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Weekly Highlights - August 10, 2007
2007-08-10 22:10:00
Another great week around the personal finance blogosphere. I am continually impressed with the quality of articles on other bloggers’ blogs. They make this look easy! Here are my top picks for the week: The Digerati Life gives advice on determining whether to keep or sell stock options. Very important if a large portion of your compensation or bonus is in stock options. Get Rich Slowly discusses the tyranny of stuff. I completely identified with his thoughts on “stuff” once he realized he could live without them. I’ve told my wife that if I wasn’t married with children I could probably live like a monk. (well, I guess I would need a computer and internet access to blog) Blueprint for Financial Prosperity delves into the art of envelope budgeting. I had never heard of this method until I met my in-laws. It worked very well for them. Clever Dude answers my question about why he chose an interest-only mortgage over a fixed rate mortgage. In his ...
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What Do I Need to Retire?
2007-08-10 14:00:00
It’s amazing how much my attitude toward pretty much everything has changed in the last five or so years. Five years ago I didn’t want any children at all. I now have two. Five years ago I wanted to be a consultant that traveled forty weeks a year, so I could see all the great cities in the U.S. Today, it’s difficult to pack up for a week of business travel without my wife and kids. Five years ago I spent money on everything I wanted and saved anything that was left over (if there was anything). Today, I save according to goals I set and spend whatever is left over. That last point is a fundamental difference in mindset between people who end up living comfortably in retirement, and those who struggle with debt their entire life and into retirement (if they CAN retire). Those that spend first and save later feel the need for immediate gratification and think that they will someday get around to saving for retirement. Those that save first and spend later un...
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Dramatically Cut Your Cooling Costs
2007-08-09 05:23:00
A couple of days ago I began putting together a list of easy things you can do to reduce your cooling costs. It appears BankRate.com was looking over my shoulder, because, today, they released an article giving 12 ways to cut cooling costs. Since their list has 12 tips and mine only had 10, I’ll just send you to them! A few of the tips I’m using/plan to use for my home: Use a programmable thermostat I was surprised to find out how little these things cost. It’s definitely worth getting one of these for $50 up to even $200 because you stand to save $100-$200 in the first year alone. I think I’ll go ahead and add that to my shopping list for this weekend. Use ceiling fans One of the first things we did when moving into our new house was install ceiling fans. Besides the obvious benefit of making a room feel more comfortable at higher temperatures, it also makes the air seem fresher. You can pick up a quality fan nearly anywhere for $50 or less. Replace ol...
More About: Cooling , Costs , Amat , Ally , Dram

Real Estate University Setting People Up to Fail
2007-08-07 21:27:00
I read a disturbing article at CNN Money today titled A Last Chance to Get Rich in Real Estate ? The article profiled a real estate investing “university” called Nouveau Riche. This unversity sells real estate investing services and products to those who want to use real estate to achieve financial freedom. At first glance it seems innocent enough, after all there is an entire industry of so-called gurus explaining how anybody can not only get rich in real estate but do so with no money down. But after reading further, it becomes increasingly clear that Nouveau Riche is setting people up to fail. Here are some excerpts from the article and my comments: In April, Cuevas plunked down tuition of $16,000 and attended a weeklong program in Phoenix. …emboldened by her instructors and an advisor assigned by the university, she [bought] - sight unseen in one case - three investment properties through a real estate agency controlled by Nouveau Riche. A couple of things t...
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112th Carnival of Personal Finance is Up
2007-08-06 19:34:00
The 112th Carnival of Persona l Finance is up at The Frugal Law Student. Big thanks to him for organizing the carnival for this week. The number of articles in this week’s carnival is mind-blowing, so grab a drink and some snacks before heading over there. While I enjoyed a large number of the contributions this week, these were my favorites: Dough Roller talks about 10 things he knew at 40 that he wishes he knew at 20. I agree with him on many of his points and have my own list that I may write about at some point. Finance is Personal informs you of five money topics to discuss with your future spouse before you get married. I would say these are the bare minimum of money topics you need to discuss before marriage. You certainly don’t want to have any huge financial surprises! (of course unless they are something like a secret trust fund with millions of dollars in it). Moolanomy explains 35 common sense rules for investing. Bookmark this post and read it every ...
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Maximize Your Paycheck
2007-08-06 15:00:00
When I was a young guy working for a tiny paycheck, I actually looked forward to tax season because I knew I would get a nice chunk of money back from the IRS. I wasn’t aware that the money I was getting back was not actually free money, but was essentially a 0% loan I gave to the government. Today, I take a much different approach. My goal each year is to get exactly $0 (i.e. no money received and none paid) for my tax refund. This takes a little planning at the beginning of each year, but, in the end, it’s worth it. For this example, I will assume my salary will be $70,000 paid weekly, and my taxable income will be $50,000. Here are the steps: 1. Estimate your taxable income This step is a bit of a guess, because the IRS does not give out this year’s tax forms until the end of the year (i.e. tax year 2007’s tax forms won’t be released until approximately October of 2007). I use the previous year’s forms which you can search for at the IRS&...
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Capital One to Report Credit Limits
2007-08-06 05:24:00
Capital One will soon begin to report credit limits to the three major credit bureaus. This is a welcome change from their previous stance of reporting only the outstanding balance. Simply reporting the credit limits is expected to increase the FICO scores of some Capital One credit card holders by 40 to 80 points within a few months. Why? Because “utilization”, or the percentage of outstanding credit card debt divided by the credit limit, is included in the “amounts owed” portion of the FICO score calculation. This portion makes up 30% of a person’s FICO score. From MyFICO.com: How can this affect a person who is getting a loan? Check out the following scenario from the Baltimore Sun: …An increase of just 41 FICO points - from 659 to 700 - would cut an applicant’s mortgage rate quote last week from 7.68 percent to 6.59 percent on a 30-year fixed-rate mortgage of $300,000, according to Fair Isaac Corp., developer of the widely use...
More About: Credit , Report , Limits , Capital One , Capital

