Archives for November 2013

Charts: Credit Card Debt and Household Debt Trends

Posted on November 17, 2013 // 13 Comments

Here is an interesting Quartz article by Matt Phillips outlining “the most important change in the US economy since the Great Recession that nobody is talking about”. I don’t know about that, I’ve seen a lot of these charts before. But many include more recent data, and below are a few of the notable ones. (Note the truncated scales on several of the vertical axes.)

The overall theme is that household debt levels appear to be settling at a more sustainable level. Household debt service payments as a percentage of disposable income are at their lowest levels in over 20 years:


(click to enlarge)

Breaking this down a bit, we see that total US credit card debt has been dropping pretty consistently since 2009 and remains lower than 2003 levels:

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Filed Under: Credit Cards, Debt //

Shoprunner Membership with American Express

Posted on November 17, 2013 // 11 Comments

Update: American Express is now offering Shoprunner if you enroll at ShopRunner.com/AmericanExpress and agree to keep your AmEx card as the default payment method for their Express Checkout feature. You can still choose to use another credit card for any specific purchase. I didn’t see this as a big deal as in May 2013 they already offered a year-long subscription for free, and who knows how long Shoprunner itself or this AmEx partnership will last.

Shoprunner is similar to Amazon Prime in that it offers unlimited free 2-day shipping with no minimum order amount from a variety of online merchants including Newegg, Babies R Us, Blue Nile, Sports Authority, Drugstore.com, and GNC. It also allows you free return shipping and the ability to ship to any address, making it handy for gifts. You can also get free delivery from Domino’s pizza.

You’ll need a consumer or business American Express card issued by an AmEx-affiliated bank (Starwood Preferred yes, Blue Cash Preferred yes, Business Gold yes, Costco yes, FIA/Fidelity no, Citibank no, prepaid versions no).

I’ve used my membership a few times to send gifts from Babies R Us, although I wouldn’t pay $79 a year for it.

Filed Under: Credit Cards, Deals & Offers //

$30,000 Beat-the-Benchmark Experiment – One Year Update, Prosper and LendingClub

Posted on November 12, 2013 // 7 Comments

After posting Part 1 yesterday, here is Part 2 of my Beat-The-Market experiment one-year update. In order to test out P2P lending, 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.

I tried to keep these portfolios comparable in terms of risk level, while still trying to maximize overall return net of defaults. I reinvested any new money from interest and early loan payoffs regularly for the first several months, but recently I stopped reinvesting my money as aggressively as I was thinking about selling everything (also LendingClub inventory was a little sparse at times). I ended up with $1,044 of idle cash at LendingClub and $862 at Prosper. More on that later.

$5,000 LendingClub Portfolio. As of November 1st, 2013, the LendingClub portfolio had 218 current and active loans, 28 loans that were paid off early, and none in funding. Two loans are between 1-30 days late. 6 loans ($126) are between 31-120 days late, which I will assume to be unrecoverable. Three loans have been charged off ($69, two A-rated and one C-rated). $1,044 in uninvested cash. Total adjusted for late loans is $5,304.


(click to enlarge)

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Filed Under: Investing, Monthly Updates //

$30,000 Beat-the-Benchmark Experiment – One Year Update, Part 1

Posted on November 11, 2013 // 6 Comments

It’s finally been a full year since starting my Beat the Market Experiment, a series 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 class of person-to-person loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

I’m splitting this summary up: Part 1 will focus on the Benchmark vs. Beat-the-Benchmark results. Part 2 will include the P2P lending performance. Values given are as of November 1, 2013.

$10,000 Benchmark Portfolio. I initially put $10,000 into index funds at TD Ameritrade due to their 100 commission-free ETF program that includes free trades on the most popular low-cost, index ETFs from Vanguard and iShares. With no minimum balance requirement, no maintenance fees, and no annual fees, I haven’t paid a single fee yet on this account. The portfolio used an asset allocation model based on a David Swensen model portfolio, which I bought and held through the entire yearlong period.

