Where did you move to? Where did you move from? How did you decide?

Larger income? Better job for similar income? Lower housing costs? Something else?

Share your story in the comments below!

I don’t think there will be as many as the 358 replies to my six-figure salary stories request, but I’m sure reading your case studies would be very interesting.

Related posts:

1. Do You Make A Six Figure Salary? Share Your Story.
2. What Cities Are People Moving To For Financial Reasons?
3. U-Haul vs. Penske Moving Truck Rentals: Share Your Story

Moved For Financial Reasons? Share Your Story. from My Money Blog.

© MyMoneyBlog.com, 2012.

Although it takes considerable effort, nearly 40 million Americans move every year. Now, the reasons for all these moves are not all financial, but you can improve your financial situation drastically by moving. You might increase your income, decrease your housing costs, or decrease your tax bill.

Where are people moving to? This Forbes article analyzed address data from IRS tax filings, and found that a trend that households are moving to warmer climates with lower taxes and property values. The majority of the top ten counties are in Texas and Florida, where there is no state income tax.

After accounting for property taxes, Shrum’s analysis shows that Texas has the fourth-lowest personal tax burden in the country, and Florida has the eighth lowest.

They also compiled an interactive map which shows relative inflows and outflows for each county. (Previous year’s version here). It’s pretty fun to click around to where you live, and where you might consider moving to.

Below is the map for Travis County, TX, where Austin is the major population center. A blue line between two counties mean that more people migrated to Austin than left, and a red line means that more people left Austin for that county than came in.

Where are people leaving? Places with high tax rates.

Shrum also points to eight states that have targeted wealthy households with extra-high tax brackets: California, New Jersey, New York, Maryland, Hawaii, Oregon, Connecticut and Wisconsin. Six of the top 10 counties the rich are fleeing are located in those states.

Personal case study. My sister used to live in San Francisco, California. She recently moved to Austin, Texas where her income increased and her housing costs decreased at the same time. Texas has no state income tax but relatively high property taxes. But since she rents in both places, the lack of state income tax becomes yet another boost to her bottom line. I should note that we both lived there for a while as children, so there is some familiarity, but she left in elementary school. From the looks of it, she wasn’t alone!

Related posts:

1. 20 Common Attributes Of People Who Improved Their Financial Situation
2. Median Housing Price to Income Ratios For Various Cities
3. Save Money on Housing: Move To a Lower Cost-of-Living Location… Like Austin, Texas?

What Cities Are People Moving To For Financial Reasons? from My Money Blog.

© MyMoneyBlog.com, 2012.

The plan is cheap too. For $45 a month you get unlimited minutes, unlimited text, and unlimited data with no contracts and no credit checks. So you can bring over any AT&T iPhone 4 that is no longer in a contract, and you’ll still be using the AT&T or T-Mobile network with 3G data (for better or worse). You’ll need the $45 a month plan card to activate the SIM. I read some rumors about slow data speeds but others say it’s fine. I do doubt it’s really “unlimited” if you are an especially heavy data user. But for casual users, this would look to supplant the Sprint Employee EPRP plan as the cheapest iPhone plan with unlimited text and data available.

Related posts:

1. Cheapest iPhone 4S Plan = $69.99 Sprint Everything Plus Referral Program (EPRP) with Unlimited Data and Text
2. Sprint SERO Premium + iPhone 4S = $50 a month
3. Republic Wireless Review: $19/Month Unlimited Plan Details

Straight Talk SIM Card + iPhone 4S = $45 Unlimited Prepaid Plan from My Money Blog.

© MyMoneyBlog.com, 2012.

Visit this promotion page to sign up for Online Cash Services and if you (1) sign up for a Visa debit card and make 4 purchases of $10+ by 3/31/12, and (2) enroll in BillPay and pay 4 bills totaling $100 between 1/15/12 and 3/31/12, you will get $100 each = $200 total. Both the debit card and online BillPay are free services.

Many of you many have old, inactive TDA accounts that are still open and you can fund them to take advantage of this promo. Offer not valid for existing debit card holders or bill pay users (boo). Via reader Michael via FW.

Related posts:

1. Easy Money: Get Paid $115 To Try These Financial Services
2. Updates: Earn $100+ In Free Money Trying Out Financial Services
3. Costco American Express $25 Bonus, Chase NYC Commuter Cash, Free Credit Scores

TD Ameritrade Online Cash Services $200 Bonus from My Money Blog.

© MyMoneyBlog.com, 2012.

New, improved offer! The Slate Card from Chase is now available with 0% APR on both balance transfers and purchases for 15 months, and the best part: NO balance transfer fee! There are different flavors of this card, but you should see it mentioned right at the top of this specific offer link. You can literally borrow money for free and pay it back in 15 months with no interest (keeping in mind you’ll still need to satisfy the minimum payment each month until then). No annual fee.

This is a limited time offer, and very rare these days to find a no balance transfer fee 0% APR offer that is available to all (as opposed to being targeted only to specific customers). You can verify in the Pricing & Terms section of the application, down in the Fees box:

None on transfers made within 30 days of account opening. All other transfers: Either $5 or 3% of the amount of each transfer, whichever is greater.

Make sure you initiate that balance transfer within the first 30 days.

