Archive for June, 2008
Sunday, June 29th, 2008
On a recent episode of the Suze Orman TV show, she announced that you can go to her website and get her Online Will & Trust kit for free for a limited time. Via Slickdeals. Here’s how to get it:
- Go to SuzeOrman.com.
- Click on Will & Trust Kit link on upper left menu.
- Click the orange Gift Code button.
- Type in the code “people first”.
I signed up for the initial profile successfully, but haven’t finished the questionnaires. The software includes the ability to create a will, a revocable trust, Financial Power of Attorney, and an Advanced Directive / Durable Power of Attorney for Healthcare. One less reason for putting off doing one of these if it’s free! 
I’m not sure how this compares to a more established legal service like LegalZoom which I had considered using up until now (I used them to incorporate my home business), but they charge about $100. I suppose I must add that if you have substantial assets an estate attorney might be worth the extra cost.
Posted in Deals & Offers, Insurance | 25 Comments »
Saturday, June 28th, 2008
Do you have an ING Direct savings account with unused referrals? People want them! The first 25 people who comment below and leave a working contact e-mail (name not required, e-mail will not be shared) will get one filled by me for free, which is $10 for you. I’m all good for now. Just look for a message from me to your e-mail address with further instructions later this evening.
Due to comment moderation, your comment may not show up right away. One referral per person. Late night readers get lucky this time. Thanks!
Posted in Banking | 48 Comments »
Friday, June 27th, 2008
Via Bogleheads, yesterday Vanguard started the trading of a new investment that attempts to track the entire global stock market in just one fund. Dubbed the Vanguard Total World Stock Index Fund, here are some details from an older press release:
The new fund will seek to track the performance of the FTSE All-World Index, a float-adjusted, market capitalization weighted index designed to measure the equity market performance of large- and mid-capitalization stocks worldwide. The fund will invest in a broadly diversified sampling of securities from the target benchmark, which comprises more than 2,800 large- and mid-cap stocks of companies in 48 countries.
The current balance is about 41% US and 59% International. The ETF version (VT) features an expense ratio of 0.25% but has to be bought in a brokerage account. The mutual fund version (VTWSX) can be bought and sold for free at Vanguard ($3k minimum) and has an expense ratio of 0.45%, along with a 0.25% purchase fee and a 2% redemption fee on shares redeemed within 2 months of purchase.
Although you could basically replicate this fund with the proper mix of the Total US Stock Market ETF (VTI) and FTSE All-World except-US ETF (VEU) funds at a lower expense ratio, you’d also be subject to double the commissions when buying and selling. Besides, I think it’s just cool that you can now passively invest in the entire world with one ETF. For example, if China eventually becomes 25% of the world’s stock market value, then 25% of this fund would be invested in China without you having to lift a finger. If somehow India or Russia explodes instead, then you’ll still hold their share.
How could this fit in to your investment plan? More posts about asset allocation information here.
Posted in Investing | 34 Comments »
Friday, June 27th, 2008
Y’all know how much I like them free razors. And this one comes with a trimmer! Via SlickDeals.
- If you’re at work, turn the sound down. Although not obscene, this involves is a pillow fight with lots of girls squealing. My wife was very curious as to what I was doing online…
- Now go to TrimFlixx.com and enter your birthdate (must be 18 years old to get the free razor).
- Upload an image when asked, any will do. If you need one, try downloading this to your Desktop first for some laughs at the expense of the world’s richest man.
- Finish and play the movie, and then click on the Save button on the bottom. Check the box “Throw in a Free Sample while you’re at it.” and fill out your info. Hope it comes!
Posted in Deals & Offers | 11 Comments »
Thursday, June 26th, 2008
Excerpted from the interesting Early Retirement page of Philip Greenspun, a fellow who says he retired at age 37.
Ask a wage slave what he’d like to accomplish. Chances are the response will be something like “I’d start every day at the gym and work out for two hours until I was as buff as Brad Pitt. Then I’d practice the piano for three hours. I’d become fluent in Mandarin so that I could be prepared to understand the largest transformation of our time. I’d really learn how to handle a polo pony. I’d learn to fly a helicopter. I’d finish the screenplay that I’ve been writing and direct a production of it in HDTV.”
