Archive for February, 2008
Instead of simply giving us higher interest rates on savings account, it seems that the big banks are relying on gimmicks to spur account openings. Here are a few. Most involve some convoluted scheme, but they still include the potential for some profit.
Bank of America: Keep The Change
You’ll need a checking account, a savings account, and a check debit card. If you charge say $4.05 on your debit card, $5 is taken from your checking account, but $0.95 is placed in your savings account. During the first three months, they match 100%, which means another 95 cents will be thrown in by BofA at the end of the year, max $250.
Best case scenario, you get 99 cents for charging $1.01 (or even 1 cent). This has led to many people trying various techniques to max out the $250 bonus. Examples: Pumping $1.01 or $2.01 of gas at a time, buying individual stamps from an automated postal machine, paying $1.01 towards your cell phone bill, or using the self-checkout lane at the supermarket and paying for small items you’d buy anyway. You definitely need to be committed to get $250. 
Wachovia Bank: Way2Save
Again, you have a checking account, a special Way2Save savings account, and a check card. For each check card purchase or electronic payment (online billpay or automatic debit), $1 of your own money is moved to the Way2Save account. In addition, you can transfer up to $100 a month from checking to Way2Save. So the amount of money that can be placed into this account is greatly limited.
The special Way2Save account pay 5% APY over the first year, plus an additional 5% bonus at the end of the year. They even have a handy Way2Save calculator to estimate your earnings. (Be sure to compare against a regular 4% savings account.) People might try gaming this by opening multiple accounts, or making lots of electronic transfers.
Washington Mutual Bank: Savings For Success
You’ll need a checking account and a special Savings for Success account. You can open with up to $500. Then set up automatic monthly transfers from your checking to savings (up to $500 per month) for the rest of the year (11 transfers). You cannot make withdrawals during the first year. Your account with earn from 5.50% to 6.50% APY for a year, depending on your state. People also might try opening multiple accounts for this one.
Biggest catch: This program is limited currently to Texas, Illinois, Georgia, and Washington. The rest of us will have to be satisfied with their online-only 4.25% APY savings + checking account combination.
Posted in General | 36 Comments »
Oprah had Suze Orman on her show today, and as part of it they are giving out a free download of her latest book Women & Money: Owning the Power to Control Your Destiny. You can find more information and the download link on this page, but it’s only available until 2/14 at 8pm EST [update: no longer available, sorry!]. So download it now, and read it later!
Hat tip to My Open Wallet.
Posted in Deals & Offers | 17 Comments »
I am often asked where is the best place to open one’s first IRA. Usually it’s a Roth IRA, since people tend to start out in lower tax brackets and Roth IRA save you taxes upon withdrawal. Choosing a one’s broker is still a very personal decision so I don’t think there is one single best broker for everyone, but here are the ones I would recommend to my friends and family, so I would also recommend them to anyone. First, some assumptions:
- You want to invest in low-cost funds or ETFs. Not every believe in this style of investing, but I do. If you wish to trades stocks all day or chase 5-star Morningstar funds, then my suggestions might not be the best fit fo you.
- You want low commission costs and account fees. By this, I mean you want the basic services at a good price. I don’t pay attention to things like streaming quotes, advanced trading software, options contracts, or if the website has AJAX everywhere.
- You wish to be an independent investor. If you want to pay for guidance, I still recommend taking the time to learn some of the basics, but please find a good fee-only advisor. They’ll probably set you up with a institutional account in which they can trade for you.
- You are just starting out. So you have anywhere from just $50 a month to $5,000 to put into an IRA. You may be worried about minimum balance requirements, and aren’t eligible for most premium accounts.
Mutual Fund Brokerages
These firms mainly trade their own mutual funds, which somewhat restricts investment choice. To generalize, mutual funds are better suited for people who wish to dollar-cost average and like simplicity.
Vanguard
- Commissions: Free to trade Vanguard mutual funds, although there may be certain redemption fees.
- Account fees: No account fees with electronic statements. Otherwise they may apply.
- Minimum to start: Most index funds have a minimum opening balance of $3,000. The STAR fund (VGSTX) lets you start with $1,000. More information here.
