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How to File a Tax Extension

Sun — Fri, 12 Mar 2010 06:42:27 PST

It’s still more than a month away from the 2010 tax deadline, April 15, 2010. If you haven’t finished your tax return yet, there’s still plenty of time to get it done before the deadline, so it may be a little early to talk about tax extension. However, if for any reason that you believe you won’t be able to file your 2009 tax on time, you should prepare to request an extension of time to file your tax return which will automatically give you 6 more months to prepare your federal tax. But you must file the extension on or before the tax day.

There are a few options for you to file an federal extension, either free or with a small fee. First, you can use IRS’s free e-filing service to file an extension for free. Currently, the IRS has two options for taxpayers seeking an extension: On IRS Free File page, you can use either

Traditional free file, or
Free file fillable form

to request an extension electronically. Even though there’s an income limit (less than $56,000) to use IRS Free File to file federal income tax, the Free File is free for any taxpayer to file a federal extension request from a home computer by April 15, regardless of income. As I mentioned earlier, using free e-filing to get an extension is fast, secure and convenient. Of course, you can always fill out the paper Form 4868 and mail it to IRS if you choose to do so

BTW, to qualify for an extension, you must

Properly estimate your 2009 tax liability using the information available to you,
Enter your total tax liability on line 4 of Form 4868, and
File Form 4868 by the regular due date of your return.

Then, there are also paid services. For example, FileLater lets you file a federal extension for $9.95 (regular price $17.95), which can be done on April 15th.

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Planning a Cheap Night Out

Yolander Prinzel — Thu, 11 Mar 2010 06:37:48 PST

Apparently, I don’t get out much. This weekend, Hubby and I decided to go out with another couple for dinner and a movie. 4 hours and $70 later I was in the car on the way home with a stunned expression on my face trying to figure out where it all went wrong.

You know, I love a night out just as much as the next girl but to spend the equivalent of a week’s worth of groceries on just one night is, well, not very fiscally responsible. Of course, there are things that I could have done to make the night cheaper if I hadn’t been so short-sighted and, frankly, lazy.

Want to know what I will do differently next time I’m asked to enter the world of social beings? Here are a few ideas:

Make Dinner Cheaper

1. Eat before you leave home. If Hubby and I had eaten before meeting the other couple for dinner then we would not have needed to order so much food at the restaurant. This would have saved us money in both food costs and tip.

2. Don’t drink expensive drinks or alcohol at the restaurant. I gave in and ordered some kind of specialty tea with dinner. It was bottled, did not have refills and retailed somewhere around $3. This is excessive and unnecessary. Water with lemon would have been both satisfying and free.

3. Go out for lunch instead of dinner. Since we had plans to go out on Saturday there is no reason why we could not have met for lunch instead of dinner. Lunch options are often much cheaper at restaurants and afternoon matinees are also less expensive.

Cheap Entertainment

1. Go to a cheaper theater. Believe it or not, there are still dollar movie theaters in operation. We opted for the opening weekend of ‘Alice’ in 3-D, which was over $8 per person. If we had watched something else and gone to the dollar theater, we would have saved a worthwhile amount of money.

2. Rent a movie. There is no reason we could not have just gone back to one of our homes and watched a rented movie or a streaming movie from Netflix. Doing so wouldn’t have just saved us money on the movie tickets but also on the popcorn, soda and Raisinets.

3. Take a walk instead of a movie. ‘Alice’ in 3-D was impressive, but you know what else is impressive and available in 3 dimensions? The entire world. We could have skipped the expensive movie, burned some dinner calories and avoided movie theater popcorn if we had just taken a walk after dinner instead of going to the movie.

4. Don’t eat at the movies. Okay, I don’t even know why I’m putting this on the list because I think skipping movie theater popcorn is tantamount to cruel and unusual punishment; the smell of that salty, buttery popcorn wafting through the theater—and you, sitting on your hands to avoid stealing your neighbor’s. Unfortunately, we would have saved about $15 if we had skipped the popcorn, soda and candy which comes pretty close to being worth suffering through a movie without snacks.

Photo credit: Dustin Diaz

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Planning a Cheap Night Out

Know When to Shop to Save Money

Shannon M. Medisky — Wed, 10 Mar 2010 06:47:41 PST

The parallel between habits when it comes to food and money are significant. Many people reach for a cookie when they’re depressed, others for their credit card. Some celebrate with cake and sweets, still others by purchasing themselves tangible treats. If you’re an emotional spender, best for you – and your budget – to fess up now.

In this case, denial can lead you straight to the poorhouse. Owning up to it, however, and taking steps to control these spending tendencies can help you not only regain financial control, but will alleviate substantial stress as well. (No more looking around the house wondering, “What in the world have I done?!) Even if you don’t fall into the category of an emotional spender, everyone can learn from these tips and strategies for when to shop and when not to shop to maximize savings and improve their bottom line.

