Archives for May 2006

Swap Gift Cards For Free at CardAvenue

Posted on May 11, 2006 // 5 Comments

Got a bunch of gift cards you haven’t used yet? Sell or trade them the new site CardAvenue.com. For example, you could swap an unwanted $100 Pottery Barn gift card you just got for a $100 Home Depot gift card that you could really use. I’ve already spent my $200 in free Target gift cards, but maybe I can pick some more up at a nice discount. At least for now, the site looks to be supported by advertising, and does not charge any fees to buy, trade, or sell. All you have to pay is postage, which hopefully will lead to better prices for both buyers and sellers.

As with any other person-to-person system, you have to watch out for fraud. CardAvenue try to avoid this in a variety of ways. They are able to check gift card balances ahead of time, and also have an eBay-like feedback system. If something does go wrong, you must use the PayPal claim system (you can only use PayPal), and then their own CardAssure protection system (up to $100). I’d still be careful.

Filed Under: Frugal Living //

Play Money Stock Portfolio Snapshot…

Posted on May 10, 2006 // 24 Comments

stockchart.gifA while ago I set aside $5,000 to buy and trade stocks. I call it my ‘play money’, as the rest of my portfolio is painstakinly allocated into index funds. But I really don’t do much ‘playing’ anymore. I just check the stock prices every few days, say silly things to myself like “Hmm… I guess that was a smart buy” (RIN) or “I wonder why nobody likes that stock anymore?” (PFE). Then I log off, forget about it for a while, and then the process repeats itself a few days later.

Exciting story huh? Yeah, I thought so. Anyways, for posterity and the voyeurs out there here is a snapshot of my current stock holdings. Feel free to make suggestions as to what I should do with it.
[Read more…]

Filed Under: Investing //

Save Money on Prescription Meds

Posted on May 9, 2006 // 13 Comments

happypills2.jpgIf you require prescription medication, and are like me and have lots of pharmacies around, you should really check out your next Sunday newspaper. Almost every pharmacy around here regularly has a $15-$20 coupon if you switch your prescription to them from an outside company. I’ve almost gone through them all now – Safeway, Walgreens, Rite-Aid, and even Target Pharmacy. If you time it right you can just go to a new one every month. Time to see if we can make another complete roundtrip!

All you need to do is bring in your old prescription label, and they do the rest. This way, we are actually making money off of our meds since we only pay a $10 copay each time.

Filed Under: Frugal Living //

28-Day Treasury Bill APY Calculator

Posted on May 9, 2006 // 16 Comments

calc.jpgIn my previous post on Calculating and Comparing Treasury Bill Returns, it was pointed out that my APY calculation was incorrect because the way T-Bills work, you can’t actually reinvest all the interest into the next T-Bill. That is true, but what you can do is set your T-Bill to fund and deposit via another interest-bearing account like Capital One Consumer Bank, Emigrant Direct, or HSBC Direct. This way, you can still invest in consecutive 28-day T-Bills, and anything not rolled over to the next T-Bill is still earning decent interest.

But, we still want to compare APYs! So, what was needed was a calculator that would take all this into account. So here it is:

28-Day T-Bill APY Calculator:

28-Day T-Bill Investment Rate:
%
Bank Interest Rate (APR) [Convert APY to APR]:
%

Principal invested per $1,000 par value: $.

T-Bill interest earned: $
Bank interest earned on excess interest: $
The approximate total APY is: %

 

Example
Let’s do an example. Let’s take the most recent T-Bill results for a $1,000 28-day T-Bill and say you set it to reinvest every 28 days. The investment rate is 4.655%. Now, let’s say you fund via Emigrant Direct, currently at 4.50% APY. Using the APY to APR calculator3 and the fact that ED compounds daily, we get an APR of 4.401%.

We input these values above. It spits out that for each $1,000 T-Bill you buy, you’ll pay $996.43. Actually, you’ll pay $996.44, but that’s due to rounding errors2. No big deal.

