Welcome to the last edition of the Carnival of Personal Finance for 2009! In today’s edition, I will share what I have enjoyed the most during the last 2 weeks of the year.

#1 Editor’s Pick: This is my Favorite Holiday!

I actually love Christmas time (who doesn’t?). This is the special period of the year where everything is touched by magic. We spend time with our families, we play with the kids outside and we are able to watch the world through the eyes of a child especially to see the amazed look on their faces when they unwrap their gifts. Definitely, this is my favourite time of the year. So here are my favourite articles for this Carnival:

J. Money from Budgets Are Sexy presents 3 Simple Steps To Rock Your Finances. Those are 3 easy steps that everyone should follow. I particularly like the third one: ACT NOW!”

J.D. Roth from Get Rich Slowly presents The Basic Law of Frugality, and says, “Frugality doesn’t have to mean sacrificing quality. And it doesn’t have to mean you never buy anything you want ever again. You can’t always get what you want — but you can sometimes!”

Jim from Bargaineering presents Automating Your Finances is an Expensive Mistake.

Madison from My Dollar Plan presents Top 10 Financial Stories of the Decade. This is great financial review of the past decade

#2 Frugality and Debt Management: The Month of January is the Best Month for Deals!

The end of the year is the perfect time to save a few bucks. While you shopped for your gifts during Christmas time, you probably identifed what you need in stores and may wait until the first week of January. For those who are Canadian (or shop online), you don’t even have to wait for the January rebate as they have the Boxing Day (looks like Black Friday in the US). Everything is on sale right after Christmas (starting December 26^th). The key is to find great deals and then transfer your purchase to a zero percent balance transfer credit card Seriously, you would be better to leave your credit cards at home if you go shopping! So here are the frugal and debt management articles of this Carnival:

WellHeeled from Well-Heeled Blog presents Old Cars: Unsung Heroes of Personal Finance, and says, “Old cars lack the flash and dash of new models, but they are wonderful for your personal financial situation. I drive an old car, and I love it. ”

Elle from Couple Money presents Saving on Pet Care, and says, “Being frugal doesn’t mean being skipping on vet visits and buying low quality food (which in turn can aid a pet in gaining weight and developing other problems). It means saving money in case a serious problem comes up and you don’t worry about paying the light bill or your dog’s surgery.”

Helen from Science and Money presents How to Reset Your “Check Engine Light”: OBD-II Code Readers, and says, “How I saved $1,800 and became the most popular person in my office.”

David from Credit Card Offers IQ presents List of Credit Card Foreign Currency Transaction Fees, and says, “Most credit cards charge a foreign transaction fee when the card is used outside the United States. ”

DR from Dough Roller presents Consolidate Debt with LendingClub or Prosper, and says, “LendingClub recently launched a new section of its website that lists statistics about borrowers and lenders.”

Clint from Accumulating Money presents Wholesale Mortgages, and says, “Thanks”

Matt from One Million and Beyond presents Overspending at Christmas – Now What?.

ElizabethG (Modern Gal) from Modern Gal presents Maintaining the Saving and Investing Momentum.

LeanLifeCoach from Eliminate The Muda presents The Saving Game – Save To Splurge, and says, “Another way to control your spending habits is to make a game out of saving. If you have ever worked a job on commission or in a retail environment you’ve likely been exposed to some type of incentive. I take this idea from the world of business and how incentives are used to drive desired behaviors.”

mbhunter from Mighty Bargain Hunter presents Pay off your car loan before paying off other debts?, and says, “Yet another method for paying off multiple debts”

#3 Money Management: The Time to Establish Goals

During December, I always take a few hours to look at what I have accomplished financially in 2009. I updated my balance sheet, looked at my net worth, my salary and my debt load! Then, I establish financial goals for the next year. I have been doing this for the past 3 years and it has helped me a lot, helping me grow my net worth and prioritize paying off my debts. In order to get some tricks about money management, here are the articles about this topic:

MLR from My Life ROI presents General Tips to Avoid Fast Depreciation, and says, “Purchasing a car can be a huge financial mistake. Often times the factor that makes it a mistake is the depreciation cost. If you can offset the depreciation cost as much as possible, you may be able to justify a new car purchase.”

Fabulously Broke from Fabulously Broke in the City presents Researching Rental Cars, and says, “Comparing rental cars against each other based on a set of criterion:

1. Daily Rates mean nothing. Final total is more important.
2. Not all discounts for car rentals and airplane flights make the rental or purchase cheaper
3. Cutting down on expenses by getting a credit card with no fee that can cover your rental insurance saves you $16.95 – $25.95 each day you rent p>

pfstock from PFStock.com presents Yodlee: A Love/Hate Relationship, and says, “This is my personal experience with Yodlee’s account aggregation website.”