Lower your interest on balances!
This is a great opportunity for those people with good to excellent credit but are still working hard to lower their debt payments with no fees at all, as now you can have all your money applied directly into cutting down your principal instead of having it go towards interest. That way, your balance owed will go down that much faster.

Chase Blueprint is a free feature on select cards that lets you break down your balances into things that you want to pay in full each month and bigger purchases that you wish to pay off over time.

Earn interest with the money?
It’s been a while since I did any sort of credit card arbitrage, but you can still get some pretty high rates with certain rewards checking accounts. For example, Consumer’s Credit Union has their Free Rewards Checking account paying 4.09% APY interest on balances up to $10,000 if you make 12 debit card purchases + one billpay per month. The rate is even guaranteed at least through June 30, 2012. You can join with a $5 one-time fee, even integrated into their online application:

All credit unions have a common bond and their members need to be associated with it in order to join the credit union. At Consumers Credit Union (CCU), our common bond is the Consumers Cooperative Association (CCA). You join CCA by paying a one-time fee of $5.00.

Another good option is U.S. Savings Bonds. Series I bonds bought right now will earn 3.06% for the first six months, and then an unknown rate based on ongoing inflation after that. Even with zero inflation, it will still earn more than any 1-year bank CD… and I really don’t see zero inflation.

If you wish to get cash from this balance transfer offer without it being classified as a “cash advance”, one idea is to ask for the balance transfer as a check or electronically transferred to your bank account. You may need to call them for this. Another option is to request money to be transferred to other non-Chase credit cards that you have, ideally already with a balance on them. This will create a negative balance, after which you request a refund check be sent to you. I know that Citibank had a feature on their site to request a credit balance refund, which only showed up when you have a negative balance.

Slate Card from Chase with No Balance Transfer Fee application link

Related posts:

1. Chase Slate Card: 0% APR Balance Transfers and Purchases for 15 months
2. No Fee 0% APR Balance Transfer For 12 Months – Discover Card – Expires 2/28!
3. No Fee 0% Balance Transfer For 12 Months – Discover More Card

Slate Card from Chase: 0% APR For 15 Months + NO Balance Transfer Fee! from My Money Blog.

© MyMoneyBlog.com, 2012.

I would like this to be similar to my Favorite Posts on Investing page and Our First-Time Homebuying Experience guides (which also need to be cleaned up…).

Expense #1 – Housing

I am going to go through all the major categories, but let’s start with the biggest expense – housing. I’m keeping this part to ways to reduce either rent or mortgage PITI (principal, interest, taxes, and insurance). Things like reducing heating bills or furniture costs will be kept separate for later.

Move to a different city/state/location
- good places in US to consider moving to
- what cities are people moving to?
- international living (working or retired)

Renting
- Rent comparison sites
- rent vs buy calculators
- buying a house for psychological benefit vs. financial

Move to a different house
- change size
- neighborhood, location
- shared living, multigenerational living
- multiple units

Buying a house
- Getting a mortgage loan
- Credit scores, income, points, etc

Refinancing mortgages
- Rate comparison
- Mortgage types (fixed, ARM, length)
- Maximizing home appraisal

Homeowners Insurance
- Shopping for homeowner’s insurance
- Deductibles, options
- Renter’s insurance

Property Taxes
- Appealing assessment value
- Special rules in certain states

I’m just starting out and I know I’ll need to write several new posts to fill in the gaps. However, I want to make this an open brainstorming post so that you the reader can make sure I don’t forget anything. Got something to add? Please leave a comment with a tip, a link, or an idea to explore further.

Related posts:

1. One Guy’s Thoughts on Housing Prices
2. Ask The Readers: Is This Affordable Housing Opportunity A Good Deal?
3. Pay Down First Home, Convert to Rental?

How To Reduce Housing Expenses – Brainstorming / Request Ideas from My Money Blog.

© MyMoneyBlog.com, 2012.

That means you early-birds out there (not me) are probably chomping at the bit to file your taxes! So here’s a question to you readers about last year:

A better question would be why you chose that software – price, convenience, trust, quality of product, or what? Would you have switched if a competitor was $25 cheaper?

Related posts:

1. eBay, Half.com, PayPal, Amazon.com Sellers: 2011 IRS 1099-K Regulations
2. How To Generate and Issue Your Own 1099-MISC Forms
3. Free IRS Tax Filing Extension Instructions 2011 (Online/E-File)

Poll: Which Tax Software Did You Use In 2011? from My Money Blog.

© MyMoneyBlog.com, 2012.

Via Abnormal Returns, Ben Lorica of The Verisi Data Studio took an academic paper by Dichev and Yu [pdf] in the Journal of Financial Economics and made a nice visualization of the hunk of data presented about hedge funds:

click to enlarge

From the paper’s conclusions:

Using a comprehensive sample, the main finding is that dollar-weighted investor returns are about 3% to 7% lower than fund returns, depending on specification and time period examined. This difference is economically large, and it is enough to reverse the conclusions of existing studies which show outperformance in hedge fund returns. In addition, the estimated dollar-weighted returns are rather modest in absolute magnitude; for example, they are reliably lower than the returns of broad-based indexes like the S&P 500 and only marginally higher than risk-free rates of return.

Most of us can’t invest in hedge funds even if we wanted to, so this is best taken as a larger lesson to be careful when chasing hot returns by any money manager. You don’t want to be the last money in. Morningstar also tracks “investor returns” (dollar-weighted) separately from “total returns” (traditional, time-weighted) in their mutual fund listings.