Down? Don’t go down the aisles. Depression isn’t good for anything, your money included. For many people, money slips more easily from their fingers when they’re not feeling at their best. Whether your defenses are down and you’re more easily swayed to purchase an impulse buy you ordinarily wouldn’t or you just don’t have the energy to adequately comparison shop (even right there at the store), skip spending money entirely. If you have to go out, do yourself and your bank account a favor, leave the cash and credit card at home.

Take a walk down memory lane and revisit the results of emotional spending past. If you have a relic from a past emotional spending spree, keep it. It can be a great reminder to not allow it to happen again. Just as unflattering photographs can spur one to diet, so can visual reminder of shopping mistakes from the past.

Search and replace the habit. Find yourself window shopping – or worse – reaching for your wallet whenever you’re feeling down? Look for activities to specifically substitute for the emotional spending instead. Start journaling to relax. Treat yourself to a bubble bath. Grab the phone and start to gab. Find something else that works for you and keep it at the ready for the next time you feel your financial defenses down.

Ask a friend for company. If you must venture out into the stores, seek strength in the company of a friend. Not only will his or her company likely help you feel better in general, but he or she can also help guard you from making purchases you might later regret both financially and otherwise. If you’re down, purchasing that yummy chocolate cake or super comfy flannel nightgown might seem like a very good idea, but your wallet wingman (or gal) can help you hold fast to your cash and make sure you leave the store unscathed.

Remind yourself that this won’t last forever. When life knocks us down, it’s easy to fall into a pity party. It’s key, however, to minimize the cost of these very pity parties. A strategy for doing this is to simply remind yourself that no matter how bad things or how down you feel now, it won’t last forever. And rebounding, after all, will be much easier if you don’t have financial regrets to deal on the other side.

(To download and print a worksheet of this topic, click here.)

Photo credit: bowbrick

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Ally Bank Has an CD That Raises Your Rate

Sun — Tue, 09 Mar 2010 10:59:19 PST

Ally Bank now has a new CD product, the second new product in as many month.

The CD product, called 2 Year Raise Your Rate CD, isn’t entirely because it replaces the current 2-year high-yield CD which has a yield of 2.04% APY as of March 9th. What’s new in this product is the promise that if the yield goes up within the term of the CD later, you will have the opportunity to increase the rate of your CD once.

Like its online savings account, Ally Bank’s CDs are quite competitive among banks offer high-yield savings accounts. For example, for the same term CD, we have

EverBank 2-year CD 2.00% APY
American Express Bank 2-year CD 2.00% APY
Capital One Bank 2-year CD 1.25% APY
Discover Bank 2-year CD 2.05% APY
FNBO Direct 2-year CD 1.50% APY

While the idea of letting customers opt to a higher rate in the future is interesting, I don’t know how much savers can benefit from it in the current environment. If you also follow Ally Bank, you know Ally is the only bank which adjusts its rates, both savings account rates and CD rates, almost every week. I have complained about this many times in the past, but still couldn’t figure the rationale behind such frequent adjustments.

After the latest policy meeting in February, the Fed said it will maintain the interest rate at near zero for some time. This means that interest rates of bank savings and CD products could still fall in the coming months even when the Fed keeps its benchmark rate steady (the current rate has been in place for more than a year already). Even if the rate starts to go up, I suspect that Ally will use the same tactic as it’s using now when lowering rates: make tiny but frequent adjustments. In that case, you probably won’t get a rate that’s a lot better than what you already have before the term expires if you use your chance too early.

BTW, I have already received the debit card from Ally interest checking account that I opened last week. Now I am just waiting for the PIN before I can use it to withdraw cash from any ATM without a fee.

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Teaching Your Child to Save Can Be Fun

David Dierking — Tue, 09 Mar 2010 06:52:10 PST

“I want (fill in the blank)!”

If you’re a parent to young children, you’ve undoubtedly heard your little one utter this phrase many times. Plus, it probably most often occurs at some pretty crowded locales such as the grocery store or Toys ‘R Us where the level of parental shame can be at its highest. At such a young age, kids really only have a comprehension of what they want and not what it takes to earn what they want.

But that doesn’t have to be the case. Studies have shown that our schools are doing a woefully inadequate job of preparing our young people to be financially wise in their later lives so it’s increasingly on the shoulders of parents to teach their kids fiscal responsibility.

With a few simple tools and a little preparation, you too can turn your avid spenders into eager savers. Here are a few ideas that will get you headed down the right track.

Start with an Allowance

Kids won’t have a good idea of what to do with money unless they have some so start them with a small weekly or monthly allowance. Birthdays and holidays provide chances for a quick windfall but an allowance will help them understand how to manage a regular “income”.