Why hasn’t he accomplished all of those things? “Because I’m chained to this desk 50 hours per week at this horrible [insurance|programming|government|administrative|whatever] job.
So he has no doubt that he would get all these things done if he didn’t have to work? “Absolutely none. If I didn’t have the job, I would be out there living the dream.”
Suppose that the guy cashes in his investments and does retire. What do we find? He is waking up at 9:30 am, surfing the Web, sorting out the cable TV bill, watching DVDs, talking about going to the gym, eating Doritos, and maybe accomplishing one of his stated goals.
Retirement forces you to stop thinking that it is your job that holds you back. For most people the depressing truth is that they aren’t that organized, disciplined, or motivated.
Could this be me? Nah, my goal is to be a beach bum and do nothing. 
Posted in Retirement | 28 Comments »
Thursday, June 26th, 2008
Here are some links from sites in my blogroll, not in the alphabetical order of their blogs, but their names. I tried (very unsuccessfully) to make something clever related to the actual titles when possible. My apologies to the English language.
Posted in General | 5 Comments »
Wednesday, June 25th, 2008
I got a lot of positive responses from my self-employed tax-related post yesterday. I’ll be happy to continue sharing more of my experiences, but given the complexity of tax issues I wanted to throw out a book recommendation - Home Business Tax Deductions: Keep What You Earn by Fishman.
This is my hands-down favorite book on tax deductions for those with home-based businesses. It has saved me many times the $20 cover cost. I checked this book out from the library first as well, but ordered it online within a few days. I’ve read several other tax books and they are either (1) too light on the details, or (2) too aggressive and bordering on both the unethical and illegal. This book provides a good summary of the IRS code, and practical ways to substantiate deductions that you qualify for.
The primary benefit of a good tax book is that it gives you the confidence to take the deductions that you deserve and qualify for. Many times people simply don’t try because they are afraid of the Big Bad Audit. Instead, I am now confident that I followed the rules and can pass an IRS inspection. Remember the difference between tax avoidance and tax evasion:
Tax Avoidance is perfectly legal. The courts have stated clearly that you have no duty to pay more taxes that what is minimally required by law. You have every right to take all legitimate deductions and also to structure your business to minimize taxes.
Tax Evasion is a crime. This involves fraud, misreporting income, or taking deductions that you do not qualify for.
(Is it tacky to quote yourself?) Even if you have an accountant, I think it is good to understand a bit of what is going on.
Posted in Self-Employment, Taxes | 10 Comments »
Tuesday, June 24th, 2008
An important part of maximizing the profit from your own business - no matter how small - is to be smart with taxes. If you are running a side business on top of your day job, you may be paying around 50 cents of every dollar made towards taxes. This means, that for every $1 in tax deductions you find, you are keeping an extra 50 cents in your pocket.
One of the more tedious tax deductions for self-employed folks is deducting transportation expenses. The simplest way to claim this deduction for those without vehicles used solely for business is to track the number of miles driven for business use. (You can also record actual automobile expenses like gas and maintenance, and pro-rate.) The IRS just announced yesterday that the standard mileage deduction will be 58.5 cents/mile for all business miles driven for the last half of 2008, up from 50.5 cents/mile.
From above, this means that for every single business mile you deduct, you might save around 29 cents. Deducting just 100 miles per month would save you around $350 over a year. Put another way, not tracking 100 miles a month will lose you $350 a year. There are many complex rules for what constitutes eligible business travel, but it can be worth asking your accountant or reading up. Here are some examples:
- Driving to the office supply store to make business purchases.
- Driving from your home office to an external location meet a client.
- Driving to the bank to deposit checks or make other business transactions.
- Driving to pick up mail from your UPS Store or P.O. Box.
- Driving to the post office to send business-related mail or buy stamps.
Many times, you might do this stuff without a second thought. But with gas costs so high, I would argue that we need to recoup whatever we can get. Trust me, these miles can add up quickly!
How do I properly track such mileage? At most office supply stores you can buy a mileage logbook. Or, simply start up a spreadsheet program and create these columns: date, purpose (bank, etc.), odometer start value, odometer stop value. Print it out, slap it on a clipboard, and stick it permanently in your car like I do. Record everything immediately, it should take seconds; you can add up the miles later. (Added: mileage log template for Excel)
What about driving from my self-employed home office to my day job with another employer? Nope, although it would be sweet to deduct such commuting costs, this is not qualified business travel. However, if you have a second site for your own business like a storefront, travel to/from your home office to/from that site can be deductible.
