Not keeping up with the Jonezez

Replacing the 5% Gas Rebate Card

2007-07-15T08:51:00.000-07:00

I finally found a replacement for my Citi Dividends Reward Card. To review, this card used to provide 5% cash rebate on gas, grocery stores, drugstores, and 1% rebate on everything else capped at $300/year. About 1 year ago, Citibank changed the policy to 2% on the gas/groceries/drugstore leaving thousands of card users in the lurch. As gas prices went up, card users were utilizing more of the gas rebate and Citibank likely realized this card was not as profitable as before.

So for about 6 months, I scoured the internet for a replacement card. Finally..! I found the American Express Costco True Earnings Small Business Card. This now also provides 5% rebates on gas (however, no more supermarkets or drugstores), 3% on eating out, 2% on travel-related expenses, and 1% on everything else. It also doubles as a Costco card and if you are reading this blog, you probably already do a lot of shopping at Costco. The added bonus is, you can also use this gas card to fill up your tank at Costco. Costco gas stations tend to be 5% cheaper than neighboring gas stations (this is their stated strategy)... so if you use this card to fill your tank at costco, you will be saving nearly 10% per gallon on gas. So let's say your price/gallon is $3.00 at your local gas station... Costco will tend to be around $2.85/gallon and if you use your Amex credit card, you are effectively paying $2.71/gallon!!!!

I've already racked up quite a bit of rebate ... and it's unlimited. Note, you don't actually have to be a small business owner to apply for one.

Something to consider... now, if only there was a card that would give you the 5% rebate at supermarkets!!

Discount Real-Estate

2007-04-08T22:18:00.000-07:00

We finally took the plunge and bought a house. After 2 years of searching in the over-priced market that is San Diego, we came across a house that my wife and I really liked. I feel that I can talk about a number of things with respect to this process but I will talk about our experience with a discount real-estate broker.

To begin with, we are very hands on whenever we purchase something and like to do our own research. Whether it's buying a toaster to a bed to a house, we like to be as informed as possible (AKA "maximizers" as described in the excellent book, "The Paradox of Choice"). So when we decided to start looking for a house, we utilized a traditional real estate agent. The traditional agent is supposed to provide expertise in providing you with a number of homes to look at that match your taste, knowing the market, providing accurate comparables, and most importantly, negotiating the deal. The traditional agent is supposed to provide personalized service and most importantly, serve as your fiduciary... the cost is typically 2-3% commission paid by the seller but indirectly paid by you, the buyer since this cost is priced into the cost of the property.

We found an agent that molded well with our personality. She didn't seem like a scheister and appeared to be honest. However, we soon realized that we were doing all the leg-work... finding the houses that we liked on different websites, telling our agent that we wanted to see them, looking at the houses with our agent, even making bids on 2 homes with their help but losing out to other buyers.

Of course, when we went with our agent, everything was always so POSITIVE! I say, "this house has road noise," Agent: "Oh, you just need to put a fountain". Me: "I noticed that drainage in the yard is lacking" Agent: "Oh yeah, I noticed the grass was really wet". Translation.."I want you to buy a house as soon as possible so that it is less work for me. I will make every negative a positive. If I notice a flaw in the house, I won't mention it to you unless you mention it to me." Not quite the fiduciary that meets the "ethical" standards of real estate agents. Now, I know there are good real estate agents out there, don't get me wrong, but the whole business model of real estate agents will eventually need to evolve as the internet plays a more prominent role for buyers and sellers.

Which brought us to try a discount broker called Buyside realty. They will provide a 75% rebate to you from the commission they get. How was our experience with them? To be continued.

Gotta love Costco. Toilet paper, TVs, and Financial Services?

2007-02-15T21:05:00.000-08:00

It's been awhile since I last posted but a lot has happened over the last several months. I finally bought a car and will blog on that experience. As part of the car buying ordeal, I came to the realization that Costco offers a whole lot more than cases of soda, digital cameras, and toilet paper by the bulkload. They also offer a bunch of very practical services, including the ability to finance your car.

In buying my car, I knew I would get the best credit offers because my credit score is >780. So I browsed different options including the local brick and mortar banks (i.e. BofA, Wells Fargo, Washington Mutual), local credit unions (San Diego Credit Union, USE credit union), and online banks. I tried meta-searches like Lending Tree. For some reason, the best rate I could get on Lending Tree was 6.49% for a new car, 36 month payment term as provided by Capital One. I then looked at Costco.

Costco offered 5.64% for the same loan terms (i.e. new car, 36 month repayment) ONLY for executive members. The loan is also provided by Capital One. I'm only a regular member with membership dues of $50/year. However, the executive membership costs an additional $50 for a total of $100/year. With executive membership, Costco will give you 2% rebate on all purchases at Costco. This translates to having to purchase $2600 annually to make up that addtional $50 difference.