- Vanguard is the place where I hold all of my Roth and Rollover IRA balances. They offer a wide variety of both active and passive products, but I use them exclusively for their index funds. I like their all-in-one retirement funds for new investors.
T. Rowe Price
- Commissions: Free to trade TRP mutual funds, although there may be certain redemption fees.
- Account fees: $10 fore each mutual fund with less than $5,000. Not sure if this is waived for AAB.
- Minimum to start: Most funds have a minimum opening balance of $1,000 for IRAs. However, if you enroll in their Automatic Asset Builder (AAB) program and can commit $50 every month, the minimum requirement is waived and you can start with nothing. More information here.
- T. Rowe Price has index funds, but their expense ratios about about 0.25% higher than at Vanguard. However, their active funds have relatively low-costs and lower turnover compared to other actively-managed funds. I like the combination of the $50/month plan and one of their all-in-one retirement funds for those with limited funds starting out, although I don’t have an account here.
In case you’re curious, I’m leaving out Fidelity because their index funds have $10,000 minimums, and their active funds are more expensive in general than T. Rowe Price. I also don’t like their all-in-one retirement funds very much, as they seem to contain a slew of mediocre funds.
ETF & Stock Brokerages
There are lots of great ETFs out there now, including several from Vanguard, and having a stock brokerage account gives you great flexibility to buy any of them. However, you will be faced with potential per-trade commissions, so here are a few that have low fees. I have accounts with all of these firms.
Zecco Trading
- Commissions: Free for the 1st 10 trades per month if you have $2,500 in total account equity (cash + value of stocks). Otherwise, $4.50 per trade. Both limit and market.
- Account fees: $30 annual IRA fee.
- Minimum to start: No minimum balance to open.
- For more information, see my Zecco account review.
TradeKing
- Commissions: $4.95 per trade, limit or market.
- Account fees: No annual IRA fee.
- Minimum to start: No minimum balance to open.
- For more information, see my TradeKing account review.
Sharebuilder (now owned by ING Direct)
- Commissions:$4 for each pre-scheduled “window” trade purchase. $9.95 for a real-time trade and to sell. Alternative higher-volume plans also available. In addition, if you open an IRA by 4/15/08 and use the promotion code ‘IRA2008′, you’ll get 7 free trades good until 12/31/08.
- Account fees: $25 annual fee if you are in their basic plan. If you are on a plan with a monthly charge, or you have any account on such a plan, this fee is waived.
- Minimum to start: No minimum balance to open.
- For more information, see my ING Direct ShareBuilder review.
I hope that helps people with their research. You should also be aware of IRA termination and transfer-out fees if you wish to move, but these change all the time so by the time you want to leave they may be different. For more related posts on starting out in investing, please see my Rough Guide To Investing.
Posted in Investing, Real Estate | 62 Comments »
A few years ago I managed to nab a used Wenger Swiss Army watch off of eBay for $35. I really liked the watch since it was classic but not flashy (shown to the right) - and it didn’t hurt that it retailed for over $200! Recently it abruptly stopped working, and so I brought it in for a battery replacement. Unfortunately, it turned out the entire mechanism was burnt out and it would cost $50 to replace. Pay $50 to fix a $35 watch? Nah, I’d see what else was out there. I was actually considering buying a similar watch from Costco for $150 before I caught myself. I was being fooled by the sunken-cost fallacy!
What Are Sunken Costs?
A sunk or sunken cost is something that has been spent and cannot be recovered. Since this is the case, economists argue that such sunk costs should not be a factor in one’s decision making. The classic example is the movie ticket decision (adapted from this Wikipedia entry).
Let’s say you bought a non-refundable movie ticket, but you later decide that you no longer want to watch the movie. Do you watch the movie anyway since you already paid for it, even though you won’t enjoy it? Or do you simply walk away and do something better with your time? Since the ticket was a sunken cost, a rational decision maker would ignore the fact that you paid for it already. In fact, you should act as if the movie was free.
A few more examples:
- Clothes. You bought a pair of $100 shoes, but after wearing them around you find that they hurt your feet horribly. Do you continue to wear them anyway?
- Consumer Products. Sometimes companies will continue to plow money into a project even though they know it will be a failure, simply because millions have already been spent on it. It’s important to know when to cut your losses. A historical example is the Concorde jet.
