Despite being considered an investment classic, I had never heard of it in part because it’s a classic in the sense that it gives a fantastic account of the financial system in the late 19th century and early 20th century. It’s more history than investing education though it has a healthy dose of both, especially with Markman’s annotations. You can preview it at Google Books and even the few pages of the preview give you a very good feel for how the book is.

Livermore, on which the book and the character Livingston is based, won and lost millions of dollars speculating on the stock and commodities markets during the early 1900s, even making ten million dollars over the course of a month. The annotated version links the fictional story of Livingston with the reality of Livermore to provide a much richer experience. Without it, and a clear understand of what is truth and what is fiction, I think the original probably would’ve fallen more into the fictional bucket for me. Having the annotations put the story into context and gave more credence to the story (did Lefevre make it up or did that really happy? Annotations make it clear what’s real and what was “editorial license).

For me, the book was an entertaining way to learn about some financial history. For example, on page 299, the Lefevre’s story mentions Ponzi and the annotations go into Charles Ponzi’s scheme in much greater detail. Ponzi promised 50% returns in 45 days by investing in “international reply coupons.” These international reply coupons were real coupons, they were created in 1906 to facilitate global shipping and redeemable into country-specific postage. Ponzi claimed to arbitrage postage rates… not an unbelievable idea right? Well, except he didn’t invest it and was outed in a Boston Post series. Ponzi only served 10 years (Bernie Madoff sentenced to 150 years!).

It’s a fun book to read, I learn something interesting every time I open it up (I didn’t read it cover to cover, though I feel like I should), and it’s a fun time if you like this sort of thing.

Reminiscences of a Stock Operator by Edin Lefevre from personal finance blog Bargaineering.com.

As I started to do more research on stock certificates, I finally understood why prices for stock trades had fallen so much in the last twenty years. The process for buying a certificate isn’t difficult, it just takes a bit of time, and there are a few options out there. Some of which are actually quite pricey, relative to the price of GM at the time (eighty five cents).

Did you know there’s a name for the “study and collection of stocks and bonds?” It’s scripophily and it’s a specialized field of numismatics, which is study and collection of currency. It’s appeal is in intricate designs and engravings of some stock certificates (and sometimes because of the signatures on the certificates, like John D. Rockefeller of Standard Oil Company).

The Process

Whenever you buy stocks through a broker, they’re usually registered in “street name.” The street name is the name of your broker and this facilitates the buying and selling of stocks on the open market. For example, if I were to buy a share of Coca-Cola, TradeKing take my money and buy the shares. They would buy the shares in their name and Coca Cola would recognize them as the shareholder, they would not know who I was. When Coca Cola pays out dividends, TradeKing sends them my way. When Coca Cola requests a vote, TradeKing sends me the proxy.

If you want the shares, you will need to employ the services of a transfer agent. Each company works with a transfer agent to issue shares of stock, you will need to work with one to get a stock certificate issued in your name. You can do this by buying shares through a company that will interact with transfer agents on your behalf (like OneShare), or you can do it yourself by either buying directly with a transfer agent or through a broker.

Buy Through a Transfer Agent

You will need to track down the transfer agent for the company whose shares you want. You can usually find this information in their Investor Relations section or anywhere they share their direct investment/purchase plans. For example, if you want to buy shares of American Express, you need to work with The Bank of New York Mellon and their BuyDIRECT program. Once you make a purchase, you can request that they mail you a physical stock certificate.

Buy Through A Broker

As I mentioned earlier, if you buy stock through a broker it will be registered in street name. After you’ve made the purchase, you need to contact your broker to find out how to get the shares transfered to the transfer agent for the company. Once you’ve made the transfer to a transfer agent, the process is the same as working through a transfer agent.

Best Way to Buy a Stock Certificate

It comes down to why you want the physical certificates, since there is no financial benefit to having the paper certificates (in fact, it makes them more illiquid since you have to send them back in if you want to sell it). If you’re buying it to collect, you may want to go with a service like OneShare because then you can have it framed, not folded, and shipped in a way that preserves it’s condition (but it’s not cheap!). If you want the cheapest option, it’s probably cheapest to buy it directly from the transfer agent and have it mailed to you. You can get a nice frame from a local crafts store and still end up with a nice little keepsake.

Of, if having an actual legitimate certificate isn’t that important, nothing stops you from just searching for and printing out a high quality scan of a certificate.

I never did buy those shares of General Motors but I think I saved myself the 85 cents.

How to Buy a Single Share of Stock Certificate from personal finance blog Bargaineering.com.