I was already sold on the executive membership as the $50 difference was more than made up for with the different loan rates (5.64% versus 6.49%). However, Costco makes it a no-brainer. If you do NOT spend enough at costco to make up the additional $50 difference, they will refund you the remainder of that extra $50! It's a no-lose situation.

Not only does executive membership give you 2% rebate and a lower rate on an auto loan, but there are several other perks that executive members get. I'm starting to sound like a Costco commercial but really.... what other company provides such no-risk terms! Something about those companies in the Northwest that just provide fantastic service and products (see Nordstrom, R.E.I., Costco). Extra bonus. Get a Costco True Earning American Express card and you get 3% rebate on travel, 2% on dining out, 1% on everything else (this is in addition to your 2% rebate on costco purchases if you are executive). Awesome.

Spending a load, but still saving (I think)

2006-11-12T00:07:00.000-08:00

Either my mouth is too small or my coordination is still in the developmental stages. Just the other day, I was sitting on the couch, IBM notebook (circa 1999) on my lap with the TV as background noise. I reached over to take a drink of my strawberry fanta soda and as I was drinking, I over shot my own mouth with the majority of the Fanta soda spilling out of the sides of my mouth and onto my beloved computer. This was an "Oh Shit! I'm so stupid!" moment right? Well, the laptop was still working, there was just some liquid in the vicinity of the keyboard. I grabbed a paper towel and starting wiping some of that fluorescent red soda up but unfortunately, the paper towel I had wasn't close to being like that Brawny shit on TV. Minimal absorption onto the towel. Of course, some seeped into the keyboard and suddenly, the IBM notebook was no more. After 7 years of near flawless performance, the IBM failed because I spilled a drink on it like a 7 year old kid would.

I thought, since breaking the computer was completely my fault, shell out some major clams to replace it; especially since I still had a desktop that was fully functional.... That lasted 2 weeks. My web-surfing behavior was completely altered. I was hardly using a computer at home since the desktop was in the "other" room (i.e. the room without the Tivo).

So I finally caved in and bought a new laptop. After much discussion with different people and some intense research, I decided to make the leap to an apple.

My biggest hold-up with making the switch from PC to apple was the price premium one pays for going Mac (after all, this is a personal finance blog isn't it?) But, now that the macbooks had recently come out near $1000 and macs were using Intel processors, I felt it was a near ideal time to make that switch. To sweeten the deal, Macbook just released the 2nd Generation Macbook Pro meaning that the original Macbook Pros must be cheap.

And this indeed was the case. I looked on the apple store website at the refurbished models and found a 1st generation MacBook Pro for $1499 (original price $2499). While it isn't the newest generation, I forfeited only a little processing speed which is fine for me as I do not consider myself a high-end user.

So while it was painful to spend that much for a computer, I still feel like a got a relatively good deal. I'm pretty happy with the purchase thus far, I just get that nagging sense that I've conned myself into believing I've saved money when in fact, I've just lightened my wallet by 15 Benjamins.

Investor Return vs. Total Return

2006-11-07T08:38:00.000-08:00

I read an interesting article in the NY times recently regarding investment return vs. total return. The article touches upon how most investors do not reap the returns that are usually published by the mutual fund companies. A large part of this is due to investor behavior. In other words, most of us are guilty of chasing performance and buying into funds that do well (see Fidelity Magellan in the 1990s, Janus in the late 1990s, international funds in the first half of this decade... are people doing the same with American Funds now?). However, by the time people buy into a fund, much of the great performance has already occurred.

The article mentions that Morningstar will soon be publishing not only total return but also investor return. This will give us a more realistic view of what performance is for a typical investor. Again, we shouldn't let these #s (investment return) dicate whether we should purchase into a fund. Rather, deciding to purchase or sell a mutual fund should be based on a number of factors, perhaps most importantly, whether or not the fund fits in with your overall assett allocation and investment plan.

Despite what academics tell us about how human behavior leads us to make poor investment decisions, it seems that collectively, we are all prone to continue to make the same mistakes by chasing performance. To behave otherwise (i.e. buy and hold), although better for our financial health, would not be very human. Fight those genes and resist the urge to chase performance and you will be in much better financial shape.

Effect of Balance Transfer on my FICO score

2006-10-16T22:17:00.000-07:00

About 6 months ago, I completed a zero percent balance transfer from my MBNA credit card (now it is owned by Bank of America. I previously posted my experience with this. The credit limit on this particular card is unusually high compared to my other credit card balances. I did a zero percent balance transfer of $32000 with a credit limit of $34000 on my card. So essentially, I maxed out 94% of my credit limit on this card.... undoubtedly dinging my FICO score. Apparently, the debt:credit ratio accounts for 30% of your overall FICO score. How did this affect my score numerically?

