I’m always looking for a good deal so I thought I’d take a closer look.

How Does It Work?

You buy one of these magicJack units (if you’re going to buy it, don’t buy it from Amazon because you can get it elsewhere for cheaper, I linked to them so you can read the 160+ reviews more easily) for around $40 and plug it into your computer. You then take your phone and plug it into the magicJack unit and viola, you have telephone service across the internet.

So what do you get for the $40? You get free service for the first year, which is normally $19.95, plus a phone number and unlimited local and long distance calls.

Risks

The product itself is not a scam but there are some significant risks you need to be aware of if you want to replace your regular phone service with magicJack.

Your computer needs to be turned on and your internet connection has to be active for you to make any calls. If you have a power outage or internet problems, you’ve just lost your telephone service. As for your computer, if you keep it in top notch condition, you probably will be fine. If you don’t, any slowdowns or blue screens of death are going to kaput your telephone capabilities as well.

In normal scenarios, that’s all fine. If you can’t make a call or have to reboot your computer, not a problem. However, in 911 scenarios, you might find yourself out of luck. If there’s a power outage, you can’t call out. Corded phones are powered by the RJ-11 phone lines, so in some power outages you can still call out (in an outage cordless phones are usually dead too).

Finally, the End User License Agreement for magicJack gives them the right to include advertisements. The Coffee Desk, in their review, pulled up this gem:

You also understand and agree that use of the magicJack device and Software will include advertisements and that these advertisements are necessary for the magicJack device to work … Our computers may analyze the phone numbers you call in order to improve the relevance of the ads.

Hmmm…

Awards

It turns out that back on January 17th, 2008, PC Magazine named it an editor’s choice, saying “So simple it’s almost perfect, the magicJack is the best home voice-over-IP gadget I’ve seen to date. Excellent call quality, a workable set of calling features, and an amazing price make this little box the VoIP wonder to beat.” (link)

But that was almost two years ago, what about today? In looking at the reviews on Amazon, they run the gamut in star ratings. You have 50 5-stars and 59 1-stars… I think this 3-star rating by Double W sums it up: “MagicJack is a mixed bag. It will save you money, but you do get what you paid for.”

If you’re itching to check out another review, Matt at Steadfast Finnaces swapped out Vonage for MagicJack and shares his opinions. For him, it dropped the price of phone service from $300 to $20, not $35 to $20, so I’m not surprised to hear he was pleased.

For now, I’m going to pass. It’s not a scam but there are enough “yellow flags” (things I consider headaches, but nothing “bad” necessarily) that I’ll just stick with Skype. Since I have a cell phone, replacing Skype with magicJack doesn’t seem like a good value.

Have you used it? Know someone who does?

Is YMax magicJack a Scam? from personal finance blog Bargaineering.com.

Always price conscious, we set out to buy wines that we enjoyed but didn’t bust the bank. As twenty-somethings, we really don’t need our palates reaching beyond our pocketbooks, if I may be so bold in my use of alliteration. Fortunately, our tastes are plenty satisfied with bottles that cost only in the “teens” (or less, as is the case with many Rieslings). For some of our wine-buying tips, I invite you to read an earlier post title How to Save Money on Wine.

So I wasn’t surprised to read a WSJ article that basically called wine critics full of crap. Actually, full of crap is probably a little harsh, but the point of the article was that wine critics are inconsistent, to the point of being random, and that wine ratings is big business.

In his first study, each year, for four years, Mr. Hodgson served actual panels of California State Fair Wine Competition judges—some 70 judges each year—about 100 wines over a two-day period. He employed the same blind tasting process as the actual competition. In Mr. Hodgson’s study, however, every wine was presented to each judge three different times, each time drawn from the same bottle.

The results astonished Mr. Hodgson. The judges’ wine ratings typically varied by ±4 points on a standard ratings scale running from 80 to 100. A wine rated 91 on one tasting would often be rated an 87 or 95 on the next. Some of the judges did much worse, and only about one in 10 regularly rated the same wine within a range of ±2 points.

