Archives for March 2013

Stumbling On Happiness by Dan Gilbert – Book Review

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.

Stumbling on Happiness by Daniel Gilbert is in many ways like other popular behavioral psychology books. It’s a New York Times bestseller. It tends to list a lot of ways that humans behave irrationally or incorrectly as shown by academic studies. The writing is casual and accessible. It even has blurbs by other very popular authors like Steven Levitt, Malcolm Gladwell, and Daniel Kahneman.

This book was actually published back in 2007, but I came across a cheap used copy recently and bought it because it had “happiness” in the title. I was interested to see these behavioral quirks applied to happiness instead of the usual economics and money. Here are my notes.

What makes humans different than all other animals? Gilbert posits that humans are the only animals to think about the future. Some animals may do things by instinct like squirrels hiding nuts, but you’ll only find humans getting excited about planning their summer vacation, or fretting about being broke in their old age. I’ve never thought of it that way.

Using our imagination. How do we find out what will make us happy in the future? We use our imagination. But in a nutshell, our imagination isn’t very good.

To start, we don’t remember the past very well. We tend to leave some stuff out and also to fill in other details, all without knowing it. (This can’t be good for eyewitness testimony.) We think something is worth a lot more on the open market if we’ve owned it before (books, cars, stock shares, etc.)

Imagining the future is even worse. We believe that we’d be completely depressed if we were part of a conjoined twin, but actually most conjoined twins are quite happy and have no desire to be split up. The same holds true of many disabled individuals. Here’s another example. Would you rather have $20 in 365 days or $19 in 364 days? Most people choose the $20. But 364 days later, if given the choice again, much more people would choose $19 today vs. $20 tomorrow. The pain of waiting one-day is always the same, it just seems different depending on how your imagination looks at it.

Gilbert also points out that the data we have suggests that having children actually doesn’t bring happiness. Figure 23 in the book (see below) combines data from four different studies that show that marital satisfaction drops after birth and only increases again when the child leaves home. He says that society needs us to believe children bring happiness or else there would be no society. Hmm… I don’t know about this one.

The book ends a bit flat, as the conclusion is that the only way to know if something will make us happy in the future is to ask someone else experiencing the exact same thing right now. The problem is that as humans, we tend to think we’re snowflakes and that possibly can’t be true. (Except it does tend to be true, especially when you ask enough people.) Even the author admits that this is unsatisfying. Other than that, the best we can do is to simply acknowledge that our imaginations are imperfect.

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.


Split by GroupMe: Collect Money From Groups – No Fee Promotion

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.

GroupMe is a group-texting smartphone app with a new feature called Split which allows you to collect payments from groups via credit card (collecting rent from roommates, splitting a bar tab, chipping in for a friend’s birthday gift, etc.). The regular fee for this service will be 4% + $0.99, which covers credit card processing fees plus some profit for GroupMe. The cost for this convenience seems rather steep for regular use, other than maybe splitting a rare dinner bill when I don’t have cash.

However, until Tuesday, March 12th at 11:59PM CST, all fees are waived. Naturally, airline miles collectors love this and a few quickly decided to split a Ford Mustang between friends at $10,000 a pop. 😉 So the free offer was restricted to apply to the first split transaction up to $499 per person. I like trying things like this out, and it was still worth the 10 minutes to get 998 miles and also be able to satsify basically $1,000 of spending requirements on a few $500+ bonus credit cards (these, actually). Here’s how I did it with two smartphones (me and wife).

  1. Both Phone #1 and Phone #2 install the GroupMe app, linked to their respective phone numbers (must verify phone number via text message).
  2. #1 invites #2 into a group and starts a “Split”, let’s call it Paris Vacation Tickets, set to $499 per person.
  3. #2 joins group, and pays $499 with credit card (verify no fees).
  4. #1 started the split and so can’t pay themselves (bummer). You could involve a Phone #3 here, but instead you use your computer to visit the custom split link sent to you via e-mail (http://split.groupme.com/XXXXXX) and choose “Pay without can account.” #1 then pays $499 with their credit card (even if linked to same account). If more people wish to pay, you can also do with the custom link.
  5. Now that two people have paid (minimum required is two), #1 “collects” by entering their bank account information. $499 will be then charged to the two credit cards (again verify no fees with this promo), and confirmation is given that the $998 will be deposited into the bank account in 3-5 business days.
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.