Related posts:

1. Morningstar Investor Returns: Another Reason Why Chasing Past Performance Is Bad
2. Hedge Funds: Too Sexy For My Money
3. Index Fund vs. Top Hedge Funds: Buffett Makes A Bet

Hedge Funds: Actual Investor Returns Less Than Advertised from My Money Blog.

© MyMoneyBlog.com, 2012.

The Dropbox free version offers up 2 GB of storage free to start, which you can increase to nearly 20 GB with various tasks. It may not be big enough for a full backup, but plenty for my important files. Check out this Lifehacker guide that details all the possibilities. You get 250 MB free by signing up under a referral link, and I get 250 GB extra too. I’ve only gotten 3 referrals up until now, but with other stuff was already at 4.5 GB free.

Today Lifehacker adds that right now if you install their new Beta version which lets you automatically back up photos and videos from your cameras/phones when connected to your computer, Dropbox will give you even more space – for every 500 MB of photos and videos automatically uploaded, you’ll receive another 500 MB of space permanently, up to 4.5 GB total. I synced up the photos from my iPhone and already have another free gig and counting. Sweet.

Related posts:

1. Make Money Bidding on Self Storage Auctions?
2. 4 More Ways To Get A Free Credit Report
3. Increase in Housing Quality vs. Increase in Housing Prices

More Ways To Increase Your Free Dropbox Storage from My Money Blog.

© MyMoneyBlog.com, 2012.

In particular, the number of households headed by 46-50 year-olds are the best indicator because they are shown to have the highest spending. This makes sense, as around age 50 is also when peak income occurs while you also have spending pressure from grown-up kids and college tuition. After that, the kids move out, things slow down, and average income drops. Here are some charts from the HS Dent Foundation website:

Source:HS Dent Foundation

By looking at birth rates and adjusting for immigration, you can basically predict how many 46-50 year-olds there will be well into the future. Here’s how the shifted birthrate data corresponds to the Dow Jones stock index adjusted for inflation:

Source:HS Dent Foundation

According to the birthrate data, we are looking at depressed prices for another 10-15 years or so, but things will pick back up after that. While I think there may be something to this concept on a long timescale, I would be careful with trying to profit with it in the short-term.

I’m actually look at Mr. Dent himself here – a quick look around shows that he is trying everything under the sun to make money from this simple theory – writing a new book every few years with mostly the same content (2011, 2009, 2006), selling $1,500 seminars to “Demographics School”, and even starting his own Dent Tactical ETF (ticker symbol: DENT) with poor performance since inception and a bloated 1.65% expense ratio. Potential investors should know that he already started a mutual fund previously that failed:

In 1999, the AIM Dent Demographics Trends Fund was launched, based on the demographic economic and lifestyle trends identified by Dent. Unfortunately, the fund’s results were miserable. From 2000 through 2004, the fund lost more than 11 percent per year and underperformed the S&P 500 Index by almost 9 percent per year. In 2005, its sponsor put investors out of their misery by merging it into the AIM Weingarten Fund.

Over the years, he has made many predictions. Some of them came true, more or less. For example, he predicted that the slowdown in Japan economy would coincide with the end of the end of their peak number of 46-50 year-olds in 1990-1994. Some of them did not, like in 2006 when he predicted the Dow Jones would reach 32,000-40,000 in the year 2010 (the highest ever close was 14,164 in 2007).

The last prediction I could find was Dow 4,000 to 6,800 somewhere around 2012. That’s over a 50% drop from today’s prices. I think I’ll add this demographics theory to my investing consciousness, but I’ll leave the bold predictions behind.

Related posts:

1. Stock Market Timing Using Historical Moving Averages
2. Magnifying Fear and Joy In The Stock Market
3. A Better Way To View Stock Market Risk

Correlation Between Age Demographics and Stock Market Prices? from My Money Blog.

© MyMoneyBlog.com, 2012.

This is a review of How To Retire Early and Live Well With Less Than A Million Dollars by Gillette Edmunds, a book published in 2000 that was recommended to me by a reader. Edmunds was a former tax attorney and financial journalist who retired in 1981 at age 29.

Unreasonably High Expected Returns
Remember that for both the 1980s and the 1990s, the average annualized total return of the S&P 500 for both decades was around 18% a year. Imagine two decades of such returns, all before the dot-com bust and the housing bust. Edmunds retiring in 1981 turned out to be some of the luckiest timing possible. As a result, a major criticism of this book is the continued expectation of high stock returns going forward. The quoted excerpts below are taken verbatim from the book:

• Can you retire today? His answer is that “most middle-class Americans, including me, could live comfortably on the investment returns from $500,000.” Perhaps, but with currently-accepted safe withdrawal rates of 3-4%, this would only create $15,000 to $20,000 a year in income. Instead, the book promotes withdrawals rate of 8-10%, which would have left many nest eggs completely wiped out from 2000 to 2010.
• “An average, educated, experienced investor can reasonably expect to make 10% a year for life.”
• “Anyone should be able to produce a 7.75% return.”

I bet these assumptions sounded reasonable, perhaps even conservative, in 2000 but they are just bad jokes today.