- Investing. Many people hate selling their shares for less than they paid for it. However, once you’ve executed the trade, that shouldn’t matter anymore. All that should matter are the current prospects for the stock.
- Human lives. This idea has even been extended to the Vietnam War and more recently the Iraq War, when the loss of previous lives has been used as justification for continued fighting.
But back to my watch story. I realized that it shouldn’t matter what I paid for the watch. The fact was that I could still get a working watch for $50, while replacing it would cost me significantly more. Nothing similar was selling for less than $100 on eBay, and a new one would cost at least $200. I went ahead and told the jeweler to fix my watch for $50.
Have you caught yourself worrying about sunken costs as well? You can also read about other ways that our mind plays tricks on us in Mental Accounting: Is A Dollar Always A Dollar?
Posted in Frugal Living | 43 Comments »
After I made the decision to get a fixed rate mortgage over one with an adjustable rate, the next was to decide what length to get. I thought this would be an easy decision, but there are a surprisingly large number of variables to consider!
Viewpoint #1: Get The Shortest Mortgage You Can Afford
With a longer term, you build equity more slowly but have more affordable payments. With a shorter term, face higher monthly payments but you own the home faster and pay less interest. So the traditional advice seems to be: get the shortest mortgage that you can afford.
This is can be a slippery slope, though. 15-year too expensive? Let’s try 30-year. No? How about 40-year? Hmm… barely. Well, maybe that ARM isn’t that bad after all… Affordability shouldn’t be the only consideration.
Viewpoint #2: Get The Longest Mortgage You Can Afford
In my previous post 10 Reasons You Should Never Pay Off Your Mortgage, I explored the reasons why certain financial advisors tell people to get the longest mortgage they can get. Basically, your mortgage is a cheap, long-term loan. If you re-invest this money into stocks, which over the long run are expected to return much more than 5-6% annually, why would you want a shorter loan? It’s a great arbitrage opportunity.
If you believe in this theory, then your answer is simple: get the longest mortgage you can afford, as long as the effective interest rate is lower than what you confidently can earn elsewhere.
Viewpoint #3: Longer Mortgages As Paying For Flexibility
Here’s the thing. Just because you have a 30-year mortgage doesn’t mean you have to take 30 years to pay it off. As long as you don’t have a prepayment penalty, you can simply send in additional money towards your loan principal and pay it off in 8, 15, or 23.5 years. However, if you have a 15-year mortgage, you have to make those higher payments every month or risk losing your home. So going for the longer term essentially sets you a “minimum payment”, which you can exceed as you wish. This can make a big difference if I run into extended unemployment or other large financial setbacks.
Example: 15-Year vs. 30-Year + Extra Principal
Of course, as you get a longer term, your interest rate will also go up a bit. But if you run the numbers, it actually doesn’t make that much difference! Let’s say that the 15-year is at 5.125% right now, but the 30-year is at 5.625%. The 15-year payment is $2,392, while the 30-year payment is $1,727 - a difference of $665.
However, if I just paid the $665 extra toward the 30-year mortgage each month, I still end up paying that 30-year loan off in less than 16 years! In exchange for the safety and flexibility of lower minimum payments, I stretched my 15-year loan out for an extra year. I view this extra interest as insurance.
Our Situation and Final Decision
In the case of Viewpoint #1, we can currently afford the payment for a 15-year mortgage. On the other hand, subscribing to Viewpoint #2 this would leave us wanting a 40-year mortgage at a relatively low 6% rate. However, while I see the merits of the arbitrage argument, I don’t necessarily think it’s an apples-to-apples comparison when you have two things with different risk/return characteristics.
I ended going with the 30-year fixed mortgage, primarily due to the reasons explained in Viewpoint #3. I am not against paying off our house early - I actually like the idea of having my home paid off as it would help simplify our income planning in retirement. (I could also treat paying it off early as owning a bond.) However, the flexibility of being able to make the lower payments as needed was a big draw, especially given the relatively small premium for doing so. Finally, if we rent the house out one day, the lower payment would also help with managing rental cashflow.