2013 New Year’s Resolution: Get Our Crap Together

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.

It’s already March, and I’ve yet to make a New Year’s resolution. Then along comes this NY Times article about a mother of two who’s young, healthy husband was killed while simply riding his bike:

In the many months of suffering after Mr. Hernando’s death in July 2009, she beat herself up while spending dozens of hours excavating their financial life and slowly reassembling it. But then, she resolved to keep anyone she knew from ever again being in the same situation. The result is a Web site named for the scolding, profane exhortation that her inner voice shouted during those dark days in the intensive care unit. She might have called it Getyouracttogether.org, but she changed just one word.

The site offers some basic financial advice, gives away free templates for a master checklist and provides starter forms to draft a will, living will and power of attorney. There’s also a guide to starting a list of all of the accounts in your life that someone might need to access and shut down in your absence.

Let’s be direct; The site is GetYourShitTogether.org. The site is okay, but I felt the story itself was more powerful.

After his death, this much was clear: The family with the six-figure income and the four-bedroom house that they had bought in the Mount Baker neighborhood one year before had a will with no signature, little emergency savings and an unknown number of accounts with passwords that had been in Mr. Hernando’s head.

I haven’t blogged about this as it brings up bad memories, but a few years ago a family situation resulted in us each hurriedly bought $1,000,000 of term life insurance. We didn’t comparison shop, I just walked into my State Farm agent’s office and asked to get the insurance as soon as possible. State Farm actually has some of the highest financial strength ratings available (AA S&P, A++ AM Best). The final rates we got were probably somewhat higher than I could have gotten with slightly lower-rated company, but I don’t regret the decision.

Having life insurance along with hefty savings gave me adequate peace of mind for a while, but now with a child I worry about the future differently. We have a lot left to do. We contacted a lawyer friend who specializes in estate planning and trusts to help us with our first will. We talked to family members about child custody if something should happen to both of us. We’re looking into long-term disability insurance beyond what is provided at work. I already track most of our passwords using software (1Password), but after reading this article I’ve been filling in the gaps in the database and quizzing my wife every day to make sure she knows the master password.

We are one of those households where one person takes on all the financial duties. I pay the bills, track our monthly budget, and manage our retirement investments. I need to teach her the essentials and lay out a simple plan for managing things if I’m not around one day. I don’t worry about the spending as she is a frugal and smart person, but I have nightmares of some high-cost, low-quality financial salesperson mismanaging her money. Lots of smart people end up trusting the wrong person. I thank Mrs. Reynolds for helping me make my 2013 resolution.

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.


$10,000 P2P LendingClub / Prosper Loan Portfolio Update – March 2013

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.

Here’s the 3rd and last piece of the monthly updates for my Beat the Market Experiment, a set of three real money portfolios started on November 1st, 2012. See also my $10,000 Benchmark and $10,000 Speculative portfolio updates for March 2013.

For this one, I started with $10,000 split evenly between Prosper Lending and Lending Club, and went to work lending other people money and earning interest with an 8% target net return.

$5,000 LendingClub Loan Portfolio. Below is a screenshot of my LendingClub account as of 3/1/13. I’ve had loans at LC before, but sold them all on the secondary market and started fresh for this tracking experiment. Here are screenshots of my total balance and my portfolio details. I would say my overall risk level is moderate-conservative with mostly A and B rated loans (top two grades).


(click to enlarge)

The portfolio is now 4 months old, with 206 currently active loans, 7 loans that were paid off early, and one is in funding. Two of the active loans are currently between 16-30 days late. The current weighted average interest rate is 12.36%, which means I can lose 4.36% to defaults and still net an 8% return.

I pick loans using a preset filter based on my LendingClub filters post as well as my Prosper filter research noted below. I never spend any time reading individual loan descriptions, as I’m trying to keep this mostly passive and scalable. The filters are saved online and it takes just a minute to reinvest interest, although I still tend to forget until I do these updates. In additional to outstanding loan principal, the account also has $249 in idle cash, $25 in funding limbo, and $38 in accrued interest.

LendingClub.com account value: $5,160 (includes principal + accrued interest, after fees)

$5,000 Prosper.com Loan Portfolio. Below are screenshots of my Prosper account page as of 3/1/13.
[Read more…]

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.


Groupon: Office Depot $10 for $20 Gift Card

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.