My pre-balance transfer FICO score was 780-790.

My post balance transfer FICO score was 687, sending me to just about average for the average amercan consumer. A sub 700 score does not provide you the opportunities for the best rates for mortgages, auto loans, APRs.

I was able to check my Fico score by joining "score watch" from Equifax for a 30-day free trial.

An interesting experiment...however, I am going to be in the market for a new car soon and will need to definitely boost my score to have access to better loan rates. I just don't know what the lag time is between paying off my credit balance and the FICO score changing back to my pre-balance transfer level.

My Solution to the end of 5% cash rebate (Citibank Dividend Rewards)

2006-09-16T19:14:00.000-07:00

In continuation of my last post, the end of a 5% cash back rebate credit card has had major discussion among different forums. The easiest card to use was the Citibank Dividend Rewards card... it was simply 5% on gas, supermarket, drugstore and 1% cashback on everything else. Many have received "the letter" indicating that Citibank will no longer offer this generous 5% rebate. This caused quite a bit of anxiety on my part as I was comfortable in my routines of using the Citibank card as my primary. I've finally come to the final solution which I think will work for me.

1. HSBC Direct Rewards Credit card. 5% back on all gas, supermarket, drugstore purchases, 0.5% cash back on the first $3000 spent on everything else. 1% cash back on purchases greater than the first $3000 on everything else. This essentially is the same deal as the Citibank Dividend Rewards card. OK.... the website looks somewhat suspect... and I was very reluctant to apply as it looked very amateurish and potentially like a "phishing" scam. But after I read about this card in Time magazine, I decided to bite the bullet and apply. I was approved but it has taken about 2 weeks since that application before I finally received a letter from HSBC indicating that my application was approved. So despite the crappy looking website and card, it appears to be for real.

2. American Express True Earning. 3% on restaurants, 2% on travelling, 1% on everything else.

3. I've essentially retired all my other cards including the citibank.

No more Citi Dividend Rewards

2006-08-25T14:15:00.000-07:00

Just received a letter from my primary credit card company, Citi Dividend Rewards. As of October 13, 2006, this card will no longer provide 5% cash rebate on supermarkets, drugstores, and gas stations. The 5% will now become 2% on those purchases but will also include convenience stores and utlities (excluding phone).

AARRRGGH! I started researching any other possible 5% cash rewards credit cards but they are few and far between. In fact, I have yet to find a suitable alternative. Discover cards offer 5% cashback only on certain types of purchases. American express has a cash rebate card that will offer you 5% on everyday purchases, 1.5% on everything else AFTER you spend $6500. The whole point of having a visa/master card rewards card is that this is accepted everywhere.... whereas AMEX is not as readily accepted.

Citi Diamond Rewards still offers the 5% rebate but you get it in the form of Thank You Points which you can only redeem with their Thank you Network. They do have a student loan rebate that equates the points you earn to as if you were getting a 1% return (i.e. 2500 points = $25 rebate in student loan).

What to do now? Would appreciate any suggestions... For now, I will still use my American Express True Earning Costco Reward card as the primary but I still want to add a Visa/mastercard reward card that will give me 5% rebates on gas.

Cheap vs Frugal

2006-08-17T09:01:00.000-07:00

I'm really having a bad year... this past weekend, I was riding my bike, minding my own business when this Neanderthal, weekend-warrior, ape-like, a-hole tried to pass me on his bike. Problem was that he didn't know what he was doing and ran into me causing me to fall... subsequently causing me to break my clavicle. I had to call 911 and was taken to the nearest emergency room.(I had my first car accident... not at fault... earlier this year). Needless to say, I can't wait until 2006 is over.

Kind of a long introduction to get to my point which is... there is a difference between being cheap and being frugal. I consider myself frugal...I try to find deals when they are available, save money, etc... but buy quality items for things that are important to me (for example, I would much rather buy soft toilet paper that is more expensive than the newspaper-like shit they have at walmart).

How does this relate to my recent accident? One of those things that I think the majority of Americans skimp on is healthcare. I have a PPO plan which gives me options in terms of seeing people out of network.. it's a bit more expensive than an HMO plan but there aren't as many limitations (to see specialists, etc.) It's amazing to see people pay extra for that warranty on their car or extend the warranty on an ipod... yet have the shittiest healthcare plan that limits your options in seeing who you need to see (i.e. HMO plans). What I think is that most people, especially young people in their 20s and 30s, feel that they are healthy and don't need medical care.... probably true for most people but you just don't want to be at the mercy of your healthcare plan in times of medical need.

