year duration and only a 1.78% yield.

However, if interest rates were to rise quickly, this would lower the market value of those bonds (as interest rates go up, bond values go down) at the same time that there may be a rush of redemptions. Would the fund be able to cash people out at the higher book value as promised? A recent Vanguard research paper ran some scenarios based on historical periods of rising interest rates (1986-1990 and 2004-2008). They used Vanguard’s pooled fund, the Vanguard Retirement Savings Trust, with an average duration of underlying investments of ~2.6 years. Read the paper for details, but the overall conclusion was that the stable value funds would survive such scenarios:

Although stable value funds in general have performed well through past market cycles and crises, in the current environment of low interest rates both stable value investors and contract providers have been concerned about the effect rising interest rates would have on the funds and the ability of the funds to continue to perform well when further stressed by cash outflows.

[…] …in our simulations, the funds’ MV/BV ratios demonstrated resiliency, and crediting rates fluctuated within a band far narrower than that of market yields, even in extraordinary scenarios.

While the paper’s findings provide some reassurance, I’m reminded that lots of people “stress tested” mortgage-backed securities in 2007 as well. Based on the Vanguard analysis, here are some additional cautionary steps to take for potential investors in stable value funds:

  1. Remember the basics of stable value funds. SV funds are intermediate bonds wrapped in an insurance guarantee, so if the insurance fails then you’re just left with bonds. This isn’t the end of the world, but make sure you’re okay with that. See previous post on stable value funds risks and rewards for real-life examples.
  2. Understand your specific withdrawal restrictions. There are usually some form of liquidity restriction attached, but they can vary greatly. In some cases, you have to give a full 12- to 24-month notice to withdraw at book value (guaranteed principal). In my plan, I am not allowed to transfer into any other fixed income (bond) funds at all. I can transfer at any time into a stock fund, but then I have to wait 90 days until I can transfer again to another bond fund. This Reuters article reports that some providers have been cutting back on guarantees.
  3. Be aware of scenarios where your stable value fund will be under stress. Usually, this results from rapidly rising interest rates. For example, if the yield on money market funds rise, people will prefer those to stable value funds. Also, the market value of the underlying bonds will fluctuate, even though only the book value is reported on your statements. If the market-to-book ratio on your SV fund drops below 98% (see updated prospectus), people may panic and start to withdraw.

Best Broker for Coverdell ESA / Education IRA

As a follow-up to my Coverdell ESA vs. 529 Plan comparison, I was looking for the best discount brokerage to open up a Coverdell Education Savings Account. Although you could also open an ESA at a bank for slow but steady growth, many people prefer to invest at a brokerage firm where they can invest in stocks and bonds.

Coverdell ESA information can be hard to find for many brokers. Sometimes the only way I could tell if they offered ESAs was to start an application and look to see if it was an option. Many of them consider the Coverdell ESA as an IRA and list it under “Educational IRA” alongside Traditional, Roth, and SEP IRAs. Therefore, when looking at the fee schedules you should assume that an IRA annual fee or IRA maintenance fee will apply to your Coverdell unless otherwise listed. Other things to look for:

  • Annual maintenance fees.
  • Minimum opening amount or minimum contribution size requirements.
  • Investment options – mutual funds, ETFs, individual bonds, etc.
  • Commission costs.

Two of the biggest mutual fund companies surprisingly do not offer Coverdell ESAs: Fidelity and Vanguard. (Vanguard no longer opens new ESAs, but still services old accounts.) My guess is that the low contribution limits and thus low balances don’t offer them much opportunity for profit, especially with all the additional paperwork involved for tracking contributions and withdrawals. Many mutual funds also have minimum initial investments higher than the $2,000 annual limit.

Top Pick

TD Ameritrade. The main reason why I picked TDA is that it provides the best available access to low-cost index ETFs due to their list of 100 commission-free ETFs which include the most popular ETFs from Vanguard, iShares, SPDR, and Powershares. This means you can build a very diversified portfolio with both no commission costs and using best-of-breed ETFs with high trading volumes. TDA also has no account maintenance fees and no minimum contribution requirements. $9.99 equity trades otherwise.