There’s more to the story, and more alarming statistics, than what I quoted but the conclusion is the same – the wine rating system is flawed, the raters aren’t as good as they’d like to believe, and that a higher rating might not necessarily mean a better wine… just a better day.

Which shouldn’t be surprising… if you hate chardonnay, you’ll hate it regardless of the score. In fact, the better the chardonnay, the more you might hate it.

Which brings me back to my point… try a bunch of wine, buy what you like, and ignore rankings and ratings. We know this when it comes to movie and restaurant reviews, but somehow with wine it’s different. My favorite places to eat are absolutely dives with little decor, no ambiance, emotionless (sometimes, rude!) wait staff, but the most delicious food I’ve ever had. Restaurant critics would slam them if critics reviewed those types of places, but they’re perfect to me.

So the next time you see wine rankings and scores, remember that there’s can be a four point swing either way (on average) and that you are the sole judge of what you’ll like.

(Photo: mr_t_in_dc)

Beware Wine Expert Ratings & Rankings from personal finance blog Bargaineering.com.

One of those systems is ChexSystems. ChexSystems is a network of financial institutions that contribute “mishandled checking and savings account” information. This includes everything from how many checks you’ve ordered, if you’ve had any bounced checks, the number of financial institution inquiries, to instances of identity theft and fraud. Whereas your credit report discusses only loan-related items and your credit score focuses on the probability you’ll default on a loan, a ChexSystems report “fills in the blanks” on how you’d be as a customer of a bank.

You can request your ChexSystems Consumer Report here.

Request Your ChexSystems Report

The request process was very easy. In fact, it’s much easier than request a credit report because you don’t have to provide much information at all.

All you need to know is your name, address, Social Security Number, and the address of your residences in the last 5 years. After that quick form, you will get the report mailed to you in 5 business days. It would’ve been nice to be able to review the report online but they don’t offer that capability.

If you ordered it and are eager to see what types of information may be included in your ChexSystems Consumer Report, they offer a three-page sample ChexSystems consumer report you can download.

Now we wait five days.

How to Request Your ChexSystems Consumer Report from personal finance blog Bargaineering.com.

The giveaway is in conjunction with a big promotional push they’ve been doing for their American Express Charge Cards and the Membership Rewards program, AMEX’s reward points catalog. They want to give Bargaineering.com readers a taste of the types of rewards they have in the Membership Rewards catalog… so they’re giving away ten Flip Mino video cameras.

Ten.

While I don’t have an AMEX charge card, one of my AMEX credit cards earns Membership Rewards points and I’ve accrued quite a tidy sum of them over the last couple of years. I’ve always been a huge fan of the Southwest Rapid Rewards points because we live near a huge Southwest airport, Baltimore Washington International, and they convert at a very attractive rate. Also, when it comes to gift giving time, I usually turn to the gift cards in the catalog because I can get favorable conversion rates and gifts cards that people love. That’s a win-win there.

So how do you enter to win one of these Flip video cameras? Answer this question in the comments below or in a post on your own blog (in case you want to get more in depth, some people have emailed me saying that a comments box just isn’t large enough to fit what they want to write… which can only help your chances!), linking back to this post:

What is the savviest way you have made your money work harder for you this holiday season?

(if you opt to blog about your savviest way, please email me too just in case the trackback doesn’t come through)

This contest will be open until noon on December 22nd, 2009, when we will select the ten best answers to win a Flip Mino camera. This isn’t a random drawing so try to be creative, we want to see some interesting ideas that other people can use to be savvier with their money. Three of the cameras will be earmarked for creative ideas from registered readers on the Bargaineering Bucks Leaderboard (AMEX rewards their cardmembers, we reward our loyal readers!).

One entry per person and household (we’re not shipping more than one camera to any one address, even if you have a cornucopia of savvy money ideas) and void where prohibited.

