Archives for December 2008

WTDirect and MyCorporation Promos Ending

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Few more quick reminders:

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Tax-Loss Harvesting For Buy & Hold Mutual Funds and ETFs

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Always the procrastinator, I finally sold some shares of my punished mutual funds and ETFs in order to do some tax-loss harvesting. There are only two days left in 2008!

What is Tax-Loss Harvesting?
The main idea of this tactic is to legally pay less taxes by taking advantage of the fact that losses are taxed at potentially different percentages than gains are.

The IRS lets you claim a deduction for investment losses against your ordinary income, up to $3,000 each year. (If your net capital loss is more than this limit, you can carry the loss forward to later years.) For example, if you lose $3,000 on an investment, and you realize that capital loss by selling the stock or fund that incurred the loss without realizing any capital gains in the same year, you can claim a $3,000 deduction on your income tax return. This means you won’t have to pay income tax of up to 35% on $3,000 of your income that you would’ve had to pay otherwise.

On the other hand, a realized capital gain of $3,000 which you held for at least a year would only be taxed at a maximum of 15%. Therefore, although losses are still undesirable, if we plan on holding the investment for at least another year, we should “harvest” all the losses we can get.

Expanded Example

Taken and edited slightly from a older post:

Scenario #1: You are in the 28% tax bracket. Say this year you bought $10,000 of IVV, an ETF that tracks the S&P 500. In 2006 it drops to $9,000, and in 2007 it rebounds to $11,000 and you sell. You’d have a long-term gain of $1,000 from your original $10k, so you pay 15% in taxes ($150), and end up with $10,850 in your pocket. Net gain of $850.

taxloss.gif

Scenario #2: Same 28% tax bracket, same start period. You buy $10,000 of IVV, and in a year (2006) you sell at $9,000, and the very same day you buy IWB, an ETF that tracks the Russell 1000 Index, but is very similar (but not identical) to the S&P 500. Since it tracks very closely, your $9,000 of IWB in 2006 will also rise back to $11,000 in 2007. After a year and a day, you sell your IWB for $11,000.

Now in 2006, you had a capital loss of $1,000 from your IVV. So you deduct $1,000 from your ordinary income taxed at 28% and save $280 in taxes. That’s $280 in your pocket. Then, in 2007 you realized a long term capital gain of $2,000. You pay your 15% tax ($300) and you end up with $11,000 – $300 = $10,700. Add in your $280 from the last year, and you end up with $10,980.

This time, even though you had basically the same level of market risk, you obtained a net gain of $980.

Substantially Identical?
Note that you must do this with similar, but not “substantially identical” investments. For example, you can’t buy IVV back again right after selling it and try this. That would be called a ‘wash sale‘ by the IRS.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Discover Business Card $100 Bonus – Expires 12/31

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

The $100 bonus promotion from the Discover Business Card is going away on December 31st. You can earn a $100 Cashback Bonus when you make $1000 in purchases within 3 months after your account is opened.

In addition, there is 0% APR on purchases for 12 months, so there is no hurry to pay the whole balance off right away. Just keep in your bank account earning interest. Finally, you can get 5% back on office supplies, 2% on gas, up to 1% on all other purchases.

As with all these business cards, individuals can apply as sole proprietors by simply using their name as the business name. You just need to put your Social Security number as requested, and leave the Federal Tax ID blank for this application (it will use your SSN). More details here. More $100 bonuses listed here.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Free Retirement For Dummies Book

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Okay, found one more freebie. Humana is offering a free copy of the 72-page book Retirement For Dummies by mail when you sign up for their REAL community. You must be of age 50+ to qualify. It looks like this book was specially made for Humana, as I couldn’t find it on Amazon. Via FW.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Free Luggage Tags From TripAdvisor.com

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

TripAdvisor is offering two free luggage tags. What a sneaky way to get my real info! 😉 The form automatically signs you up as a member of the website, but looks like that’s all. Use a spam e-mail if desired.

Although there is the occasional fake glowing review from management or unreasonable whines from uptight travelers, I do always check TripAdvisor for hotel reviews. There are some pretty bad ones out there. Check out the reviews for this awful hotel with camping cots for beds in London and this bedbug-ridden place in New York City.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Free Intuit Quickbooks Cash Register Plus Software

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Intuit is offering their Quickbooks Cash Register Plus Software for free instantly via download. This is the 2009 version, which is selling for $239 on Amazon. As the name suggests, this software turns your laptop into a cash register, accepts credit card payments, and syncs with Quickbooks very easily. No hardware is included. (Expired)

I decided to take one just in case. You just checkout for $0 and you receive a license key and a download link. No credit card required. It says the offer expired 12/15/08 but everything appears to still work. Via SD.

Not a business? Don’t forget that you can also get personal finance management software Quicken Online for free as well to track your household expenses.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Puppy!

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

We added a new member to our family today, of the four-legged and fuzzy variety. Her name is Pumpkin, and she was placed in our home by a dog rescue group.