Don’t Drive Much? Get a Discount on Insurance
2007-08-05 21:23:00
It looks like technology is finally catching up with consumer demand. Both GMAC and Progressive are beginning to offer discounted auto insurance based on the amount of miles you drive. This has been notoriously difficult to implement in the past, because drivers often lie when giving mileage numbers to insurance companies. Now, new onboard technologies are allowing insurance companies to track your mileage…and other driving habits. GMAC is taking advantage of their OnStar technology to give discounts ranging from 14% for those driving less than 15,000 miles per year to 54% for those driving less than 2,500 miles per year. Progressive tracks mileage and other driving habits using their TripSense program which requires installation of a small device onto a car’s onboard diagnostic port. Customers must then download the information at regular intervals and send it to Progressive. Disc ount s for this program range from 5% to 25%. Hopefully other insurance companies wil...
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Get Your Motley Fool Message Board Invite Right Here!
2007-08-04 05:51:00
As many of you may have heard, the Motley Fool message boards have changed from a pay-per-access to an invite-only access. This is an incredible opportunity to participate in discussions with other top-notch finance and investing gurus. Once you sign up, you are given 20 invites to give out to whoever you want. I received my invitation from My New Choice who was giving out invitations to the Motley Fool message board. For this kind gesture, I have given him a spot on my blogroll. (see the bar to the right) Now, I would like to give my 20 invitations away. To receive an invitation, just leave a comment with your email address, and I will send the invitation. Good luck!Share This
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Weekly Highlights - August 3, 2007
2007-08-04 00:00:00
Another great week of posts around the personal finance blog world. These were my favorite posts this week: Clever Dude shows how he reduced his debt by over $58,000 - Way to go, Clever Dude. Very impressive. Consumerism Commentary gives a list of 50 credit cards offering 0% APR on purchases - Definitely do some extra research for any catches. No Credit Needed talks about 10 inexpensive toys his kids love - My kids like to use empty diaper boxes as racecars and plastic bowls to make pretend food. Mighty Bargain Hunter explains the trick to finding really good deals on housing - I don’t have the patience to wait on my primary residence, but her post is also good when thinking about investment properties. The Digerati Life gives tips to save money on your wedding - My wedding was less than half of the average wedding cost, but I don’t know that there is anything I would add. A reader at The Simple Dollar wants to know how to invest $50 million - Give it to the pros. Th...
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Percentage Deductibles: Coming to a Policy Near You
2007-08-02 21:10:00
Lately I’ve been hearing a lot about insurance companies switching from a flat deductible to a deductible based on a percentage of a home’s value. A couple of my fellow personal finance bloggers - AllFinancialMatters and Beyond the Consumer have made recent posts detailing their dilemmas, and today in the Wall Street Journal there is an article about homeowners being stung by higher deductibles. The percentage deductibles in question are typically reserved for natural events such as high winds, earthquakes, and tornadoes. From what I’ve read, these percentage deductibles seem to be mandatory (in most cases). Even the percentage amount doesn’t sound like it is negotiable. It doesn’t make sense to me why anything on an insurance policy is mandatory. If the insurance company is losing money in areas that have had problems with natural events, they can certainly give percentage deductibles as an option. If the policy holder decides they would rather pa...
More About: Policy , Poli , Ming