Show Your Kids How You Do It

Now that your child has an income stream of their own, don’t hesitate to show them what you do with yours. Explain to them that while you get paid a lot of money (in their eyes, at least), you have to use some of that money to pay for the house, food, clothes, etc. You can use the concept on them in that if they want something like a toy or a shirt they need to use some of their money to pay for it.

Give Spending Money ahead of Time

How many times have you walked into a grocery store to find your little one eying up a candy bar at the checkout aisle and want it? Kids don’t understand the value of something if they’re simply able to get it when they ask for it. Instead, give them a dollar or two at the beginning of the shopping trip and tell them they can spend it on whatever they want but that will be the only money they get. You’ll be surprised at how carefully they evaluate if that candy bar is really worth it. (And, yes, let them choose whatever they want to buy. Put your child in charge of the transaction and see how they react.)

Reward Their Savings

You have a 401(k) that rewards you (hopefully) with a matching contribution for the amount you save. Why not use the same idea for your kid? For every dollar of their allowance they choose to save, match it with an additional dollar. As your child gets older, you can pare back on the matching contribution you give them as they begin earning their own money and become more independent. Which brings us to….

Encourage Them to Get a Part Time Job

Your child will soon reach an age where they need to begin to help providing for themselves. If they want a car or an Xbox or anything else, have them save for it so they can at least pay for a good chunk of it themselves. Anything that they pay for with their own money you’ll find them taking a little better care of. Plus, it teaches them the value of working hard to achieve a goal.

Teaching your child the value of saving versus spending can actually become a fun process. Instead of worrying about trying to head off an argument in the checkout aisle, you can give your child the tools to help them determine for themselves how valuable something is. By encouraging certain behaviors, you can help them learn to separate what they want from what they REALLY want.

And those lessons can last years and years.

Photo credit: arecknor

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February 2010 Score Card — Part I: Net Worth

Sun — Mon, 08 Mar 2010 06:17:07 PST

After the streak of 10 straight monthly increase was snapped in January, the growth of our net worth returned last month as the overall stock market recovered from January’s poor performance. Even though the gain wasn’t big enough to offset January’s market loss, it was big enough to put net worth to a new high after losing nearly 2% on paper in January. For the month, the Dow gained 2.56%, the S&P 500 rose 2.85%, and the Nasdaq rallied 4.23%. With the help from the stock market, our net worth also rebounded nicely in February. At the end of the month, we had a total of $916,561.08. That’s an increase of $33,920.68 (3.84%) from the month before.

A breakdown of last month’s number looks like this:

Credit card balance(—–): Our credit card balance shrank another $683.55 (16.75%) last month, reducing the total to $3,395.30 at the end of February, far less than our 2009 monthly average of $4,000. When I ordered my last credit score in December, the only negative factor on my file was I have too many cards with balance. Right now, there are only 3 cards between me and my wife that carry balance. I plan to keep it this way until we buy the house.
Cash(++++): We kept growing our cash last month, with a net increase of $11,268.88 (4.83%) in February to $244,653.07. Part of the increase was due to the annual bonus my wife received last month that we simply put in our savings account. The next couple of months probably won’t be as good as last month because the taxes we are going to pay back. I haven’t finished the taxes yet, but it looks like we owe a large amount again.
Taxable accounts(++): Our investments in taxable account grew moderately in February when compared with other categories. The gain was $9,117.68 (3.01%) and the total market value was $312,215.38. No new stock was purchase last month, except those DSPP stocks and mutual funds that I buy regularly.
Retirement accounts(+++): On the other hand, our retirement retirements did better last month with a gain of $11,282.90 (3.73%). The larger increase also made our investments in retirement accounts, valued at $313,477.11, the largest asset in terms of market value, surpassing the taxable investments. The last time this happened was one year ago in January 2009 accounts.
529 plans(–): Last month, I switched one of our 529 plans to the Virginia VEST plan to take advantage of the $4,000 annual tax deduction for Virginia residents. I may switch another plan to VEST as well, though I will keep the Ohio CollegeAdvantage plan because of their occasional bonus promotion. Even without any bonus, the 529 accounts still grew $1,392.15 (4.79%) last month to $30,459.06.
Bonds(+): Our investment in bonds grew $100 (0.61%) last month to $16,584.24 due to our monthly purchase of $100 I-Bonds.

Year-over-year, our net worth doubled with an increase $470,280.98 (105.38%) from what we had at this time in February 2009.