Get your thinking caps on and good luck!

American Express Flip Mino Video Camera Giveaway from personal finance blog Bargaineering.com.

So for years, the Foreign exchange market has been a secret and somewhat of a mystery to many traders, including myself. If you thought about investing, you mostly looked to the stock market or to bonds as places to invest. If you were like me, you knew about people trading in currency on the foreign exchange market but you never knew much more about it.

While I’m not advocating anyone jump into Forex investing today, I think there’s value in understanding how it works, even if you never plan on investing in it. To help demystify the Forex market, I thought I’d write a Foundation article about the basics of FOREX.

What is FOREX?

Forex is the shorthand name for the foreign exchange or currency market. The Forex market is the largest capital market in the world with an estimated 2-3 trillion dollars changing hands every single day.

So where is the Forex market? It’s kind of everywhere people exchange currency and there is no central clearinghouse, unlike stocks and options. Stocks that trade on the New York Stock Exchange are bought and sold in New York. Many futures and options are traded on the Chicago Board of Ttade in Chicago. With forex, it’s everywhere.

Another interesting distinction is that forex is traded twenty four hours a day from 20:15 UTC on Sunday until 22:00 UTC on Friday. The NYSE trading hours are only from 9:30 AM ET until 4 PM ET, with some pre-market and after-hours trading.

Also, unlike other markets where everyone is presumably on the same footing, there are different levels of access in the forex market. At the very top are commercial banks and securities dealers in the “inter-bank market,” which accounts for about 53% of all transactions. That’s where bid and ask prices vary by only a pip or two (more on that later). Below that level are the smaller banks, then multi-national corporations, hedge funds, and then retail investor/speculators. As you move down the hierarchy, the bid and ask spreads on transactions widens (which is where market makers earn a profit).

How does a trade work?

First, currencies are quoted in pairs. The majority of currencies are traded against the US Dollar. The Eur.Usd (Euro/US Dollar), Gbp.Usd (Pound/US Dollar), Usd.Chf (US Dollar/Swiss Franc) and the Usd.Jpy (US Dolar/Japanese Yen) are considered the “majors” and are the most actively traded currencies. Trading in the majors equates to approximately 80% of all volume transacted in the Forex market.

Let’s take the Eur.Usd pair as our example. We are buying the first currency using the second, so we’re buying Euros with Dollars. We do this if we believe that the Euro will increase in value versus the US Dollar. In other words, we are taking a long position in Euros at the current market price and expecting to close our position at a higher price at a later time in the future.

Also, there are no restrictions in short selling because. If you think that a currency will lose value, you can take a short position and sell that currency immediately. Regardless of which direction the market is moving you will be able to make the appropriate decision that fits your trading plan.

Forex Commissions & Fees

The interesting thing about the Forex market is that brokers are compensated through the difference in bid and ask prices. When you go to sell a currency pair, you sell it at the bid price. If you go to buy a currency pair, you buy it at the ask price. The more liquid the pair, the lower the spread and the lower the commission.

You don’t pay a per transaction commission in the traditional sense, the commission is built right into the bid/ask spread. The transaction fee can be very high for the small time investor because spreads can be very wide on some of the more illiquid pairs. Whereas TradeKing always charges you a flat $4.95 a trade, you have to pay careful attention to spreads when making forex trades because the price, percentage-wise, can vary greatly.

In addition to the transaction fees, there are all the other fees common associated with any broker. Review to see what the minimum balance requirements are, if there are inactivity fees, fund transfer fees and the like.

So Why Forex?

If it sounds like forex is mostly for speculators, you’re not far off. Forex isn’t for the buy and hold investor because every site I read touted features of the forex market that appealed to speculators. The 24 hour nature of the market, the massive liquidity, speed of trade executions, and the number one reason forex is so popular – leverage.