Other Worthy Options
The following brokers also offer Coverdell ESAs and have been ranked in various “top broker” lists from SmartMoney, Barron’s, and Consumer Reports. Many people may simply choose to open an account where their other accounts already reside. In no particular order:

  • Scottrade. $7 equity trades. Must open with $500. No account maintenance fees.
  • E-Trade. $9.95 equity trades. Must open with $1,000. No account maintenance fees.
  • Schwab. $8.95 equity trades. Schwab offers own line of low-cost index ETFs with no commission, albeit with limited volume. Must open with $1,000 or sign up for automatic monthly transfer of $100 or more. No account maintenance fees.
  • TradeKing. $4.95 equity trades. No minimum to open, no account maintenance fees.
  • Capital One 360 Sharebuilder. $4 scheduled window trades (not real-time). Offers dollar-based trades. No minimum to open, no account maintenance fees.

Coverdell ESA vs. 529 Plan Comparison Chart

I’ve been doing some research into college savings plans, and here is a side-by-side comparison of the Coverdell Education Savings Account (ESA) and the 529 College Savings Plan. The Coverdell used to be known as an “Education IRA” and still functions similar to a Roth IRA for qualified educational expenses. However, 529 plans also offer tax-free growth and seem to be much more popular these days. Each plan has its own set of strengths and weaknesses.

Coverdell ESA 529 Account
Federal Tax Advantages Earnings grow tax-deferred and withdrawals are federal income tax-free when used for qualified education expenses.
Earnings grow tax-deferred and withdrawals are federal income tax-free when used for qualified education expenses.
State-Tax Deduction for Contributions No. Possible, state-specific.
Qualified Expenses Qualified elementary, secondary, and college education expenses.
Qualified college expenses only
Contribution Limits $2,000 annually for 2012. After that, it reverts to $500 annually unless extended again by Congress. Technically, the limit is the “anticipated cost of a beneficiary’s qualified education expenses”. This results in state-specific total limits of ~$200,000 or more.
Income Limitations Contributions are phased out for married filing jointly with MAGI $190,000 to $220,000; single filers MAGI $95,000-$110,000. (2012) None.
Investment Flexibility Open at broker of your choice and invest in any bank deposit, mutual fund, or individual stocks and bonds. Buy/sell as you like.
Limited to the selection provided by each state-specific plan. Investment changes only allowed twice a year.
Beneficiary Limitations Can change beneficiary. Beneficiary must be under 18 during contribution phase, and the funds must be withdrawn by age 30. Can change beneficiary. No age restrictions.
Financial Aid Treatment A parent-owned Coverdell ESA is reported as a parent asset on FAFSA. If owned by grandparent, it is not included in FAFSA.
A parent-owned 529 Plan is reported as a parent asset on the FAFSA. If owned by grandparent, it is not included in FAFSA.

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Credit Sesame Promotions – Free Android App

Credit Sesame offers free credit scores and feedback based on your Experian credit report. No credit card required, no trial required, and you can check once a month.

You can now track your credit score with their newly-released free Android app (also available on iPhone), which also shows your total outstanding debts and historical credit score movements. You can log in using your existing account info.

Credit Sesame is the first and only Android app that allows consumers to check and keep monthly tabs on their Experian credit score for free every month. Additionally, it provides an easy way to track consumers’ credit and debt line items such as mortgages, credit cards, student loans, etc., that are reported to the credit bureaus, and receive personalized savings recommendations based on their credit profile and financial goals. The consumer’s financial goals are collected as part of the sign up process. Homeowners are also able to keep monthly tabs on their home value estimate of their primary residence.

Related: More free credit scores with no trial required.

Chase Total Checking Account Promotion – $150 Bonus

Chase Bank is offering a $150 bonus for new customers when you open a Chase Total Checking account plus deposit $100 and set up direct deposit within 60 days of account opening. You can avoid monthly service fees if you make a $500+ direct deposit each month or maintain a $1,500 minimum daily balance. Must keep account open for 6 months to keep the bonus. Expires 8/15/12.

At least in the past, you could simulate direct deposit using an ACH transfer from an online savings bank. Fine print quoted below.
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Free Summer Bowling Promotions

In celebration of National Bowling Day, register and get a coupon for a free game of bowling at participating centers on August 11, 2012. You can also try the direct download link here. Valid for a free game up to $6 value. Limit one free game of bowling per person, per valid e-mail address, per coupon. (So bring multiple printouts in case.) Check participating locations here.

Also check out and the AMF Summer Unplugged Free Bowling for Kids summer promo for more free game time. Lanes are closing left and right around here, hopefully my kids will still get to bowl. I remember when games were 99 cents!

Lowe’s Iris: DIY Home Security System With No Monthly Monitoring Fee?

