If you got in on the free iPod shuffle offer or the $24 ex24.com referral bonus offer, be aware that as of 9/30 ex24.com has changed their commission schedule so that it actually costs money to sell your share of stock. Before it was free. I already sold my 1 share of Costco for a slight profit, so I’m good. Just a heads up. Here is a link to the new ex24.com fee schedule. So if you want to unload now is a good time!
Archives for September 2005
ex24.com Now Charges Sell Commission
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Fill Up Your Gas Tank Now
Not to be insensitive (I’m a native Texan), but if you’ve got a car with a big gas tank I’d fill it up now in case Hurricane Rita also makes a direct hit. $3 gas may sound like a good deal shortly. Various reports even mention the possiblity of $5 gas. Don’t forget to try GasBuddy.com too.
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Capital One 360 to Emigrant Direct One-Step Transfer Confirmed
After linking Capital One 360 and Emigrant Direct directly, I just checked and my $5 test transfer from ING -> Emigrant over the weekend just posted to Emigrant today, so it is officially possible to move your money from 3.30% to 4.00% with just a few clicks!
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Emigrant Direct now at 4.0% APY
Sweet. Emigrant Direct’s American Dream Savings Account is now paying 4% APY [Info Page, Bank Review], up from 3.50% and leapfrogging basically everyone in the liquid online savings arena, including Presidential Bank’s Premier Savings Account. And I just moved over ten thousand dollars out of Emigrant in the last two months. But I don’t think the interest rate wars are over yet. Things continue to look up for savers! An arbitraged $20,000 balance transfer at 0% APR would now earn $800 a year!
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PayDays Loans Revisited: Who Is Really Using Them?
I’ll admit I don’t know much about PayDay loans, I just avoid them like the plague. So when a commenter posted a very interesting 4-part series from the Motley Fool about the merits of payday loans in my previous post, it made me think: who is actually getting these loans? If I were to guess, it would be someone making barely over the poverty line and just trying to make ends meet. According to the Fool.com article, last year 5 million people got these type of loans, and paid $3.4 billion in interest and fees! 5 million people? So about 2% of the U.S. population got one? Yet the default rate is only 2%. Hmm…
Google Answers is a site where you post a question and how much you’re willing to pay to get it answered. The cool thing is that after it’s answered it’s posted online for all to see. One guy offered $200 for information about opening up his own payday advance/check cashing shop. The answers were very interesting –
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Net Worth Blogs Mentioned in New York Times
Jim of Blueprint For Financial Prosperity and Nev of Neville’s Financial Blog were interviewed recently in a huge article in the New York Times today in an article called ‘Psst: Want to Know My Net Worth?‘ (annoying registration may be required). Nice job Nev and Jim!
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Online Payday Loans: Get Fleeced Without Leaving Your House!
Most people know Payday Loans are a bad idea. Except for, of course, the people that use them. This weekend I saw one of these places having a free BBQ outside their store, with a decent turnout. I can already imagine the banner: “Pay 600% APR interest, Start your downward spiral into debt, and get a Free Hot Dog!” Anyways, I guess it was just a matter of time before these guys went online. Bankrate.com just ran an article titled ‘Online payday loans: Borrower beware‘, outlining the many pitfalls of online payday loans. Besides the outrageous interest rates and numerous fees, you have:
- You have to give them all your personal information, including name, address, Social Security number, and the routing number and account number of your checking account. The idea is they deposit the loan money in there, and then suck it back up plus fees after payday. But what if they decide to suck more?
- It can be very very difficult to actually figure out where the online lender is located. They can easily be outside the country (and outside the reach of law enforcement).
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Book Review: Freakonomics
I grew weary of my real estate textbook, so I picked up Freakonomics at the obligatory overpriced airport bookstore. You may have heard of this book as the one that suggests that the legalization of abortion is the main cause of recent decreases in violent crime. In short, this books tries to apply the math of economics to issues like crime, cheating, and parenting. It’s is co-written by an Economics Ph.D., and a New York Times writer. The NYT writer imparts a very strong “dumbed-down” flavor to the book, and as such the book reads like a newspaper article with a lot of sensationalization.
Still, the book was a fast read and mostly entertaining. It boils down economics to it’s basic idea: what do people do to get what they want? But it goes beyond supply and demand. For example, the book talks about real estate agents. It’s commonly known that the commission on a house is 6%. So on a $300,000 house that’d be $18,000. Sounds like a lot of money right? You’d think it would be a good incentive for your agent to sell your house for as much as possible. But wait.
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Success Linking Capital One 360 Directly to Emigrant Direct
Yes, I used ‘Direct’ three times in the title. Many people have wanted to link their new Emigrant Direct account with their existing Capital One 360 accounts. However up until recently, unless you used your Capital One 360 account as your initial funding account, you couldn’t do this, as both required checks to link additional accounts. But thanks to a new check-less linking feature, it has been done! I got this idea from Consumerism Commentary.