Many brokers enable their clients to trade over 200-1 leverage. This allows you to increase your position size exponentially. You can increase your over all return while tying up less capital. This is like trading stocks on margin and increases your risk exponentially.

If you are utilizing 200-1 leverage, starting with $2000 in margin would allow you to control upwards of $400,000 in currency! With stocks, you’re usually only talking leverage around 2-1, not 200-1.

For all the scams and rip-off artists claiming you can become very very rich in a short period of time, you can also become very very poor just as quickly. With leverage, gains are magnified… but so are losses.

Picking a FOREX Broker

If this sounds like the game for you, because it’s a game for speculators, you will want to find a reputable broker.

Most brokers offer paper accounts, letting you paper or demo trade for a month or so. This lets you familiarize yourself with their software package, how the market works, and let’s you lose fake money without real penalty. You can take a test drive of their charting packages and analysis services, just to get a feel for it.

Here’s something important though, you have to figure out how they execute trades. Brokers will do one of two things when they take your currency transaction:

• they will either use a dealing desk,
• or no-dealing desk model of execution.

A dealing desk firm will offset your transactions internally. In other words, when you place an order, your broker will be the direct counter party for your trade. You will buy or sell directly to your broker, which means you probably aren’t getting the best price. When executing your trades, a dealing desk is taking an open market position which immediately creates a conflict of interest against you.

A no-dealing desk broker will pass your order through directly to an interbank counter party. This means that your orders are anonymous and your broker does not take an active interest against your positions. When deciding on a broker, be sure to ask these types of questions. Good brokers will be happy to explain their dealing methods and inform you of any other restrictions they may have.

My Conclusion

I can see why forex trading can be very exciting and why there are so many “get rich quick” schemes. When you can leverage 200-1, you can earn a lot of money very quickly (and lose it just as quickly). With 24 hour trading, it’s a lot like gambling in the casino… the lights are always on and the clocks are always off. I’m fairly certain forex trading isn’t for me but it was fun reading about it.

Do you have any experience in Forex trading? Words of warning or advice?

(Photo: matze_ott)

Introduction to FOREX Investing from personal finance blog Bargaineering.com.

A point that I never got to make, in part because it was a little off-topic, was that I never had consumer debt because I thought that debt limited your options. Making money is hard enough as it is, you don’t need to be giving up some of it to pay a credit card company for something you bought years ago. Scraping up enough for a down payment on your first home was and is still very difficult. I didn’t need the added pressure of consumer debt following me everywhere I went.

I felt that having the debt hang over me was worse than not buying something I couldn’t pay for that month.

Whenever you have debt, be it $5 you borrowed from your co-worker for lunch yesterday or $5,000 you owe a credit card company, your future is partially determined by someone else. Whether it’s a personal commitment, like $5 to a friend, or a written contractual commitment, as is the case with any sum to a credit card company, you lose control. You’ve acquiesced a small part of your freedom to someone else.

I think that “fear of the unknown” really kept me in line. I don’t know what I’ll be doing in five or ten years, I don’t know what my financial situation will look like, but I do know that having credit card debt will limit my options so I steered clear.

(Photo: alancleaver)

Debt Severely Limits Your Options from personal finance blog Bargaineering.com.

Well, years later, after enjoying yields of 5% or more, the general public is starting to pick up on the fact that just like buying books and CDs online, you can find better prices for your savings by shopping online.

It’s only natural that after savings and certificates of deposits, the next bank deposit product to start percolating the interwebs would be checking accounts. Most checking accounts do not bear any interest and often cost consumers money in various fees, from overdraft to ATM fees.

So what if I told you that you can get an online checking account, pay virtually no ATM fees, and increase your interest rate all at the same time? Well you can… online checking accounts offer just that.

In fact, some of the online checking accounts I list below may give you a higher interest rate than your brick and mortar savings account!