FIRE Finance from FIRE Finance presents Americans Living Without Bank Accounts?, and says, “Last weekend we were wondering how many Americans live without bank accounts. Our first thought was not many. Curious to know the facts we started researching on the web. We were stunned to find that 17 million Americans have no bank accounts! And 18% of the rest of the population that do have bank accounts use non-traditional banking services like pawn shops and payday lenders.”

Adam from Money Relationship presents Big Changes and An Even Bigger Confession.

Kris Bickell from Debt Tips presents Credit card interest – how high is high?.

Dr Dean from The Millionaire Nurse Blog presents Mega-Consumer, or Careful Consumer-Dr Dean’s Rant.

FT from Million Dollar Journey presents 3 Ways to be More Like Scrooge

Austin from Foreigner’s Finances presents 8 Money Tips I Learned from Clark Griswold and Christmas Vacation, and says, “A look at my favorite Christmas movie – National Lampoon’s Christmas Vacation – and the money tips that can be learned from it.”

Clarence Haynes from Personal Finance Analyst presents Robert Kiyosaki, Another False Profit in the Financial Guru Game .

#4 Investing: The Time to Review Your Portfolio

This is the perfect time of the year to look at your stock portfolio and see if there are any capital losses you should take advantage of. You can review your investing strategy while looking at an  investment guide. I always take a few hours to balance my portfolio and make sure I am ready for next year. Here are some great investment articles:

Zina from Tonka Beans Blog presents 2012: End of the World? Or the End of Your Target-Date Fund? (Part 2/3), and says, “This is part two of a three part series on Target Date Funds. In the first part of this three-part series we reviewed the fundamentals of target-date funds. What are they? Why do they exist? How are they different from other mutual funds?

Paula Wethington from Monroe on a Budget presents What’s happning to the scholarship funds?, and says, “I gave examples appropriate to my local audience, but this post works just as well for the national readers.”

Carlos from Tiny Money presents Stock market of the 2000’s: Worst ever?, and says, “Why the poor performance of the stock market in the 2000’s doesn’t mean much, and why stocks are still the best way to invest over the long term”

D4L from Dividends Value presents Best Stocks For 2010, and says, “This is the season for stock predictions! Virtually every financial writer will pen an article selecting his or her top picks for the upcoming year. I enjoy reading them and the logic behind the picks and sometimes there is a gem to be found.”

Susan Tiner from Brain Dead Simple! Financial Organizing presents Expected Return of Income Property, and says, “Follow-up to Mike Piper’s post on computing expected return for a home purchase for a real estate investment property.”

Darwin from Darwin’s Finance presents Study: Smart Investors MUCH Better Stock Pickers than Dumb Investors , and says, “A surprising study sheds light on how investor IQ is correlated with actual stock-picking performance. Results, analysis and what you should consider as an investor in common equities.
”

Craig Ford from Money Help For Christians presents How To Become An Accidential Millionaire, and says, “Saving to become a millionaire only requires a simple, disciplined investing plan implemented early in life. ”

The Smarter Wallet from The Smarter Wallet presents A 529 College Savings Plan As A Child’s Gift, and says, “On opening a 529 college savings account for your kid.”

The Dividend Guy from The Dividend Guy presents Contributions Matter (Most), and says, “No matter what you do as an investor, the more money you put into your account the more money you will end up with in the end.”

Revanche from A Gai Shan Life presents On the non-retirement investments front.

The Dividend Guy from The Dividend Guy presents Dividend Safety and Warnings, and says, “There are a number of warning signs that suggest potential problems to your dividends. Here is a summary of a few of them.”

#5 Others: Take Some Time Off and RELAX!

While shopping and visiting are 2 activities that require a lot of time, it is also important to take a few days off and relax. We used to take a day in pyjamas and watch movies all day long (usually the 26th!). So for all the other things, here are the rest of the articles of the Carnival of Personal Finance:

TIP Guy from TIPBlog.in presents Year 2009: A Bit of Nostalgic Reflection, and says, “It is not necessary to reflect back only on your professional goals. You can also look at your personal life or your hobbies or your side projects or extra curricular activities. Do you reflect back like this?”

FMF from Free Money Finance presents Four Things I Like About Quicken, and says, “I’ve used Quicken for years and love it! Here’s why.”

Henry Stern, LUTCF, CBC from InsureBlog presents Look, Overhead!, and says, “Summary: What happens to your business if you’re disabled? InsureBlog explains how business overhead insurance works, and why it’s important.”