So when you buy a 28-day T-Bill, $996.44 will be taken out of your Emigrant on the next Thursday after the auction you participate in.

28 days later on another Thursday, your ED account will get a deposit of $1,000 and also a withdrawal of $996.44. $3.56 cents is left behind and earns interest at Emigrant. 28 later again, the same thing happens. Another $3.56 is left behind. This continues for a year and 13 T-Bills5 mature in that 364 days. At the end of this theoretical1 year, you’ll get approximately ($46.38 from T-Bill + $0.95 from Emigrant =) $47.33 in interest from your $996.44 initial investment. That’s an approxmiate APY of 4.75%.

It’s not perfect, but it’s something more accurate than investment rate that you can now use to compare with other online bank APYs. Note that this is pretty close to the APY that would be calculated assuming full interest reinvestment – 4.76%.

Finally, this does not take into account the tax benefits of T-Bills for those that are in states that charge state or local income taxes.

Assumptions and Caveats
1) The calculator assumes that the current T-Bill rate is extended out for an entire year. This cannot happen in real life as the rate is determined by auction every week. We are just extrapolating to find APY for comparison purposes. Banks change rates throughout the year as well.
2) There are plenty of round-off errors since I am allowing you to input the investment rate, which is already rounded off.
3) I again note that I am asking for the APR of the savings account you will be using, not APY. Hence, my APY to APR Calculator.
4) I am assuming that the bank interest compounds every 28 days for simplicity. Some banks compound daily, some compound monthly. It really doesn’t matter that much.
5) In actuality, there are 13.0357 (28×13= 364) T-Bills.

Filed Under: Tools & Calculators, Treasury Bills and Bonds //

APY to APR Calculator For Bank Interest

Posted on May 8, 2006 // 23 Comments

These days you usually get APY (annual percentage yield) from banks, but there are some times when you want the APR (annual percentage rate), which does not take into the compounding of interest as it is earned. For some reason I could not find an APY to APR calculator online, so… I made one myself. Here are the definitions that the calculator is based on:

APR = PeriodicRate x Periods in a Year

APY = (1 + PeriodicRate)^(Periods in a Year) – 1

[Read more…]

Filed Under: Banking, Tools & Calculators //

Experiment: Life Without TV

Posted on May 7, 2006 // 34 Comments

notv.jpgAfter we moved, I didn’t sign up for Cable TV as I couldn’t find a good deal and was morally against paying the full price of over $50 a month again. So, we decided to try life without television. We don’t watch that much TV, but we are definitely used to having it around. The only show I watch religiously is PTI. I’d like to not have cable when we have kids, but I’m not sure we can pull it off.

So far, it’s been pretty bland. Contrary to what some may say, we did not spontaneously start to read Shakespeare or become triathletes. Our IQs did not mysteriously double. On the other hand, we do actually talk to each other over dinner now. I do miss PTI, or what my wife calls “the two loud guys”. We’ll see how the rest of the month goes…

Filed Under: Frugal Living //

Other Places To Stash Your Cash

Posted on May 6, 2006 // 25 Comments

piggy bankBeing my money blog and all, I inherently have a biased focus on the best places to keep own my money based on my own personal tax situation, time horizons, and existing accounts. So far I’ve mostly talked about the banks in my online savings accounts comparison, savings bonds, and Treasury bills. However, I do feel like I should point out that there are definitely some alternative options to safely ‘stash your cash’ that also offer good if not better interest rates depending on your own preferences. They include other online banks, bank CDs, brokerage taxable and tax-exempt money market funds:
[Read more…]

Filed Under: Banking //

Free GainsKeeper with Scottrade Account

Posted on May 6, 2006 // 10 Comments

Another nice feature of my Scottrade account that I noticed recently is that they offer GainsKeeper free with every account. GainsKeeper is an add-on program available for all brokers that offers a lot of useful tax-related features such as:

  • Track your cost basis and realized and unrealized gains/losses
  • Tax lot accounting
  • Generate your IRS Schedule D
  • Export data into tax software, Excel or text file
  • Tracks stock splits, mergers, and wash sales

You can do all this stuff manually pretty easily, but it’s definitely a nice time saver if you trade regularly. I plan on dollar-cost-averaging into ETFs and then harvesting tax losses, so keeping track of tax lots would probably get to be a pain in the butt after a while. Retail cost is $49/year (<100 trades).