Owning Non-Correlated Asset Classes
Edmunds tells us not to time the markets, ride out temporary market drops, and to maintain low investment costs. He advises you to hold a variety of “non-correlated” asset classes such as:

• Real Estate
• Foreign Stocks
• US Large Stocks
• US Small Stocks
• Emerging Markets Stocks

Edmunds believes that these asset classes are on different business cycles. When one is going up, the other is going down. However, I don’t like the term “non-correlated”, as very few asset classes have negative correlations these days. Low or minimally correlated is a better term. As we saw in the recent financial crisis, when the poo hits the fan correlations can go back to 1 (everything goes down together). However, I agree with the general asset allocation advice of holding different asset classes with minimal correlations. He counts as an early proponent of not holding too much in US stocks (no more than 1/3rd of total portfolio), and an equal amount in foreign stocks (also use for 1/3rd of your portfolio).

I did have an issue with the lack of supporting evidence as to why these assets and not others, as we only get weak arguments like “after owning bonds for about five years, I realized that a portfolio of five different high-return asset classes that excluded bonds had both high predictability and high returns”. I’m sorry, but making a conclusion to stop holding bonds after 5 years of data is just plain bad advice and makes him come off as egotistical.

He ends the book with a philosophical epilogue with the usual “money isn’t everything, enjoy life with family and friends” material. I don’t mean to belittle the importance of this factor, just that I didn’t really learn anything new from it. He does come off as well-intentioned and talks about the effect of his divorce. Despite its flaws, I found this book worth the read as it encompasses the overall philosophy of one person who had been successfully retired for 20 years. Just remember he had a very strong tailwind of high returns, and adjust your own expectations accordingly.

Other “early retirement” books that I’ve reviewed:

• ¹Cashing in on the American Dream: How To Retire at 35
• Early Retirement Extreme
• Your Money or Your Life
• The 4 Hour Workweek

Related posts:

1. Book Review: Yes, You Can Still Retire Comfortably!
2. Book Review: All About Asset Allocation
3. Book Review: Early Retirement Extreme

How To Retire Early and Live Well With Less Than A Million Dollars [Book Review] from My Money Blog.

© MyMoneyBlog.com, 2012.

Imagine that all your investment holdings were sold overnight by accident.

Would you buy back everything you owned previously again at their current prices? If not, why are you holding them now?

I think this provides a fresh look at your portfolio, as many times we hold investments for irrational reasons. For example, there is the well-documented trait of loss aversion (even though readers of this blog may be immune), where investors really hate selling at a loss, even more than they love selling with a gain.

Perhaps you bought the stock at $20 a share, and it is now at $15 a share. You want to get rid of it “just as soon as it gets back to $20 a share”, so that so you can say you didn’t lose money on it. It’s better to admit the mistake and put your money in something better.

Then there is regret aversion. Perhaps you bought it at $50 a share and now it’s at $400 a share. You get to tell your friends how you bought Apple at $50 a share. You’re afraid it’s overpriced, but you don’t want to miss out if it rises some more. You sit on your gains and choose inaction instead of having to make a hard decision even though your money could be better deployed elsewhere.

Maybe it is company stock from your job, or shares that you inherited from a beloved family member. Whether is it some form of sentimental attachment, inertia, or plain laziness – you may want to consider your reasons for holding them.

There is a small exception to this rule if you are sitting on large capital gains in a taxable account and don’t want to realize them and get hit with the tax bill, especially if the alternative investment is also very similar (ex. mutual funds with similar holdings). However, even in this scenario you want to make sure that you’re not holding a poor investment just to put off a tax bill.

I did not come up with this myself, but read about this rule somewhere online within the last month. I’ve searched for the source but can’t find it, so please let me know if you do. Found it, thanks!

Related posts:

1. Frugal Living Ideas and the Rule of 72
2. Portfolio Manager Rick Ferri Shares Personal Portfolio and Asset Allocation
3. Building My Portfolio: Efficient Frontier and Modern Portfolio Theory

The Overnight Rule For Managing Your Portfolio from My Money Blog.

© MyMoneyBlog.com, 2012.

Citibank $50 bonus if you open a Citibank account with $1,000 and complete 1 direct deposit and 1 electronic bill payment for 2 consecutive months. New checking account customers only. There’s no monthly service fee if you maintain a $15,000 combined average monthly balance requirement in eligible products; otherwise $20.00 monthly service fee is applied. Eligible products are linked deposits, loans, mortgages, and investment accounts. $100 bonus available with Citigold account.

Chase Bank $150 bonus when you open a Chase Total Checking account and set up direct deposit (new Chase checking customers only). This account is free if you make a $500+ direct deposit each month, or have $1,500 minimum daily balance.

M&T Bank $100 bonus when you open a MyChoice checking account and set up direct deposit within 90 days. This account is free if you maintain a direct deposit each month or have $500 minimum daily balance. $125 and $150 bonuses also available with upgraded accounts (and higher requirements).

Capital One $100 bonus when you open a Interest Online Checking account by 1/31/2012 using offer code CHEC168DF and make a direct deposit of $250 or more within 90 days. No monthly service fee, and pays 0.75% APY on balances less than $100k.

Related posts:

1. Chase Bank $125 New Checking Bonus In-Branch or Online
2. Checking Account Bonuses: $125 From Chase, $100 From Bank of America
3. Chase Checking Account $100 Bonus Coupon Code

New Checking Account Promotions: Citibank, Chase, M&T Bank from My Money Blog.