Groupon is offering a $20 gift card to Office Depot for $10 (Update: sold out, boo). Valid “at any Office Depot location across the country, and for online purchases”. Also, the LivingSocial Sam’s Club membership deal has been extended for another day (previous post).

Remember that you can save even more with cashback shopping sites like eBates ($5 new customer bonus), Mr. Rebates ($5 bonus), and BigCrumbs.

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.


$10,000 Beat-the-Benchmark Speculative Portfolio Update – March 2013

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.

Here’s the 2nd piece of the monthly updates for my Beat the Market Experiment, a set of three portfolios started on November 1st, 2012. Since this update is rather boring, let me provide an update on the overall experiment:

  1. $10,000 Passive Benchmark Portfolio that would serve as both a performance benchmark and an real-world, low-cost portfolio that would be easy to replicate and maintain for DIY investors.
  2. $10,000 Beat-the-Benchmark Speculative Portfolio that would simply represent the attempts of an “average guy” who is not a financial professional and gets his news from mainstream sources to get the best overall returns possible.
  3. $10,000 Consumer Loan Speculative Portfolio – Split evenly between LendingClub and Prosper, this portfolio is designed to test out the alternative investment of peer-to-peer loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

$10,000 Beat-the-Benchmark Speculative Portfolio as of March 2, 2013. Many people speculate with their money, buying and selling stocks now and then, but they rarely track their performance even though they may brag about their winners. Honest tracking is the primary reason for this “no-rules, just make money” account. I am using a TradeKing account for this portfolio as I’ve had an account with them for a while and am comfortable with their low-cost $4.95 trade structure, free tax-management gain/loss software, and free dividend reinvestment. Here is a screenshot taken from my TradeKing home page 3/2/13 mid-day:

[Read more…]

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.


Amazon Gift Card, Kindle Accessories Promotion

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.

Amazon has a special Kindle promotion where if you buy a certain amount of Amazon gift cards, you’ll get up to 20% back towards qualifying Amazon Kindle accessories in the form of a promotion code (i.e. coupon code). The key here is that “Amazon.com Kindle Accessories Gift Cards” work exactly the same as any Amazon gift card. The offer page reaffirms that you can use them on “Kindle Accessories as well as millions of other items on Amazon.com“.

This is the same fact that allows people to buy Amazon Kindle gift cards at the grocery store for 6% cash back and use them online towards anything at Amazon.

Buy $50-$99.99, get back $10 via promo code
Buy $100-$499.99, get back $20 via promo code
Buy $500 or more, get back $100 via promo code

You must make your purchase by 3/14/13, and you’ll get the promo code by 4/1/13. The promo code is only good towards an unknown list of “qualifying Amazon Kindle accessories” which are sold directly by Amazon. If you already spend this much at Amazon and have a Kindle accessory you want in mind, then front-loading your purchases to get up to 20% back/$100 in “free” Kindle gear may be worth it. Make sure you spend exactly $50, $100, or $500.

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.


Amazon Mom & Baby Promotions: $10 Off Diapers, Coupon 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.

Amazon Mom is a program that has some nice perks for parents if you already pay for Amazon Prime at $79 a year (name is a little sexist, though ;)). The main draw is the 20% off diapers & wipes (5% Subscribe & Save discount + 15% Amazon Mom discount).

Right now, they have a new-member promo for $10 off your first pack of diapers when you sign up for a free 3-month trial. During the trial, you’ll also get the free 2nd-day shipping of Prime but not the video streaming or free Kindle book borrowing. Many people have reported problems stacking the $10 off with the 20% off Subscribe and Save discount, but others have reported success after either changing up the subscription periods or using Amazon’s Help chat feature to manually combine them. If you can stack them, it’s a good deal.

Also, I saw that they are offering a mysterious coupon book of “$100 value” when you buy a qualifying baby book. Has anyone gotten this coupon book yet and is it any good? We currently own the following books on their list (amongst others, we went book crazy):

Now I’m looking for a good baby sleep book. Any suggestions?

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.


$10,000 Benchmark Portfolio Update – March 2013

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.

