Archive for the 'General' Category
This is a bit late in the season, but if you like to ski or snowboard be sure to sign up for the e-mail newsletter by SlidingOnTheCheap.com. They send out a free weekly newsletter that summarizes all of the specials and discounts offered by each of the resorts in most of the major US ski areas: Lake Tahoe, Colorado, Pacific Northwest, New England, Utah, and Southern California. It saves a lot of time versus tracking all of the changes on each of the websites separately. They also give away several free lift tickets each week, and occasionally get their own subscriber-only deals.
It’s always good to stay subscribed year-round because often ski resorts will sell some really cheap season passes early on in the year. For the Lake Tahoe area specifically, you can also bookmark SnowBomb.
Otherwise, if you are willing to take a gamble on buying some employee freebies or lift-ticket credits, you can either keep your eye open at the resort for scalpers or try on your local Craiglist ahead of time (just search “lift tickets”). We recently saved $24 on each of 4 lift tickets this weekend this way.
Posted in General | 7 Comments »
Here’s a funny yet educational slide show explaining how the subprime mortgage mess was created through some complex financial trickery and well… simple and stupid assumptions. You know, like (1) housing prices always go up and (2) you can always refinance to another loan. There are a few expletives, but I would rate it PG-13.
Thanks to Kirsten who e-mailed it to me. I couldn’t find an author, but it seems to have been first posted online by The Big Picture.
Posted in General | 35 Comments »
You may have heard that Stanford University is waiving tuition for students with families making less than $100,000 annually. If your family makes less than $60,000, room and board is waived as well. This is not chump change: Annual tuition for Stanford is around $35,000 a year and housing is $11,000 a year.
What was interesting was the last line: Only about a third of students are expected to qualify. According to the 2006 census only 19% of US households made more than $100,000. For the students at Stanford, approximately 67% of families make more than $100,000. Of course, Stanford is in California where the incomes are higher overall. Still, this information makes me want to know the income breakdown of various community, state, and private schools out there. It will also be interesting to see what Stanford’s make-up becomes after this decision comes into effect.
In an ideal world, such things wouldn’t matter, but it’s quite apparent from this move that it does. Many qualified students don’t apply to certain schools due to high costs, and this will help Stanford get more of those kids. Financial aid may bridge the gap with loans, but not everyone wants to leave school with $100,000 in loans.
Posted in General | 20 Comments »
Reader Kristina from Arizona has a problem. Well, some might not see it as a problem, but here it is:
On December 7, 2007, I had $2,802.00 deposited into my business checking account at Wamu. A chunk of change I must say. I called the bank to ask them about it and said they would put in search and see if there is a match in the system for anyone with missing funds. They told me that it was a counter, CASH deposit made in Georgia. I live in Arizona and have never been to Georgia. The bank said they would call me when they found something.
So a week goes by and I hear nothing. I call the bank again and ask them about it. Still nothing. Then another week goes by. I call the bank a 3rd time and still nothing and tell me they will do another search. I called today and asked them if they could send me a copy of the deposit slip. So they will be sending it out soon.
I really don’t know what I should do. I know the money is not mine, but what if I never caught the deposit in the first place and used that money? Would I get in trouble for using that money that is in MY account?
The bank has made an error. I think the bank should have to fork out the money back to the person who made the deposit and let me keep the money. OK OK maybe that is a little to greedy. But who wouldn’t want some extra money!
It’s been over 2 months and still waiting.
So what I did with the money for now is put it into my IngDirect Savings to earn a little money on it for the time being.
I would love everyones thoughts on this. Please help!
So a bit of ethics, and a bit of legality. My non-lawyer, non-ethicist opinion is this: It was correct to contact them about it, both in terms of ethics and to avoid any future legal hassles. But I would also document that contact somehow, either through a letter, saved e-mail, or signed acknowledgment by a bank employee. Otherwise, I’d probably do what you did. If someone claims it correctly, they can have it, but in the meantime there is nobody to actually give it back to, so I’d keep it.
Any other viewpoints or suggestions for Kristina? Has a similar bank error happened you to you, or perhaps one not in your favor?
Posted in General | 85 Comments »
A few weeks ago I was reading an article in Money magazine about a couple who retired at 40. While they do live frugally in relatively low-cost St. Louis, the primary reason they were able to retire is that they each served for 20 years in the military and now receive a pension of $58,500 per year. They will receive this amount, adjusted for inflation, for the rest of their lives! On top of that, they get health coverage forever as well.