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Weekend Linkage – March 7, 2010

Sun — Sun, 07 Mar 2010 19:55:16 PST

After a quite month of February because of the winter blizzards, we are back in house-hunting again as the weather turns warmer. The market also seems to be more active now than the first two months. We went to a few open houses this weekend in our area and found a couple of nice houses. One is a bank-owned house, but in an excellent condition. The price $600K is also quite low given the size of the lot and house. The only drawback is that the house has a swimming pool. With two little kids, we are not ready to have a pool yet, so we didn’t pursue it. The other one is a normal sale in the same community as the one we offered to buy in January but didn’t get. It’s not as big as that one, but it’s big enough for a family of four. And since it’s a normal sale, the price is a little higher than the foreclosed house, but still within our range. After some comparison, we decided to make an offer with a price that’s $50K less than what the owner is asking for. Hopefully, it won’t end up like last time.

Weekend Readings

Carnivals

Photo credit: BlakJakDavy

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Weekend Linkage – March 7, 2010

Weekend Deals: Chase Sapphire Card $100 Bonus and myFICO 30% off

Sun — Sat, 06 Mar 2010 07:13:17 PST

A couple of promotions this weekend.

Chase is having a promotion for its Sapphire Card with $100 bonus. Sapphire is a premier travel card with the following features:

No annual fee
Redeem Points for travel, gift cards, merchandise, cash back and more
Earn 2X Points on Airfare booked through Ultimate Rewards & 1 point for every dollar spent on all other purchases
Points never expire and there are no Limits on How Many Points You Can Earn
24/7 dedicated service advisor (No voice recording)
Premier travel protection benefits

The bonus is given as 10,000 rewards points after the first purchase, which can be redeemed for $100. Check out my previous post for details about the card and its rewards program.

myFICO is celebrating it 9th anniversary with a 30% off sale of its products, including

FICO standard (was $15.95, now $11.17), including FICO score and credit report from Equifax or TransUnion;
Score Watch (was $9.95/month, now $6.97/month), including daily monitoring of your Equifax credit report, weekly tracking of your FICO score
Suze Orman’s FICO Kit Platinum (was $49.95, now $34.97), including 3 FICO scores and credit reports from Equifax or TransUnion, and Suze’s saving tips on car loans, mortgages, and credit cards
FICO Quarterly Monitoring (was $4.95/month, now $3.47/month), including 4 TransUnion FICO scores and reports per year and trends in your FICO score history
IDFreeze (was $10.00/month, now $7.00/month), including total protection system that helps detect and stop identity theft before it happens

Use coupon code myFICOis9 when ordering myFICO credit products to get 30% off. This offer ends March 31, 2010.

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Household Debt Panel

Yolander Prinzel — Fri, 05 Mar 2010 06:39:16 PST

I think the goal of almost every single person on Earth is to go through many stages of upgrading his or her life. Remember the car you drove when you were a teenager? Well there is no way you want to drive that car foreve – heck no, you want to upgrade. From the car you once drove, the last apartment you lived in, the job you had or the neighborhood you were located in, chances are you have spent a great portion of the last 10 to 20 years upgrading and you probably plan to continue to do so.

But where does all of this upgrading put us? Sure we have nicer cars, bigger homes and better job titles but if our assets are not much greater than our liabilities then all this forward movement isn’t really an upgrade – it’s a lie and eventually it will catch up to you. It’s like every episode of Scooby-Doo, when they pull the face off the ghost, ghoul, goblin or other spooky character. When they do, you find that the face was nothing more than a mask to hide the villain’s true identity, just like the expensive SUV, the big house and the Coach purse is nothing more than a mask that many people wear to hide their true financial identity.

If this sounds like you then it may be time for you to create your own debt panel. President Obama recently created a bipartisan debt panel to make many of the big decisions about which programs and funding efforts our government needs to cut and what taxes might need to be increased in order to get our national debt under control. Sometimes even in our own personal budget it is a good idea to get some outside feedback to help us decide what bills and services we should cut and how we should arrange our budget to reduce our debt.

While many people turn to professionals in order to help get them on the right track, you don’t have to take that route. Instead, you can go to friends and family members that you trust and create your own personal debt panel. In order for it to work you must be completely honest with them about your finances and you must be willing to adopt the changes they ask you to make in your spending.

Steps to Creating and Instituting Your Personal Debt Panel

1. Make a list of family and friends whom you trust with your personal financial details, whose financial judgment you trust and who will understand the commitment, scope and purpose of the project and ask them to join your debt panel. You should have at least three people on your panel in order to ensure a good number of ideas and input and no more than five to avoid confusion.

2. Gather your last 3 or more bank statements, credit card statements, mortgage statements and any other relevant financial records. These documents should give the full picture of your income, expenses and debts. Make copies of them and give a copy of the entire packet to each of your debt panel members.

3. Schedule an initial meeting between the debt panel members so that they can go over your financial situation and create a course of action. You should not be present at this meeting.

4. Schedule another meeting during which the debt panel members will meet with you to discuss their findings and give you direction for future spending.

5. Set up a monthly, recurring meeting that allows the entire panel to get together and review your finances and your progress.