What if my UPS mailbox is next to my day job? Here’s where things get a bit fuzzy. You definitely aren’t allowed to deduct personal trips. But let’s say the supermarket is right next to your business bank. Since you’re already there, isn’t doing some grocery shopping the the eco-friendly thing to do? From my non-official understanding, you would need to prove that your trip to the bank is necessary and the primary reason for the trip, and not just an excuse to go to the supermarket. Making an actual deposit transaction would seem to be sufficient in that regard.
But if you are trying to say that your “business bank” is 30 miles away from your home office and just happens to be the one next door to your 9-5 job, then that may be much harder to justify. It is truly necessary to use that branch?
There’s more… You may also be able deduct mileage driven for charity, medical treatment, job searches, and moving.
References: IRS Publications 535, 463, and 529
Posted in Self-Employment, Taxes | 26 Comments »
Monday, June 23rd, 2008
I’m always flattered when anyone (online or offline) asks me for investing advice, but at the same time I’m very cautious about giving it out. And it’s not just the usual *I’m not a financial professional* legal concerns, but the fact that it’s hard to give useful advice in a few paragraphs or a 5 minute chat. Over time, I’ve been refining my “amateur, informal financial advice over coffee” speech. My goal is to give specific ideas but to keep it simple. Let me know what you think.
1. Put your money in a Vanguard Target Retirement Fund. These mutual funds are an all-in-one basket of different low-cost index funds. You get some US stocks, some international stocks, and some bonds. The mix is automatically adjusted for you. No, they might not be perfect, but they are pretty darn good and very simple to hold. I have specifically have told my own mother to open an account at Vanguard. I withhold any theory talk about passive investing because this is when most people’s eyes seem to glaze over.
Just buy the fund with the date closest to when you want to start making withdrawals. All lifecycle or dated funds are not made the same. The ones in my 401k stink, and I don’t even like the Fidelity Freedom 20XX funds.
The Vanguard funds do have a $3,000 minimum initial investment. Until you have $3,000, just stick your money in an savings account paying decent interest and with an automatic deposit system. I know it sounds nice to “start investing with $100″ (and here are some ways to do that), but honestly, if you don’t have $3,000, your focus should be more on saving money by spending less/earning rather than investing at this point. There is no need to rush.
2. Read a good investing book
Websites and blogs are great, but it is still very hard to replace a good book. They tend to be professionally edited, better organized, cover all the bases, and are easy to refer back to. I think the following books are great and are definitely worth the $10-$20 cost:
If you’re not convinced (perfectly understandable), first borrow it from the local library and then buy a copy if you like it. Read as much as you can!
3. Hey, no skipping ahead. Please do #2.
My friends ask me for advice. I say to read a book. Months later, most of them (not all) haven’t read any books but still want advice. Yes, I know, this involves effort. (Gasp!) Please, spend a weekend doing something that will dramatically increase your net worth in the future. If you don’t, then at least if you did #1, you’ll be ahead of most investors who pay too much money chasing hot stock tips or pay other people to chase hot stock tips for them.
4. Pay someone to do it for you
If it’s been years and you still haven’t read a darn book and don’t plan to, go to NAPFA.org and find yourself a fee-only financial advisor that you click with. Pay that person to keep you on track. If they are fee-only they are less apt to be biased on what investments they recommend. But remember, the person who will care most about your money is still you.
Posted in Investing | 31 Comments »
Friday, June 20th, 2008
ZipCar is a company that lets you rent cars in urban areas by the hour. Right now, they have a promotion called the Low-Car Diet to encourage people to try using a combination of public transit and occasional ZipCar rentals instead of their own car. You get a “loaded” public transit pass, one free year of ZipCar membership, and between $100-$500 of credit towards hourly rental fees. In exchange, you promise to give regular feedback and make a good effort not to drive your own car from July 21st through August 15th. Via SlickDeals.