Silicon Valley Blogger from The Digerati Life presents Employment Discrimination, The Glass Ceiling & The Gender Wage Gap

vh from Funny about Money presents Bumhood: The Fruits of Financial Freedom, and says, “An interview with a practicing idler: How a man quit his job at 47 and lived happily ever after in “Bumhood.”"

Jason from One Money Design presents Christian Giving: When to Give to Christian Ministries, and says, “This post explores when we should give to Christian ministries in our overall giving plan and also MinistryWatch.com which is a helpful tool in deciding if a ministry is worthy of financial support.”

Curt from PennyJobs.com presents The True Author of Economic Stability Is None Other Than Jesus Christ.

Kyle from Suburban Dollar presents T’was the Night Before Christmas.

Author: Mike.

Image source: the suss man, the last minute, lululemon, bramu, eye of enstein

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In the First Light

In the first light of a new day
No one knew He had arrived
Things continued as they had been
While a new born softly cried.

But the heavens wrapped in wonder
Knew the meaning of His birth
In the weakness of a baby
They knew God had come to earth.

As His mother held him closely,
It was hard to understand
That her baby not yet speaking
Was the Word of God to man.

He would tell them of His kingdom,
But their hearts would not believe
They would hate Him and in anger
They would nail Him to a tree.

But the sadness would be broken
As the song of life arose
And the First born of creation
Would ascend and take his throne.

He has left it to redeem us,
But before His life began
He knew He´d come back not as a baby
But as The Lord of ev´ry man.

Hear the angels as they´re singing
On the morning of His birth
But how much greater will our song be
When He comes again
When He comes again

Hear the angels as they´re singing
On the morning of His birth
But how much greater will our song be
When He comes again to Earth

When He comes to rule the Earth!

Article by Stew

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We are now the 24^th of December and my children are getting pretty excited! They just can’t wait to get their gifts from Santa… and I just can’t wait to eat the delicious homemade cookies they will leave for Santa before going to sleep tonight

But seriously folks, I think Christmas is more than a fancy and overly marketed Holiday abused by gifts and excesses of all kinds. Christmas is a special time of the year where you have the unique opportunity to connect with all the people you love. It is time to forget about your old disputes and call those people you call “friend”, “father”, “sister”, etc.

During this time of the year, I always take a moment to think about the people I love who left us too early. I wish they were still here with us to celebrate and sing Christmas carols. And then, I look into the sparkling eyes of my children and I appreciate these magical moments. Those filled with love, hope and happiness.  To see the world through the eyes of a child, especially at Christmas, is a magical gift.

I did my “extra” groceries

We always buy more food (and more wine!) during the Holidays. So before Christmas, I always go for an “extra” trip for groceries. But this one is not for me. This one is for those in need. Every year, we buy for about a week’s worth of food and we give it to our community center. We make sure to include good and healthy food but also a few cookies. Hey, it’s Christmas for everyone, everyone should be able to eat something sweet

My children participate too

My children are spoiled with gifts. They were fortunate enough to live in a house where they will never want for anything. But there is more than just receiving toys. Each year, they go into their play room and pick 1 or 2 toys each that they like and we wrap them up and give them to other children who don’t have the good fortune to receive so many gifts.

My older son (he is 4 years old) was quite happy to do it this year. He has started to understand that not everybody has this chance at Christmas and he really wanted to make another child happy during this time of the year.

Now we are ready to celebrate!

Now that we have given to charity, to our community center and to our church, we are now ready to celebrate. Over the year, I have realized that giving is the most amazing gift you can offer yourself. Don’t hesitate to give to those in need and everyone will feel much better during Christmastime!

I wish you a Merry Christmas and have fun with people you love!

Author: Mike.

Image source: scottfeldstein

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A good name is to be chosen rather than great riches, and favor is better than silver or gold.

God has promised to meet your needs, you do not need to trade your good character or reputation in order to get ahead in life. After all, our lives are “but a vapor” in light of eternity. Do right in every circumstance.

The rich and the poor meet together; the LORD is the maker of them all.

Do not be covetous toward those who are better off than you and do not be condescending to those who lack. God is not a respecter of persons and the rich and the poor both have equal standing before him.

The prudent sees danger and hides himself, but the simple go on and suffer for it.

Save for a rainy day, invest for the long term, do not buy more than you need. Never assume that your plans will unfold exactly as you wish. Investigate and listen to wise counsel.

The reward for humility and fear of the LORD is riches and honor and life.

Remember that Proverbs is not a book of promises, but rather a book of wise sayings that are good to live by and true most of the time. Not all riches are monetary.

The rich rules over the poor, and the borrower is the slave of the lender.