With my recent car accident and biking injury... I suddenly feel more vulnerable than I felt in my 20s when you feel nearly invincible. While I skimped (and probably shouldn't have) on my car insurance plan by not purchasing collision coverage... I'm sure glad that I have pretty good health insurance.

I recommend doing the same thing the next time you purchase an extended warranty for any product. Think about your healthcare plan and ask yourself is this really what want when you're lying in bed in an ER hoping that the injury or sickness you have is not serious.

Bogleheads and other books

2006-08-02T17:12:00.000-07:00

I just checked out a book from my local library called, "Bogleheads Guide to Investing" which is written basically by a few super-DIEHARD John Bogle fans. I've read several different investment books over the years and would rate this as one of the best. A bit on the basic side, it's a great starting-off book for those that are in their 20s/30s just about to embark on the adventures of investing. I just wish I read it about 4 years earlier. Surprisingly, the book is pretty thorough and delves into such issues as saving for college, using a financial adviser, thinking about wills and trusts. So a nice background book that will give you a nice foundation for good assett management. And the book doesn't read like a Vanguard marketing pamphlet either.

I would add this to a list of my favorite finance books. Others include:
1. Four Pillars of Investing by William Bernstein
2. Common Sense on Mutual Funds by John Bogle
3. Millionaire Next Door By Stanley and Danko
4. Irrational Exuberance (2nd edition) by Robert J. Schiller
5. Unconventional Success by David Swensen.
6. Articles in Paul Merriman's website under the tab, "Buy and Hold"

My wife always says that I am so "undiversified" when it comes to reading these books because as you will see, the general premise of these reading materials are similar. Is it possible to be closed-minded in supporting passive investing and indexing? Call me one-track minded.

Vanguard Target Retirement Funds

2006-07-23T22:26:00.000-07:00

The one-fund solution is a strategy that many mutual fund companies have pursued over the last several years. Investors have responded by pouring money into these one-stop solutions. The idea is that most people are too busy to keep track of their finances, let alone research and keep track of multiple funds necessary for diversification. Whether it's Vanguard's Target Retirement funds, Fidelity Freedom funds, T Rowe Price Retirement funds, they all have subtle differences but embark on the same concept; namely, provide broad diversification with a single fund that gradually becomes more conservative over time.

The other aspect of these retirement funds is that it allows investors starting out to obtain instant diversification even with low balances.

I currently have my Roth IRA in the Vanguard Target Retirement 2045, mostly b/c you all know how much I like Vanguard. However, the knock on Vanguard's Target Retirement funds was that they became too conservative too early. On the other hand, T-Rowe prices funds were much more aggressive and maintained a higher percentage of equity positions for the equivalent Vanguard fund.

I reviewed these Vanguard funds and now noticed that they added a bunch of new funds, Target Retirement 2050, 2045, 2035, 2030, 2025, etc. However, in looking at the asset allocation breakdown, there seems to be no difference between the 2050 fund through the 2030 fund!!! (They are all approximately 90% stock 10% bond). I am somewhat bothered by this b/c I recommended to my parents that they should invest in the 2035 or 2025 fund but now I'm realizing that them doing so has given them a 90%stock/10% bond allocation. I think a little too aggressive given their age of 58 and 67 respectively. I think I will call Vanguard and ask them about these aggressive positions for target 2035, 2030, 2025 and see what differentiates these funds from the more aggressive 2045, 2050 funds.

Car quest: Still Searching

2006-07-19T21:22:00.000-07:00

Well, it's been awhile since I last posted but much has happened since then.... I moved into a new apt, my wife started a new job, and I've finally been able to go out and test-drive some cars. I appreciate the suggestions from those that have posted regarding their experiences with cars. To recap, my "short list" was: Camry, Accord, TL, Audi A4, BMW 3series, Infiniti G35, Lexus IS 250. In the interim, people have suggested other cars including a VW jetta, Acura TSX, and Honda Accord LX v-6.

I've tested the following: Camry SE v-6, Accord EX V-6, Infinit G35, Acura TL. I must say, I would be happy with any of these... I went from a Altima 1995 that some dumbass crashed into and so now have been relegated to an acura integra... 1991 that is. Old-school.

Of all the cars I've tested, I have been most impressed with the acura TL. Actually, the best car to drive was the infiniti G35... it drove like a real sports car; but the entire TL package is what impressed me. Everything was standard, there is more leg-room/truck space in the back; and the interior feels more luxurious. Of course, the ride is a little mushier which in my eyes, is more of a downside than an upside (I want stiff suspension).

