Archives for April 2014

Free eBooks on Real Estate Investing and Renting Out Your House

Posted on April 7, 2014 // 2 Comments

biggerbookBiggerPockets.com is a popular discussion forum for real estate investors. Founder Joshua Dorkin and Senior Editor Brandon Turner have also written a couple of books about the subject. For a limited time, they are free in Amazon Kindle format.

I have not read either book (yet). According to the Amazon reader reviews, it looks like there is some solid beginner information inside both books along with numerous references back to their BiggerPockets website. I believe the first book is also available as pages on their website but it may be easier to read this way.

Download the books now while it is still free and read them later. As a reminder, you can read Kindle books on a web browser, Mac or Windows computer, tablet, or smartphone.

Filed Under: Deals & Offers //

American Express AmEx Everyday and Amex Everyday Preferred Credit Card Review

Posted on April 3, 2014 // 11 Comments

amexeverydayAmerican Express has just introduced two new rewards credit cards called the AmEx Everyday and AmEx Everyday Preferred. Note that these are NOT the same as the Blue Cash Everyday and Blue Cash Preferred cards. They are worth a look as they offer a unique rewards structure, although it can be a bit tricky to maximize their value. Here is my review and comparison with similar cards.

Both are credit cards that let you carry a balance, as opposed to charge cards that make you pay in full each month. However, they both earn “real” Membership Rewards points just like the traditional Gold or Platinum charge cards. This means the points can be transferred to 17 different airlines including British Airways, Delta, and Hawaiian Airlines and 5 hotel loyalty programs. Otherwise, you can get about 1 cent per point when used with their “Pay with Points” feature or if converted to gift cards (Home Depot, Gap/OldNavy/Banana, Zappos, etc). Here’s how they differ:

Amex Everyday Credit Card

  • Sign-up bonus: 10,000 Membership Rewards points after you use your new Card to make $1,000 in purchases within the first 3 months.
  • 2x Membership Rewards points at US supermarkets (up to $6k in purchases per year), 1x points on other purchases..
  • Possible 20% bonus on points earned. Use your Card 20 or more times on purchases in a billing period and get 20% more points on those purchases (less returns and credits).
  • No annual fee. No annual fee for additional cards.

Amex Everyday Preferred Credit Card

  • Sign-up bonus: 15,000 Membership Rewards points after you use your new Card to make $1,000 in purchases within the first 3 months.
  • 3x Membership Rewards points at US supermarkets (up to $6k in purchases per year), 2x points at US gas stations, 1x points on other purchases.
  • Possible 50% bonus on points earned. Use your Card 30 or more times on purchases in a billing period and get 20% more points on those purchases (less returns and credits).
  • $95 annual fee. No annual fee for additional cards.

In order to maximize your rewards earned, you’ll need to makes 20 purchases on the no annual fee version or 30 for the Preferred version. For most people, that means this card has to be your primary card. Otherwise, you may have to work a little to meet that hurdle. You might buy some small Amazon.com gift codes, take a few extra trips in that self-checkout line, spend some extra time pumping gas, or pay your cell phone bill in small chunks. The good news is that you can track your purchase count easily with the AmEx mobile app designed to work with this card.

Both cards also have a EMV smart chip, but unfortunately foreign transaction fees are not waived. I’m guessing that is because this is an “everyday spending” card and not a “travel rewards” card.

The problem is that in order to maximize the total value of this card, you’ll have to get more than 1 cent of value out of a Membership Rewards point. Because even with the boosts, at 1 cent per point the most value you could earn with the is 2.4% back on groceries (Everyday no annual fee) or 4.5% back on groceries and 3% back on gas (Everyday Preferred $95 annual fee). Yet the existing Blue Cash Everyday card already gets you 3% cash back on groceries and 2% cash back on gas with no annual fee, and the Blue Cash Preferred gets you 6% back on gas and 3% back on gas with a $75 annual fee.

However, if you can get around 1.5 cents of of value out of a Membership Rewards point by converting it to airline miles, this card becomes better than the Blue Cash cards. The numbers then work out to 3.6% back and 6.75% back on groceries, respectively. That’s pretty solid. (Break-even value is 1.25-1.33 cents per point.) So while it is not marketed as a travel rewards card, it is really only best for people who can redeem their points efficiently via airline miles. Make sense? 🙂

Filed Under: Credit Cards //

Frugal Mattress Shopping Tips and Our Experiences

Posted on April 2, 2014 // 38 Comments

mattsmallShopping for a new mattress bed is confusing and annoying. Sadly, that’s exactly how it was designed to be. This Slate article talks about this maddening process and offers a few tips:

  1. Mattress makers intentionally hinder comparison shopping by selling the exact same product with unique names for each individual store.
  2. Higher coil counts are not a good indicator of quality. More coils may simply use thinner gauge metal wire.
  3. Pillowtop foam materials are cheap and a huge source of profit. Mattress thickness is thus also not a good indicator of quality.
  4. There is no evidence that box springs are necessary or even helpful, other than to raise the height.
  5. Firmer is not always better for your back. You just don’t want it too soft or too firm. Each person needs to find their own optimal firmness level.