Home improvement chain Lowe’s just announced a new “smart home” system called Iris where you can monitor and control your home through your smartphone or computer. The DIY system can be installed with just an ethernet broadband connection and a screwdriver.

You can either buy everything a la carte or via three bundles. The “Safe & Secure” kit includes the central hub, a motion sensor, keypad, and two door/window sensors for $179. The “Comfort & Control” kit includes the hub, a smart plug, and smart thermostat for $179. You can get both kits for $299 (includes range extender but only one hub). However, if your going to outfit an entire home, you’ll probably want to add some extra sensors. The good part is that the basic service has no monthly fee, while the premium service costs a flat $9.99 a month. Available online now, or in 500 stores by August.

The ability to turn lights on/off and your thermostat up/down remotely has always seemed a little bit overhyped to me, more an amusing feature than money-saving necessity. I see commercials about it, but I guess I just don’t think about light switches when I’m not at home. Otherwise, a simple programmable thermostat works well enough for me. I do like the idea of real-time power usage reporting though (here it requires a $150 meter reader).

Cheap Home Security?

Mostly, I was interested in the home security aspect of Iris because of the lack of monthly fees. Such monitoring fees can add up to hundreds of dollars every year and quickly make up the bulk of the system’s overall cost. I recently installed a somewhat similar Simplisafe system (review) that is also based on using various wireless sensors with 5-year lithium batteries (and costs $15 a month for monitoring). Is my investment outdated already?
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$15 Free Live Nation Credit With Starwood Preferred Guest

If you are a member of the Starwood Preferred Guest hotel program (good credit card), enter your SPG number at and get a free $15 promo code (limited quantities) redeemable towards merchandise or concert tickets. The easiest thing to buy if you don’t want to spend anything out-of-pocket is an MP3 album download (decent selection, go to Music/All MP3s not just Hot Downloads). I picked up the Glee movie soundtrack (~$12 value) for DW with no credit card required.

FNBO Direct Returning Customer Promo 1.35% APY

If you have a dormant FNBO Direct account, you may be interested to know that they are offering a promotional rate of 1.35% APY beginning July 1, 2012 on all the money above what your balance was on June 29th, 2012. (Only available to existing FNBO Direct customers as of June 29, 2012.) Even better, the rate is guaranteed until December 31, 2012, making it better than 6-month CDs from other banks. All rates above have expired and FNBO is now offering a standard rate of 0.85% APY.

I should probably move a little money over… see my June 2012 Emergency Fund update for where else I stash my cash. Also see my rate chaser calculator for some real-world estimates of how much extra interest you’d get.

FNBO Direct has become just another commodity online-savings account these days, so it’s good to see they’re trying to keep things at least a little interesting. I’d be a little annoyed if I kept a lot of money in there this whole time, though! The fine print from the e-mail I received is quoted below.

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Free 500 Delta Skymiles via Le Club Accorhotels

It would appear that you can get 500 bonus Delta Skymiles by signing up for a hotel rewards account with Le Club Accorhotels and choosing Skymiles as your preferred loyalty program. Reading the fine print, I’m not quite sure if you need to actually stay in a hotel for the miles to transfer over, but it’s worth a shot.

Completely Use Up Prepaid Credit Cards With Split Tender Transactions

Here’s a quick tip for using up those last few dollars of a prepaid Visa, Mastercard, or American Express cards with bonuses. When you use up the last bit of an store-specific gift card, the register zeroes out the card automatically and tells you the remaining amount owed. However, if you try this with a prepaid debit or credit card and the amount charged exceeds the amount on the card, you’ll usually just get a flat rejection. This does not necessarily mean there is anything wrong with the card!

The solution? The way to use up the remaining balance on a prepaid-style credit card is to ask for a “split tender” transaction. First, you’ll need to find out the remaining balance on the card using the phone number on the back or by checking the appropriate website. Let’s say it’s $2.57.

Next, go to a store and make a purchase exceeding that number, let’s say $10. Now, ask the cashier for a split tender transaction. You must ask them to charge exactly $2.57 to the prepaid card, and then you can charge the rest on another credit card or pay it with cash. This way, the system won’t be asking for more charging limit than your card actually has.

Smaller retailers might either not know how to do a split tender transaction, or their (point-of-sale) POS system may simply be outdated and not be able to perform one. However, I’ve never had a problem with asking for a split tender transaction at Target or Wal-mart, and I would suspect similar results at other large retailers as they will have modern POS systems. At the very least, you’d just need to switch to a more experienced cashier.

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