High Speed Debt Elimination
2007-08-02 18:23:00
Over the past couple of years, I have been on a mission to eliminate all non-income producing debt from my life (besides mortgage). When I first started this mission, I had not only a ton of credit card debt but also a decent amount of installment debt. This mix made it difficult to figure out which debt I should pay off first. To come up with an answer, I first looked at the most important factors in deciding which debt payoff would be most beneficial: Rate This is one of the obvious factors. If you have a credit card at 14.99% and another at 9.99%, you should pay the higher rate down first. This minimizes the amount of debt you will pay in the long run. It is a bit more complicated to compare the rate of credit card debt to installment debt, because the overall effect of paying them down is not the same. The impact of a payment to the interest that is accrued is similar with each type of debt (all else being equal), but the amount of the next payment will be lowered on the cr...
More About: Debt , Elimination , Speed , High , High Speed

6 Ways to Increase Your Kids’ Financial Intelligence
2007-07-31 23:14:00
My wife and I have been talking a bit lately about when the appropriate time would be to start educating our three year old about money. Thus far she has seemed too young to understand most money concepts, but she likes to put spare change in the money jar and marvel at how full it gets. While at the store, we explain to her that we can not buy the toy she wants because we haven’t set aside the money for it. She seems to be catching on, but we have a huge setback whenever any of her grandparents come for a visit. Overall, I think she has a fair grasp for her age on the basic concept of money. To that end, here are a few things my wife and I plan to do to keep her financially intelligent: 1. Start early Never assume your child won’t understand anything you tell them. Keep reinforcing the basic fundamentals of money. One fundamental that applies at any age is the idea of limited resources. Don’t let them spend more than they have and explain before going to ...
More About: Intelligence , Financial , Finan , Ease , Fina

Don’t Ask for a Raise or You Could Be Shot
2007-07-31 19:33:00
Apparently those looking to increase their income by asking their boss for a raise should be wary. The owner of a car dealership near Atlanta, Georgia shot and killed two employees after they repeatedly asked for raises. I always tell my friends and family to ask for a raise if they feel the deserve it, because the worst the employer could do is say, “No.” I guess I was wrong. See the full story.Share This
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401(k) and Roth IRA Frequently Asked Questions
2007-07-31 15:44:00
This is a continuation of a post at Blueprint for Financial Prosperity called Six Roth IRA and 401(k) Questions Everyone Asks. The following are a few questions I hear often that are very basic but often require some explaining: How much money can I put into my 401(k)/Roth IRA account? The 2007 contribution limit for a 401(k) is $15,500. This amount is indexed for inflation and rises in $500 increments. Those 50 years old or older can contribute an additional $5,000 as a “catch up” contribution. The 2007 contribution limit for a Roth IRA is $4,000. This amount is also indexed for inflation, although it has had the same limit for the past few years. Those 50 years old or older can contribute an additional $1,000 as a “catch up” contribution. Can I take a loan out if I am strapped for cash? Some 401(k) plans allow you to take out a loan and pay yourself back with interest. If, however, you are unable to repay the loan, the loan becomes a distribution and ...

Banks Getting Rich(er) on Overdraft Fees
2007-07-30 16:44:00
According to the Center for Responsible Lending, Americans are getting hit harder than ever on overdraft fees. Their findings show that checking account holders pay more than $10.3 billion (and rising quickly) in overdraft fees every year. To give a sense of the impact to the checking account holders, overdraft fees for a debit card transaction are approximately $2.17 for each dollar “borrowed”, and the overdraft fees for a paper check purchase are approximately $.86 for each dollar “borrowed.” It appears that as debit cards become more prevalent and paper checks go by the wayside, people are forgetting the fundamental skill of balancing their checkbook. Even with the myriad of tools available that allow you to check your balance instantly by phone, at an ATM, or online, many people are continually getting hit hard by these harsh fees. Is this laziness or cluelessness? The banks themselves aren’t doing anything to mitigate these fees despite their a...
More About: Rich , Banks , Fees