Photo credit: P Matthews 86

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Fed Discount Rate Increase Could Signal Change In Policy

David Dierking — Thu, 04 Mar 2010 10:43:34 PST

Is the economy finally starting to turn around? If you pay attention to what the Fed is doing, you might get the impression that the answer to that question is yes.

But it’s more important to first take a look at exactly what the Fed’s been up to. A couple of weeks ago, the Fed made news by raising the discount rate – the rate that the Fed charges banks for emergency loans – a quarter point from 0.50% to 0.75%. This increase could signal a number of things regarding the Fed’s opinion of the state of the economy and that of financial institutions.

First of all, a change in the discount rate will have little effect on the average consumer. Consumers will be more affected by changes in the prime rate as that rate can be the basis for everything from credit cards to adjustable rate mortgages to HELOCs. The discount rate is used strictly for government to bank short-term lending.

But a change in the discount rate does offer a glimpse into the Fed’s current thinking. The fact that the Fed raised one of its rates is not surprising as rates really had nowhere to go but up after the Fed’s extended “free money” period. The fact that the rate was increased at this point indicates the Fed believes that the economy is on the road to recovery.

The Fed has long used rate policy as a means of containing the core inflation rate. Inflation in the recent recession hasn’t been a concern as much as easing monetary policy enough to fuel economic growth again. The Fed for the last several months has kept rates at a very low level to accomplish that but now they’re also indicating that they’re being watchful of inflationary pressures so that they won’t derail any potential economic recovery. Ben Bernanke and crew are essentially telling us that the wheels of resurgence are in motion but they don’t want to overheat the economy too fast either.

The Fed may also be stimulating banks to begin using the private sector more frequently to do business instead of the government. Through programs like TARP and a relaxed monetary policy, the government has become the de facto safe haven for many financial institutions to acquire the funds necessary to support their balance sheets and capital ratios. The Fed could now be signaling that they’re trying to start shedding this label and encourage a more normal pattern of lending amongst institutions.

The increase in the discount rate does tell us though that a more widespread tightening of monetary policy might not be too far off in the future. As the economy improves, the Fed will want to balance economic growth with inflation control. If the Fed raises rates too fast, it could push the economy back into recession. If the Fed is too slow to react, inflation will begin creeping back onto the radar. They could be looking to act in the second half of 2010 or perhaps even wait until 2011. It’ll be a balancing act worth watching.

The news of a discount rate increase should be taken as an encouraging sign. The stock market is well off its recent lows, the housing market has given indications of hitting a bottom and unemployment has slowly begun starting to move back down. It’ll be up to the Fed now to keep that momentum going.

Photo credit: Nicobobinus

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Best Interest Checking Accounts

Sun — Thu, 04 Mar 2010 06:37:13 PST

A few years ago, I wrote a post about who offers the best deal in both the checking and savings accounts. Back then, 5+% yield on savings accounts and 3+% on interest checking accounts were very common. Now, we know things are totally different. With the Fed fund rates being held at close to zero for more than a year, you are lucky if your savings account pays 1.50% APY. From where we are now, it could take years for yields of online savings accounts to go back to where they were three years ago.

Though I have been chasing rates for quite a long time, with nearly a dozen savings accounts opened and closed in the past 5 years, I have never been a fan of interest checking accounts because I don’t see much use of it. I usually keep only a small amount in checking account with Bank of America by moving most of the money coming into the account to high-yield savings accounts, such as EverBank, so I can earn a better return. Most interest checking accounts, on the other hand, employ a tiered rate structure which usually pays interest rates that are close to zero (0.50% or less) for the balance of only a few thousand dollars. Besides, even with a high balance, the next tier of interest rate is still usually lower than the rate for saving account from the same bank. You can’t really get much from an interest checking account, in my opinion. That said, I did open an Ally Bank Interest Checking Account recently. But I am not going after the interest. I only want to have their debit card so I can withdraw cash from any ATM without paying any fee.

If you’d like to have both checking and savings account with the same bank, here are some online banks that offer high-yield savings account (well, some aren’t really that “high” yield) as well as interest checking account, with good interest rates and additional perks.