I never got around to the german cars.... I walked into the BMW dealership and not one person seemed willing to show me a car. (Kearny Mesa BMW). Same for the Audi dealership..."um, someone will be with you in 15 minutes". Bullshit. Maybe I shouldn't wear birkenstocks when I go car-shopping but believe me, I'm not walking in there to fool around... I'm a serious buyer.

Lesson taken is that I presume you also have less negotiating leverage with cars that are more popular such as the BMW 3 series and the Audi. In fact, it seems like everyone and their mom has a BMW in san diego.

So, would still like to test drive those german cars but will go to another dealer in the meantime. Stuck-up A-holes.

Fidelity Rollover IRA part 3

2006-06-23T07:59:00.001-07:00

Well, I've finally completed the rollover of my previous 403b retirement account with Fidelity. I had previously posted on this process which began about 1 mos ago. Overall, a pretty smooth process, most of the delay occurred from me getting the necessary signatures from my previous employer. Again, while I prefer Vanguard over Fidelity, I have decided to keep my retirement funds with Fidelity since my current employer retirement plan is also with them.

A few comments about the whole process:

-Fidelity had great service.... very accessible, polite people that actually were helpful.

-As part of the rollover process, they are supposed to provide some guidance with investing options... I found this not as useful. I think it depends on your level of knowledge with mutual funds. For a beginner, it is great...I consider myself intermediate so not that useful. It seems that they mostly promote their Freedom Funds (i.e. fund of funds) which seems reasonable especially since my overall balance is not so large.... however, don't expect much in terms of guidance for individual funds to makeup an overall appropriate asset allocation.

-Entire process is done electronically. Recommend this so as to avoid any possible complications with taxes as you have 60 days from withdrawal of funds from a 403b to rollover your funds into an IRA before paying penalties to the IRS.

-Of note, while all the Fidelity mutual funds I owned rolled-over without hiccups, I had a PIMCO bond fund that did NOT rollover and went into a money market fund. I could repurchase this with my rollover; however, the minimum purchase is $2500 which is more than I wanted to allocate to a bond fund at this time. Given the current environment of rising interest rates, I think it's OK to leave my money in a money market fund for now (yield was 4.75%).....but kinda sucks to not have the same access to my previous Pimco fund.

Active Management and Fantasy Baseball

2006-06-18T08:52:00.000-07:00

I'm very much a fan of indexing and try to read as much as possible by people like John Bogle (Vanguard) and Jonathan Clements (WSJ) who are strong advocates of indexing and passive investing. One of the benefits of passive investing is decreasing transaction costs and minimizing taxes which necessarily should result in higher returns...

How does this relate to fantasy baseball?

At work, I joined a group of co-workers for a friendly game of fantasy baseball this season as provided by Yahoo. Just like stocks, we can add new players to our teams or drop players from our team if you don't think they are putting up the numbers (i.e. performing well in your "portfolio"). Of the people in the league, one guy is actually serving in Iraq so I presume has limited access to information (looking at box-scores, stats, etc) and limited access to the internet. He is the quintessential passive player b/c he hardly makes any moves/transactions in changing his lineup.

The rest of us... depending on how serious the competitor is, spend quite a bit of time "researching" players and re-evaluating our lineups. As part of the game, the league keeps track of how many "transactions" or moves each has made. Unlike my approach to investing, for some reason, I execute a number of transactions for fantasy baseball (29 moves so far this season). I was in first place for the first 6 weeks of the season and of course, trash-talking; however, lately, I have lost the lead to the current first place leader..... notably, the guy serving in Iraq.

He has a total of 8 transactions all season. So while I'm constantly tinkering with my lineup and trying to find "hot" players, the guy that is not adjusting his lineup frequently has eventually overcome all other players and is now in first place.

I finally realized that similar to many investors, I have been chasing performance in my fantasy league team and this eventually caught up to me in costing me the lead. And across all yahoo sports fantasy players, people often do the same thing... namely, chase performance. I noticed this b/c yahoo provides statistics of the most added or dropped player over the previous week and players that are added are often those that have recently caught fire and are putting up big offensive numbers. Similarly, investors have poured billions of dollars into emerging markets and international funds in 2005/6 even though the bulk of gains in these sectors were made in years prior.

So who will be the next hot hitter for the month of July in Major League Baseball? Might as well throw darts as nobody can truly predict this... not even Peter Gammons, Stuart Scott, or Joe Torre.

Credit Monitoring

2006-05-30T07:32:00.000-07:00

Well, as a continuation of my previous post, I went ahead with my 0% balance transfer plan. Just to recap, I've extended myself a $33000 line of credit from MBNA that will go straight to a GMAC savings account and earn interest until January 2007 at which point, I will pay off the entire balance as the 0% offer expires.