Time again for a Beat the Market Experiment monthly update, for the first of three portfolios started on November 1st, 2012:

  1. $10,000 Passive Benchmark Portfolio that would serve as both a performance benchmark and an real-world, low-cost portfolio that would be easy to replicate and maintain for DIY investors.
  2. $10,000 Beat-the-Benchmark Speculative Portfolio that would simply represent the attempts of an “average guy” who is not a financial professional and gets his news from mainstream sources to get the best overall returns possible.
  3. $10,000 P2P Consumer Lending Speculative Portfolio – Split evenly between LendingClub and Prosper, this portfolio is designed to test out the alternative investment of person-to-person loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

$10,000 Benchmark Portfolio as of March 2, 2013. My account is held at TD Ameritrade due to their 100 commission-free ETF program that includes free trades on the best low-cost, index ETFs from Vanguard and iShares. I funded it with $10,000 and bought all the ETFs required to be fully invested on 11/1/12. All trades were commission-free.

Here’s a screenshot from my account showing exact holdings and their market value on 3/2/13 mid-day:


(click to enlarge)

Here’s the asset allocation pie chart, tracked with a simple Google Docs spreadsheet:

No new trades over the past month as the allocations are still close to targets. Still no dividends or money market interest. Here is the target asset allocation:

[Read more…]

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.


Sam’s Club Membership Discount – LivingSocial

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.

(Update: Extended for an additional day. Also, if you use them, remember that you can save even more with cashback shopping sites like eBates ($5 new customer bonus), Mr. Rebates ($5 bonus), and BigCrumbs.)

LivingSocial has a special Sam’s Club membership deal where for $45 you can get:

  • 1-year Sam’s Club membership
  • $20 Sam’s Club gift card
  • $19.84 in food vouchers (free Artisan Fresh Rotisserie Chicken, 16″ Artisan Fresh Take-and-Bake Pizza, and two boxes of 6-, 12-, or 24-count Artisan Fresh Cookies)

Expires soon, over 25,000 purchased already. Valid at any Sam’s club location. New members only, which is defined as someone who does not have a currently valid membership. However, it appears that you can wait until June 8, 2013 to actually activate the voucher without losing any value.

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.


Investment Returns By Asset Class – March 2013 Update

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.

Here is my monthly update of the trailing total returns for the major asset classes that I find useful. Passive ETFs are used to represent major asset classes, as they represent actual investments that folks can buy and sell. Return data was taken after market close at the end of February 2013.

Asset Class
Representative ETF
Benchmark Index
1-Mo 1-Year 5-Year 10-Year
Broad US Stock Market
Vanguard Total Stock Market (VTI)
MSCI US Broad Market Index
1.29% 13.89% 5.62% 9.12%
Broad International Stock Market
Vanguard Total International Stock (VXUS)
MSCI All Country World ex USA Investable Market Index
-1.20% 6.98% -0.93% 10.33%
Emerging Markets
Vanguard Emerging Markets ETF (VWO)
FTSE Emerging Index
-1.73% 0.14% 0.34% 16.60%
REIT (Real Estate)
Vanguard REIT ETF (VNQ)
MSCI US REIT Index
1.23% 17.36% 8.00% 12.34%
Broad US Bond Market
Vanguard Total Bond Market ETF (BND)
Barclays U.S. Aggregate Float Adj. Bond Index
0.51% 3.09% 5.41% 5.46%
US Treasury Bonds – Short-Term
iShares 1-3 Year Treasury Bond ETF (SHY)
Barclays U.S. 1-3 Year Treasury Bond Index
0.07% 0.43% 1.65% 2.58%
US Treasury Bonds – Long-Term
iShares 20+ Year Treasury Bond ETF (TLT)
Barclays U.S. 20+ Year Treasury Bond Index
1.29% 3.24% 8.62% 7.17%
TIPS / Inflation-Linked Bonds
iShares TIPS Bond ETF (TIP)
Barclays U.S. TIPS Index
0.01% 4.06% 5.66% 5.9%
(est.)
Gold
SPDR Gold Shares (GLD)
Price of Gold Bullion
-4.61% -10.62% 9.90% 15.9%
(est.)

For an easy visual comparison, here is a chart of the 1-year trailing returns:

March 2013 Trailing 1-year Returns

I like collecting this information because it allows me to keep an eye on the market while still keeping the long-term returns in perspective. Often, the asset classes with the best long-term returns have had recent poor performance. The 1-year chart helps me decide where to invest new funds and also for rebalancing. Note that I do not necessarily invest in all the listed asset classes, see my personal portfolio for details.

[Read more…]

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.