© MyMoneyBlog.com, 2012.

As of right now both the Citi Platinum Select Mastercard and the Citi Diamond Preferred Mastercard have a 0% APR on balance transfers for 18 months and on purchases for 18 months. Balance transfer fee is 3% with a $5 minimum. No annual fee.

In addition, the Discover More Card – No Balance Transfer Fee has 0% APR for 12 months but with no balance transfer fee. No annual fee. My unofficial sources tell me that this will be extended for the rest of February, but after that it will likely end. This matches historical patterns that this is a limited-time post-holiday promotion. More details on the promo here.

As always, these cards should be used as a tool to lower the interest rate on your existing debt to accelerate payoff. If you can pay it off in the proper timeframe, some people have paid off their student loans. Consumer debt is kryptonite to financial freedom.

Related posts:

1. Navy Federal Credit Union No Balance Transfer Fee Promotion
2. Are 0% APR Balance Transfer Offers Coming To An End?
3. Free Money! …aka Best of 0% Balance Transfer Offers

0% APR Balance Transfer Promotion Updates from My Money Blog.

© MyMoneyBlog.com, 2012.

When the Treasury announced the $10,000 purchase limit for 2012, a few readers asked if you should buy savings bonds in January, or wait until later in the year. Since then, a few things have happened. For one, the Federal Reserve has basically said that they will keep their target fed funds rates at zero until late 2014, while setting a target inflation rate at 2% annually. Translation: Interest rates on savings accounts and similar products will be remain crap while the things we buy get more expensive.

Also, we have another month’s worth of Consumer Price Index (CPI) data which is how the inflation rate is defined for savings bonds. The next 6-month variable rate update will be based on the CPI-U change between September 2011 and March 2012. We are halfway there:

CPI-U
Sep 2011 226.889
Oct 2011 226.421
Nov 2011 226.230
Dec 2011 225.672
Jan 2012 ?
Feb 2012 ?
Mar 2012 ?

You can see that inflation is actually negative over these three months. However, user MoneyOCD of Bogleheads posted this informational chart showing that in recent years there have been many periods of negative inflation from September to December, only to be followed by periods of higher inflation from December to March.

Basically, making predictions now is premature. If you buy in January through April, you will get a fixed rate of 0%, and a variable rate of 3.06% for six months. Given the interest rate environment, this is pretty much one of the best options for “safe” money. If you wait all the way until May, you’ll get something new based on whatever happens to inflation the next few months along with a fixed rate that will most likely be zero again. The inflation rate resets every 6 months based on your purchase month.

In general, if you have the money and are looking to put it in shorter-term, low risk investments that are guaranteed not to lose money (in terms of face value), I would be maxing out my limit on savings bonds for 2012. Keep in mind that savings bonds can’t be cashed in for an entire year after purchase. My personal opinion on the short-term? I don’t see any benefit in waiting until May. If you have money to put aside now, buy Series I savings bonds now. If you don’t, just wait until you do. The rate is already higher than savings accounts or 1-year CDs, and by waiting around in a 0.75% savings account or 1-year CD you’ll be missing out in interest.

If you’re looking to buy in January, I’d put in your order today at TreasuryDirect. It’s better to buy near the end of the month, as you get credit for the entire month no matter if you buy at the beginning or the end.

Related posts:

1. US Treasury Ends Paper Savings Bonds in 2012
2. Savings I-Bonds November 2010 Fixed Rate: 0.0%
3. Savings I Bonds September 2011 Update: 3.06% For Next 6 Months

Savings Bonds vs. Bank Savings Accounts from My Money Blog.

© MyMoneyBlog.com, 2012.

Along those lines, I received a PR e-mail from a site called 1417power.com. The idea is that you pay them “tuition”, and in return they pay your kids official job income that makes them eligible to contribute to a Roth IRA. They claim to follow all applicable child labor laws for those aged 14 to 17 (thus the name). Your kids do thing like fill out marketing surveys, but you’re essentially buying them a job. Digging through their fee structure, roughly 50% of what you pay them is skimmed off to go to the site owners.

Naturally, my question was – why can’t I just do this myself? The idea of paying your kids to do things like babysitting, lawn care or landscaping work, or manual labor seems simple enough. However, this Fairmark article argues that paying your own kids for chores is usually not considered taxable income, so you can’t “switch it” to taxable income for Roth IRA purposes when it benefits you. I’m not completely convinced, but for the sake of argument let’s explore other options:

• Have the teenager earn money via traditional jobs like grocery bagger, cashier, food delivery, waiting tables, etc.
• The child earns income from other neighborhood families doing things like babysitting, lawn care, or painting. The pay rate would have to be at reasonable market rates. You could even work out a “I’ll pay your kid if you pay mine” agreement, if you find a like-minded parent.
• If you run your own business, you could pay the child for more clerical or administrative-type duties such as proofreading, delivering documents, or office organization.
• If the teenager is especially industrious, they could be doing more skilled work like graphic design or making iPhone apps.

There would still be some loss, as their gross income would be subject to payroll taxes like Social Security and Medicare, as well as a small amount of federal income taxes (less than 10%). But if your child has the discipline to not touch the money for decades, the tax-free growth could be enormous. You’d have to be comfortable with the fact that they could do whatever they wanted with the money at age 18 as they can withdraw the money after taxes and penalties.