The total portfolio value after one year was $12,095, up 21%. Here’s how each separate asset class fared from November 1st, 2012 to November 1st, 2013 (excluding dividends):

  • Total US Stocks +$986 (+25%)
  • Total International Stocks +$588 (+15%)
  • US Small Cap Stocks +$150 (+30%)
  • Emerging Markets Stocks -$3 (-1%)
  • US REIT +$72 (+7%)

Screenshot of holdings below:

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Filed Under: Investing, Monthly Updates //

SavedPlus Review: Automated Savings Linked to Spending

Posted on November 6, 2013 // 8 Comments

You’ve probably heard the adage “pay yourself first”. Well, now there is a website that will help you essentially tax yourself first. Recently mentioned in Businessweek magazine, SavedPlus.com tracks your spending and automatically transfers a set percentage of whatever you spend into your savings account.

Let’s say you choose a 10% preset savings and spend $75. SavedPlus will then transfer $7.50 from your checking account into your savings account. (In practice, the transfers are only done once a week.) This is an interesting way to force yourself to save, and perhaps knowing you’ll have to set aside extra will keep you from spending so much in the first place. You will have to provide your financial passwords for them to track everything. They claim the usual security precautions, using Yodlee for account aggregation. iOS and Android apps are also available.

After playing with it for a couple of days… so far I felt the interface to be a bit clunky and it took me a few tries to get my accounts linked up properly. It’s just not as polished as say Mint.com. A handy feature allows you to link credit card(s) to track spending; you don’t have to buy everything with your checking account debit card.

Expired $100 bonus offer. Their new Christmas promotion offers to match up to $100 your SavedPlus savings as of December 15th, 2013. You have to follow the directions carefully to set it up and it is limited to the first 100 new users, but otherwise it appears to be a pretty easy 100 bucks and they provide enrollment confirmation so you know you’re in. There is no need to change your spending habits at all. The promo worked, it got my attention!

Filed Under: Deals & Offers, Frugal Living //

Healthcare Flexible Spending Accounts $500 Carryover

Posted on November 6, 2013 // 4 Comments

The U.S. Treasury recently announced that participants in Healthcare Flexible Spending Accounts would now be able to carry over $500 of unused funds into the next year, but only if your employer chooses to allow it. Employers can allow either a 2.5 month grace period after the end of the year or the $500 rollover, but not both. Or they could be punks and offer neither. This could start as early as this year for 2013 funds.

I like the proposal that these “use-it-or-lose-it” FSAs be simply rolled into Health Savings Accounts which are currently only available to those with high-deductible health plans. The infrastructure and administrators (bank and brokerage holding accounts) already exist, and that way people can simply set aside some tax-protected money for health care for an indefinite period without worrying about losing it. Don’t make people predict their own medical expenses, that’s the main reason we need insurance.

Filed Under: Frugal Living //

Google Hangouts iPhone App: Free Voice Calls and Google Voice Compatibility

Posted on November 5, 2013 // 7 Comments

Google announced a few days ago that third-party apps will no longer work with Google Voice as of May 15, 2014. I already updated my Obihai post, but this will also affect those people who make voice calls over data with GrooveIP or similar smartphone apps.

The good news is that Google has stated that it wants to fully integrate Google Voice into their own mobile apps so that you can make free voice calls and SMS over data. (Well, I’m not sure about the free part. Given how late it is in the year, I think it will stay free for another year at least.)

The Google Hangouts app for iPhone/iOS has been updated to add free voice calls over WiFi and cellular data (anywhere in the US and Canada) and Google Voice integration. I downloaded it and it worked well. Incoming calls to my Google Voice number rang directly to my phone screen. I can make outgoing calls from inside the Google Hangouts app, and the person I call sees my Google Voice number on their Caller ID. Voice quality was good, although I was on WiFi at the time. So far, SMS/MMS/voicemail are unavailable.

This makes Google Hangouts a good alternative for iPhone owners on the T-Mobile $30 a month Unlimited Data Plan or for those on minimalist pay-as-you-go plans as you can make free voice calls over WiFi. Works on iPod Touch too.

Similar functionality is supposedly coming to Android phones “early next year”. I would hope this means before May 15th.