So why not a 40-year mortgage here as well? As you go longer, the mortgage payment stops dropping very much. A 40-year loan would involve an even higher rate and only lower our payment by 4%.
Posted in Real Estate | 43 Comments »
Here are some more links from my weekend reading:
Nina of Queercents found out the hard way that Home Equity Lines of Credit (HELOCs) can be revoked! It was done because her property value had dropped significantly, which makes sense. But not only was it through no adverse action of her own, she had to pay closing costs and various other fees upfront. A classic case of heads I win, tails you lose.
NCN of No Credit Needed has been blogging about living without credit and getting out of debt for two years now. You can read virtually all he knows about debt reduction here.
Heard of the debt snowball? Jaimie of PaidTwice explains the related concept of debt snowflakes. Via Get Rich Slowly.
Pinyo of Moolanomy shares an interview with author Larry Swedroe. I’ve actually got two of his books sitting on my desk right now - the newer Wise Investing Made Simple and the classic The Only Guide to a Winning Investment Strategy You’ll Ever Need. Too bad all this house-buying stuff is getting in the way of me reading them!
Posted in General | 2 Comments »
Conforming loans are those that satisfy the criteria that Fannie Mae and Freddie Mac set regarding what kinds of loans they will buy. Besides certain credit-related guidelines like debt-to-income ratio, one major constraint is the maximum loan amount. Barring any upcoming changes (see below), the current limits are $417,000 in the continental US (AK, HI get $625,500).
Because they can be so readily sold to these psuedo-government entities, conforming loans are usually very competitively priced. Non-conforming loans have to be sold elsewhere or kept in-house, so they usually end with higher rates. But as recently as July 2007, the added cost for a non-conforming loan might have been only 0.20%. However, due to rising default rates and skeptical investors, the premium is currently around a full 1%. This has led to the increasing popularity of replacing a jumbo loan with two loans - a conforming one and a second loan to make up the difference.
Example. Let’s say you wanted to buy a $600,000 home, with a 20% down payment ($120,000). This leaves $480,000 to be financed, which is over the $417,000 conforming cap. With a single Jumbo loan, here’s your scenario. (I’ll use estimated mortgage rates based on current market conditions.)
But, here’s what happens when you split it up into a $417,000 conforming loan and a $63,000 second loan. The second loan usually has a higher interest rate, similar to that of a home equity loan.
By restructuring, you have lowered your effective interest rate nearly 50 basis points .from 6.5% to 6.01%, which in turn lowered the mortgage payment by $127 a month ($1,524 a year). To find the blended rate, I used the this Dinkytown calculator.
The Fine Print:
- This works best with small 2nd loans. Kind of obvious, but the less you have to put on the 2nd loan with higher interest, the better your blended rate would be. As the loan amount rises, there will likely be a point when the plain Jumbo loan will give you the lower payment.
- The second loan can be structured in a variety of ways. It could be a completely separate loan from a different lender, it could be a home equity loan from the same lender, or it could be a home equity line of credit.
- You might have balloon payments. In my case, I was offered a equity loan amortized over 30 years, but with a balloon payment due after 15 years. So I would need to either pay off that $63,000 within 15 years, or refinance before then.
- Possibly higher closing costs. The second loan may incur closing costs, but they should be a lot smaller than the first loan because things like appraisals have already been paid for.
- Conforming limits might change soon! The pending economic stimulus package legislation - which is almost on Bush’s desk as I type - proposes to temporarily raise the conforming limits to as high as $729,750 in “high cost” areas based on median home price. It is unknown how soon this will take effect, but probably too late for me. (Google News)
Posted in Real Estate | 21 Comments »
With all of this talk about recession and after watching too much History Channel, I’ve been reading up about the Great Depression of the 1930s. Check out this excerpt from a paper entitled Main Causes of the Great Depression:
One obvious solution to the problem of the vast majority of the population not having enough money to satisfy all their needs was to let those who wanted goods buy products on credit. The concept of buying now and paying later caught on quickly. By the end of the 1920’s 60% of cars and 80% of radios were bought on installment credit. Between 1925 and 1929 the total amount of outstanding installment credit more than doubled from $1.38 billion to around $3 billion. Installment credit allowed one to “telescope the future into the present”, as the President’s Committee on Social Trends noted.