Eligible cities include Atlanta, Boston, Chicago, Philadelphia, Pittsburgh, Portland, Seattle, Toronto, Vancouver, and Washington DC. Some examples are Pittsburgh which offers $500 in credit good for 1 month, and Portland which offers $100 credit with no indicated expiration date (I assume it’s at least good for a year).
Who should participate in the Low-Car Diet Challenge?
* Be willing to make a month-long commitment to reduce their personal vehicle use. It takes a little extra time, some lifestyle adjustments and enthusiasm to complete the Low-Car Diet.
* Share their experiences (positive or negative) by emailing LCD@zipcar.com. We asking folks to email us at least three times during the challenge.
* Start out the diet with a positive attitude. After all, dieting (even low-car dieting) can be difficult, and a starting out on the right foot will be a big help!
* Have viable transportation alternatives. Before you commit to the challenge, assess your work and home transportation options. For example, if you live in the city and drive to work everyday to a location that doesn’t have public transit, then it will be difficult to make the challenge work for you.
This would be a pretty cool experiment if you ever really wanted to see if downsizing by one car was possible. ZipCars cost roughly $10 an hour. But if you add up all the costs of your car like depreciation, gas, insurance, parking stall costs, and maintenance, you might be surprised by the hourly rate you’re already paying. Sometimes I wish I could do this myself.
But I’ve ran the numbers before, and in the end it really depends if you can depend on public transit for the vast majority of your transportation needs. This really depends on where you live and work. Coincidentally, I sold an extra bookshelf on Craiglist recently and the buyer had rented a ZipCar (Honda Odyssey minivan) to pick it up.
Posted in Deals & Offers | 15 Comments »
Thursday, June 19th, 2008
Most of my friends on Facebook show themselves doing something they love as their profile pictures. Hiking, partying, sitting on a beach. But ones that are now real estate agents? I get the standard “Hey, I’m a real estate agent!” pose. You know, the one that looks like a mix between Glamour Shots and something you’d find in a yearbook. I swear, they all go to the same photographer. I even found this parody of the situation:
Is this required to obtain your Realtor license? “You must slap your picture on everything possible. Any house you sell, your business cards, your MLS listings, billboards, your car. Please consider tattooing your picture and phone number on your child’s forehead.” Yes, I know that familiarity supposedly breeds trust. But it still creeps me out. You’d think consumers would have a better way to pick a real estate agent…
Posted in Real Estate | 30 Comments »
Wednesday, June 18th, 2008
If you’re looking to reduce expenses, why not start with your most expensive category - usually housing. While it can be a lifestyle change, one of the most effective ways to save money is to share a household with others, as it also can reduce your costs in other areas like utilities. In this article The “N” Factor and Retirement Planning, columnist Scott Burns focuses on the financial impact of having kids but also shares a interesting way to estimate how the size of a household affects how much it spends overall:
Here’s the algorithm: The cost of living for a household is the square root of the number of people in the household. So if you are single, your cost of living is the square root of 1 or… 1.
But if you are recently married, your cost of living is the square root of 2, or 1.414. Yes, two can’t live for the price of one. But they can live for only 42 percent more than the price of one. Economists call this “economies of shared living.”
Expanding on this, if you have 3 people then the √3 is 1.73 (73% increase over a single person). But if we are talking about adults and not kids, then it is probably more helpful to simply focus on the effect of each person’s share.
Example
If you’re single and live by yourself, your total cost of living may be $2,000 per month. This includes things like food, transportation, and utilities.
- Get one roommate, and your cost of living is now 1.414/2 = 71% of living alone, or $1,420 per month.
- Get two roommates, and your cost of living is now 1.73/3 = 58% of living alone, or $1,160 per month.
- Get three roommates, and your cost of living is now 2/4 = 50% of living alone, or $1,000 per month.
Quick Check
Using Rentometer, I found the median rent levels for a one, two, and three bedroom rental in my area. (Yes, they are really high overall for the US.) This should provide a quick check for this rule, even though we are just looking at housing. It turns out to be pretty close:
One bedrooms: $1050/month - $1050 per person
Two bedrooms: $1600/month - $800 per person, or 76% of living alone
Three bedrooms: $2175/month - $725, or 69% of living alone
According to the √N Rule, the biggest relative benefit comes when you stop living alone, at a savings of nearly 30%. While it is easy to dismiss communal living, I think it is important to realize that is an option, even if you choose not to go that way. In many cultures even having multiple families living under one roof is common.