Don’t we know it! I think this verses has application in our personal, family lives. Just think about the money we send out every month to creditors! I think this principle also has application in our civil government. Everything you are given by the government comes with a price and our American government is increasingly the “slave” of other countries who have lent us money.

Whoever has a bountiful eye will be blessed, for he shares his bread with the poor.

Do you have an eye that sees the needs of others?

The sluggard says, “There is a lion outside! I shall be killed in the streets!”

We can always find an excuse to be lazy, can’t we? Right now, I am using the “I’ll start working out in January” excuse to avoid exercise.

Whoever oppresses the poor to increase his own wealth, or gives to the rich, will only come to poverty.

If you seek success through the oppression of the poor or through “kissing up” to the rich, things will end badly for you. Remember that words like “riches” or “poverty” do not always refer to physical money in Proverbs. When I read this verse, I think of a godfather or mafia kind of set-up, where illicit favors are exchanged for power.

Do not rob the poor, because he is poor, or crush the afflicted at the gate, for the LORD will plead their cause and rob of life those who rob them.

There are some who make a living from taking advantage of the poor or using the less fortunate in order to gain treasure and power. God is keeping score and even though a man might publicly get away with usury, He does not forget. Modern day usury happens in the Payday Loan or Cash Advance store. Sometimes I wonder if this verse is a warning to the politician who trades the life of the unborn in exchange for the vote of the mother.

Be not one of those who give pledges, who put up security for debts. If you have nothing with which to pay, why should your bed be taken from under you?

Do not risk the things that you and your family need for sake of the things you want. Be content. A home equity loan in order to take a vacation to Mexico . . . ?!

Do you see a man skillful in his work? He will stand before kings; he will not stand before obscure men.

Take your time, set a good foundation, prepare, practice, work hard and you will have success!

Article by Stew

Photo by Gene Hunt

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We are approaching Christmas and most of us are now  shopping in “light speed mode”. Unfortunately, Santa won’t give us many gifts with regards to fixed income. Rates are currently at their lowest since the legend of Saint-Nicolas was first told and things probably are not going to be better in a few months. Can rates go lower? That is not the problem. In fact, I would be more worried if interest rates start rising. If you were bitten hard enough by the stock market in 2008 and decided to switch your investments towards bonds, you will see that your portfolio can suffer negative results as well. Why? Because bond values drop as interest rates goes up.

Why do Bond Prices Go Down When Interest Rates Rise?

This is an interesting concept and most people don’t realize the impact of rising  interest rates on bonds unless they have live through it: when interest rate goes up, the value of existing bonds goes down. Some people may be tempted to think that bond values would go up as more people would want to buy them due to a higher interest rate, but it doesn’t work like this:

Let’s say that you have paid $1,000 for a municipal bond giving 4% over the next five years. Once you have paid the amount of $1,000, you receive a transaction confirmation and you see the bond value in your investment portfolio.

During the next five years, you will receive the amount of $20 every six months ($40 per year, so 4% of $1,000) and at the end of the 5 years, you will get your $1,000 back. If interest rate haven’t changed, your bond value in your portfolio will stay at $1,000.

What if the interest rate goes down?

If interest rates go down, this means that the same municipality can offer bonds with a lower interest rate. Instead of paying investors 4%, they may be able to pay only 3% for 5 years. So they will continue to issue bonds at $1,000 but will offer 3% interest on them, so $15 every 6 months.

Even though your bond matures in 5 years, you always have the possibility to sell it on the market. This is why bond values fluctuate over time.

Therefore, if you have a bond paying 4% and the same bond is now offering 3%, do you think yours worth more? Yup, you are right. The value (originally set at $1,000) is now worth more money. In order to compensate for the fact that your bond is paying 4% and the others are paying 3%, your bond value will increase from $1,000 in order to compensate for the “extra” $5 you receive each semester.

So if rates go down 1 year after you have purchased your bond, you still have $160 to receive in interest before maturity while the new bonds will offer only $120 for the same period. While the calculation is a bit more complex as rates never change exactly on interest payout dates, your bonds value will more likely increase by $40 (so $1,040) to compensate the lower interest. So if you sell it on the secondary market, the investor won’t get more in his pocket compared to a new bond at 3% because he will purchase the bond at $1,040 and get $1,000 back in 4 years… while he will receive $160 in interest during this period.

This is why your bond values will temporarily increase. I wrote “temporarily” because if you keep your bond, you will still receive $1,000 at the end of the term.

What if the interest rate goes up?

We are currently living the lowest interest rate period of all time. Therefore, chances are that the interest rates will go up in the near term, right?