This strategy created artificial demand for products which people could not ordinarily afford. It put off the day of reckoning, but it made the downfall worse when it came. By telescoping the future into the present, when “the future” arrived, there was little to buy that hadn’t already been bought. In addition, people could not longer use their regular wages to purchase whatever items they didn’t have yet, because so much of the wages went to paying back past purchases.
Sound familiar? Now add in a stock market slump:
This speculation and the resulting stock market crashes acted as a trigger to the already unstable U.S. economy. Due to the maldistribution of wealth, the economy of the 1920’s was one very much dependent upon confidence. The market crashes undermined this confidence. The rich stopped spending on luxury items, and slowed investments. The middle-class and poor stopped buying things with installment credit for fear of losing their jobs, and not being able to pay the interest. As a result industrial production fell by more than 9% between the market crashes in October and December 1929. As a result jobs were lost, and soon people starting defaulting on their interest payment.
So let’s see. First, people were spending too much. Then, people suddenly became afraid of losing their jobs, so they stopped spending. This meant businesses stopped making money, so… people lost their jobs.
Eighty years later, here we are getting mailed “economic stimulus” checks. But if people are truly scared, why wouldn’t they just hoard it as well? I still don’t understand macroeconomics for the life of me.
Posted in Frugal Living, Simple Living | 65 Comments »
Before shopping for rates, we had to figure out what kind of mortgage loan we were going to get. The first decision was between a fixed-rate or an adjustable-rate mortgage. Quickly, here are some very general definitions:
- Fixed rate mortgages (FRMs) provide a constant monthly payment for the life of the loan, no matter what interest rates do in the meantime. Common lengths are for 15 and 30 years.
- Adjustable rate mortgages (ARMs) offer a lower monthly payment for a certain initial period, and then adjust periodically afterwards. Common initial periods are 1, 3, 5, and 7 years. For example, if you see a “5/1″ ARM, the rate and payments are fixed for the first 5 years, and then will adjust according to a pre-determined formula one a year after that. A “5/5″ ARM adjusts only once every 5 years. Usually they are also based on a 30-year amortization, but not always.
Here were my three main considerations for choosing between ARMs and FRMs:
How long do I expect to stay in the home?
I’ve read statistics that people tend to move about once ever 5-7 years, and that the average mortgage only lasts 7-8 years before being refinanced or paid off (usually from the sale of the home). But who cares about average? Everyone is different.
It’s true that if I bought a “starter home” that with the arrival of kids we might need a quieter neighborhood or more space. In our case, we ended up finding a home that has everything we need for the foreseeable future. While trying to be as objective as possible, if I had to lay odds I’d say that there is a 95% chance that we’d stay past 5 years, and 75% that we’d stay for 15+.
What’s the interest rate savings if I go with an ARM?
Here you’d have to look at current rate curves. At one unlikely extreme, if you’re getting the same rate for both types of loans, of course you’d go for the fixed. Right now, the spread is about 0.5% between a 5/1 ARM and a 30-year fixed mortgage, which is pretty narrow. In the past the spread has been as little as 0.1% and as high as 1-1.2%, possibly more.
Although many mortgages brokers will tell you “even if you end up staying longer than 5 years, you can always refinance”, that’s just not true. You can’t always refinance - check out all those sub-prime borrowers who can no longer get a loan anywhere. They are stuck with rates resetting in the 15% range!
And even if you can refinance, it might be ugly… What if your credit score drops in that time? What if lending standards continue to tighten? What if rates rise significantly? What if your home value drops and your loan-to-value (LTV) ratio is now horrible?
I think ARMs can be a smart buy if you can assess your situation accurately. Some people know they’ll be gone in four years or less. Who knows, rates might actually drop like we’ve seen recently. But no matter what there is an element of risk involved. With rates still at historical lows, we see the downside being a lot worse than any potential upside.
Do I want to rent it out?
This is one consideration I don’t always see mentioned. If I do end up moving, there is a very good chance that I’d like to make my home a rental property. With a fixed mortgage, again I have stability. Rents will rise with inflation, but my mortgage payment will always stay the same. I also don’t have to worry about obtaining a investment-property mortgage, as primary-home loans are usually much cheaper.