At the core of many of these decisions, as sad as it may be, are taxes. It’s obvious in the case of the Roth IRA and Traditional IRA and less obvious in the housing (interest, property taxes, and such are tax deductible), but it’s present in many money decisions. Do I take that new job? Well, how much do I really get to take home? That will, in part, depend on taxes.

In the same way that it’s important for you to know the value of your time, it’s important for you to know your tax bracket.

Answering “What’s My Tax Bracket?”

You can see your federal income tax brackets here but you’ll have to go to your state’s Department of Taxation (or similarly named department) website to find your state income tax rate.

With the federal tax brackets, you have to do more than find the range your salary falls in. You need to also take into account deductions you may be taking, because that will give you a more accurate marginal tax rate, which you can use to help make decisions. For example, if John earns $35,000 a year, he appears to be in the 25% tax bracket. However, he can take the standard deduction of $5,700, putting him in the 15% tax bracket.

It’s important to know which tax bracket your in because you can use that information to help make decisions. For example, if you were planning on selling a stock you own, knowing your bracket will help you understand what you will pay on the gains. For long term capital gains, you pay 0% if you’re in the 10%/15% brackets and 15% in the higher brackets. You might want to sell a long term holding if you’re in the 15% bracket to lock in tax free gains.

I wouldn’t spend too much time calculating your exact effective tax rate, you won’t need that much detail unless you are making a very large decision and the decision hinges on knowing your exact rate. Usually a ballpark figure is good enough to help you make decisions.

What’s My Tax Bracket? from personal finance blog Bargaineering.com.

One of the important ideas behind dividend investing is that you should reinvest the dividends if you don’t need the income. Public companies offered dividend reinvestment plans, or DRIPs, that let you buy shares directly from them and have your dividends reinvested for free. Nowadays, many brokers offer this service for free and I take advantage of them.

However, just because everyone says it’s a good idea doesn’t make it a good idea. Why should I reinvest my dividends?

The main argument, as far as I can see, for reinvesting dividends is because you get to dollar cost average additional shares at no additional cast, assuming your broker offers free dividend reinvestment (and many do). It’s recommended that you reinvest dividends because it lets you buy more of a company you had confidence in at absolutely no cost.

You still pay taxes on the dividend income. So if you do reinvest, be sure to account for the tax you owe on the dividend because the entire dividend will be reinvested. For example, I own a few shares of Costco (COST) and get paid a small dividend of $0.18 a share every quarter. If I had 100 shares, I’d get $18 a quarter reinvested in the form of Costco shares. In turn, I’d owe 15% in taxes on the $18 so I need to set aside $2.70 in taxes.

If you read about the subject elsewhere, they’ll show you numbers about how reinvesting is better than not reinvesting but I think they’re unfair comparisons. If you reinvest dividends, you’re investing more of your money and so if it appreciates then you make more. If the stock falls, you lose more money. Over the long run it’s more likely that you will gain more but it’s not a 100% certainty, plenty of well-known and illustrious companies see their stock price fall to $0.

Dividend reinvestment is a great way to accumulate additional shares in a company you believe in and those shares will, in turn, pay out dividends. It isn’t, however, some sort of fancy magic.

(Photo: epicharmus)

Why You Should Be Reinvesting Dividends from personal finance blog Bargaineering.com.

Unfortunately, even with all the strategies below, nothing replaces the dependability and safety of a high yield savings account. The days of exceptionally high yields protected by FDIC insurance are gone until we see the stock market reach its once lofty heights but hopefully some of these strategies can bridge the interest rate gap without introducing too much risk.

Fixed income investments are usually safe investments that give you a fixed rate of return. The safe part is really a relative term, as bonds are only as safe as the ability for the bond issuer to pay the fixed interest rate. The idea is that you pick stable companies or municipalities and you have a reasonable expectation that the interest will be paid. How do we use those principles to find similar “investments” to boost our savings rate?

Reward Checking Accounts

Reward checking accounts are checking accounts that offer a much higher than average interest rate if you satisfy certain conditions. You are usually required to use their debit card 10-12 times a month, use their billpay system, direct deposit your check, and sign up for paperless statements. The higher interest rate applies only up to a certain balance, usually around $25,000. They are able to offer this higher interest rate because it’s paid for by the debit card transaction fees.

How good are the rates? As of this writing, DepositAccounts.com lists the top reward checking account rate is 4.26% APY from NBRS Financial Bank for up to $25,000. While this isn’t strictly a fixed income strategy, it is an FDIC insured way to boost the interest rate on your savings.