111th Carnival of Personal Finance is Up
2007-07-30 16:30:00
The 111th Carnival of Persona l Finance is up at plonkee money. These are my top five from the carnival: Saving Advice shows how lifestyle inflation can sneak up on you and how to avoid it. Accumulating Money explains the many benefits of 529 plans (besides the financial ones). Mighty Bargain Hunter ponders the point of raising the minimum wage. Clever Dude explains that focusing on debt should be a part of reaching a future goal. Million Dollar Journey talks about the 1% stock trading rule. There were a LOT of great posts to read in the carnival this week that are not listed here, so please visit the 111th Carnival of Personal Finance at plonkee money and read a few. Also take a look at my entry for this week where I talk about the return on investment of an MBA.Share This

Weekly Highlights - July 27, 2007
2007-07-27 18:41:00
Here are some of the my favorite posts from the previous week: The Simple Dollar answers a reader who asks if it is better to pay off debts now or avoid future debt. Mighty Bargain Hunter shows that debt troubles are not just for low wage earners. Some of the high wage earners I know are in this exact position. They think retirement savings are a “middle class” problem. Free Money Finance shows thathome prices may be falling faster than the statistics show. Five Cent Nickel is looking for the very best 529 plans. I am currently participating in the Illinois plan he mentions and am very excited about their decision to switch to Vanguard index funds. Vanguard + index funds = super low fees. Consumerism Commentary talks about the team experience in the University of Phoenix MBA program. I always wondered what the team experience would be like in a 100% online class. After reading his post, I am very happy I decided to obtain an MBA the normal way. All Fina...
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Start Saving Today
2007-07-27 00:21:00
Last Sunday’s edition of the Chicago Tribune had an interesting article called The Time To Save is Now by Janet Kidd Stewart. It gave an overview of the lack of savings that many soon-to-be retirees currently have. Some of the worrisome points she makes: More than a third of people over 55 aren’t saving for retirement Fewer than half have tried to calculate how much they’ll need in retirement Just over half have saved less than $100,000 excluding home equity and defined-benefit pensions It’s unclear whether those not saving for retirement are depending mostly on defined-benefit pensions, social security, downsizing their home to turn their equity to cash, or some combination of these. In any case, the most disturbing point to me was that fewer than half have actually tried to sit down and figure out how much money they will need. Despite the multitude of retirement planning tools and calculators on the Internet (which, to be fair, a lot of the older gene...
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Wait! Don’t Pick Harvard Just Yet!
2007-07-25 14:17:00
Over the last decade or so, undergraduate degrees have changed from a differentiator to a near requirement in most business settings. That’s not to say the degree is worthless, however. Those with college degrees can expect to earn nearly 80% more than their high school counterparts. But in a business setting, the degree no longer sets you apart from nearly every person you work with who also has a college education. Now, many are turning to MBAs to get that extra ‘edge’ over the competition. But there are several questions to be answered before selecting a school and program such as “Should I pick a top ranked school?” or “Which type of program will deliver the best results.” The Graduate Management Admission Council (GMAC) set out to answer these questions in a December 2006 research report titled Examining the Value Added by Graduate Management Education. A few of the things I found interesting: The overall return on investment (ROI...
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So Much for 14K
2007-07-25 05:57:00
Just as the DOW was approaching this elusive target, it changed its mind. The DOW fell 226 points to about 13,717 leaving the question open - what is driving this bull market in the first place? Will the bubble bust anytime soon? Read more about it. Share This

Who Needs to Shower?
2007-07-23 21:43:00
After moving into my new home a few weeks ago I purchased this water heater from Sears. The total cost of the water heater including installation amounted to much less than I had budgeted during negotiations, and I had it installed within a week. Cut to about a week ago when I was hit with a blast of cold water in the shower. My first thought was that the pilot flame had been extinguished thus requiring a relighting. After a half hour without any results, I called the Sears help line. The lady on the line said they would be happy to help me - they could have somebody out to my home in a week. SERIOUSLY? Cold showers and baths for my kids for a WEEK? The answer didn’t change by talking to her manager and her manager’s manager, so I broke down and hired someone independent of Sears. While talking to the independent plumber who fixed the problem, I found out that they get a ton of business from people who are unhappy with Sears customer service. He said the best thi...
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