The Parental IRA Match
Another move taken from this Forbes article for those that are already parents of teenagers with part-time jobs is to match their earned income. If little Jane earns $3,000 being a lifeguard, then let her spend her all or part of her take-home pay, but help her fund a Roth IRA to the full $3,000.

Effect on College Financial Aid
From my quick research, it appears that retirement accounts like Roth IRA are not considered an asset by the generic FAFSA form, but individual universities may deem them as a student asset. This could make for example 25% of the IRA to counts toward the student’s expected contribution, which doesn’t seem too bad.

Here’s a question for the parents out there – have you done anything along these lines? What did you do and why (or why not)?

Related posts:

1. Roth IRA Contribution vs. Emergency Fund Savings
2. 2010 Roth IRA Income Limits Effectively Removed
3. Does Your Income Vary? Get Around Roth IRA Income Limits

Pay Your Kids To Fund Their Own Roth IRA? from My Money Blog.

© MyMoneyBlog.com, 2012.

I am out of invites, so please randomly choose from one of the links in the comments which are provided by fellow readers.

After you join, go ahead and leave your own referral link in the comments. I have to approve the comments though, so please be patient as it may take a while to show up.

Related posts:

1. Zecco Refer A Friend Promotion: $100 Referral Bonus (2012)
2. 2011 TradeKing New Account Referral: $100 Bonus
3. 2010 TradeKing New Account Referral: $50 Bonus

Clover Pay $5 Bonus via Referral from My Money Blog.

© MyMoneyBlog.com, 2012.

p.s. Groupon has $6 movie tickets to romantic comedy flick “One For The Money”

Related posts:

1. LivingSocial: $20 Amazon Gift Card For $10
2. American Apparel: $50 Gift Card For Just $25
3. $2 for Five Movie Rentals from Blockbuster Express – Groupon

LivingSocial: $20 at The Body Shop for $10 from My Money Blog.

© MyMoneyBlog.com, 2012.

Chase Freedom Visa – $200 Bonus

• $200 bonus cash back after spending just $500 in first 3 months.
• Earn 5% cash back on up to $1,500 spend on rotating categories each quarter. 1st quarter 2012 categories are Amazon.com and gas stations.
• Earn 1% cash back on everything else. There is no limit on the 1% cash back.
• Instead of cash, you can also redeem points at Ultimate Rewards site.
• No annual fee.

Citi Dividend Platinum Select Visa – $200 Bonus

• $200 bonus cash back after spending just $500 in first 3 months.
• Earn 5% cash back on rotating categories each quarter. 1st quarter 2012 categories are fitness clubs, health care, and utilities (including electricity, gas, water, garbage, cable, phone, cell phone).
• Earn 1% cash back on everything else. There is no limit on the 5% categories, but instead there is an overall limit of $300 total cash back.
• No annual fee.

Which one is better?
Both offer a $200 bonus after spending $500 on the card for anything (40% back). Both offer 5% back on select categories, and the good thing is you can benefit from having both cards since their categories often don’t overlap. Both require you to “activate” the 5% online each quarter, which is a bit annoying but only takes a minute. Both cap their rewards at similar levels (5% of $1,500 is $75 per quarter = $300 per year). Both have no tiers on their 1% back on everything else. The Chase Freedom has no expiration of rewards as long as the account is open, whereas the Citi Dividend rewards do not expire as long as you have activity once every 12 months. Last I checked, the minimum redemption amount was $20 for Chase, $50 for Citi. Overall, they are both very similar in my opinion.

However… in my credit card survey a few weeks ago with over 3,000 reader responses, there was an open-ended question asking which card was the “best credit card on the market today”. The #1 most popular answer was the Chase Freedom card, beating out everyone including travel cards. Where was the Citi Dividend card? Not even in the top 20. The people have spoken, but I’m really not sure why! Better commercials?

Related posts:

1. Citi Dividend Platinum Select Visa Card – 5% Cash Back on Rotating Categories
2. Chase Freedom Promo: $100 Sign-Up Bonus + 5% Cash Back
3. Chase Freedom Promo: $100 Sign-Up Bonus + 5% Rotating Rewards

Citi Dividend Platinum vs. Chase Freedom Visa: Which Is Better? from My Money Blog.

© MyMoneyBlog.com, 2012.

For the best value, note that Costco is a participating merchant. Keep in mind, you’ll have to visit two of them, but given all they sell there (stamps, gift cards, toilet paper) you shouldn’t have a hard time saving $50 off on $200 of stuff you would have spent anyway. Screenshot:

Related posts:

1. American Express & Foursquare Promotion: $10 off $10+ Purchase
2. Costco / American Express Promotion: Two Free Months of Membership
3. American Express Gift Chain: Free Gifts Each Time You Spend $25+ on AmEx

American Express New York City Promotion: $50 off $200 from My Money Blog.

© MyMoneyBlog.com, 2012.

The first main topic is hedonic adaption. When things are awesome, we eventually get used to it (celebrities, lottery winners). When things are really awful, we tend to get used to that as well (disabled persons). This is why it’s hard for people to achieve a constantly higher level of happiness. We get a nicer car/house/toy, we get used it, and then soon we want an even nicer car/house/toy, never getting anywhere as if we are walking on a treadmill.