Based on the above mentioned example, if interest rates go up, bond values will go down to match the new interest rate. Therefore, your bond value of $1,000 will drop at $975 for example because your bond is not giving a high interest rate compared to what is being offered right now.

If you sell it at $975, the buyer will receive a lower interest rate but will receive $1,000 back at maturity. This is how the overall yield will be balanced.

How does bond value drop affect your portfolio?

If you have bonds in your investment portfolio, chances are that you will see their value going down during 2010 and 2011 (while the interest rate will go up). However, if you keep them until they mature, you will still get your money back. You just have to keep in mind that you will see negative returns during 1 to 2 years.

If you have bonds in your mutual funds, you will see the same variation. The only difference is that you don’t see which bonds you hold and what their value is since your money is pooled with others. Nonetheless, the result will be the same: you will suffer from 1 to 2 years of negative returns before your bond mutual funds bounce back upon bonds maturity.

Final Thought:

If you have bonds in your portfolio, be prepared to see their value tank once the interest rates start to rise. However, you don’t have to worry and keep the very same investing strategy. You will get your money back upon their maturities. In the end, you just have to be patient!

Author: Mike.

Image source: gilbertofilho

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I set out to write a post about how to get the best deal on air travel. My list consisted of the following:

• Book travel as far in advance as possible.
• Use an air travel aggregator site.
• Get an airline “miles” credit card.
• Look for airlines that feature child fares.

That is a pretty good list, not too much wrong with it, but most of you knew all of that already.

Mrs. Stew and I are veteran flyers. I fly five to ten times a year for business. Mrs. Stew flew four to six times a year while she was in college and we have continued to fly throughout our marriage, both before and after our children were born. Our seven year old has flown over a dozen times in her life and I think our five year old flew four times before she was two. In recent years, we have flown less as a family since it usually costs less to drive five people a thousand miles than to pay for five round trips, but we still have reason to fly fairly often – always to see family. This last fall, Mrs. Stew flew to see her parents with all three of our children in tow.

If you see us in the airport, we are family with three children each pulling a roller backpack through the terminal. We are also the family whose two year old understands how to get through security and knows to whom he needs to hand his boarding pass. Our kids do not scream on flights, they enjoy talking to the flight attendants and ordering their in-flight beverage.

That said, years ago we quit using flight aggregator websites to get the best price. We used to hunker down in front of the computer, checking multiple websites and different airports, trying to get the best possible price. We quickly learned where to get the best fares: Southwest Airlines.

I know, I know, you think I am being paid to say this, but the fact is, neither I nor Mike will get a dime from Southwest for this post – that is one way they keep costs low – I think. Southwest is not on the usual aggregator sites, you have to book directly through their site. But here is how Southwest is beating the competition in my estimation:

• Fares: the bottom line is the bottom line. I recently flew on Southwest for $112 round trip. I keep tabs on the other airlines, but they never beat Southwest.
• Free bags: Southwest is the only airline who does not charge extra for checked bags – both bags! There are still weight requirements, but your first two bags are free. This is a $50 savings over most airlines right off the top – that is if you are only checking one bag.
• Venues: When we first started flying Southwest, venue was a problem, the nearest airport that carried Southwest was a three hour drive from our house. Even then it was a better deal to drive and park than to fly other airlines.  Since then Southwest has added a huge number of places and serves the whole country. I have flown everywhere from Philadelphia to Portland to San Diego to Charlotte to Miami to Denver to Phoenix to Las Vegas to Minneapolis and more on Southwest.
• Flight credits: I have earned a number of free flights through Southwest. The best trip we ever took as a family was when both of our daughters were under two years old. I had earned a free flight for my wife and both of my children were free. I booked a flight for myself and our entire family of four flew 2,000 miles round trip for $179.
• Children under two are free. They are considered a “lap child”. Be sure to bring a birth certificate and make sure your child has an aptitude for contentment while being held . . .
• Friendliness: Customer service is really important to me, but I will rarely pay extra for it . . . at Southwest, we get frugal value and great customer service. I can sincerely say that after ten years of flying Southwest, I have yet to have a bad experience with anyone connected with the company.
• Changes to itineraries: If you miss your flight or have to cancel, it takes some talking, but Southwest has almost always let me used my money toward a flight that works better for me. There are fees to change an itinerary, but I almost always get those fees reduced one way or another. One time, I missed my flight because of traffic in Chicago. Southwest booked me on the next available flight without charging me another penny.
• On time: I have never been on a Southwest flight that was late – even in terrible weather. In fact, most of the time, I find that I am ten to twenty minutes early.