In the end, all the signs pointed towards a fixed-rate mortgage for our situation, so that’s what we’re getting.
Posted in General | 39 Comments »
Yes, there’s AnnualCreditReport.com for free credit reports. But what about your credit score? I’ve mentioned a couple of these before, but here is a compilation of five different ways to grab that credit score for free without the hassle of annoying trial offers. I repeat: No free trials, no credit card number required, nothing to cancel.
Washington Mutual Credit Card
Formerly Providian, WaMu credit cards will show your your FICO score free of charge when you log into your account. It is based on your Transunion credit report, and is updated once a month. I believe is is for all of their credit cards, but I may be mistaken. The catch is that if you don’t already have a credit card with them, you’ll have to apply for one which will ding your credit score - something that’s worth $100 or more to me!
Prosper Person-to-Person Lending
Prosper Lending provides a free credit grade for prospective borrowers, based on your Experian credit data. Details here. Also of note is the $25 bonus for new members once a loan is funded as either a borrower or lender.
LendingClub Person-to-Person Lending
Similar to Prosper, if you start an application to become a borrower at LendingClub they will check your credit on your behalf to find out what rate they will charge you. Instead of a numerical score, you will get a grade like “A2″ or “B3″. Then you can use this key to determine your FICO range. For example, A2 would indicate a score range of 747-769. It is also based on your Transunion credit report.
You’ll also be able to find out what kind of interest rate you might get on a personal, unsecured loan. This is based strongly on your FICO score, but is also adjusted due other factors like employment status. If this is less than what you can currently get on your existing debt, you might consider consolidating your debt at LendingClub. Otherwise, it can just satisfy your curiosity. New lenders and borrowers can earn a $25 bonus for joining by using this referral link (not just the home page).
(Note: If you are currently a lender, you must set up a separate account (new e-mail address) to become a borrower. This is not unethical or “getting around their system”, I asked and this is simply how their system is set up right now.)
E-Loan Mortgage
Supposedly this is to help you shop for mortgage rates, but E-Loan also sells a variety of credit score products as well. See this link at E-Loan and scroll to the bottom for Free Credit Score (Credit Score Only) which doesn’t require any trials. It not a FICO-brand score, but is the CreditXpert score and is based on your Experian credit bureau information. But keep in mind this is good for one-time only, so you might want to save it for later.
CreditKarma
Currently based on your TransUnion data, CreditKarma offers a daily look at your credit score. The catch is that it’s not a FICO or any other major brand of score (at least that is known), but with this service you can track changes from month-to-month. Details here.
You will need to provide your personal information and Social Security number to these companies, naturally, so be comfortable with that. Unless otherwise noted, none of these methods by themselves will affect your credit score as you are requesting them for yourself. However, if you do take out a loan or take some other additional action, a hard inquiry which will affect your score may result.
Posted in Credit Cards | 27 Comments »
Credit Card Debt
If you’ve recently starting reading, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it, I am placing it in high yield savings accounts that actually earn me 5% interest or more, and keeping the difference as profit! 
Along with other deals that I write about, this helps me earn extra side income of thousands of dollars a year. Recently I put together a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.
Cash Savings, Home Purchase
We’re still in the process of buying a home. There will be big drops on the cash column soon as we finally spend our down payment funds as well as pay for things like closing costs and home improvements for our home.
$5,000 was put towards the earnest deposit, and I just marked it as spent. But I will have to decide on how to account for my home value in my net worth. I’m leaning towards just keeping it simple and taking option #2, but that may be considered a cop-out if my home value drops.
Retirement and Brokerage accounts
For the third month in a row, our investments overall have dropped in value by 2-3%. Good thing I only check in once a month. I gloomily predict that things will get significantly worse before they get better… but I don’t actually risk my money on guesses. I continue to “stay the course” and keep making regular investments into my asset allocation.
New Midterm Goals?
Although I still want to visit Brazil, Australia, and Southeast Asia, it looks like we’ll probably be spending the next 6 months instead installing hardwood floors, remodeling bathrooms, and jackhammering some concrete. I don’t know if we’ll have the time or money to visit any other place besides the wonderful world of Home Depot. We’ll have to see.