Simply knowing that the good feeling from that purchase is only temporary may help you cut back on your spending. In addition, author Dan Ariely suggests you deal with the hedonic treadmill by pacing yourself when it comes to experiencing pleasure, and (when needed) making painful cuts all at once. For example, you might not buy a entire home theater setup all at once, but perhaps upgrade one component and wait until the shine completely wears off before buying a new couch. If you need to cut costs, it may be better to make a big spending cut by downsizing your house rather than cutting things you’ll miss repeatedly like your daily coffee or selling your stuff on eBay piece-by-piece.

The second main topic is how most of us get more pleasure out of doing stuff than out of having stuff. This especially applies to activities with other people and/or activities that we find important and worthwhile. A nice result form this is that those activities often cost very little or nothing. I think this concept is related to the research by Daniel Kahneman that found that happiness did not increase past earning $60,000 a year.

Below 60,000 dollars a year, people are unhappy, and they get progressively unhappier the poorer they get. Above that, we get an absolutely flat line. I mean I’ve rarely seen lines so flat. [...] Clearly money does not buy you experiential happiness, but lack of money certainly buys you misery,” he said. But the real trick, Kahneman said, is to spend time with people you like.

We all need a certain amount of “stuff” (and thus money) to make us feel physically healthy and safe from harm. Past that, adding more stuff doesn’t seem to help. Schwartz suggests that at some point, one might even stop looking for a job that pays more, but instead go for a job that makes us feel valued and doing something important. Of course, more money can get you to early retirement faster if you’re into that sort of thing, so there is a balance to be made.

Related posts:

1. Graham Hill: Less Stuff, More Happiness (TED Talk)
2. Your Money, Your Brain, and Your Happiness
3. How Much Money Do I Make On The Little Stuff?

Exploring the Connections Between Happiness, Stuff, and Money from My Money Blog.

© MyMoneyBlog.com, 2012.

If you have some American Express Membership Rewards points lying around, perhaps from the American Express Platinum or the AmEx Rewards Premier Gold, then is for you. Reader David reports that right now you can get a $25 Gap gift card for 1,250 points when you redeem by January 29, 2012, which is 50% less than the normal exchange rate for gift cards ($25 = 2500 points). Supplies are limited.

Even if you don’t like Gap clothes, PlasticJungle.com and others from my gift card sellback website comparison will give you up to $83 for a $100 Gap gift card. That works out to a value of 1.66 cents per point (10,000 points = $166), which is much better than any other direct cash-out option, although some people may be able to get better value by redeeming airline miles for award flights.

Related posts:

1. American Express 15,000 Membership Rewards Points Bonus
2. Practical Uses For American Express Gift Cards
3. Free 25,000 Rewards Points ($250 in Gift Cards or a Free Plane Ticket) For American Express Business Gold Card

Best American Express Membership Reward Redemption: Cash Via Gap Gift Cards? from My Money Blog.

© MyMoneyBlog.com, 2012.

Discount Policy Change Notice
Effective your February bill cycle, Family and Business Share monthly plan charges will be billed differently. Discounts will only apply to the monthly recurring charge of the primary line. Line 2 will be billed at the applicable Add-a-Phone rate and will not be discount eligible.

Previously, the discounts applied to first two lines, but now it only applies to the first line. (What if both users qualified for discounts?) SprintFeed has an earlier leaked memo with example. In addition, this SprintUsers post (by an actual Sprint employee) reports that this indeed constitutes a material change to the contract, and thus gives you the ability to cancel your contract before the end date without having to pay an early termination fee (ETF). However, you must actually end your contract, as opposed to simply switching to a month-to-month basis. You’ll probably have to escalate your call to the Sprint retention department, and they may offer you some sort of incentive to stay on your plan.

Related posts:

1. Cancel Your Sprint Contract Without Penalty – Success Stories [January 2010]
2. Cheapest iPhone 4S Plan = $69.99 Sprint Everything Plus Referral Program (EPRP) with Unlimited Data and Text
3. Get Out Of Your Sprint Cellphone Contract Without A Penalty

Sprint Family Plan Discount Change, Cancel Without Penalty from My Money Blog.

© MyMoneyBlog.com, 2012.

By the way, if you have a smartphone you can also score additional free points from Hilton and other points programs by “checking in” using the Foursquare app (or Facebook, Twitter, and Instagram) when you register with TopGuest. You can get 50 Hilton points every day you check in at a Hilton hotel, for example. You only need to be within 10 miles of the hotel to check in the first time, and in future times I don’t think you need to be nearby at all.

To receive the Hilton HHonors™ mobile messaging enrollment bonus offer, you must register for the program between January 20, 2012 and June 30, 2012. HHonors members who enroll in this program will receive an enrollment bonus of 1,000 HHonors Bonus Points. In addition, HHonors members have the opportunity to earn up to an additional 4,000 HHonors Bonus Points by spending a minimum US $100 using your Hilton HHonors mobile messaging enrolled Visa card at any participating U.S. hotel or resort in the Hilton Worldwide portfolio after enrolling in the program. Please allow up to six weeks from enrolling for the enrollment bonus of 1,000 Bonus Points to appear in your account. Please allow up to six weeks after completing the minimum spend for additional HHonors Bonus Points to appear in your account.