As part of a little experiment, I wanted to see how much doing this would affect my credit score. While obtaining a credit report is free from annualcreditreport.com, obtaining your FICO score is not and can run up to $45 to obtain all 3 scores.

So I signed up for a 30-day free trial credit monitoring service provided by Experian which also provides what they call a PLUS score which I had never heard of. According to Experian, it ranges from 330-830 so I thought it is a very similar scale to the FICO score. Now, I think paying a monthly fee for "credit monitoring" is a waste of money; if anything, credit card companies should provide this service for free since they will benefit most from it from not having to absorb any fraudulent disputed charges. Nonetheless, I plan on canceling my free trial but I did obtain my credit score pre-0% balance transfer... a score of 784.

It's amazing how many different credit accounts (many closed) that I have listed on my report. Just my student loans alone are something like 7-8 accounts although I long ago consolidated them into one. Back to the main point. The line of credit has shown up on my MBNA credit card statement but has yet to be transferred to my checking account.... I'll keep updating..

0% balance transfer

2006-05-25T23:27:00.000-07:00

After pondering for several days, I finally decided to take advantage of a 0% balance transfer offered by one of my credit cards, MBNA. Now, I pay off my credit cards every month and never carry a balance, but have come across the notion of making money off balance transfers from other bloggers. It works like this... my credit card sent me a mailer with checks and a 0% balance tranfser promotion. The offer gives me the option for them to either pay off a pending balance or to make a direct deposit into my checking account. I have 0% APR on the balance transfer until January 2007.

The cost: $75 fee for the transfer. And a ding on my credit score because it will increase the percentage of credit I have outstanding relative to my overall credit amount. According to FICO, this will affect 30% of my credit score... how that translates numerically is unclear to me.

Now, I am planning on purchasing a car in the next 6 mos; however, I will likely have my wife apply for any financing that we might do as I likely lowered my score by these antics.

The payoff: I will transfer $33000 to GMAC bank which is currently paying 4.75%. I opened up a new account just for this balance transfer to keep it separate from my other money. This will translate to approximately $130/month or ~$900 in FREE interest for the next 7 mos. It will be slightly less than this as I have to pay 1% of the balance per month to maintain the 0% APR.

The fine print: Pay 1% of the balance on-time every month. Purchases do not qualify for 0% APR. If purchases are made, any payments will be applied to the LOWEST APR first.

What I really debated was whether doing so was worth a ding in my credit score. What I might do is obtain my credit score now pre-balance transfer and then after my balance-transfer to see what happens to my score. If it drops it to < 700 I'm going to be pissed off.

Need new car: Fighting the urge to keep up

2006-05-20T00:49:00.000-07:00

Cell phones and (dumb) drivers just don't mix. While mostly everyone has been annoyed by another driver on a cell-phone, I was never affected directly... until last month. Some knucklehead crashed into my beloved 1994 Nissan Altima with 150k miles on it forcing my hand into needing to replace this car. Turns out, the guy was looking for his cell phone and didn't notice the red light, thus plowing into the side of my car and royally "effing" it up. Now, I love nice cars as much as the next person and this being the first real car that I will have to purchase... I was not nearly as p.o.'ed about losing my Altima as I should have been.

So what to buy? The first thought that came to my mind was a nice German-engineered car ... something like the BMW 3 or the Audi A4. Being in San Diego, I spend a lot of time on the freeways and thought that I should drive something enjoyable. Plus it has to look good right? But then, I decided to make a spreadsheet comparing the price/horsepower/enginesize/MPGs for various cars and to my complete disappointment, it seems that the best values (for my price range <$35k) are either a Toyota Camry, a Honda Accord, or a Honda Civic. But c'mon, I'm in my early 30s and a Camry is just not the car that I envision myself driving AND having fun doing so.

The urge to keep up with the jonezez and go for a nicer car versus pursuing the most "bang for my buck" are completely in conflict. Boring-ass Camry that will likely last 10-15 years versus nice-looking Audi/BMW/Lexus/Infiniti but pay an extra $5k-10K? Man... in the end.. all I really want is my Altima back!!! I still haven't gone for a test-drive but will keep posting how the car-buying process goes.

Fidelity Rollover IRA part 2

2006-05-18T23:23:00.000-07:00

Well, I've initiated the rollover IRA process in my employee-sponsored account held at Fidelity. The transfer hasn't been done yet because my employer requires a notarized signature which I have yet to obtain.