You can see our previous net worth updates here.
Posted in Goals | 19 Comments »
I’m curious as to where people initially found their mortgage loans, even if later on it was sold to someone else. Here are the options, along with a brief and very generalized impression of their pros and cons.
- National Banks. In general have above-average rates, but may have special programs for certain groups of people. May be more comfortable and/or reputable. Relatively rigid lending standards. Examples: Bank of America, Wells Fargo.
- Local Bank. May have a good relationship and be easier to communicate with, and may be more flexible with underwriting.
- Online Bank. May offer competitive rates, but the communication and service might not be as good. Example: ING Direct.
- Local Broker. May offer a better rate by shopping around for a wholesale rate and adding their commission. However, the quality and honesty of these brokers can vary wildly from great to subpar. The rates quoted might not actually materialize.
- Credit Union. Limited membership field, but may still offer good rates to members. Example: Navy Federal Credit Union.
- Online Broker. You can compare lenders online at a distance. However, the service again might not be that great. Example: LendingTree.com.
Here’s is the poll:
Loading …
Feel free to explain your decision in the comments if you have time!
Posted in Real Estate | 60 Comments »
For some reason, my friend received a postcard from Maserati offering him some Omaha Steaks if he came in for a test drive. You’d think buyers of $150,000 luxury vehicles couldn’t be convinced to do a test drive for $50 worth of meat, but I guess not. Anyways, I convinced him to go - and of course to let me tag along.
I wasn’t really familiar with the car, but the Maserati Quattroporte does look sexy. You may have seen it on the HBO show Entourage. Designed by Pininfarina and engineered by Ferrari, with a base price of $110,000 it could almost be seen as a bargain… compared to the $250,000 F430 it was sitting next to in the showroom. Here’s a video review from the UK:
Deep Thoughts…
One realization I had while cruising down the road - caressed by supple leather and listening to the Ferrari engine - was that I was getting more comfortable in my own “financial skin”. Before, I might have felt self-conscious on going to this test drive. Now I don’t care what people think of me. If I really wanted to, I could probably buy such a car some day. But I already have my priorities and they are nothing to be ashamed of.
At the same time, I also started to understand that there is nothing wrong with someone who does buy such things. Sure, they might be mortgaging their future in order to look cool now. But they also might be successful people with a solid financial plan and also appreciate fine Italian cars. I asked the saleperson who the typical buyer of a Maserati was. While many people were business owners or corporate executives, he also said his last sale was to an 82-year-old government retiree who finally decided “what the hell” and bought something nice for himself. In other words, perhaps us frugal folks shouldn’t judge others either.
I know I’ve been guilty of this. To this day, whenever I see someone under 25 and driving a shiny new BMW, the words “paid for by the Bank of Mom and Dad” pop into my head!
Posted in Frugal Living | 36 Comments »
You read it correctly, a new site called NotchUp is trying to replace pricey headhunters by actually paying people hundreds of dollars to interview. The twist is that they are actually looking for people who are already happily employed! From this article at NetworkWorld:
You say you wouldn’t interview with Company X if they paid you?
A startup called NotchUp is betting that’s a bluff.
Debuting this morning at Network World’s DEMO 08 in Palm Desert, Calif., NotchUp founders Jim Ambras and Rob Ellis tell me that 15,000 people a day are signing up for their new eBay-like employment service - based solely on word of mouth. The founders are convinced employers will pay hundreds of dollars directly to people they would like to interview — especially those not actively in the job market — because it will bring them better candidates faster.
So how does it work?
To get started, simply register, create a profile (which is similar to an online resume), and set an interview price. Your interview price is the price at which you’ll talk to prospective employers. Once you’ve created your profile, companies will search it and make you paid offers to interview if you have the skills and experience they’re looking for. Accept the offers you’re interested in, go to the interviews, and we’ll collect the money and transfer it to you.
It’s free to join, and you can even estimate how much you should ask for an interview with their calculator. For the type of professionals that they are targeting, I would actually say the price is about right. You’d still have to be careful about your current employer though, don’t want to ruffle any feathers. It’d be cool if this company merged with LinkedIn or something. Thanks to Stephen for the tip.
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