Archives for October 2008

WaMu/Chase Lowers Interest Rates, Time To Move Banks?

Posted on October 7, 2008 // 49 Comments

Some eagle-eyed readers let me know late last night that WaMu/Chase quietly made a change to their offered interest rates. Their online savings account is now at 3% APY when attached to their free checking, down from 4%. Not too bad, but no longer the highest yield for a no-minimum-balance savings account.

They also lowered the rates on their online CDs, with the 8-month, 12-month, and 13-month CDs all at 3% APY. It looks like those that opened up one of their 5% APY CDs late last week just got in under the gun. My 12-month CD was successfully funded yesterday, and today I see my 5% APY rate shown online. All signs seem to suggest that Chase will honor these CD contracts. Hurray for small victories 🙂 , I hope everyone who wanted in on these got their application in on time.

Options?
Given these actions, it might be time to move banks soon… now to investigate other attractive all-in-one Checking/Savings combos. Here are some possibilities:

Everbank has their FreeNet checking account with a 1.10% bonus rate for the first 6 months, and then 0.70%-0.86% APY afterwards depending on balance. No minimum balance, but you need $1,500 for free billpay. $6 in free ATM fee rebates each month.

Combine this with Everbank’s Yield Pledge money market account, which also has a 1.10% bonus rate for the first 6 months, and then 0.86% APY afterwards. This account “pledges” to stay amongst the top 5% of competitive banks, and there is a minimum balance requirement of $1,500 to avoid fees.

Fidelity has their mySmart Cash account. It is kind of a checking account/brokerage account hybrid where you can basically use their money market funds (non-FDIC-insured) as the main holding place on your cash for higher yields. You can choose from taxable to tax-exempt money market funds with competitive yields. Their main checking account is FDIC-insured, and is currently earning 1.50% APY. No minimum balance, and you get unlimited ATM fee reimbursements.

Filed Under: Banking //

October 2008 Financial Status / Net Worth Update

Posted on October 6, 2008 // 33 Comments
Net Worth Chart 2008

Credit Card Debt
If you’re a new reader, let me start out as usual by explaining the 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 3-4% interest or more, and keeping the difference as profit. Along with other deals that I blog 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 credit card balances off, I choose not to.

Retirement and Brokerage accounts
Whew! Ignoring new investments, the value of my holdings lost nearly $12,000. I won’t go into why, I think most people have heard the overall reasons. I did a portfolio update in mid-September to better understand what happened specifically. Accordingly, I am directing future contributions as I can to help rebalance my portfolio back towards the target asset allocations (mainly international developed and emerging markets stocks).

I did make an $5,000 contribution to my self-employed 401k, although I am still left in negative territory for the month. I do hope to contribute at least the $15,500 maximum salary deferral in 2008, as this has been my only contribution so far this year. My wife has already maxed out her 401(k).

Cash Savings and Emergency Funds
Last month, we achieved our mid-term goal of six months of expenses ($30,000) in net cash put aside for emergencies. Once my retirement accounts are funded, I may try to increase this cushion. An alternate reason for increasing cash is for potential real estate opportunities (way) down the road.

Home Mortgage
Another ~$500 of loan principal paid off. According to Zillow, the estimate of the value of my house is still higher than what I originally paid for it, but has also dropped 3% in the last month alone.

Big Expenses
We are taking a trip to Spain in November, which will cost us about $1,000 each. I wrote earlier about how we tried to save money on travel and how we manage cash and credit cards abroad. The airfare has already been paid for (charged on the credit cards to earn rewards, of course).

Basically, I still consider myself doing well, but I guess it is hard to avoid what everyone else is experiencing. Shrinking 401(k). Dropping house value. Rumors of potential layoffs for part-time employees at work (who’s next?). Lots of red in my net worth chart. 🙁 Fun times, eh?

You can see our previous net worth updates here.

Filed Under: Goals, Investing, Retirement //

Planning For Early Retirement Makes Me Happy

Posted on October 3, 2008 // 15 Comments

In a recent issue of Money magazine, Walter Updegrave shared the results of a recent survey by insurer Northwestern Mutual and health education company LLuminari. It showed that people who perform financial planning tend to feel happier than those who don’t. The article is also online here – Save for tomorrow, be happy today.

You have to be a little careful in reading the diagram provided, and realize that there are separate components going on (the colors help):

Economists, psychologists and others who study happiness find that people who have a sense of control over their lives cope better with stress and live more happily, while those who feel powerless are more likely to be depressed.