EverBank FreeNet Checking Account

EverBank has been quite aggressive in attracting new customers with its 2.25% bonus rate for its Yield-Pledge Money Market Account ($1,500 minimum to open account, $5,000 balance to avoid $8.95 monthly fee). I would love to put all my money in that bank if the rate were good more than the three-month introduction period. EverBank FreeNet Checking Account offers

2.25% 3-month bonus rate (current rate 0.61% APY for balance less than $10,000)
FDIC insurance
No monthly fee
$1,500 minimum initial deposit to open an account
Free online bill pay for monthly balance at least $5,000 (otherwise $8.95 monthly fee)
Unlimited ATM fee reimbursement for monthly balance of $5,000 or more

FNBO Direct Billpay Account

FNBO Direct used to have a very attractive Online Savings Account. However, with 1.25% APY, the savings account rate is hardly competitive, almost at the same level as ING Direct. But its Billpay account does look good. With FNBO Direct Billpay Account, you will get

1.25% APY, the same rate as the savings account
FDIC insurance
$1 minimum to open an account, no monthly fee
Free Visa check card
Four fee-free withdrawals per month from non-network ATMs with monthly balance of $25,000 or more
Free online bill pay
POPMoney service (send money to other people directly from FNBO account) at $2 fee for standard delivery

Ally Interest Checking Account

This is the account that I opened the other day. As I mentioned above, I am only interested in the No Fee ATM part of this account, but the Ally Interest Checking Account does have other features

0.50% APY for balance up to $15,000; 1.15% APY for balance above;
FDIC insurance
No account minimum and no monthly fee
Free online banking and bill pay
Free debit card, checks and unlimited check writing
Free overdraft service

Of course, by now you should be familiar with Ally Bank Online Savings Account which has an yield of 1.30%.

ING Electric Orange Checking Account

ING Direct is one of the first banks to offer both savings and interest checking account. It’s ING Electric Orange Checking Account offers

0.25% APY for balance from $0 to $50,000 and 1.20% APY for balance of $50K or more
No minimum, no monthly fee
FDIC insurance
Free online bill pay and free MasterCard debit card
Free ATM withdrawal from Allpoint network ATMs
P2P payment (send money directly to a person)

ING Direct Orange Savings Account now has an yield of 1.10% APY.

HSBC Online Payment Account

Used to be HSBC Direct, the new HSBC Advance is very much like ING Direct, in terms of rates. The HSBC Online Payment Account is another interest checking account that offers one single rate for any balance. You will get

0.80% APY
FDIC insurance
$1 to open an account and earn interest
Free debit card
No monthly fee
Free bill pay and free debit card

Like all other banks listed above, HSBC Advance also has an Online Savings Account. The current rate is 1.10% APY.

So as you can see, there isn’t really ONE best interest checking account that gives you everything. Some (Ally) has good rate, but only for very high balance; some (HSBC) offers a single rate regardless of balance, but the rate is rather low for high balance compared with other banks; some (Ally) offers free ATM, but you need a large balance to enjoy a good rate at the same time; some (FNBO) does have a good single rate, but then you don’t have free ATM all the time. Then you also have the bank (ING) that pays a ridiculously rate and limited free ATM, but doesn’t require anything to open an account and bank (EverBank) that requires high initial deposit and let you got to enjoy free ATM with even higher balance, but with a good rate for only a limited time.

What’s your choice?

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Free H&R Block At Home Deluxe When Signing up for LifeLock Service

Sun — Wed, 03 Mar 2010 19:43:24 PST

LifeLock is offering a free copy of H&R Block At Home Deluxe during the month of March if you sign up for its LifeLock Identity Protection program.

LifeLock is known for its pledge for $1 million guarantee for members of the LifeLock Identity Theft Protection service if they become victims of identity theft. What the $1 million guarantee means is, if someone stole your identity while you are a member of the program, LifeLock will spend the money, up to $1 million, to heir a third party Recovery Specialist to restore your identity. Not that the company will compensate you $1 million. The cost of the service is $10 per month. You can follow the above like to learn more about the program.

The tax offered in this promotion is H&R Block At Home Deluxe with State and E-file, the same as the one in my tax software giveaway last week. The value of the software is $44.95 at H&R Block, but you can get it at much lower prices if you want to purchase your own tax software.

If you are interested in this offer, use this link and promo code MARCHTAX to sign up for the LifeLock service and get the tax software for free. The offer ends March 31, 2010.

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Ally Interest Checking Account Opened

Sun — Wed, 03 Mar 2010 06:05:56 PST

When I talked about Ally Bank Interest Checking Account in January when the product was introduced, I mentioned that I may get one for myself. What I like about the new checking account isn’t that it bears interest. With 0.50% APY for balance under $15K, there isn’t much I can earn. Rather, what attracts me is its No Fee ATM policy. Basically, there’s no ATM fee when using Ally Bank debit card to withdraw cash from ATMs, any ATM. Since Ally Bank is an online bank (that’s why it can pay interest rates that’s higher than other B&M banks), you won’t find an Ally ATM, so the ATM fee is charged by other banks for using their ATM. Under this policy, Ally will reimburse all the fees charged by other banks at the end of the statement cycle. Since I am a credit card person, I don’t usually carry or use a lot of cash (when I do need cash, I get it from my Bank of America ATMs which seem to be everywhere). However, I still feel that it would be nice to have an ATM card that allows me to get cash without paying any fee, just in case I ever need it.

