Washington Mutual Bank has a new and improved WaMu Free Checking Account, and it looks pretty good. Features include:
» No minimum balance or direct deposit requirement
» Free checks for life
» Free outgoing wires (great for funding brokerage accounts fast)
» Free ID Theft Recovery Service
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The comments in my last post went off in a wonderful direction - people sharing how they budget. I’ve haven’t yet improved my own simple but ineffective budgeting system, so clearly I need some new ideas, as I’m sure others do as well. Therefore - How do YOU budget?
Do you use pen and paper? Excel spreadsheet? Which one? Quicken? MS Money? Open-source version? Online software? Spousal nagging?
If you contribute, you will be entered in a drawing for a free 1-year subscription to either Forbes or SmartMoney. Spread the word and share!
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Just because I have been ignoring my budget (my last budget update was back in early December), doesn’t mean you should! Someone just sent me a link about MySpendingPlan.com, a free online budgeting software system that works on the ‘envelope system‘.
I’ve made an account and fooled around a bit, but haven’t really gave it a real trial run yet. It looks like you still have to enter all your transactions manually, similar to the You Need A Budget System (review), so I have a feeling I personally won’t go for it. The site does also ask some weirdly probing questions (why do they need to know my address?), most likely because they seem get their revenue by hooking you up with mortgage brokers and real estate agents. But hey, it’s free, so I can’t complain.
I have been searching high and wide for a business checking account that offered both a physical presence nearby and decent interest rates. That is looking increasingly unlikely, but I did find nBank, a bank online which offers a Business Money Market account that allows limited check-writing and currently pays a healthy 4.52% APY with a $3,500 minimum. The rates also look to remain high as it is based on the 3-month T-Bill rate.
Of course, it may be too good to be true. Although nBank is FDIC insured, Bankrate.com gives it a ‘weak’ Safe & Sound rating of only 1 star (the lowest possible), and this memorandum details how it is both losing money and has “questionable asset quality”. Yeesh.
Most people who have done some reading on investing have heard of the concept of Dollar Cost Averaging (DCA), which involves spending the same amount of money regularly buying their chosen investment, regardless of how the investment fluctuates. For example, I could commit to buying $100 of VFINX every month, no matter what the share price is. If it drops, I buy more shares at the lower price.
Near the end of reading The Intelligent Asset Allocator, I ran across the concept of Value Averaging (VA), which is supposedly gives you a bit better returns than DCA. A simplified version of this method involves trying to increase the total value of your investment by the same amount every month. For instance, instead of my DCA plan above, I could decide to increase my total value of VFINX by $100 each month.
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Developed by Vanguard Diehards member ‘yobria’, EasyAllocator.com is an online tool that helps you create your own asset allocation plan, depending on your risk tolerance, time to retirement, and other factors. It even incorporates popular index fund-based portfolios such as the Coffeehouse portfolio and those by William Bernstein (whose books I am reading right now). What I really like is that it even helps you decide where (Roth? taxable account?) to put each fund to achieve the greatest tax efficiency. I wouldn’t use it blindly without doing some background reading, but it is definitely a neat tool.
Please let this work… Added: Ok, I’m still not sure what happened but this site broke sometime last night. I have restored the database from a backup, and manually restored about 50 comments from yesterday, but there are still some that were lost. Sorry about that. Everything ’should’ be back to normal now.
I noticed that I was over $100 in rebates for my Citi Dividend Platinum Card, so I just requested a nice fat check for $112.47. More free money!
I honestly think that, second to deadbeats, I may be the most unprofitable customer that Citibank has. I use their no-fee 0% balance transfer offers with glee, I take their $100 sign-up bonuses and run, and I only use their 5% cash back card for the stuff that gives me 5% cash back (gas, groceries, and some gift cards) and nothing else. I’m well over the $1,000 mark in free money from them, and I’m still going!
An alternative to using mutual funds to split up my asset allocations is using ETFs. One of the perks of ETFs is that they often have lower expense ratios than similar mutual funds. An example is the Vanguard Total Stock Market Index Fund (VTSMX) vs. Vanguard Total Stock Market VIPERs (VTI). Both track the MSCI US Broad Market Index, but VTSMX has an expense ratio of 0.19% vs. VTI’s 0.07%. But, since I plan on dollar-cost-averaging, I must also consider transaction costs. If you meet the minimums, it costs nothing to buy VTSMX in a Vanguard account. But every time you buy VTI, you have to pay stock commissions.
The Motley Fool recommends that you keep your commission cost below 2% of your invested principle. I personally like to keep it under 1%. This means if you are paying $5 a trade, you should be buying at least $500 of shares at a time. Otherwise the stock will have to gain more than 1% just for you to break even.
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Found this while looking for a better business checking account - Wells Fargo is offering a $25 SuperCertificate for opening a checking or savings account with them by 4/30. It seems to be open to both new and current customers, per the fine print. I need to call them to see if it applies to business accounts too.
Oh, the wise words of Kanye West. Just kidding 
All this marriage and money talk brings up the obvious - what about pre-nuptial agreements? My wife and I discussed it only briefly, and we don’t have one.
This may surprise people, but I think that a prenup should be legally required for every married couple, just like you have to choose beneficiaries for your IRA. That way nobody is the bad guy/girl for bringing it up and everyone can have an open discussion about money before getting hitched. At the very least, every couple should be taught what will happen without a prenup, as this can vary widely among states. Maybe a good one will even make having separate accounts pointless? I have no idea, not being a lawyer. If you have a prenup, what did you put in it?
An e-mailer asked a question that opened up a very interesting discussion for my wife and me. It was “I know you are married, but is the Net Worth for you only or for both?” My initial internal response was “Duh, of course it was for both of us. We are married, how could it be any other way?” But in reading NYC Money’s post about splitting the money in marriage, my eyes were opened. Check out this comment (not by NYC):
My wife and I also maintain seperate accounts. In fact, when she needs money she applies for a loan with me. I then charge her the appropriate interest rate and make sure she pays on time (late charges make a nice side income)… I see marriage as a business venture with my wife being the most important client. It?s cold but why mix love and money?
Well if you’re going to try and change your portfolio, you might as well take a ‘Before’ snapshot for comparison later. I entered our retirement account holdings as of today into Morningstar’s X-Ray tool and got the following asset allocation:
This is based on our current holdings of only two mutual funds:
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Of course, as soon as I say how simple my investing is I go and try to complicate it. I spent this weekend reading my new copy of The Intelligent Asset Allocator as part of my upcoming portfolio recontruction. Man, it is some dense stuff. Let’s just say it’s no Harry Potter.
In addition, for my portfolio research I will also be referring back to my two favorite investing books so far - The Four Pillars of Investing (same author) and A Random Walk Down Wall Street.
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Although I blog about everything money, I want to make perfectly clear that the amount of entries I devote to a particular topic does not directly correlate with its importance. For example, out of 20 posts I may talk about easy ways to make $100 or the latest savings account rates for 15 of them. Maybe only 1 or 2 talk about saving for retirement. Why? Because saving for retirement is dead simple for me:
1) I save money regularly, and put it in tax-deferred accounts.
2) I buy an auto-pilot retirement fund - Vanguard’s VTIVX.
It takes hardly any time at all, but that is the most important thing I am doing for my future. The rest is just gravy. Obviously, I love gravy!