EverBank – Best Interest Rate

EverBank’s checking account offers the highest APY of the group – a 2.51% 3-month bonus rate on deposits up to $100,000 and then a 1.51% APY thereafter. There is a minimum opening balance requirement of $1,500 but afterwards there are no minimum required to earn interest, no monthly fees, free check writing, debit cards, online banking, plus unlimited ATM fee reimbursement if your balance is at least $5,000. Billpay is free if you maintain a minimum monthly balance of $5,000.

Schwab High Yield Investor Checking – Kiplinger’s Pick

Named the “Best Checking Account” by Kiplinger’s Personal Finance in 2008 and 2009, the Schwab Bank High Yield Investor Checking account tops our list of the best online checking accounts. Like the other banks on this list, you get FDIC insurance up to $250,000, plus no ATM fees (plus ATM fee rebates up to $9 per statement), free online bill pay, and no minimum balance. Add to that a yield of 0.75% APY, which you won’t get from your brick and mortar checking account, and it’s obvious why this checking account leads the way.

Only one downside, according to Kiplinger’s you need to link it to a Schwab One brokerage account, which doesn’t have a minimum either.

If you have an E*Trade account, they also offer a Max-Rate checking account with a 0.30% APY on accounts $5k+, ATM fee refunds, free billpay.

PerkStreet Financial – Best Rewards & Bonus

PerkStreet Financial is the name of the online checking account product offered by PerkStreet Financial and they’ve partnered with the Bancorp Bank to offer a free FDIC-insured online checking account. Debit cards rarely offer cashback features (allegedly only 17% of debit cards offer rewards, according to the BAI/HItachi 2008 Study of Consumer Payment Preferences) and that’s what is notable about this non-interest bearing online checking account. If you’re anti-credit card and use only debit, consider this online checking account because of the opportunity to earn rewards.

There are no minimum balance requirements beyond the $25 initial deposit, you get free online banking and billpay, along with a PerkStreet $50 promotional bonus offer for new accounts. The big draw of this checking account is the rewards, not the promotional bonus.

ING Direct – Best Package Deal

Finally, you have ING Direct, the grand daddy of online savings accounts and their checking account offer, Electric Orange. I mention them because of how feature-rich ING Direct’s savings accounts are and how easy it is to open. The yield on balances up to $49,999.99 is only 0.25% APY but if you can break $50,000, you can appreciate a yield of 1.50% APY. You also get FDIC insurance, free online bill pay, free debit card, and access to the Allpoint ATM network.

If you want to get an online checking account and already have an ING Direct savings account, you can save yourself some hassle by going with a company you’re already working with. To truly maximize your savings, keep money in your savings account and only transfer them over to the checking when you need it.

With those four options, each with compelling reasons why they’re one of the best, you should be able to find the one that matches your needs.

Is there a better online checking account I missed?

Best Online Checking Accounts from personal finance blog Bargaineering.com.

For my thoughts on myFICO, check out my myFICO review. If you just want your credit report, you can request your credit reports for free every 12 months at annualcreditreport.com.

The code is valid until December 30th, 2009.

MyFICO Coupon Code: SURVEY30 from personal finance blog Bargaineering.com.

Knowing nothing else about him, other than scanning his blog a few times, I knew that at the very least he’d be an expert on travel and squeezing every bit of value out of his dollar. You see, Chris isn’t rich. He makes a living as a blogger but he’s not the heir to a vast fortune he taps to fund an extravagant lifestyle. He’s someone who has decided what he wants to do with his life, designed it in a way that makes his goals achievable, and explains the whole mentality in a totally free ebook called A Brief Guide to World Domination. I think it gives you great insight into who he is and a taste of his writing style, which takes me to his latest piece of work – Frequent Flyer Master.

So what does someone without bags of cash lying around need to do to visit over a hundred countries? You have to be very resourceful.

Chris sent me a copy of Frequent Flyer Master (for free and at my request) because, as I’ve admitted many times before, I’m a fan of travel. I favor experiences over things. After hearing JD gush about Chris and after learning Chris’ goal was to visit every country in the world, I wanted to know what this guy knew.