Municipal Bonds

When your local or state government wants to borrow money, they don’t go to the local commercial bank. They issue bonds and sell them with the help of an investment bank. You can buy municipal bonds directly from the municipality/state, if you meet their minimum purchase requirements, or you can buy them on the secondary market. While there is a possibility that the government will default on the bonds, it’s still safer than a lot of other investments.

One of the benefits of municipal bonds is that the income from the bond payments are given favorable tax treatment. They are usually Federal income tax free and, if you live in the issuing municipality, state income tax free as well. Before you purchase a bond, be sure to confirm this as there are some exceptions.

Dividend Stocks

One of the benefits of researching fixed income strategies when you’re under 30 is that you’re able to take on a little bit of risk. That’s why lately I’ve been looking at dividend stocks and why I’ve been slowly accumulating shares in blue chip companies that consistently pay out dividends. You may remember the Dividend Aristocrats, companies that have increased their dividends each year for 25 consecutive years, and Dividend Champions, companies that have maintained or increased their dividends each year for 50 consecutive years, posts. Those two were written out of my interest for finding consistent dividend paying companies. It’s not a definitive list of what to buy but it’s a start.

Stocks are risky. Dividends are not guaranteed. A company like Integrys Energy Group (TEG), a dividend champion, is appealing because they offer a 6% dividend yield but remember they are still publicly traded and there’s no guarantee they will continue making payments.

Favorable tax treatment of dividends. One of the benefits of dividends is that the payments are taxed at long term capital gains rates. Whereas savings interest is taxed at your ordinary Federal income tax rate, dividends get a lower, favorable rate. For 2010, it’s 15% for those in the 25% and higher tax brackets and 0% for those in the lower brackets.

As is the case anytime you invest, and this is still investing even though it’s “safer” than buying penny stocks, you want to use diversification as your friend and always do a ton of research beforehand. You can’t predict the future but you can improve your chances through research and hard work.

Do you have any good ideas how to to tweak a few extra percent out of your savings?

(Photo: iain)

Fixed Income Strategies to Help Boost Savings Interest Rates from personal finance blog Bargaineering.com.

1. The credit reports are free, if you remember to cancel the trial (big if!).
2. Consumers have been educated by the FTC that they can get a copy of their credit report for free once every 12 months, no strings attached… except they have to go to AnnualCreditReport.com, not FreeCreditReport.com.
3. Consumers are, knowingly or unknowingly, signing up for the trial service, getting their free credit score and reports, and then not canceling.

So, in early November, the Bucks blog on the New York Times wrote about how Senator Chuck Schumer of New York wants the FTC to force Experian to give you your free report and score before they ask for the credit card information. This was largely shelved because the CARD Act included a provision that required credit report services to include a disclaimer.

I understand the need to police overtly scammy negative option billing practices but how much intervention is too much? I think it was right for the FTC to force Experian to notify visitors to FreeCreditReport.com that they are not affiliated with the free credit report program. It’s also good that the site informs you that you are signing up for a free 7-day trial. It should also be clear that you will be charged for it after the trial because otherwise they wouldn’t ask for your credit card information! (to be clear, I’m fine with the regulation as it stands now… but I didn’t like Senator Schumer’s idea of forcing Experian to change their business practices in that way)

So at what point do we stop? At what point does common sense get completely thrown out and replaced with regulation? I’m curious to hear your thoughts on this.

Your Take: Common Sense vs. FreeCreditReport.com from personal finance blog Bargaineering.com.

Why Sallie Mae?

I’ve been racking my brain to come up with an explanation of why Sallie Mae has started to offer banking services and I was at a loss until I remembered one key insight – most consumers, until recently, were completely unaware of high yield online banks. It wasn’t until Ally Bank made front page news that online banks started to get respect and awareness for your average consumer.

It’s easy for “us,” readers and producers of personal finance blogs, for us to forget that because we get a daily dose of it. If you mentioned “reward checking accounts” to some of your friends, I bet you’d see some puzzled looks. Ultimately, I think Sallie Mae is leveraging their connection with students and parents to bring even greater awareness to the consumer.

Upromise 10% Bonus

If you use Upromise, you can get a 10% annual match on your earnings if you satisfy these conditions:

You must link your High-Yield Savings Account to your Upromise Account and, within 90 days of opening your High-Yield Savings Account, either: (1) set up an Automatic Savings Plan with a monthly deposit of $25 or more, or (2) fund the account with $5,000 or more. Upromise will match 10% of your Upromise earnings posted as ”funded” to your Upromise Account during the calendar year of January 1 through December 31. Your 10% annual match will be deposited into your High-Yield Savings Account in February of the following year provided that both accounts remain active and are in good standing at the time of transfer.