Filed Under: Frugal Living //

Obihai + Google Voice = Free Home Phone Service Until End of 2013

Posted on November 5, 2013 // 10 Comments

(Update November 2013: Google announced a few days ago that third-party apps like Obihai and GrooveIP will no longer work with Google Voice as of May 15, 2014. Obihai confirmed this on their official blog, while stating that your box will still be compatible with many other low-cost VoIP providers. It looks like Google wants people to do the free calling via their own apps…)

Original post December 2012:

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Filed Under: Deals & Offers, Frugal Living //

Pentagon Federal Offering 3-Year CDs at 2.02% APY

Posted on November 4, 2013 // 3 Comments

Pentagon Federal Credit Union is now offering 2.02% APY rate on it’s 3, 4, 5, and 7-year CDs (they call it a Money Market Certificate). The minimum opening deposit is $1,000. Early withdrawal penalties are as follows:

  • For terms from 6 months to 4 years, you will lose the last 180 days of interest. If you haven’t earned 180 days of interest yet, you lose all the interest and get back only your opening amount.
  • For terms of 5 years or longer, you will lose the last 365 days of interest. If you haven’t earned 365 days of interest yet, you lose all the interest and get back only your opening amount.

As a credit union, you must meet their eligibility requirements to join. Basically all members of the military and their immediate families are welcome, as well as many other military-related groups. Otherwise, simply become a member of the organization Voices for America’s Troops. Membership costs $15/yr, and you don’t need to renew to remain a PenFed member. “Voices for America’s Troops advocates for a strong national defense, including sustaining and improving quality of life programs for America’s troops, their families and survivors.”

(I ran a search through the blog archives and found a post about PenFed offering 6.25% APY 3-year CDs back in late 2006. I wonder how long until we see rates like that again?)

Filed Under: Banking, Deals & Offers //

US Savings Bonds November 2013 Update

Posted on November 3, 2013 // 9 Comments

One more quick savings bond update… the official rate for new I Savings Bond was announced and the variable rate is indeed 1.18% but the fixed rate was a surprise at 0.20%. It’s still very small, but the last time we got a rate slightly above inflation was May 2010.

This means that if you buy a I Savings Bond from November 2013 to April 2014, you will earn 0.20% + a variable rate based on inflation updated every 6 months. The first six month variable rate is 1.18%, so your total rate for the first six months is 1.38%.

Short-term CD replacement? If you wanted to use this bond like a short-term CD, at the very minimum you would be guaranteed 6 months at 1.38% and then 0% after that. If you assume you buy at the end of November and hold for 11 months to maximize interest, with the 3-month early withdrawal penalty your effect annual rate would be approximately 0.75%. That’s not a bad floor considering that the minimum scenario would only occur if we had mild negative inflation (deflation).

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Filed Under: Savings Bonds //

Consistently Top-Rated 529 Plans: Morningstar Gold and Silver Ratings 2010-2013

Posted on November 1, 2013 // 11 Comments

Investment research firm Morningstar rates 529 plans in their annual “529 College Savings Plans Research Paper and Industry Survey”. They recently announced their top plans from the 2013 survey, although it appears the full study and state-specific analyst reports are only available in their paid Premium section. Below, I have listed all of the top-rated plans from each of the 2010-2013 survey years, including which plans were consistently top-rated all four years.

Morningstar now uses a Gold/Silver/Bronze rating scale for the top plans and Neutral/Negative for the rest. (In 2010 and 2011, they employed the same methodology but used Top, Above Average, Average, Below Average, and Bottom. Top is now broken up into Gold and Silver, and Above Average is now Bronze.) The criteria include five P’s:

  • People. Who’s behind the plans? Who are the investment consultants picking the underlying investments? Who are the mutual fund managers?
  • Process. Are the asset-allocation glide paths and funds chosen for the age-based options based on solid research? Whether active or passive, how is it implemented?
  • Parent. How is the quality of the program manager (often an asset-management company or board of trustees which has a main role in the investment choices and pricing)? Also refers to state officials and their policies.
  • Performance. Has the plan delivered strong risk-adjusted performance, both during the recent volatility and in the long-term? Is it judged likely to continue?
  • Price. Includes factors like asset-weighted expense ratios and in-state tax benefits.

Consistently Top-Rated Plans 2010-2013

  • T. Rowe Price College Savings Plan, Alaska
  • Maryland College Investment Plan
  • Vanguard 529 College Savings Plan, Nevada
  • CollegeAdvantage 529 Savings Plan, Ohio
  • CollegeAmerica Plan, Virginia (Advisor-sold)

Gold and Silver-Rated Plans 2013 (source)

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Filed Under: College & Education, Investing //
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