Burns also extended this concept a bit in showing us how a retiree can survive on $15,000 a year. Of course, the same idea can also apply to non-retirees. “Cooperation is a wonderful but generally overlooked substitute for money.”
Posted in Family, Frugal Living | 20 Comments »
Tuesday, June 17th, 2008
This is not how I like to get reminded of things, but sometimes that’s just how it goes. I hope all those out there affected by the floods are at least safe. A few months ago I wrote about buying flood insurance even if you are not required to by your mortgage lender. This means you are outside the 100-year floodplain, but could still be in the 500 year floodplain (1 in 500 chance each year, or 0.2%). Check if you are in a flood plain here. We got quotes, but never actually got around to buying a policy due to a combination of cost concerns and simply forgetting about it.
1 in 500? Why bother? Well, reports say that one third of Iowa is currently underwater. From one local newspaper:
“We’ve been taking a lot of calls, but most people don’t have flood insurance,” said State Farm Insurance Agent Doug Valentine. “This flood has blown through the 500-year flood plain and most only have to have insurance if they are in the 100-year flood plain because the banks require it.”
Valentine said many homeowners will soon face a difficult decision on what they will do given many will still have mortgage payments to be made and no insurance to cover rebuilding. “They may have to plow it down and will have $200,000 in payments on a $100,000 house,” he said.
This got me thinking - how likely do you think it is that your house will burn down, which is a major reason for homeowner’s insurance? Perhaps a 0.2% chance each year of severe flooding is worth insuring against. Insurance is all about paying to transfer the risk for events that can crush you. On that note, I also will need to check if our policy cover sewer backup, which has also caused a lot of damage in the Midwest.
Posted in Insurance | 31 Comments »
Monday, June 16th, 2008
Here are a few more tidbits that may be of interest:
E-Rewards Signup Links
E-Rewards is a paid survey site that is only open via invitation. It is often linked to an airline, so that you can can redeem your rewards for frequent flier points. Here are two open links for Continental and Northwest airlines, must have a frequent flier account number. I am a member; they aren’t the best in my opinion, nor are they the worst. I get a lot of survey opportunities, but they don’t pay as well as others. More information about other paid surveys here.
$10 from Costco American Express Card
If you have a Costco American Express card, they are offering a promotion where you can earn a free $10 Costco Cash card for paying your wireless phone plan automatically with the card. This card is one of the better gas rebate credit cards.
9 Months of Free Credit Monitoring
One of the three major credit bureaus, TransUnion, apparently lost a class-action lawsuit and the settlement involves offering up to 9 months of free credit monitoring service to anyone who has ever held a credit card over the last 20 years (i.e. lots of people). This includes free access to your credit score in addition to the report, as well as e-mail alerts when something changes. There is also a “potential cash payment” option, but it doesn’t very tempting given the number of eligible claimants (small pie, millions of slices).
They are supposed to allow claims starting today, June 16th, on the official settlement website. You don’t need to supply your full Social Security number (needs last 4 digits) or a credit card number, and you won’t be automatically signed up for any paid subscriptions after the free period.
Posted in Bored Money, Credit Cards, Deals & Offers | 6 Comments »
Monday, June 16th, 2008
Reader Chris sends in a way to turn credit into cash:
I just discovered a great way to turn credit into cash. This would be great to use with a 0% intro APR card and stick in the bank.
Circulating $1 Coin Direct Ship Rolls
If you go to checkout these have free shipping. You can only order $500 at a time. I haven’t tried doing it multiple times, but in theory you could do it over and over again. I am planning to max out my card and just take these coins up to the bank when they come in, and just pay the minimum payment each month. I’ll then put the money in a money market to get maximum interest. Just thought you might be interested. Thanks again!
In addition to 0% intro APR cards, it may be easier to just buy them with one that offers cashback or other rebates. Are we finally ready for dollar coins in the US? I know $1 paper bills are wasteful, but I still hate carrying around heavy coins. I used to ask for Sacagawea $1 coins for bridge toll booths until I signed up for the electronic auto-debit system.
Posted in Credit Cards | 32 Comments »