The Upromise bonus, a partnership that makes sense, is the differentiator for this account. If you earn a lot from Upromise, this normally dull 1.35% APY might be much much higher once you factor in the 10% bonus. If you don’t, then this account doesn’t really offer much else.

Pedestrian CD Rates

Their CD rates are competitive with the best CD rates but they’re not rate leaders (but they aren’t rate laggards either):

• 12 month – 1.50% APY
• 36 month – 2.20% APY
• 60 month – 3.00% APY

There are no minimum balance requirements on CDs and standard fees for closing a CD before maturity (3 months interest if it’s a 12 month or less CD, 6 months interest for CDs over 12 months). Pretty standard stuff.

Account Fees

While there are no monthly fees and no minimums, there are fees associated with the account, set out in the Fees and Charges section of the Terms & Conditions:

• Excessive Transaction Fee – $10 (The “Truth-in-Savings” section applicable to your Account(s) sets forth transaction limitations.)
• Returned Deposit Fee – $5
• Paper Statement/Statement Copy Fee – $5 per statement

If you do open an account, be sure to avoid excessive transactions (more than 6 transfers a month) and request paperless statements.

What are you thoughts on this account? I’m especially interested in hearing from people who use Upromise a lot to get a sense of how much they’re earning in a calendar year. If the most active people are earning $1,000 a year, then an extra $100 is going to be great. If most people are earning $100 a year, then $10 is… eh, so so.

Sallie Mae Bank Review from personal finance blog Bargaineering.com.

Her husband remembered that their American Express Blue offered Purchase Protection and decided to give them a call. Why not right? As it turns out, they’re protected by a consumer protection most people forget about – American Express Purchase Protection.

How does it work? Use your AMEX card when you pay and you get 90 days of protection against accidental damage or theft. You file a claim and the protection replaces the item or reimburses you up to the amount of the purchase price. There’s a limit of $1,000 per occurrence and up to $50,000 per cardmember account per year. You can file an American Express claim online or call 1-800-322-1277 and you’ll be asked to provide proof of theft, accidental damage, or vandalism.

They were sent a claim form to fill out and needed to provide additional documentation such as receipt of purchase, AMEX statement with the purchase, and description of the damage. Had the jacket been stolen, instead of damaged, they would’ve had to include a police report as well.

American Express has a reputation, among merchants, of having the highest processing fees out of any of the issues. Not coincidentally, they offer some of the best consumer protections like return protection and purchase protection.

Her husband told me that they make most of their major purchases using their American Express card because of these types of protections. Between the 90 day product insurance and the doubling of the manufacturer’s warranty up to a year (which many issuers offer), there are two excellent reasons why I can see an AMEX beating out a comparable cash back card.

Every American Express card I looked at on their site included this Purchase Protection insurance policy and I totally forgot it existed. Have you ever used it? Heard of a friend who used it?

American Express Purchase Protection Perk from personal finance blog Bargaineering.com.

So, like zombie attacks, the key to surviving a tax audit is to be prepared.

Keep Accurate Records

When you file your return, assume that you will be audited. Keep receipts of absolutely everything and keep them with your return. If you can’t produce proof of something you claimed and you’re audited, the deduction will be disallowed and you’ll be penalized for it. While the chances of you being audited are low, you need to retrieve the receipt now while it’s still fresh in your mind. If you get audited in four years, it’ll be hard to track it down.

Read the Notice

Read the notice carefully and respond as quickly as you can, though you generally have thirty days. Being proactive and helpful can turn the auditor into your ally. The audit will tell you what items on your return are being reviewed, prepare a copy of that documentation and bring it to the meeting (don’t give them originals, they might lose them and originals aren’t necessary). Bring only what they ask for! If they ask about certain charitable deductions, bring documentation of those deductions and nothing else. You don’t want them digging around and asking other questions. That’s not because you have anything to hide but because more questions mean more time and this is time consuming enough.

Also, you might have only received a CP2000 clarification letter, which is commonly known as a correspondence audit, which is the simplest type of audit. They call it a mail-order audit because a face to face meeting isn’t necessary, you only need to send in the documents they request.

Treat It Like A Trial

You should be cordial with the auditor but don’t treat them like your friend. At the end of the day their job is to find tax cheats and they’ve identified you as a potential cheater. It’s important that you review this IRS document that outlines your rights as a taxpayer under examinations and ensure that your rights aren’t violated.

The document also outlines the auditing process, or examination process, including a reference to Publication 556, which as details on appeals. If they disallow a deduction that you feel is rightfully yours, pursue it. Don’t let the IRS intimidate you, flex your muscles and arm yourself with the knowledge you need to prevail.