There might be things that you don’t like about Southwest – no first class, only 737’s, no assigned seats, limited meal service – but if you are only looking at the bottom line, SA is the way to go.

Article by Stew

Photo by doortoriver

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It is now time to name the 2 SmartyPig contest winners of a $50 gift card for their SmartyPig account!

#1 CM (comment #12)

#2 Rebecca (comment #27)

I’ll be contacting the winners to send them the money over next weekend. Congrats and thanks to everybody who participated!
I am also adding a chart at the bottom of this post that compares all the CD’s and savings bank account you can get. You will see that Smarty Pigs is by far the best deal around right now! (note: the table is too big right now, I am working on this ).

I need your help! Please vote for Gather Little by Little:

Gather Little by Little has been nominated for the best host of the Best of Money Carnivals. If we win, we will have the opportunity to give money to a charity. Since it is for a good cause, please go to the Best of Money Carnival site and vote for carnival #5 by entering your comment.

Here are some good reads for this weekend:

Mrs. Micah is sharing the best personal finance practices of 2009. My favorite is to create an alternative source of income. I find it more interesting although challenging to earn more rather than cutting down on my expenses.

Man vs Debt is offering a free copy of Crush it!

A thought provocative post at Cash Money Life: The importance of Self Ownership. If you aim is towards financial freedom, you need to gain control over areas of your life. Take action and take back your life!

Interesting thoughts on impulsive buying by Bible Money Matters. I am continuously debating with myself with regards to taking the credit card out of my wallet!

Being Frugal is offering her top 10 Christmas Movies. I really like The Polar Express too!

PT money is giving 10 tips to help reduce your credit card debts. I would personally start by transferring to a 0 APR balance transfer credit card and accelerate the snowballing payment.

Enjoy your weekend! Last one before Xmas, can you belive it!!!

Select CD Term: 30 Days3 Months6 Months9 Months12 Months18 Months2 Years3 Years4 Years5 Years

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APYMin

9.67%

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2.01%

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APYMin

1.85%

$2,500

APYMin

1.84%

$0

APYMin

1.77%

$10,000

APYMin

1.75%

$5,000

APYMin

1.75%

$1

APYMin

1.74%

$2,000

APYMin

1.65%

$1,000

APYMin

1.65%

$1,500

APYMin

1.25%

$1,000

APYMin

1.25%

$500

APYMin

1.25%

$1

APYMin

1.05%

$500

APYMin

1.05%

$2,000

APYMin

0.90%

$2,500

APYMin

.60%

$10,000

APYMin

0.50%

$5,000

APYMin

.50%

$5,000

APYMin

0.25%

$1,000

CD Rates updated daily. Data provided by Debt Kid.

Bank

APY

Min Deposit

Review

Notes

Learn More

APYMin

9.67%

$0

APYMin

2.01%

$0

Review

Learn More

APYMin

1.77%

$1,500

APYMin

1.75%

$500

APYMin

1.60%

$100

APYMin

1.51%

$10,000

APYMin

1.50%

$10,000

APYMin

1.50%

$0

APYMin

1.40%

$1

APYMin

1.35%

$1

APYMin

1.30%

$1

APYMin

1.15%

$5,000

APYMin

1.15%

$100

APYMin

0.95%

$50

APYMin

0.75%

$1,000

APYMin

0.50%

$1

APYMin

0.35%

$5

APYMin

0.10%

$1

APYMin

.10%

APYMin

0.05%

$100

APYMin

0.05%

$100

Savings Account and Money Market Rates updated daily. Data provided by Debt Kid.

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Last week, I discussed why I really like index mutual funds. Some readers might prefer to trade ETFs (Exchange Traded Fund) directly, in order to replicate stock market indices with lower fees. However, there are 2 major inconveniences with ETFs when you are investing smaller amounts (i.e. less than $10,000):

#1 You are limited in your trades due to your small amount (you shouldn’t buy 5 or 6 ETFs with 10K)

#2 Transaction fees will eat up a lot of your yield (if you buy an ETF with $3,000 and you buying cost is $10 and your selling cost is $10, this represents close to 1% already).

This is why I prefer index mutual funds since they don’t carry transaction fees AND they allow for preauthorized systematic investments too.

Why Setting Up a preauthorized Investment plan?

If you have $10,000 or less to invest, this probably means that you are accumulating for retirement and that you have several years to prepare. Therefore, it is important to setup an automatic investment plan in order to participate in the stock market as soon as possible.

#1 Pay Yourself First

When it comes down to investing their savings, most people wait until a specific time of the year (the beginning or the end of the year in most cases) and drop a bigger amount into their retirement savings account. They prefer to do so since they think they can’t do much with $100 at a time. Yet they are wrong.