Getting a rescue is kind of stressful. You put your name on lists. You get a call that dogs need a home. You have to sit down, talk it over, and decide whether to say yes. Do you have the time? The money? Then, you still don’t know if you’ll get the dog. People volunteer ahead of you. People drop out. You get a phone call asking if you are still available? You ponder again. You say yes, but you still can’t be sure until you actually pick them up. (To be fair, I’m sure it’s much more stressful for the animals.)

To top it all off, you don’t know much about the history of the dog and any health and/or behavioral problems. She’s intact, so we will try to take advantage of the discounted spay and neuter services that many humane societies offer. As for Pumpkin, we don’t know much about her history, but from what we were told she was one of 20 dogs someone used to run a puppy mill in their house. We assume that she’s been stuck in a cage much of her life, as she is over 2 years old and is not potty-trained nor leash-trained. She’s a bit skittish, but I can already see her coming around. I don’t have any eloquent words, so read these instead.

This will of course affect our finances, but we’ll take it as it comes and I already know I’ll be getting a huge increase in the quality of my life. Dogs seem to take love and multiply it! Hey, at least our holiday gifts to each other are taken care of already. 😉 Let’s hope the house-training goes by quickly…


(Guess why her name is Pumpkin…)
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Fed Funds Rate Drop Update: Locking In Higher Bank Yields Now

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Given the recent drop in the Fed Funds rate to nearly zero, bank have been adjusting their interest rates accordingly. Now that the dust has settled a bit, I suppose it is time to see what rates we can get now for our FDIC-insured cash. It may be a good idea to lock in some CDs based on your time horizon, and/or if you are willing to give up the liquidity.

Liquid Savings Accounts

  • DollarSavingsDirect remains the top overall rate, holding steady at 4.0% APY for now, although it could change at any time. See my quickie review here.
  • The Everbank Yield Pledge Money Market Account is offering 4.00% for 3 months guaranteed as long as you open by 12/31/08. (Balances up to $50,000.) See my review of the application process here. 4% for 3 months is actually better than any other banks’ top 3-month CD rate, while still allowing withdrawals.
  • If you signed up for the WT Direct $250 bonus, just a reminder that today (12/22) now December 31st is the last day to initiate your transfer. So you still have time, and it works out to be a good deal for a couple months of commitment.

Shorter Term (1-2 Year) Certificates of Deposit

  • FNBO Direct is offering a 9-month CD at 3.75% APY, a 1-Year CD at 4.0% APY, and a 2-Year CD at 4.26% APY. These are all very competitive for their respective lengths. The FNBO Direct liquid savings account (my review) also holds steady at 0.85% APY.

Longer Term (3+ Year) Certificates of Deposit

  • Pentagon Federal Credit Union is offering 3-year, 4-year, and 5-year CDs at 4.75% APY. If you aren’t a member, you can join the NMFA for a one-time fee of $20.
  • WaMu actually has a 5-year CD at 5% APY. Not bad if your mortgage is under 5%. Their liquid savings account continues to drop steadily (as we were afraid of) and is now only paying 1.50% APY.
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Free Lift Ticket To Park City Utah Ski Resort

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Planning a trip to Park City, Utah? I am for a conference coming up, and I found a promotion where you can get a free lift ticket to any Park City ski resort on the day that your arrive. You’ll need to bring your boarding pass and fill out a voucher form online. Looks like I need to book a flight that arrives early!

You will need to bring the completed, required redemption voucher, along with your same-day boarding pass and out of state photo I.D., to the resort ticket window, to receive your same-day lift ticket. Quick START offer valid: Respective resort opening – 12/24/08, 1/4/09 – 2/13/09, and 3/29/09 – 4/12/09.

Other than that, the lift tickets seem pretty pricey. $85 during peak season? Ouch. I found some potential discounted tickets at Liftopia and Canyon Sports. Any other tips for skiing on the cheap at Park City? I also need to figure out how much Delta Airlines charges to check in ski bags nowadays.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Good Time To Ask About Refinancing Your Mortgage: I Might Save $50,000!

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

With the rate drop yesterday, mortgage rates are at amazing lows. People in the office are bragging about locking in 4.50% mortgage rates with no points, or 4.25% with 1 point. While I haven’t done a lot of in-depth research on this topic, I would agree that right now is a good time to explore your options. (Especially if you have a good credit score and a loan-to-value ratio below 90%.) My favorite source for helpful mortgage info remains the Mortgage Professor.

Breakeven Calculators
The main cost of a mortgage refinance are the points and settlement costs (appraisal, etc.). The primary benefit (when you aren’t trying to pull cash out) is a lower monthly payment. This way, you can find a break-even point after which you save money with the refinance, say 20 months. Obviously, you’ll want to be confident that you’ll be holding the loan longer than that. Here are two breakeven calculators: one and two.

If you want instant savings or are just short on cash, you can attempt to find a “no cost” refinance, where you get a rate with negative points that actually cover your upfront costs. Even better, to avoid funny business later, find a lender that actually guarantees that they will cover all settlement costs. However, your rate might not be the best.