Consider a Tax Professional

If you have a particularly difficult situation that isn’t solved by offering up a forgotten 1099 or some other form, you may want to hire a tax professional who has experience dealing with audits. Audits can be very time consuming so you’ll have to select the tax professional very carefully but their expertise in dealing with numerous audits should aid you in getting as favorable an outcome as possible. It also helps that they aren’t emotionally invested in the process so they can make smart decisions.

In the end, getting audited sucks even if you don’t end up paying an additional cent in taxes. They are time consuming, stressful, and prevent you from doing something else (that you enjoy!). If you are well prepared and know how to respond, you can minimize both the cost and the time.

(Photo: wiredwitch)

How to Survive a Tax Audit from personal finance blog Bargaineering.com.

I’m honored and happy to share that Bargaineering was included in several categories and is up against very stiff competition. Many thanks to those of you who may have nominated Bargaineering but know that this site is as much a product of your contributions as it is my own. Without your comments, this place would be nothing more than my ramblings and would not be a place I’ve come to treasure. This recognition is as much a tribute to you as it is to me, so thank you.

If you have a few moments, please cast your vote for your favorites.

Thank you!

2010 Plutus Awards from personal finance blog Bargaineering.com.

Instead of throwing up our hands in frustration, I believe in the power of getting educated and making small changes with big impact on or health and environment. Here are three small changes that can improve the quality of life in your home sweet home.

Cleaning

To maintain a healthy eco-friendly kitchen the first place to start is to get replace any products that contain ammonia and bleach. Both of these ingredients are clearly labeled as toxic and do not belong in the same room where you prepare food. While small exposures to these toxins may simply irritate your breathing, skin and eyes, it can be very harmful to young children and anyone with a compromised immune system. There is a reason the labels say “poison”. There are better, safer ways to clean up in green style.

Another very important reason to skip the commercial brand in your kitchen is that they wreak havoc on our environment. Just think of the runoff into our drains, water supply and eventually our local water systems, lakes, rivers and oceans.

Here are some safer alternatives that I use in my very own kitchen. Not only will you turn your kitchen green, but you will save some ‘green’ along the way.

• Borax – aka sodium borate, is a naturally occurring compound that disinfects when used as a cleaning agent– Simply use anywhere you would use commercial brand abrasive. You can make a pretty fabulous cleaning paste by mixing together a paste of borax and natural liquid soap.
• Distilled White Vinegar
• Baking Soda
• Plant-based liquid soap (with no fragrance)
• Lemons
• Olive Oil

Eating

The food choices you make every day can help to create a greener kitchen for you and your loved ones. One of the most profound changes you can make is to begin to educate yourself about what you are REALLY eating on a daily basis. The best tool you have to create a green healthy eating life is to read the labels on everything you buy and to choose more things that don’t even have labels, other than those cute little stickers, i.e. fruits and veggies.

When it comes to buying produce, there is a coding system that is universally used in the industry to indicate whether an item has been grown organically, conventionally (read: with pesticides), or in a lab. Here are the codes you will find in all stores:

• Organically grown food has five digits and starts with #9
• Conventionally grown food always has four digits
• Genetically grown food has five numbers and will start with the #8 or #3

To keep it simple, I always remember to look for the nine! And whether you choose organic or not, always remember to thoroughly wash your fruits and vegetables with either a store bought natural produce wash or simply use a bit of plant based soap and wash any residue or dirt away before eating.

Storing

When it comes to storing food in our fridge or pantry, we have been taught over the years that plastic is the way to go. We’ve learned that the “burp” of the trusty Tupperware is what we need to watch for to keep foods fresh and healthy. Today, we know about some of the dangers of plastic when it comes to food storage. The two main words that have come to light are Phthalates and BPA.

Phthalates are a type of additive that is used to make plastic softer and more flexible. They are also found in a wide variety of other places like cosmetics and cleaning materials. They are even found in some foods like milk, meat and butter! There has been much controversy as to the safety of phthalates and its effect as an endocrine disruptor, especially in younger children.

Personally, I understand that we are exposed to so many toxins in our environment, and you may ask “does this REALLY make a difference”. Well, as the mother of a young child I am always looking for ways to reduce the toxic burden in my home and in our lives. Choosing to eliminate plastics is a simple way to create a cleaner, greener kitchen in my home.

BPA – Bisphenol A – is used to make plastics such as water bottles, food can lining and sports equipment. BPA, another endocrine disrupter has been linked to obesity, neurological issues, and because of its levels of estrogen levels, has even been linked to breast cancer, among other conditions.