With any type of mutual fund, they can set an automatic preauthorized investment payment plan for as little as $25 per month (depending on the mutual fund). The most important advantage of this strategy is that it ensures that the amount you want to put aside for retirement is actually working for you.

Once it is taken from your account (or pay check) on a bi-weekly or monthly basis, you don’t have to think about putting money aside. You simply live with a different level of disposable income and your Roth IRA is growing without any pain.

Paying yourself first is definitely the best way to ensure a comfortable retirement. Look your Roth IRA contribution like a debt payment and you are your most important creditor (you owe it to yourself and your future!)  We have all heard how no one else is going to look after us financially.

#2 Dollar Cost Averaging

While this is not a major advantage, being able to enter in the market gradually as it goes up or as it goes down still averages a greater yield in your portfolio than attempts to time the markets.

Instead of trying to time the market and buy shares at their lowest, you continuously invest no matter what happens. Therefore, you are not always buying at the lowest price, but you are not always buying at the highest price either.

Therefore, you are averaging the cost of your shares. This will help smooth your investment statement balance from quarter to quarter. While the stock markets drop, you will keep buying more mutual fund shares at lower prices which will bring your overall balance higher. Remember the all important strategy to buy low!  This won’t make you make more money immediately, but you will have more shares in the markets when it goes up again. Therefore, you will be in a better position to recuperate your losses.

Final Thought

I think what I appreciate the most about systematic investment plans is the fact that you don’t feel it after the initial few months. You struggle a bit during the first pay checks since you were used to spending it all and there is less to spend now that you have decided to take care of your retirement.

However, after a few weeks, you get used to your “new” disposable income and you find a way to live with it. Next time you get a raise in salary, you just have to increase your investment contribution with the same percentage so you can benefit from a part of your raise and add more money to your retirement savings account.

Author: Mike.

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I do not normally like to steal other people’s ideas, but I thought I would offer some responses to a recent article that I saw in a magazine. No, not online, an actually paper-and-ink glossy magazine that someone gave my wife and she had it sitting around the house. I do a lot of personal finance reading and naturally a title like “Save $2,010 in 2010!” would catch my eye. The article appeared in the January 2010 issue of Woman’s Day.

Here are the suggestions from the article and my peanut-gallery comments:

1. Reduce kitchen paper. WD suggests using fewer paper towels and switching to cloth napkins. Spending money on disposable paper is a major annoyance of mine, but I have not found too many ways to reduce kitchen paper usage other than trying to use half of a paper towel when possible. Cloth napkins? That might be a good idea. Following WD’s instruction will save you $83 over the course of a year.
2. Unhook the cable. If you currently subscribe to cable, this could be a huge savings – $600 +
3. Use rechargeable batteries. We do not use a ton of batteries, our digital camera is pretty much the only place where we use rechargeable batteries.  You could save up to $24 this way, but I am not sure if that savings will come in the first year, unless you use a lot of batteries.
4. Cut childcare costs. WD suggests opening a dependent-care flexible spending account. Not every company offers such an account and you would need to be in at least the 28% tax bracket in order to realize much savings. Should you qualify on all accounts, you can save as much as $900. We save childcare costs by having a stay at home mom and “trading” babysitting whenever possible.
5. Drop the landline. Many families are moving to all mobile phones or online services such as Skype in order to save the expense of a landline. WD puts the savings at $300. We have not had a landline since 2001.
6. Sell the gold. My kids see the “sell old gold” commercials on television all the time. They are convinced that we are going to get rich this way. The problem is that we do not have any old gold. WD suggests that if you do have gold to sell, take it to a jeweler, do not mail it in. I think this is sound advice. At the same time, I doubt that I will be making $200 anytime soon. Have any of you sold scrap gold for money?
7. Chop and grate. Stop purchasing vegetables, fruit and cheese that is already sliced, diced, pealed or grated. I do not know a whole lot about grocery prices, but WD estimates yearly savings of $260 using this technique. Is that accurate? It is worth it, if that is an accurate number.
8. Cancel the gym. Gyms can be one of the biggest money pits around. Some gym membership contracts are harder to get out of than an arms treaty. Cancel it and find a way to work out for free and you could save as much as $420 a year.
9. Reduce dry cleaning. We have little need for dry cleaning. I used to have to wear a suit and tie to work every day, so this cost was high. My current job . . . well, let’s just say that I wore a polo shirt and shorts recently and one of my coworkers asked why I was dressed up. No more drycleaning, annual savings: $120.
10. Think before you print. Ink cartridges are a killer on the wallet. Do everything you can to reduce the amount of printing – both black and white and color – that you can. We usually only have to replace our cartridges once a year, but it still costs close to $75. WD estimates that you could save $120 annually.