After reading up on some articles on the Professor’s website, here seems to be a possible action plan:

  1. Check with competitors first to get an idea of what combination of rates and closing costs you can get. Try an Upfront mortgage broker or lender.
  2. Armed with this information, call your loan servicing company and ask about your remaining loan balance. Casually ask what could be done with the current low rates. If needed, use your rates collected previously to let them know you’re shopping around and make them go one better. Your existing lender may have more flexibility in waiving and/or reducing fees.
  3. Ask for a loan modification if your lender has not sold the loan, and are servicing it themselves (see below).

My Refinance Attempt

I am in the least common situation, where I got my loan through a community bank who did not sell the loan. They are both the lender and servicing agent. Thus, they are very interested in keeping my loan and not losing it to a refinance. After talking to them, the refinance route was not looking too good, and so they offered me a rate reduction instead. I got to keep my same loan with the same remaining term length, but the rate would be reduced from 5.625% down to 5.125% for a $500 fee. Neither of us has to pay for an appraisal, title insurance, document fees, recording fees, or another mortgage broker commission.

After running the numbers, I would be saving $150 per month, which would give me a break-even period of only 4 months! The catch: I had to lock today to get it guaranteed, and I could not lock again for 30 days. I decided to not to be greedy and locked it in (at no cost). I should get the paperwork tomorrow. If I have a $150 lower monthly payment for the next 29 years, that’s a potential savings of $50,000! ($150 x 12 x 29, but less if you calculate back to present value…)

It’s almost too good to be true, considering I don’t have to try and go through the hassle of a refi. In fact, since I paid points to lower my mortgage rate initially, I thought my chances for a profitable refinance were slim to none. Now, I still have to look at the fine print, so this is not a done deal.

Again, I am not an expert on this stuff. But given the weird situation we have right now, if you have a mortgage professional that you trust, you might want to give them a call. This one phone call today saved me tens of thousands of dollars. I just read a newspaper article that they have gotten more loan requests in the last two weeks than they have had in the last 11 months! So while they are busy again, they are less likely to take your business for granted.

Good luck, and share your success stories below! Oh, and if you missed it before, you can read about our (long) first-time home-buying experience here.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Worry-Free Investing: Calculate Your Risk-Free Savings Rate For Retirement

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Conventional advice has been that we should invest in some mix of stocks and bonds to reach our retirement goals. But as we’ve seen, rolling the dice on a varying return distribution every year can be quite stressful. What if we start our retirement planning based on buying a safe investment that guarantees a steady after-inflation return instead? This question is posed in the book Worry-Free Investing by Bodie and Clowes.

Treasury Inflation-Protected Securities (TIPS) are bonds that promise you a total return that adjusts with the CPI index for inflation. Very generally, it works like this: if the stated real yield is 2% and inflation ends up at 4%, your return would be 6%. TIPS are issued and backed by full faith of the U.S. government, so they are as safe as they get. As your investment the automatically adjust with inflation, you will never have to deal with the stomach-churning swings of stocks, and also you avoid the risk of underperforming inflation that traditional (nominal) bonds have.

How much would you have to save if you decided to take zero market risk and invest solely in TIPS? The book outlines the mathematical formulas to use, but also provides a free spreadsheet calculator to do the heavy lifting for us. I uploaded it to ZohoSheets:

I would recommend playing with the numbers a bit. To start, the book was written in 2003 when the real rates were relatively high at around 3%. Given the recent history of the 20-year TIPS yield (shown below), I would assume a maximum of a 2.5% real interest rate.

I would also change the replacement rate to something that more closely tracks your specific expected expenses. The book recommends the income required to maintain your “minimum acceptable living standard”. For the skeptical and/or early retirees, don’t put in anything for Social Security. Finally, don’t forget to input your current savings.

You now have your personal risk-free savings rate to reach your goals. (Warning: It might be really high! If so, try retiring at 65 and input something for Social Security.) But let’s say you need to save 10%, but you are able to save 15%. You could put the 10% in the ultra-safe TIPS, and put the other 5% in something riskier to boost your returns while still guaranteeing a minimum future income. I’ll share a possible solution from the book once I get access to a flatbed scanner.

Now, there are lots of potential glitches with this simulation. For one, there is reinvestment risk because the TIPS real interest rate will continue to vary, and could drop to much lower levels. The government could even conceivably stop selling new TIPS at any time. Some people are skeptical that the CPI properly tracks inflation. Finally, TIPS are taxed at ordinary income levels, so one should keep them in tax-advantaged accounts. However, most people’s 401ks don’t include TIPS as an option! Otherwise, taxes are going to hurt returns.

In the end, I think a portfolio of 100% TIPS is impractical for most people. However, I definitely like TIPS as a component, and see this thought process as a way to estimate a “target” savings rate that can let those so-inclined to take less risk and sleep better at night.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Dogbert The Financial Advisor

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.