Yes, this seems like a pretty bad situation. However there is good news. Choosing alternative storage is healthier and actually less expensive. Here are some great ways to eliminate Phthalates and BPA in your kitchen.

• Choose stainless steel and glass containers – I like to keep glass jars from food products such as olive and pickle containers. These make wonderful storage containers for grains, nuts and anything else you can think of. I even use an apple sauce jar for my daily green smoothie on the go.
• Mason jars make great cups and storage jars.
• There are non-leaching PBA free plastic alternatives showing up at markets around the country due to high demand. If your store doesn’t carry one, make sure to let the manager know you are interested.

What are some ways you are “greening” your kitchen?

(Photo: elanaspantry)

3 Easy Steps to a Greener Kitchen from personal finance blog Bargaineering.com.

I do this today with my auto insurance. For my Acura Integra, I didn’t carry comprehensive insurance and was able to saving hundreds of dollars a year. When it was totaled, through no fault of my own, I rolled the savings over to do the same thing with my current car, a Toyota Celica. As I’ve gotten older and the premium on excluding comprehensive insurance decreases, I’m tempted to add comprehensive again and pay for it with the fund. I’m able to because of good driving and good fortune, but I think that self-insurance is something everyone should consider.

The General Idea

The general idea behind self-insuring is that you want to reduce your level of coverage and put the difference in savings. The obvious benefit of this is that by having the difference in savings, you earn interest. The not so obvious benefit is that when the more dangerous accumulation period is over, that is the time it takes for your savings to grow large enough to cover potential problems, the benefits accelerate.

It’s like buying a car (self-insuring) and leasing a car (not self-insuring). The first few years of ownership or leasing are pretty much a wash, which is why leasing is appealing to businesses. However, there comes a point several years down the road where the car is basically “free,” excluding some maintenance, after you pay off the car loan. I see self-insurance in the same way, as long as you can avoid calamities for the dangerous accumulation period, you can get ahead by self-insuring where it makes sense.

Where this makes most sense is where the potential catastrophes are relatively small, to whatever benchmark you feel comfortable with (net worth, savings, etc.), and the savings you could get by downgrading coverage is great. There aren’t many cases where this is possible but there are a few notable ones.

Auto Insurance

This example is cleanest with auto insurance because it’s easy to see the savings. If you’re able to save $50 a month by raising your deductible from $500 to $1000, then after ten months you’ll have saved enough to cover the difference in the event of an accident. In this case, by raising your deductible you are exposing yourself to $500 of risk. If you can save $50 a month, then the accumulation period is 10 months… so avoid accidents for 10 months.

On auto insurance, like with many insurances, you have a lot of options:

• Comprehensive insurance
• Rental car coverage
• Deductibles

Homeowners Insurance

With homeowners you may be required by your mortgage lender to keep a certain level of insurance coverage but you may have options picking the deductible you want. Again, like auto insurance, compare the prices to see if it makes sense for you to increase the deductible and put the savings away to cover potential problems.

I’m hesitant to offer up removing flood insurance and guesstimating how much it would cost to repair “typical” flood damage, though those riders are certainly worth considering.

Life Insurance

Is this possible with life insurance? This is really the scenario that prompted this post in the first place. When I started thinking about it, what are we really insuring against? Ultimately I settled on the idea that life insurance exists to do one of two things:

• Insure against a future income stream – this risk is most obvious for a single income family where the death of the breadwinner really puts the family in a bind. If the spouse hasn’t worked in a long time, it’ll be difficult, especially now, it won’t be easy restarting.
• Insure against current debts – this is the risk that probably affects more families and it’s because of the mortgage. If either spouse dies, the survivor is still responsible for the debt. If it’s the breadwinner who dies, that makes the situation even worse because you have both the loss of income and the demands of a loan.

I ran some numbers and it doesn’t seem feasible to self-insure for this sort of thing. If you assume 8% APY on your savings, which puts it into investing terrible (rather than savings account territory), you need to save $71 a month to reach $100,000 in thirty years. $213 a month if you want to reach $300,000. If those issues are concerns for you, I don’t think self-insuring makes financial sense.

Final Thoughts

Remember that you’re up against actuaries, with years of training and tons of statistical data, so self-insurance can be a risky proposition. Even if you’ve had a lifetime of safe driving, you never know when you’ll run into a string of bad luck that saps your self-insurance fund of all its money. It takes a certain time of person, who isn’t afraid of assuming this level of risk, and careful financial calculation.

Do you self-insure? If so, what do you self-insure?

(Photo: ej_imageries)

Consider Self-Insurance Against Calamities from personal finance blog Bargaineering.com.