This list did not save me $2,010 this year, but if you are new to frugal living, you might find lots of areas on this list to reduce your spending. You and I can always make do with less. Believe me, we can.

Article by Stew

Photo by Seth Tisue

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chase blueprint

In recent times, I have been receiving email from Chase and their “fabulous” new concept: Chase Blueprint. I was a bit reluctant to look into this “new concept” as I wondered how it could really help a person to manage his debt better… especially since the idea came from a bank

However, I have received more information about the Chase Blueprint features and they appear promising.

chase blueprint

What is Chase Blueprint?

As the name suggests, Chase is offering you a way to create a Blueprint to pay off your debt. Blueprint is a free debt management system that allows setting repayment goals for specific expenses.

Forget about the regular zero percent balance transfer credit card and think about a genuine, useful tool to manage your debt. The Chase Blueprint works with 3 of their credit cards (see details below). Here how it works:

#1 A Blueprint to Eliminate Interest Charges on Recurrent Monthly Expenses

The feature I like most is the fact that you can separate your recurrent monthly expenses on your statement. If you make the payment in full for this specific category on a monthly basis, you won’t pay any interest on these bills. Better than that: the Blueprint tells you exactly how much you have to pay so you don’t even have to bother!

Example:

Let say you spend around $1,000 in recurring expenses (such as gasoline, grocery, cable, phone, cell phone and internet) but you also had some Christmas gifts that you can’t pay right away totalling an additional $300 (I do not suggest you finance your Christmas gifts but we all know that stuff happens from time to time!).

With a regular credit card, you would spend your $1,300 on your credit card and you will be charged for interest on $1,300 for one month. At a 15 APR, this is $16.25 in interest costs.

However, with the Chase Slate credit card with Blueprint, you will only pay interest on $300, which means $3.75.

So you can simplify your finances with the Chase Blueprint without having the worry of being gauged by interest charges.

#2 A Blueprint to Split Your Expenses And Manage Them

If you buy a new TV or a new refrigerator with your Chase credit card, you will have the possibility to know exactly when you will pay it off completely.

You have the option to choose the payment you want to make or in how many months you want your purchase to be paid off. Upon your selection, Chase Blueprint will calculate your payment and will tell you when it will be paid off.

Each month, you will be able to see your progress on paying down this specific purchase and you will be able to change your original payback plan if you would like (this is perfect to implement a debt snowball).

#3 A Blueprint to Pay Down Your Balance Faster

In addition to paying your recurring expenses in full without paying interest, to track down specifics purchases, you can also determine when the rest of your balance will be paid off.

With this feature, Chase Blueprint allows you to select your payment or number of months you want to take to pay off your credit card balance completely.

#4 A Blueprint to Track Your Debts Down

Do you wonder how much you pay to eat outside of the home each month? Your Chase Credit Card can track down your budget with the Blueprint feature. You can also setup your budget and determine how much you want to spend in each budget categories.

Each month, you will be able to track down your expenses and calibrate your budget accordingly.

chase blueprint

They now offer a 0 APR for the first 12 months

In order to try the Chase Blueprint system without any costs, they offer the Slate^SM from Chase Credit Card (regular credit card),  the Chase Freedom Credit Card^SM (cash back credit card) and the Chase Sapphire Credit Card^SM (reward points credit card) for free (no annual fees) and they also offer a 0 APR for the first 12 months (for the Slate and Freedom credit card) AND a 0 APR balance transfer for the first 12 months as well (for the Slate credit card). Therefore, you can try the card for free and see if their Blueprint really works for you.

You will have time to get used to the new features of these very interesting credit cards and it won’t cost anything to do so!

Overall, here is what the Chase Credit Cards with Blueprint has to offer:

#1 Blueprint system for free that enables you to manage your debts according to your terms.

#2 Avoid paying interest on recurring expenses upon full monthly payment.

#3 0 APR trial period of 12 months (Freedom and Slate).

#4 0 APR on balance transfer for 12 months (Slate).

#5 No annual fees.

#6 Zero Liability on unauthorized payment

Since it is free and the Blueprint system really works, I suggest you give it a try. Go see for yourself, read about the amazing Blueprint system. I would personally apply for the Chase Slate credit cards since it offers a 0% both on new purchases and balance transfer:

Chase Slate Credit Card description:

Chase Freedom Credit Card Description:

And for those who are looking for one of the best reward programs, you can also order the Chase Sapphire Credit Card

Chase Sapphire Credit Card Description:

Author: Mike.

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