After reading the forty page ebook, I was impressed both by the “hacks” Chris has been able to find and his overall approach. The hacks will change every year, since companies will try different promotions and offers, but if you have a solid approach then you can adapt to the changing environment. The first half of the book is spent discussing the “strategy” Chris uses, the second half discusses the tactics he uses to earn more miles.

For example, one of his best pieces of advice in the book is to have a travel goal in mind. His is to visit every country in the world, he has about seventy left. If you don’t have a travel goal, you won’t get as much value out of his book because you don’t have a purpose in mind. It doesn’t have to be as ambitious as his, but it has to be something you’re working towards. A laudable, though less ambitious, goal is to get one free flight home every year or a free weekend hotel stay. Having a goal in mind is crucial because it puts the tactics within a context. Miles have value since you’re working towards something tangible, rather than just “racking up more miles.”

If you’re a well seasoned traveler, the ideas in this book might not be mind blowing, especially if you’re done a lot of the analysis yourself. However, if you’re new to travel or wondering if there are tricks you don’t know about, take a look at this book. The book itself is $49 and comes with a 100% satisfaction guarantee. “Using the information in the guide, you’ll earn at least 25,000 Frequent Flyer Miles, enough for one free plane ticket ($300+), within 90 days. If not, I am obligated to give you your money back—even if you love the guides.”

Frequent Flyer Master Review from personal finance blog Bargaineering.com.

You can check your score at a variety of places that offer free FICO credit scores but how do you really know whether your score is good or bad? Is a 700 good? Or do you need an 800? How’s a 600?

I think it comes down to what you plan on doing with that number.

(If this post looks familiar, it’s because it was originally published earlier this year. I brought it back because a lot of people have been emailing me about their credit score and, in short, kind of freaking out. This post explains why your score might matter and how it only pays to focus on it so much…)

FICO credit scores range from 300 to 850, with the average being 680 – 700, depending on which of the three credit bureaus you ask. FICO stands for Fair Isaac Corporation, which is the company that created the FICO credit score formula. I wrote an entire Foundation article on FICO credit scores if you want a primer on the subject.

You will be able to find someone to give you a loan regardless of your credit score. You might have to put down a larger down payment and pay a higher interest rate, but even if you have the world’s worst score of 300, someone will give you a loan – you’ll just pay dearly for it.

So, what’s a good score then? It depends on the loan you’re trying to get. Here’s what myFICO lists as sample FICO scores and potential interest rates:

30 Year Fixed Mortgage Rates

These are sample rates on a $300,000 home mortgage.

On mortgages, it doesn’t really matter if you have a 761 or the perfect 850. According to Fair Isaac Corporation, the creator of the FICO score, the two are pretty much the same when it comes to mortgage loan interest rates. It’s a gross simplification but the point is you don’t need a perfect score and it’s almost impossible to get a perfect score.

Let’s look at auto loans:

36 Month Auto Loan Rates

These are sample rates on a $25,000 auto loan.

According to Fair Isaac, the ranges for auto loans and FICO scores is even wider. If you have a 720 or higher, you can expect to pay the lowest rates. Again, it’s a gross simplification but I think you get the idea.

If you aren’t getting a loan in the next year, knowing your score is useful but not immediately valuable. If it’s low, as in outside the first three tiers, then I’d work to try to improve it. If you are getting a loan, knowing your score is crucial because you want to know if you’re a few points shy of the next tier. If you’re close, you want to work to get yourself into the next tier so you can pay a lower interest rate.

(Photo: thetruthabout)

What Is A Good Credit Score? from personal finance blog Bargaineering.com.