If you’re submitting resumes and calling companies, there are only so many resumes you can submit, calls you can make, before you start burning out. If you start burning out, you reduce the chances you’ll ace the interview because your brain is being beaten into submission by monotony.

That’s why it’s important for you to sprinkle in other activities throughout the day. It’s hard to do this because when you don’t have a job, you feel like you have to get one. To get one you have to submit resumes, call companies, and do all the things involved in “job hunting.” Then you fall into a vicious cycle… no job, want job, must search, keep searching, burn out… you get it. So how do you introduce activities that aren’t directly related to looking for a job but improve your prospects?

Volunteering

You have skills and volunteer organizations need skills. Whether you have trade skills or office skills or you’re just a fast and hard worker, local volunteer organizations can use you. By working as a volunteer, you don’t lose unemployment benefit eligibility and you can flex some of your skills and keep them sharp.

Also, this gives you a great answer to a common interview question: “what have you been doing since your last job?” Being able to say that you help an organization solve a problem is a fantastic answer.

Freelance Consulting

If you’ve exhausted your unemployment benefits and are still having difficulty, consider freelance consulting. A lot of companies need talent but can’t afford to add someone to their payroll, so offering your services as a consultant can bring in some much needed income while keeping your industry knowledge and skills fresh. If you think you might be able to do this, consider going to some local business events like chamber meetings to meet other business owners or search online sites like Craigslist for freelance gigs.

The freelance road isn’t for everyone and it’s not easy but if you’re able to leverage your skills this way you could accidentally start your own business or find your next job.

Pick Up a Complementary Hobby

Want to teach yourself something useful by accident? Pick a hobby that builds on a skill you might find useful in your main career. Let’s say you’ve been doing web design for the last five years and you’ve become pretty good, why not take up a little reading on graphic design or search engine optimization? Start a blog tracking everything you learn and you never know, that might blow up and become a nice side income for you. If nothing else you pick up some new skills that complement your career skills and you become a better hire down the road.

Do Something Fun

Do something you’ve always wanted to do but never had a chance to. This won’t really keep your skills fresh while your unemployed but it will keep you fresh. It’ll break up the monotony and make you a more appealing candidate when your job prospect improve and you get called into interviews. You want to go into interviews with a lot of energy and excitement, which are very difficult to fake especially after months of searching.

And when you do something fun… it’s fun!

Do you have any good suggestions for what a job seeker should do, outside of direct job hunting activities, that can help him or her become a better candidate or a better person?

How to Keep Your Skills Fresh When Unemployed from personal finance blog Bargaineering.com.

I totally get it because everyone does the same thing. There are a lot of things in our lives that we probably do the exact same way because “that’s the way we’ve always done it.” It’s familiar. It’s comfortable. It has worked… but it could be better. And, just like at work, we’ve done it that way because while it may not be the best way, it worked and you have a million other things competing for your time and energy.

However, today I want to work with you to try to find some ways we may be leaking money. It’s hard to know where you might be losing your hard earned cash bit by bit because it’s hard to know what you don’t know, right? So, to help get our mindgrapes flowing, I listed a few common money leaks in the hopes that you could kick in a few leaks you may have found recently.

Not Using Billpayment Services

It’s the year 2010 and if you’re still putting a stamp on an envelope to pay your bills, you’re wasting your money. The stamp is going to cost you 44 cents and the envelope will run you a penny or two, making each bill cost you about forty five cents each. Pay five bills a month, twelve months a year, and you have $27 you could spend on a case of good beer (or something else you enjoy). That doesn’t consider how much you’d pay in fees if the payment gets lost in the mail, which happens infrequently but is more likely to happen with the mail than with the photos of the Internet. Finally, think about all the time you’re wasting on making out the check, writing the address of the company on the envelope, and walking to your mailbox. With a few clicks, online billpay takes seconds.

Don’t Review Your Fixed Monthly Expenses

You don’t go to the gym as often as you think you do. You don’t use Netflix as often as you think you do. You don’t watch as much TV as you think you do. If you think I’m wrong, that’s fine, there’s a pretty good chance that even if you do use one of those things often enough to justify the monthly cost, you don’t do all of them enough to justify each of their monthly fees.

Keep a log of how often you use certain services and calculate how much you’re paying per use. Pay $90 a month for a gym membership? Even if you go every single day, that’s $3 a day. Once you do the math, you might be better off paying per visit if they offer it. This applies to almost everything and you’ll be surprised how much you don’t use your monthly memberships.