Also see: Consumer Reports

Our Mattress Shopping Experience

The last time we did frugal mattress shopping was 7 years ago. We ended up with a Simmons Beautyrest mattress from a Simmons World of Sleep mattress outlet. It was a mid-tier mattress with a super-thick pillow top layer and cost $700 while comparable mattresses were $1,500 and up. It was so high that we had trouble finding sheets big enough to fit it. (We were trying to replicate the Westin Hotel Heavenly Bed.) We liked that mattress a lot, but we decided to move it into the guest bedroom. Unfortunately, it appears that there are now only three such outlets remaining in the entire US – Atlanta, Dallas, and Seneca, SC.

We tried to buy a comparable Simmons mattress, but after visiting a few local showrooms I was so annoyed at the obfuscation and overall skeeziness that I just went to our local Costco and bought the only flavor available. The Sealy Posturepedic Newfield Cushion Firm Cal King set with two twin box springs cost $900. Not a bad price, but after just a week my back was hurting and the bed felt like it was sagging in the middle. We returned it to Costco and got our money back (though it took some effort to secure it on the top of my car). This route may work for some people, but the mattress was not for us.

I decided to go back to a Simmons mattress and looked into buying online. Check out this comparison chart from US-Mattress.com:

usmatt

I am supposed to accept that they control the expected durable lifetime that finely between 11 and 17 years? “This mattress will last 13 years, but this will last 14 years”. Please. Even if they could, why would they bother with the extra engineering and assembly line tweaks involved. I bet the $700 mattress is exactly the same inside as the $1,150 mattress (both with 800 coil count, pocketed coils, edge foam encasement, blah blah blah). I considered just buying the $700 mattress ($879 for Cal King). My sister actually bought a mattress from US Mattress earlier in the year and was satisfied with the experience.

However, I ended up shopping locally at yet another “sale” and found what appeared to be a very similar Simmons Beautyrest Firm mattress for also around $850 for a Cal King. That way I was able to at least lie down on it and compare with others. We had a wooden mattress platform so we didn’t need a box spring and saved a few more bucks.

The final touch? We bought the NovaForm® 3″ Pure Comfort Memory Foam Mattress Topper for about $150. The reviews seem positive overall and after sleeping on it for a while we found it to be very comfortable. There was a little plasticky odor in the beginning but it disappeared quickly. The only real quibble is that it tends to shift on top of the bed and so you have to reposition it every so often. I’ve thought about spraying the bottom with hair spray or some sort of tacky adhesive to solve that problem. Otherwise, we like it even more than our previous mattress.

In the end, I like the idea of buying a firm mattress (the “bones”) separately from the padding material (a replaceable “skin”). Our 11″ firm mattress + 3″ memory foam topper meant a 14″ total height. Buying a 14″ pillowtop “luxury” mattress would have cost between $300 and $1,000 more and I doubt that we would be able to tell the difference.

Filed Under: Frugal Living //

How To Never Retire: Cash Out Your 401(k) When Leaving a Job

Posted on April 1, 2014 // 17 Comments

I mentioned Charlie Munger and his principle of inversion in a recent book review. Sometimes the best solution to a problem comes by approaching it backwards. You can learn more about it by reading the transcript from Mungers’ 2007 USC Law School Commencement speech. An excerpt:

Let me use a little inversion now. What will really fail in life? What do you want to avoid? Such an easy answer: sloth and unreliability. If you’re unreliable it doesn’t matter what your virtues are. Doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability.

What can you do to never retire? The broad answer is to never put anything aside for later. A specific answer is to cash out your retirement plan whenever you get the opportunity (i.e. when you leave a job).

Seems simple, right? But according to 401k behemoth Fidelity Investments, more than one third of all participants (35%) cashed out their 401(k) balances when leaving their job in 2013 (source). Among workers aged 20 to 39, a whopping 41% cashed out their 401(k) balances!

Cashing out before age 59.5 means you owe income taxes on the entire withdrawal amount immediately plus an additional 10% penalty. You only get allotted a certain amount of contributions to a tax-advantaged account each year, so that’s even more potential money washed down the drain.

I repeat, the most important thing to do is not cash out your 401(k). What you actually do with it instead is also worth some discussion:

  1. Roll it over into an IRA. I would say for most people, it is best to roll it over to an IRA at your own custodian. Brokerages like Vanguard, Fidelity, TD Ameritrade, and Schwab all have IRAs that feature low-cost ETFs and numerous other options (Barron’s broker rankings). They all want your money desperately, so if you have any problems at all, just call them up and ask for some help. My mom recently moved her 401k into a IRA at Vanguard and the Vanguard phone rep helped her through everything step-by-step.
  2. Keep it at your old employer. This may or may not be an option, but if you have a decent plan you could just leave it there for a while. Leaving assets in a 401(k) may allow you do contribute to a “Backdoor” Roth IRA for those people with high incomes.
  3. Move it to your new employer. It is harder to think of a compelling reason to do this these days. It used to be that some plans offered cheap institutional shares but now most ETFs already offer rock-bottom expense ratio. But again, you may want your assets to stay in a 401(k) and not an IRA for Pre-Tax IRA to Roth IRA conversion purposes.
Filed Under: Retirement //
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