For those with debt, the Blueprint program and it’s full pay component, makes one good reason to join. With full pay, you can select certain categories to pay off each month and those category don’t accrue interest. If you carry a balance, those categories normally would, along with everything else, accrue interest. Another reason to consider the card is for the promotional 0% APR for twelve billing cycles (there’s a standard 3% fee), which gives you twelve months to catch up.

For credit card holders that pay their balance each month, there’s no compelling reason for this card. All the features are intended for those with a balance and with no cash back offer, any cash back credit card is better.

I’d ask for your thoughts on the card but it seems very straightforward as the card doesn’t have many bells and whistles beyond the Blueprint program. Am I missing anything?

Chase Slate with Blueprint Review from personal finance blog Bargaineering.com.

For years, cheap credit has fueled American consumption and lenders have been eager to feed that hunger. Now that the average household credit card debt has become less of a trivia statistic and more of a sobering reminder of our economy’s fragility, I think credit card companies are responding to what the climate is demanding – more financially responsible credit cards.

It makes perfect business sense too. Rewarding someone for good behavior and paying on time is better for the customer and the company. While it’s great to collect fees, I think it makes better business to just be a responsible partner in the relationship. Borrowers don’t walk out on their responsibilities, lenders don’t gouge their customers because they think they’ll default, and everyone is happy.

If you don’t believe the trend, here are some examples…

Discover Rewards Debt

The first case was Discover and their Discover Motiva card. The major appeal was to consumers with credit card balances because you get 2 months of interest back when you pay on time each and every month. This was coupled with a 3.99% introductory APR on balance transfers for twelve months, which isn’t as awesome as a 0% balance transfer, but certainly tailored to people carrying balances and getting them to repay on time.

Citi Lowers APR for On-Time Payment

Then, if my memory serves me correctly, next was Citi rolling out their Citi Forward card. The Citi Forward offered a 0.25% APR reduction when you pay on-time for three months plus 100 points to the ThankYou Network. The APR discounts were cumulative up to 2%. There is also a 0% promotional APR for six months to lighten the debt load.

Chase Blueprint

Next up, we have Chase offering up their whole Chase Blueprint program with their four different ways of paying (Full Pay, Split, Finish It, Track It). It coincided with a whole rebranding of their credit card lineup so that their cards had fancy names like Slate, Sapphire, and Ink (probably more).

The program doesn’t reward you the same way Citi and Discover does, by giving you APR reductions, but it does put you on a structured path towards debt repayment.

American Express Charge Cards

Finally, American Express has been heavily promoting their line of charge cards as a way to help people spend responsibly. They’re even getting consumers into the design phase of a card with their new American Express Zync card and it’s various cashback “packs.”

(I think the trend is especially pronounced because I watch a lot of television on Hulu.com and I spend a lot of time online. I see the same ads repeated over and over again. Lately, the Chase Blueprint and the AMEX Charge ads have been everywhere)

I like where the trend is going and I’m eager to see some features that reward consumers who don’t have credit card debt. Have you seen this trend too? What do you think about it?

Responsible Credit Card Use Phenomenon from personal finance blog Bargaineering.com.

I have no qualms with these types of arrangements, as long as the retailer isn’t too pushy about it, but I almost never donate money. I don’t donate for a couple reasons:

• It wasn’t part of the plan. I don’t have some grandiose philanthropic plan but there are several charities we support and while a dollar or two here or there doesn’t derail anything, part of me feels a bit ambushed when I’m solicited at a grocery store.
• Donating direct is more efficient. The store gets something for their involvement (at least the charity has to pay for the promotional materials), I’d rather donate via a website or sending a check so that the charity gets 100% of the money.

There are, however, exceptions to my general feeling towards these solicitations. For whatever reason, if it has to do with kids and if the promotional push is one of their “big” ones for the year, we’ll usually buy a balloon or star or whatever. The prime example is Alex’s Lemonade Stand’s partnership with Rita’s Water ice.

What’s your take on this? Hate them? Indifferent?

Your Take: Charity Solicitations at Stores from personal finance blog Bargaineering.com.