I finally got around to open the Interest Checking Account last night, which didn’t take much long. Because I already have an Ally Bank Savings Account, the whole process took about 5 minutes to complete. However, like what happened when I tried to open the savings account, it’s kind of tricky to open a new account when you are already a customer. You would think that it is natural to open the new account when you are already in your account so you can skip all those steps required only for new customers. That’s what I think how it should work for existing customers. Not so, apparently.

When I tried to open the new checking account from inside my account, only the left part of the application screen appeared (see screenshot below), making me feel that I have to start all over again by providing SSN and all other personal information. Then I remember what happened last time. So I logged out, started again. There I saw the option to start the application as a current customer. Why can’t they just make it a little simpler?

Afterwards, there were a few more steps to go through, such as verifying identity, choosing how to fund the account (either by check, or by transfer through existing Ally Bank account or external account that is previously linked to an Ally account), etc. But nothing time-consuming. Finally, there’s an option to select to receive 50 free checks or not. Though I don’t expect to write any check with this account, I still opted to receive the free checks.

Now I am just waiting for the debit card to arrive so I can check whether it’s really No Fee ATM, or not.

BTW, in addition to interest checking and savings account, Ally Bank also offers other products such as conventional CDs (terms from 3 months to 5 years) and no penalty CD. Check out my Ally Bank review post for details of Ally banking products. The following are the up-to-date rates for Ally Bank products.

Ally Bank Rates Effective -
Duration	Rate
3 Month High Yield CD
6 Month High Yield CD
9 Month High Yield CD
12 Month High Yield CD
18 Month High Yield CD
2 Year High Yield CD
3 Year High Yield CD
4 Year High Yield CD
5 Year High Yield CD
9 Month No Penalty CD
Online Savings Account
Money Market Account

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optionsXpress 5 Free Trades for a New IRA Account

Sun — Tue, 02 Mar 2010 20:01:52 PST

Here’s another broker promotion for new IRA account.

Online broker optionsXpress is offering 5 commission free trades for a new IRA or rollover IRA account. Eligible IRA accounts include Traditional IRA, Roth IRA, Rollover IRA, and SEP-IRA. If you open an account with optionsXpress before April 15th, 2010, which is the tax deadline, with at least $500, either as bank deposit or securities transferred from another broker, you will receive 5 free trades, valued at $74.75. The free trades will be credited within two weeks after the account is opened and funded in the form of $14.95 commission per trade for the first five trades. The new fund has to remain in the account for at least 12 months, or the credit will be forfeited.

Sure, optionsXpress isn’t really a *discount* broker because its commission is rather high (see discount broker comparison for commissions charged by brokers for stock, options, and mutual fund trades) when compared with others. But there’s one little nice thing about optionsXpress: It also has a referral program that lets you earn 10 free trades for every person you refer to optionsXpress (you can select to receive $100 bonus instead). So if you don’t trade a lot, a couple of referrals will let you trade commission free for quite a long time Also, the broker recently launched a standalone trading platform Xtend, which is pretty cool.

Early, OptionsHouse also offered commission free trades for new IRA account.

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Lending Club Loan Update

Sun — Tue, 02 Mar 2010 06:45:25 PST

I am still investing in Lending Club loans as an alternative investment, but I must admit that I am a little disappointed by the performance of my investments, especially when two loans went bad after only two months since they were issued. Overall, the number loans and the number of late and charge-off all grew since last update in December.

I have added 25 new loans since last December, bringing the total number of loans invested to 172. As you can see from the above screenshot, there are 6 loans that are more than 31 days late, up from 3 in late December. Of the three new loans that are late in making payment, one grade B loan filed for Chapter 7 bankruptcy in January only two months after the loan request was approved. I know that unexpected things can happen, but filing for bankruptcy must be an extreme step for a person to take. In this case, I wonder if Lending Club has done a thorough investigation of the borrower’s financial condition before approving the loan. Of course, I also share the blame as there were clear warning signs in the original loan request, such as more than $75K revolving credit balance and 1 delinquency in the last two years. I always avoid borrowers with delinquency history, but somehow this one slipped away.

Of the other five loans that are late, four of them either made partial payments since the first failed payment or had a new payment plan with reduced payment. If all the revised payment plans work out, then the overall situation won’t be that bad as right now the charge-off/default rate is only 1.7% (3 out of 172). Otherwise, the investments in Lending Club will become a little sour because the total value in charged-off and late loan is about $260, almost equal to the total interests of $274 received so far, one year since I first began to buy loans on Lending Club’s secondary market in February 2009.

Though not very happy with the number of late loans, I will keep investing with Lending Club. With nearly $150 monthly payment, I can add a few more new loan every month to keep it going.

BTW, if you are interested in becoming a Lending Club investor, you can receive $100 bonus if you make an initial investment of $2,500 or more. This is a limited offer from LC through its referral program.