Obviously there are some extra issues involved in working in the military. National duty, risk of injury, possibly lower pay, and constant relocation, just to name a few. But let’s just focus on the financial aspects here. I knew military pensions were good, but I didn’t know they started as soon as you retired. I figured they’d kick in at 60 or 65, not right away.
Today I saw the article again and thought to myself… How much is that pension really worth? How much would a civilian job-jumper have to put away to replicate it?
Converting A Pension To A Lump Sum
A pension income is essentially what is provided by an immediate annuity. You pay a lump sum, and in return you get a constant stream of payments for the rest of your life. According to the quote estimates at ImmediateAnnuities.com, a policy that provides $58,500 of lifetime income per year starting at age 40 is worth a million dollars. This is without inflation adjustments, as I couldn’t find an instant quote for that. There are a ton of different options to these annuities, and there are tax implications to boot, so I’m just giving a ballpark number here. (You can estimate your own lump sum number by multiplying your desired income by 17.)
In addition, I can’t even properly estimate how much the lifetime of health insurance is worth, but it has to be worth at least another $100,000-$200,000. The article lists their net worth at about $500,000, but really it is the equivalent of around $1.75 million for someone with no pension. At 40 years old, well done!
Converting Lump Sum To Savings Rate
So let’s take an even million dollars. According to this simple savings calculator, if I assume an 5% annualized return on my investments (after-inflation), to end up with a millions dollars, that would be the same as saving $2,500 every single month for 20 years (in today’s dollars).
One way to to look at this is that their pension benefit was like receiving an additional $30,000 per year on top of their previous income. Of course, they had to have the resolve to stay for 20 years, which does not sound like an easy task at all.
Posted in General | 47 Comments »
I haven’t picked up any other great tips since then, so here are my 5 Romantic Yet Money-Saving Ideas For Valentine’s Day that I posted last year. My wife and I both have long days tonight with work and all, so we’re moving it to another day. Tonight it’s just ice cream and the couch. Hope things go smoothly for the rest of y’all!
Posted in General | 6 Comments »
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 »
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 »
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 »
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.
Posted in General | 22 Comments »
Yes, here’s yet another new financial service vying for your attention. This time it’s RevolutionMoneyExchange, which is a person-to-person payment system similar to PayPal. It’s free to send, receive, and withdraw money, but the only funding source allowed is your bank account (no credit cards). It will be interesting to see if it gains some traction (and if eBay allows them as a payment option). Currently, they are offering a $25 bonus just for signing up. Here’s mine:
However, you’ll have to submit your Social Security Number to verify your identity, so I had to do a little digging first. According to this article in American Banker, it is backed by Citi, Morgan Stanley, and Deutsche Bank AG, which participated in a $50 million venture capital round. The parent company was formed by bajillionaire Steve Case, co-founder and former CEO of AOL, and the son of the former CEO of Mastercard. Also mentioned in USA Today.
Also, there is no hard credit check done using your SSN. It says clearly at the top “This information is not used to review your credit history or to establish new credit.”
Posted in General | 59 Comments »
For a while, the site OfficialPayments.com has been offering people a way to pay a variety of federal, state, and local taxes with their credit card. While you can earn rewards for doing so, the 2.49% processing fee usually canceled everything out. Enter the Citi Cash Returns MasterCard, which offers 5% cash back on purchases for 3 months, with no caps or limits. (Update 4/23: Promotion has changed.)
The trick is then to load up your card as much as you can during the promotional 3 month period. In this case, if you used Official Payments to pay your tax bills which you used to pay by bank account, you’d stll be left with 2.51% of profit on your tax payments, or $251 for each $10,000 in taxes paid. This is especially applicable to me, as I underwitheld my taxes (without penalty) in 2007 by at least $10,000.
Who Else Can You Pay This Way?
Besides federal income taxes and estimated tax payments for sure, there are actually a good variety of options:
Official Payments is the trusted payment services partner of the United States Internal Revenue Services, 25 state governments, the District of Columbia, more than 2,500 local and municipal government agencies, more than 400 colleges and universities, and other public and private interests in all 50 states.
Use the the Who Can I Pay? and enter your zip code for the full list in your area. Being able to pay state income taxes online would be worth at least another $100 in my pocket…
Something More Controversial…
If you’re like me and you know you’ll owe some amount by April 15th to settle your tax bill and avoid late-payment penalties, why not just play it safe and overpay by a safe margin? Then you can file a tax return extension until October 15th and file your actual return at your leisure later on. When you do, you’ll simply be refunded any overpaid tax amount. This is what I had to do last year anyway, even without the carrot of instant 2.51% return on my money.