First, log in at ingdirect.com, and click on the link about Externally Link Accounts. Then click on the Add Link button. You’ll need to know the name of your bank, the routing number, and the account number. For Emigrant, the name is Emigrant Savings Bank, and the routing number for Emigrant is 226070319. They’ll then send two small deposits to your Emigrant Direct account (free 43 cents for me!) which show up in a couple days and you confirm them again back at ING. I just confirmed my deposits and they’re all linked up. I’ll also send a couple bucks back and forth to amuse/assure myself, but I think it’s a go.
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How To Predict I-Bond Savings Bond Rates
I-Bonds pay a rate based on two parts, a fixed component good for the life of the bond and a variable component based on inflation that changes every November and May 1st.
It turns out you can actually predict the variable component of the rate before it is actually announced officially. Inflation in this case is measured by the CPI-U, which is released every month by the government here. For example, the inflation information for August 2005 was just released today. The rate in May is a measure of inflation from the previous October through March; the rate announced in November is a measure of inflation from the previous April through September. Here’s how to use this information to compute the I Bond rate:
Here’s how the current rate of 4.80% that was announced in May 2005 came about.
The CPI-U in September 2004 was 189.9.
The CPI-U in March 2005 was 193.3.
193.3/189.9 = 1.01790, or a semi-annual increase of 1.790%.
So, Semiannual inflation rate = 1.79%
Fixed rate = 1.20% (set separately, not sure how)
Total rate = Fixed rate + 2 x Semiannual inflation rate + (Semiannual inflation rate X Fixed rate)
Total rate = 0.0120 + 2 x 0.0179 + (0.0179 X 0.0120)
Total rate = 0.048, or 4.80%
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So what’s going to happen when the rate changes on November 1st? We’ll know the Semiannual inflation rate for sure in Mid-October, but let’s see what we can guess now. Since we don’t have March-September (3/05-9/05) data, we could
A) Use the previous rolling 6 months, and use February-August (2/05-8/05) instead, or
B) Use March-September (3/05-8/05), and extrapolate another month’s worth of inflation.
Are you stil with me? I’m gonna do both.
Method A above
CPI-U in February = 191.8
CPI-U in August = 196.4
Change = 196.4/191.8 = 1.02398 or a semi-annual increase of 2.398%.
Again, I don’t know what the fixed rate will do. I don’t think the change will be radical, so I’ll use a range of 1.0-1.4%.
Using the above formulas and ranges of rates, Method A estimates the next I-Bond rate to be from 5.8%-6.2%.
Method B above
CPI-U in March = 193.3
CPI-U in August = 196.4
Change = 196.4/193.3 = 1.01604 or a 5-month increase of 1.604%.
I then divide 1.604 by 5 to get a monthly increase of 0.3208%. Extending it for six months gives me a semi-annual inflation rate of 1.9248%, or 0.019248.
Again, I’ll use a range of 1.0-1.4% for the fixed rate.
Using the above formulas and ranges of rates, Method B estimates the next I-Bond rate to be from 4.9%-5.3%.
Hmm.. that gives you a pretty wide range of possibilities, but I think it’s safe to say it’s very likely the rate will rise on November first. I’ll check back and update these predictions in Mid-October before then too.
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Delta and Northwest Airlines File For Bankruptcy
Well, it happened. Delta Air and Northwest Air both filed for Chapter 11 Bankruptcy. Check out the 1-Year charts for Delta [DAL] and Northwest [NWAC]. This is going to be bad for current and future pensioners. United already broke its promise to workers and left them with about 60% of their expected retirement money. I have relatives in the airline industry and they needed to hear this like they needed a hole in the head. How would you like to hear that your 401k got chopped by a 1/3rd? And of course taxpayers will be footing the bill through the Pension Benefit Guaranty Corp. (PBGC). Delta’s pensions are already underfunded by $10.6 billion. Sheesh.
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Emergency Funds Brainstorming Options
I apologize if my post topics are a week late, I am a bit late processing this stuff. Several bloggers have touched upon this subject, all making good points. In light of current events, you can see how emergency funds are important. What if your ‘really stable’ job turns into rubble? At the same time, your house is underwater, and your car is an aquarium. Your online savings account is going to be a bit hard to access without electricity. Even something in a safety deposit box isn’t so safe. I like to think of emergency funds as Real Life Insurance, protecting your current way of life, not protecting against your death. So I’d like to brainstorm different ways of having some backup money first. In no particular order (more like stream of consciousness):
1. Cash – I usually keep less than $200 of cash in the house, but I’m definitely going to put more in the house. No electricity = No ATMs and No credit card swiping machines.
2. Liquid Savings/Checking Accounts – Of course not all emergencies involve loss of power, and having thousands of dollars in cash under your mattress is not going to earn you any interest. And it’s FDIC/NCUA insured.
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