My current allocation in my 403b is as follows:

26.42% FID CONTRAFUND
11.94% FIDELITY LOW PR STK
11.91% FID SMALL CAP VALUE

11.19% FIDELITY NEW MILLEN
10.10% FID INTL SMALL CAP
9.68% FID LARGE CAP VALUE
9.36% FID DIVERSIFIED INTL
5.77% PIMCO TOT RETURN ADM
3.63% FID INFLAT PROT BOND

While my preference overall is Vanguard, I've been pretty satisfied with Fidelity thus far and will keep the rollover with Fidelity.... for now. I'm predicting that completion of the transfer will take place over the course of 2 weeks.

Fidelity Rollover IRA

2006-05-15T23:51:00.000-07:00

When I changed jobs from Cleveland to San Diego, I "left behind" one very important thing... my 403b account. My old employer used Fidelity as the custodian and I basically had access to all Fidelity funds plus a sprinkling of others (some Janus and Pimco funds). When I started my new job in San Diego, the 403b account also uses Fidelity as the custodian. Because both employers used Fidelity, I never felt the need to do anything with my old 403b account. There were no extraneous fees or what I felt was limited access to sub-par mutual funds since I could access the entire Fidelity lineup.

Today, I called Fidelity asking about the pros/cons of rolling over my 403b into an IRA. It boiled down to the following: more flexibility and more favorable status for beneficiaries on the IRA. More flexibility meant that with a rollover IRA, I can access many more mutual fund companies and even ETFs. Apparently, Fidelity has agreements with some companies (Janus and Pimco for example, notably, NOT vanguard) where you can purchase their funds and not pay a transaction fee ($75). The other positive of a rollover IRA was if I happened to be so unfortunate as to die, the rollover IRA would continue to remain in a favorable tax status to my designated beneficiary (i.e. spouse) and not necessarily be cashed-out. If I died and my money was still in the 403b, the employer would most likely cash-out the money and pay out a lump sum to my beneficiary, thus losing tax-benefit status and also incurring a penalty to the IRS.

For these reasons, I have decided to change my 403b over to a rollover IRA (the final option is to not rollover and just cash-out... this was not an option for me). In addition, Fidelity provides portfolio advice!

Now, for those that have read my blog, you know that I am a much bigger Vanguard enthusiast and often criticize Fidelity. However, I have been pleased with my returns in my retirement account at Fidelity so for now, will keep the rollover with Fidelty. I will keep you posted on the whole rollover process. I wonder if during the advice session, Fidelity will encourage their own mutual funds?

Supreme overdiversification

2006-05-11T23:00:00.000-07:00

Found a cool website that lists the investments of all judges. What does chief justice Roberts have in his portfolio? 46 common stocks and 31 mutual funds plus other miscellaneous investments. Granted, I have no doubt that being as busy as he is, he must have professionals managing his investments. While I give him props for owning several low-cost Vanguard funds, there is significant overlap in some of his holdings. For example, he owns Fidelity Contrafund, Magellan, and Scwhab S&P 500. Why own the more expensive Schwab index fund when you can just go with Vanguard 500 index? Just interesting to see that even professionals with professional help often don't get good advice.

Dow near record high: BOO!

2006-05-09T21:05:00.000-07:00

Ok...I must admit, although most "experts" state that once you invest money in the market, you shouldn't follow your investments on a day-to-day basis, I intently track the market on a daily basis. This advice from the experts stems mostly from behavioral economists that have shown we are our own worst enemies and tend to act irrationally when it comes to investing. We have the tendency to buy high and sell low as opposed to the other way around.

But come on, part of the fun is tracking your investments and I am guilty as charged. I find it hard to expect people to not follow their investments. The key is to not act on the day-to-day fluctuations of the market (unless you are a superstar investor). Bill Bernstein gives the analogy of walking your dog to the park. The dog will dart from side to side (day to day fluctuations) but the final destination is eventually the park.

Why am I booing as the DOW nears it's record high? Because I am relatively youngish and am buying into the market for eventual retirement. So I dollar-cost-average into my 403b and a Roth IRA every month. But the analogy of me buying into the current bull market is like buying a pair of jeans that are priced high. When we all go shopping, we look at the sale rack first and try to get those jeans cheap. This is equivalent to investing in a down market. It would be to my advantage if the market was actually tanking right now so that as I continue to invest, I am buying things on the cheap. For those that are near retirement age or are hoping to realize some of their gains, of course, it is to their advantage to have an upmarket so they can sell high.

So while the Dow continues to climb and I feel good about my investments, I really should be more disappointed as it is equivalent to buying those Diesel jeans at regular price rather than buying the Garanimal brand at Sears.

Tax Refund

2006-05-05T00:46:00.000-07:00

Most that have filed taxes for 2005 have already received refunds, especially if the choice is for direct deposit. The numbers are in for the amount of federal income-tax refunds and for 2006, it is $190.52 billion dollars!!!! The average refund was $2237.