Filed Under: Investing //

Are Credit Card CashBack Rebates Taxable?

Posted on May 5, 2006 // 13 Comments

Hmm… the media seems to be addressing all my questions today. This Wall Street Journal column addresses the taxation of credit card rebates:

The IRS hasn’t issued any specific public guidance on whether cash-back card rebates are subject to income tax, says an agency spokesman. But the IRS did issue a private-letter ruling in 2002 that said certain card rebates aren’t included in a taxpayer’s gross income. Although a private-letter ruling applies only to the taxpayer that applied for it, such rulings are considered to be a gauge of the agency’s thinking on a particular issue. Tax advisers say rebates are generally considered to be a reduction in purchase price, and not likely to be taxed. Rebates on purchases made for business or investment may have more complex treatment, so consult a tax adviser.

In short, the IRS hasn’t said anything specific either way, but has ruled in specific cases that they are not taxable. Although certainly not concrete, this is still reassuring as I personally have never reported any of my cashback as income.

I would estimate I pull in well over $1,000 a year in free money from credit cards, with my 2 to 5% back on all my purchases as well as signing up for $100 to $250 in upfront incentives. The great thing is that anyone with decent credit can get in on these offers. Article via Boston Gal’s Open Wallet.

Filed Under: Credit Cards, Taxes //

NY Times Article on Online Banks

Posted on May 5, 2006 // 13 Comments

Thanks to David for sending me this New York Times article about online savings accounts. I really think this market is maturing, especially since Citibank is entering the fold. Here’s an interesting quote:

Unlike credit card users, who freely hop from one product to the next to get a better rate, savings account holders tend to be more loyal, Mr. Newman said. Thus, he said, HSBC Direct does not feel compelled to offer the very highest yield.

This inertia explains HSBC’s drop back to 4.5% and ING’s recent lagging rates. But with no minimums, I’ll be working hard to keep them honest.

Filed Under: Banking //

Merging SEP and Rollover IRA Funds with Traditional IRA

Posted on May 4, 2006 // 6 Comments

I love Vanguard, but it seems all their funds require $3,000 to open, except for the STAR fund, which really doesn’t interest me. Unfortunately, I could only contribute $2,500 to my SEP-IRA for 2005. Arrgh. The good thing is that, if you have a regular Traditional IRA with them, you can simply have them transfer the funds from your SEP-IRA or Rollover IRA into your Traditional IRA. There are no tax consequences and it doesn’t affect your IRA contribution limits. That way, you have a bigger chunk of money that is easier to work with, and can help you avoid low-balance fees and minimum balance requirements.

Now, instead of having three IRAs ($8.7k Traditional, $16k 401k Rollover, and $2.5k SEP), I just have one with $27k that is invested as I like. I don’t know if I’ll do a SEP-IRA again this year, I just didn’t have the option before of an individual 401ks since I had to open one up by the end of the year. I wish these financial companies would step it up and start offering Roth Individual 401ks already!

Filed Under: Retirement //

Stock and Options Trading Book Suggestions?

Posted on May 3, 2006 // 24 Comments

I’m currently finishing up All About Asset Allocation by Richard Ferri and I think I’ve had my fill of books about index funds. Now that my primary portfolio is set up (I’m fighting the urge to tinker already), I’m considering splashing around with individual stocks again! So I’m looking for some book suggestions. Here are some I’ve heard good things about:

[Read more…]

Filed Under: Investing //
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