Related posts:

1. Bored Money: e-Rewards is my NetFlix Alternative
2. Marriott Rewards Premier Credit Card: 50,000 Points + Free Hotel Night Certificate
3. 100 Free Starwood Hotel Points For Earth Hour

Visa & Hilton Honors Promotion: 1,000 Free HHonors Points from My Money Blog.

© MyMoneyBlog.com, 2012.

Looking back, 2011 was a great year for credit card sign-up incentives. The major issuers rolled out some new cards and features and offered up big bonuses to get you to try them out. By picking up the tastiest offers, you could have reaped thousands of dollars in bonuses even with average incomes and without spending more than normal. If you have good to excellent credit, why not earn some money with it? Here’s what Mrs. MMB and I decided to jump on last year:

Chase Sapphire Preferred: $500 cash or $625 in travel
The Chase Sapphire Preferred Card gives you 50,000 bonus points after you spend $3,000 in purchases within the first 3 months. With this new card, Chase is basically trying to make a premium card that competes with American Express, with their Ultimate Rewards rivaling Membership Rewards. (It’s metal and heavy, too!) For example, you can now transfer Ultimate Rewards points to Continental/United, Southwest, British Airways, Hyatt, and Marriott. This the same system the Chase Freedom card uses now as well.

But my favorite features are the cash options and the 25% bonus towards travel. 10,000 points = $100 cash = $125 towards travel at no markup (same price as Expedia, Travelocity, etc). You can mix points and cash however you like, which means 50k points = $625 towards any airfare or hotel nights. No annual fee the first year, $95 after that. For more details, please see my Chase Sapphire Preferred review post.

Chase Ink Bold: $500 cash or $625 in travel
The small business version of the Chase Sapphire, this card also offers a huge sign-up bonus. The Chase Ink Bold with Ultimate Rewards gives you 50,000 Ultimate Rewards points after spending $5,000 in the first 3 months your account is open. For more details, please see my Chase Ink Bold review post, including details on what constitutes a small business.

Citi ThankYou Premier: $500 in gift card or $665 in airfare
The Citi ThankYou Premier Card is another travel-oriented premium credit card gives you 50,000 ThankYou points after spending $2,500 within 3 months of account opening. The special feature here is that it offers you a 33% premium on when used towards travel. That means those 50,000 ThankYou points can be redeemed for $665 in airfare. They also have their own airfare portal with the same prices as Expedia, and you can also mix and match cash and points if you don’t have enough points to pay for the entire amount. For more details, please see my Citi ThankYou Premier review post. (Now expired)

Delta Gold SkyMiles American Express: 30,000 miles + $99 Companion voucher
The Delta Gold SkyMiles American Express is not a great deal for everyone, but it works out very well for us. (It’s actually our second card, I had one previously.) My wife and I both fly cross-country together to a city primarily served by Delta at least once a year to visit the parents. The sign-up incentive is pretty good – 30,000 Skymiles after just $500 in purchases within 3 months. More importantly, the card comes with a buy-one-get-one-for-$99 companion voucher that saved us $250+ this year since it’s usually during a holiday. We’ve used this voucher before, and the prices are comparable to online travel engines, but you do get stuck with the taxes of $50 or so. The annual fee is free the first year, and $95 after that. You also get a free checked bag on every flight for you and up to 8 travel companions (so one card gets us two free bags as a couple, a $25 value per person each roundtrip). The total one-year value of this card is at least $600 if value a mile at a penny.

Grand total: $625 + $625 + $665 + $600 = $2,515
That’s just for four cards from three different issuers, which is far less than the most cards I’ve applied for in a year on my own. This means a couple could make over $5,000, which is 10% of the 2009 US median household income of $50,221 per US Census. As for us, we plan on making good use of this money to cover future airfare and hotel expenses. This total also does not include any earnings from cash-back rewards credit cards.

If we include the Chase Ink Bold, the required spending total was $11,000. Exclude the Ink Bold, and it goes down to $6,000, which if you use time-shifting techniques like pre-paying bills such as insurance/utilities or buying gift cards for groceries/gas, works out to a reasonable $500 per month. That’s well within our normal spending anyway.

Honorable mentions go out to three other cards:

• The Chase British Airways 100,000 miles offer came back in 2011 (now expired), but both my wife and I already jumped on it previously and have already used it for a luxurious business-class trip around Europe.
• The Southwest Airlines card offered up 50,000 points (also expired) which was good for over $800 in Wanna Get Away airfare after just one purchase of any amount. The current offer is 25,000 points for a still-respectable $416 in airfare. We don’t fly Southwest all that often, so we passed on this card this year.
• The Hyatt Card offers two free nights at any Hyatt in the world after any first purchase, which includes some rather swank hotels. There is a $75 annual fee. My sister got this card and we were pretty close to applying, but we wanted to hold off until we had firm travel plans since I believe you have a certain time to redeem.

My psychic powers tell me that some of you are wondering about this , so here’s the answer: How Opening and Closing Credit Card Accounts Affects Your Credit Score.

Related posts:

1. Top Credit Card Bonuses Roundup – June 2011
2. Top Credit Card Bonuses Roundup – July 2011
3. American Express Gold Card: 25,000 Point / $250 Sign-Up Bonus

Credit Card Sign-Up Bonus Summary 2011: Over $2,500 in Free Money from My Money Blog.

© MyMoneyBlog.com, 2012.