Basically, this amounts to an interest free loan that taxpayers are providing to Uncle Sam interest-free. If you did get a large refund, consider changing your withholding (W-4) form to decrease the amount that is witheld from each paycheck and thus decreasing the amount that you are loaning to the government.

Consider a $2000 refund. If you leave this in an internet savings account such as ING direct or Emigrant direct with a 4.5% interest rate, this amounts to about $90 in interest over the course of the year. Not much right? Hey, but $90 can buy you a nice dinner for two, several movies, even a cheap wetsuit if it so interests you.

The only time I think it's OK to get a large refund is for those people that have trouble saving money. Then, having a large amount withheld is sort of a forced savings account. Just make sure that when that big refund check comes, the money should be saved or spent wisely.

Roth IRA for the wealthy

2006-05-03T21:11:00.000-07:00

There is a bill that is currently going through congress that would allow high-income taxpayers to convert traditional IRAs into Roth IRAs. Apparently, the current $100,000 income limit on such conversions will be suspended for 2 years (WSJ, 5.3.06) if the bill is approved. Now, while this legislation will not affect me as my income is below this ceiling and I already contribute to a Roth IRA, I totally support this type of tax legislation. I just don't agree with the message from tax policies that seem to penalize people with higher incomes by taxing them more and/or not giving them the same access to tax-benefits (for example, income limits on Roth IRAs). The message seems to be, "The higher the income that you earn, the more you will get taxed/penalized". Look at the alternative minimum tax.

So legislation like this that removes income ceilings seems and allows wealthier individuals to access the same tax-benefits as everyone else seems fair to me. Of course, the downside will be to figure out how the government will be able to make up for some of the lost tax-revenue that will result from any tax cuts. Unfortunately, given the current state of affairs with worsening deficits, low savings rate, foreign dependence on oil, weakening dollar, the rise of China and India, aging population and slow erosion of social security, we may be in for some serious sacrifices and more than likely, possibly higher tax rates. All the more reason to convert to a Roth IRA if you haven't already done so.

Surfing San Diego

2006-05-02T23:02:00.000-07:00

So much blogging about finance stuff, but still no posts on the surfing as I had originally intended. But choosing to surf has to do with finance... at least indirectly.

So as I enter my 30s, the body just doesn't hold up as well... pants start to get a little tighter, get the occasional sprouting of grey hairs, fatigue kicks in earlier. So I thought, I need to do something to keep physically fit... but preferably something inexpensive, hence the tie-in to my personal finances. Being in San Diego, how can you pass up on the surfing? plus, going to the beach is free and you need minimal equipment. But I'm starting to realize that surfing becomes very addictive, subsequently putting me into a positive feedback loop of more and more purchases.

Expenses thus far:
1)used surfboard $275
2)Oneil psycho 2 wetsuit $200 (hook-up, reg price is $395)
3)Quicksilver backup wetsuit $100
4)Yakima Surf rack set-up for my crappy car $375
5)Leash $25
6)Board shorts x 2 = $40
7)Boat-loads of sunscreen = $20
8)Surf hat to keep sun off = $20
9)Wax $10
10) now looking into another surfboard purchase to diversify ~$300-500

That's well over $1000 and pushing $1500 if I buy another surfboard. Not so cheap afterall... but the way I see it, it will keep me in shape, I enjoy doing it, and there's nothing like the gratification of being able to go at will without having to pay any type of fee (like a course fee or lift ticket, etc). Maybe I should invest more time and energy in learning to play poker well where there is a potential for positive returns.

Nigerian Scam...In Japan

2006-05-01T19:08:00.000-07:00

So some genius felt that it was best to try to scam someone by posting on the comments section of my blog. I can barely even understand what the heck they are trying to ask...of course, how does this relate to personal finance?

There is no such thing as having returns without risk (the closest thing perhaps are treasury bonds, money markets, FDIC savings accounts).

Check out the scam below:
"I need your help.
So I manage as anybody find only your benefit without your loss and risk.
If you can not trust me after you reed this, please teach me how I can trick you.

I want to buy a thing which I can not buy it in my country.
And I can not make a credit card.So I can not pay.
So please buy and send it to me.

In total, I pay you about US$ 2000.
It costs about US$ 450 - US$ 500.
I need two kinds of them. so US$1000 for one.
To trust each other, I send US$1000 whenever I get one of them.

I pay US$ 300 in advance for it and the other after I get it.
So no risk for you.Please send a reply.
Then I can write detail of the thing.

I pay total because I need your cooperation for my life.
I wish you do before it.
--->
rootk9000@yahoo.co.jp"

-Uh... thanks loser. can i call you so I can just GIVE you my credit card #, SSN, and/or bank information?