Timing The 3-Month Window
I’ve been waiting for a good 3-month window where I can max out this card. Given this tax situation and also all my upcoming new house expenses - home improvement, hardwood floors, furniture, moving, etc. - I think the timing is right. I applied tonight, but didn’t get an instant decision, most likely due to my recent move. I’ve been taking it very light on the credit cards lately, so I see no reason not to get approved.
Posted in General | 30 Comments »
Confused about the stimulus package? Here’s a quick summary from Bloomberg:
Bush and House lawmakers yesterday agreed on a $150 billion economic stimulus package aimed at avoiding an election-year recession. About $100 billion would pay for tax rebates to about 117 million families and $50 billion for business tax breaks.
The package also addresses the growing number of housing foreclosures with a provision allowing Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, to temporarily buy mortgages of as much as $729,750, up from the current limit of $417,000.
And here’s my short version:
- Singles: If you earn less than $75,000, you’ll get $600. Married couples: If you are filing jointly and earn less than $150,000 combined, and you’ll get $1,200. Additional $300 per kid. Additional details for each scenario in this Treasury Department Factsheet (thanks to commenter cek260).
- This is just the proposal they’ve agreed to vote on, but nothing has been approved yet. Bush hasn’t signed anything. Therefore, there is nothing you need to file or do yet in order to get your check. It is an election year, however…
- You won’t see any checks until May (read: June or July) at the earliest.
- Raising the conforming loan limit is good for folks like me who don’t want to pay 1% more interest for a Jumbo loan. Doesn’t really seem like something to help most middle-class folks, though. Seems to be mainly a product of lobbyists for the banking and housing industry.
But again, nothing firm has actually occurred yet, despite the news frenzy.
Posted in General | 53 Comments »
First. it was credit cards and their foreign transaction fee settlement. This time, it’s the De Beers diamond company accused of being a naughty monopoly and artificially raising diamond prices. They have reached a tentative settlement which you can learn all about at DiamondClassAction.com. For the consumer, they are proposing to split about $135 million (less fees) to the following eligible consumers:
All persons located in the United States who purchased any diamond or diamond jewelry or other products containing gem diamonds for personal use and not for resale between January 1, 1994 and March 31, 2006. For example, Consumers include people who purchased diamond jewelry to wear or to give as a gift.
Lawyers will get at least 1/3rd, so the pie is more like $80 million. The money will be pro-rated across all claimants, so the more approved claims that there are, the smaller the individual payments will be. In addition, if your share is less than $10.00, no check will be sent to you as a result of “prohibitive administrative costs”. Still, I filled out the form - they asked for name, address, e-mail, and basic jewelry info. Regarding proof:
If you did not buy a diamond or piece of diamond jewelry that cost over $10,000, you do not need to submit documentation at this time. Please remember to keep all documents showing your purchase, such as a receipt, invoice, insurance statement, appraisal, authenticity certificate, or other proof of purchase. You may need to send the documents to the Claims Administrator to prove your purchase at a later time.
I look forward to receiving my check for $15.61 in the year 2011. 
Thanks David for the tip.
Posted in General | 8 Comments »
Am I describing myself? Nah, just my selection of reading over this weekend:
Jeremy of GenXFinance offers a glimpse at his personal experiences while encouraging us not to make bad decisions during this volatile stock market.
My job has good and bad periods, and when the markets are up, everyone loves me and I hear nothing but good things. But at the same time, as soon as the markets begin to show some weakness, my phone is ringing constantly with worried investors. While you can occasionally talk some sense into certain people, others just go off and make irrational decisions.
Madame X of My Open Wallet has a series called New York Stories, which offers up real financial stories from real New Yorkers. I like it because these are kinds of stories you’d hear from your friends, if money wasn’t such a taboo topic. I particularly enjoyed the one by Escape Brooklyn.
Hazzard of Everybody Loves Your Money pointed me towards this post about the simple life. But if there’s one thing I’ve learned, it’s that simple does not equate to easy. For example, why is it we have to work hard and remember tips to keep things simple? Hmm?!
J.D. of Get Rich Slowly has a nice discussion going on about how to find work that you love. I tend to think that some people really do need to love their work, while others are able to keep a certain amount of detachment from it.
Posted in General | 3 Comments »