If you can keep your wits about you while all others are losing theirs, and blaming you. . . . The world will be yours and everything in it, what’s more, you’ll be a man, my son.

That’s a famous line from Rudyard Kipling’s If and if you followed that advice the last year (the first part anyway), especially in the stock market, you would’ve done very well and kept a few gray hairs at bay. Since the S&P hit its low in March of 676.53, it’s come roaring back a stunning 63.4% since then. While it’s still down from where it was before the recession (it was 1251 on Sept 19, 2008, down 11.64%), you have to admit it’s a pretty amazing recovery in such a short period of time.

We benefited from being young, with decades until retirement, and one thing we’ve been looking into is dividend yielding stocks in our regular non-retirement brokerage accounts.

Favorable Tax Benefits

Dividends are taxed at the investor’s long term capital gains tax rate, which is 0% for taxpayers in the 10% and 15% tax brackets and 15% for everyone in the 25%, 28%, 33%, and 35% tax brackets (see 2009 tax brackets).

It’s a common strategy for those on fixed income to invest in dividend yielding investments for this very reason. Interest from your savings account is taxed as ordinary income, making the tax equivalent yield (tax equivalent yield calculator) of a dividend bearing stock at the same percentage much higher.

This makes them well suited for non-retirement accounts, where taxes are a constant factor in decision making. In a Roth IRA, it wouldn’t matter because nothing is taxed. In a Traditional IRA, everything is eventually taxed at your marginal tax rate. Being in this middle ground gives you no benefit.

Why Dividends Suck

The biggest argument against dividends is that a company should retain those earnings to grow the business and subsequently it’s share price. If a company is writing checks to its shareholders, paying for it with earnings, then those dollars can’t be used for capital investments, new hires, new projects, etc. It’s not difficult to see the logic in that argument.

To this I have two counter arguments:

• Most companies that offer dividends aren’t in super-charged growth mode and the earnings they don’t pay, on an absolute level, are sufficient to grow the business. For example, Merck pays a 4.05% dividend right now and they just bought Schering-Plough for $41.1 billion in cash and stock. They paid a healthy dividend and were able to build their business.
• The dividend stocks I’m looking at are all going to be stable blue chip companies with good dividend coverage. That is to say the stock price isn’t going to gyrate too much and their cash flow from operations can cover their dividends by a healthy margin. I’m not looking for growth, I’m looking for stability.

Finding Dividend Yielding Stocks

As I mentioned before, it comes down to dependability and coverage. The best place to start is with companies that have paid out a dividend for years and this Fool.com list isn’t a shabby place to start. I don’t own any stocks on their “dividend dynamite” list but I think I might in the near future.

Another way is to simply buy a dividend fund. Vanguard has their Dividend Growth Fund (VDIGX), with an expense ratio of 0.32%, a yield of 2.08%, and holdings in 49 different stocks. Fidelity’s version (FDGFX) has an expense ratio of 0.62%, a yield of 1.90%, in 483 companies. A dividend fund gives you a little protection with diversification at the cost of an expense ratio.

Do you do any dividend investing? Do you have any tips and tricks for a novice like myself? Do you absolutely hate the idea of dividends?

Why Dividends Stocks Rock from personal finance blog Bargaineering.com.

The new wrinkle they talk about is how tax filers in the 10% or 15% tax bracket, in 2009 and 2010 tax years, pay 0% capital gains tax on qualified dividends and long term capital gains. The 15% tax bracket for 2009 ends at $67,900 for married couples filing jointly and $33,950 for single filers. Remember, that’s taxable income, so take your gross income and deduct exemptions, credits, and other deductions.

If you recently lost your job and saw your income fall, this might be a good time to harvest stock market gains and not pay any capital gains taxes on them.

(Photo: mcdermottd)

Harvesting Stock Gains: 0% Capital Gains Tax from personal finance blog Bargaineering.com.