Don’t Optimize Your Savings

How much money do you have in your checking account? How much do you actually need in that account? This is one leak I know we are currently suffering from and it’s such an easy fix, if we take the time to do it. Money in our checking account earns nothing, whereas money we transfer into our high yield savings account has the opportunity to earn at least a percent or two. We keep a bit of a buffer in our checking account but everything else goes into a savings account where we get a little something while we’re waiting.

Drive Fast, Brake Hard

If your morning commute is 20 miles, it’ll take you about 21 minutes and 49 seconds if you go 55 miles per hour. If you drive 65 miles per hour, you get there in 18 minutes and 28 seconds – or three and a half minutes faster. The difference? You can get pulled over for speeding if you are going 65 in a 55 and while it will probably not happen, it will suck really bad the one time it does. Plan your trips better and stop speeding. You avoid tickets, you improve gas mileage and tire lifespan, and you don’t sacrifice much. (if you drive 80 MPH, you still takes 15 minutes to get there…)

While you’re at it, use Google Maps and map out your daily commute. You can drag your path around to see if you’re really minimizing your total mileage or the number of red lights you hit.

Don’t Review Your Insurance Coverages

When was the last time you took a look at your insurance needs and adjusted your coverage? Here’s a scenario that probably happens all too often – you increase your deductible to lower your premiums (great move) but over the years your car has gone down in value and now it’s worth less than your deductible. It sounds obvious right but do you know the blue book value of your car? Ask your insurer what they think the value of the car is (chances are it’s less than blue book)… you’ll be surprised. Anyway, it’s not an intelligence test, sometimes we just keep doing what we’ve been doing because it made sense once and I’m telling you that you should review them. If things have changed in your life and you need less coverage or a different type of coverage, tell your insurer and get your policies adjusted to fit your current needs.

Don’t Find Ways to Trim Electricity

Finding ways to conserve electricity around your home is a nice way to plug a leak because you often only need to do something once and you reap the savings for months. I personally like CFLs, despite their up front costs, but there are plenty of ways to trim your electricity bill without much up front cost. For winter savings ideas, here a post on ten quick tips to winterizing your home. If you do a quick search on Google on how to conservation, you’re sure to find a lot of tips you can implement to start saving on electricity.

Don’t Review Your Mutual Funds

How has your mutual fund been performing? Are you happy with it? How much are you paying? Do you own the world’s most expensive index fund? (it’s the Rydex S&P 500 and it charges a 2.28% expense ratio!)

My point is that you should review your investments, especially your mutual funds, to see if your investments make sense. Index funds are easy to review because it’s as close to an apples to apples comparison as you’ll ever get and it really makes little sense to pay more for one fund over another (there are some differences, mostly dealing with the speed at which they match index changes, but they’re fairly nominal). You wouldn’t pay $20 for a gallon of milk, right?

I tried to run the gamut from leaks in your home to hard money leaks, like overpaying for an index fund, but I don’t know what I don’t know so I need your help. What money leaks do you see every day that most people don’t seem to catch? What about a leak you may have plugged lately?

(Photo: johnx62)

Find and Plug Your Money Leaks from personal finance blog Bargaineering.com.

Unemployment insurance “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work,”

The title of the article is a little misleading. In quotes, Kyl said that benefits dissuade people from job hunting, not that they “make people not want to get a job,” as the title states. While I didn’t hear or read about the debate, it seems like a stretch to take the quotes and twist them to match the title.

However, unemployment benefits do act as a disincentive. You get unemployment benefits when you are unemployed, you don’t get them when you are employed. If you remain unemployed, you get paid for not working… so in that respect Kyl is right. Given that base unemployment benefits lasts 26 weeks (not including the extensions from the stimulus package), I’m inclined to think that it’s not unfair for Bunning, or others, to ask how we are going to pay for these things especially if we’re extending benefits again.

While the initial 26 weeks are funded by my employer and myself, through past payments, the extensions, in theory, aren’t. They’re funded by current workers and are taken from their future benefits, should they ever need them. I’m not well versed in how it all works but that’s just my layman’s understanding of it.

If I lost my job and was on unemployment, my initial sense of urgency at finding another job would be much lower than if I didn’t have unemployment benefits (once I got over the sting of being fired). If I just need to meet the job hunting requirements to receive unemployment benefits, I’ll do that while I search for the “right” job and not the “right now” job. I would rethink my career, a la Lemonade, and not rush to find income. Without unemployment benefits, I would be less likely to do it… so in a sense the benefits act as a disincentive.

What are your thoughts on unemployment benefits and whether they reward laziness? Did you think Bunning blocking the bill because he wanted the Senate to follow its own PAYGO rules were justified?

(Photo: notionscapital)

Your Take: Does Unemployment Insurance Reward Laziness? from personal finance blog Bargaineering.com.