Now correlation doesn’t necessarily mean causation. It could be that those who are happy are more likely to budget. But in general, I agree that consciously choosing how I spend and invest my money makes me feel in control of my future, which makes me happy. Realizing the abundance of choices and alternatives out there is one of the best things I’ve learned from blogging.

(It also helps keep my mind off of all the things I can’t control, like a bailout bill with $150 billion of pork attached. Wooden arrows? Nascar race tracks? How is this related at all???)

Filed Under: Retirement //

New $50 Signup Bonus For TradeKing Brokerage

Posted on October 2, 2008 // 21 Comments

Online stock brokerage firm TradeKing has a new $50 sign-up bonus for new accounts. To qualify, you must open with at least $2,500, make one trade, and not take it out for 6 months.

There is no referral required, just be sure you see the $50 offer from the link. Expires 10/31/08 Extended until 11/30/08. Selected fine print:

1) To qualify for this offer, new accounts must be opened and funded with $2,500 or more. Account opening and funding must occur within 30 days from the date this email was sent, and one trade must be executed within 180 days of account opening. […] A minimum balance of $2,500 is required in the account (minus any trading losses) for the first six months or the credit may be surrendered. Offer applies to new non retirement accounts funding for the first time.

Background – Why pay more?
TradeKing is a discount brokerage with $4.95 trades and $0.65 option contracts. They have good customer service, with both Live Chat and phone reps with short hold times available. Won SmartMoney Magazine’s Best Discount Broker award in 2006, 2007, and 2008.

They are one of my three favorite discount brokers. To sum things up very briefly, they are between Zecco (cheaper, less refined) and Scottrade (more expensive, but has local physical branches). I don’t see any reason to be paying $10+ for a trade, given these three options.

For more information and tips on TradeKing, please check out my TradeKing Review. I have an account with them, so you can also ask questions in the comments.

Filed Under: Deals & Offers, Investing //

Bought Some More 5% APY Bank CDs From WaMu/Chase

Posted on October 1, 2008 // 27 Comments

I went ahead today and bought some more of the 12-month CD at 5% APY from Washington Mutual/Chase. Here’s why:

Reason #1: Chase agreed to honor WaMu CD rates
From the official FDIC WaMu takeover page:

6. Will I continue to earn interest at the same rate?
JPMorgan Chase accepted Washington Mutual’s interest bearing accounts including CD’s at the contract rate; therefore, they are not waiving early withdrawal penalties.

Even though there was speculation that Chase would only pay interest up to the failure date as was the minimum requirement, Chase went as far as to not even allow early withdrawals without penalty. They have committed to honoring these rates, which also worked out great for those that jumped on it last month.

Reason #2: They are still offering the 5% APY 12-month CD
A week later, the same high rate is still on their website:

This can’t have been an accident. 13-month CD is available too.

Reason #3: It’s FDIC-insured, now with a more stable bank
For those that worried about WaMu service interruption or lost liquidity (which never happened) , now it should be even more stable with Chase Bank.

Reason #4: It’s still a top rate, and it might change at any time.
Maybe there is some sort of behind-the-scenes rate freeze agreement that we don’t know about. Their popular Online Savings + Free Checking combo is still paying 4.00% APY on savings and the checking perks haven’t changed (WaMu review). Savings accounts at any bank are always subject to change, so there is nothing I can do about that. But I can sure lock in this rate now and keep my system going as long as possible:

Reason #5: Fed may drop interest rates soon
Bailout plan or not, this economy ain’t doing so well. Although I don’t make big bets on such forecasts, there is a good possibility that Fed will lower interest rates by the end of the year (see USA Today, WSJ).

If your funding source is not WaMu, they let you fund electronically with another bank’s routing and account number. You have to remember to verify the test deposits, though.

Filed Under: Banking, Deals & Offers //

Free FICO Credit Score From Equifax (No Trial)

Posted on October 1, 2008 // 56 Comments

Equifax is currently running a campaign that is giving out your FICO credit score for free (expired) based on your Equifax credit report. There is no credit card or free trial subscription required, so you don’t have to cancel anything. Only available to the first 10,000 responders, so go try it now! If you’ve used Equifax before, you should just sign in because they will make you sign in again anyways once getting your information.

The free score comes with some general information about your credit history (see mine below), but to get more specific information you’ll have to purchase your credit report and analysis.

I see my score of 754 is only better than 62% of US consumers. Given that I am making interest off of 0% APR credit card debt, I am pretty happy with the results. 🙂

Filed Under: Deals & Offers //
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