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Know Thy (Financial) Self

Sun — Mon, 01 Mar 2010 06:30:29 PST

You may be an introvert or an extrovert. Maybe you’re highly organized or barely able to stay afloat of the clutter. Whatever your personality type, you also have a spending type. Identifying and knowing your spending type and financial habits is one of the first steps to taking control of your monetary resources. Ignore or deny your financial self, and you might as well be throwing money away.

Traditionally speaking, financial personalities break down into two camps: the spenders and the savers. There are those for whom money burns a hole in the pocket and is spent nearly as quickly (or even before) it’s earned. Then, there are those for whom a penny saved is truly a penny earned and every cent is squirreled away in an effort to acquire more wealth and/or security. Obviously, the goal for most is to become better at saving. If this is the case for you, there is much good news and much you can do to help attain this goal. Spending and saving money are both habits, nothing more, and both can be learned behaviors. You may very well have a tendency towards the prior, but if your motivation and determination are strong enough the latter can soon become second nature.

Just as fad diets often don’t work and can lead to more weight gain, so, too, can going on a spending “diet” backfire financially. To achieve long term saving success, focus on making small, much more manageable changes that are more likely to stick. Forget giving up your favorite coffee drinks entirely, for example, and instead opt for putting yourself on a limit of one per week. If you enjoy reading magazines, skip buying them entirely, save the associated cost and instead commit to reading them while you’re in line at the grocery store or start checking them out at your local library. If you enjoy dining out, start ordering takeout instead and squirrel away the money you would have spent on tip and a beverage. An old German proverb says, “Who begins too much accomplishes little.” Same can be said of saving. Whoever tries to save too much at one time will likely save very little because they’re likely doomed to fail. Start small, make palatable changes and you’re much more likely to see lasting change when it comes to your saving habits, increasing the money in your bank account and lowering your financial stress over the long haul.

If you’re thinking you must resign yourself to a life of boredom sans any little luxuries in an effort to make the shift to “saver,” think again. Money is merely a tool, a tool that helps you live your life successfully by paying for all of the little necessities that pop-up as well as helps you to afford the things that help make life more enjoyable. That said, a life spent merely hoarding money is really no life at all. On top of that, working to simply acquire a bigger and bigger number in your bank account might very well leave you bitter and tired of work. After all, all work and no play makes Jack (and Jill) very dull. The key is to learn how to properly prioritize your funds, making sure there’s an adequate supply of money to go around for all the necessities as well as the luxuries. Spend some time figuring out your financial self, make small, easily attainable goals and work towards achieving them and a life of financial security (and balance) won’t be far behind.

(To download and print a worksheet of this topic, click here.)

Photo credit: Amy Messere

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Weekend Linkage – February 28, 2010

Sun — Sun, 28 Feb 2010 18:57:21 PST

Last week, I ran a TurboTax and H&R Block At Home giveaway. Perhaps many people have filed their taxes already, the giveaway only received moderate response as a total of 17 readers entered the contest. Still, I am glad that five of them can file their taxes, both federal and state, for free Using a random number generator, the following five readers were selected to receive a total of five copies of free tax software.

Chris J (H&R Block At Home)
Devender Babber (TurboTax Deluxe)
leslie rubinson (H&R Block At Home)
Christopher (H&R Block At Home)
Linda (TurboTax Deluxe)

Congratulations to the winners and thanks everybody for participating! The TurboTax Deluxe is an online version, while the H&R Block At Home Deluxe is a PC software that needs to be installed.

Weekend Readings

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Sallie Mae Savings Account 1.25% APY

Sun — Sat, 27 Feb 2010 12:28:04 PST

A high interest rate savings account is an essential part of our financial system. With a large amount of money that is currently held in bank accounts, I’d love to get as much return as possible while making sure that the money will be there when we need it in the next few months. Unfortunately, the current status of high-yield savings accounts don’t offer too much help in terms of returns. In fact, I found that online savings accounts are increasingly becoming what we called “chicken rib” these days. On one hand, I really can’t get much from it as yields of most savings accounts are now in the low 1.0% APY, while on the other hand, it still won’t make any sense to just abandon the passive income generated in savings accounts because the interest rates are so low. Late last year, I was considering getting another savings accounts for myself. After looking around and watching rates at banks I was interested got cut repeatedly, I gave up that idea because I realized that it’s just not worth it to get another account with rate that’s only 0.1% higher than what I already have. Plus, with rates changing so fast even as the Fed funds rate has been held steady for more than a year, today’s winner could well be tomorrow’s loser. The rate-chasing game is not worth playing in this environment.

Anyway, if you are looking for a high-yield online savings account, here’s another option in addition to those I listed earlier: the Sallie Mae High-Yield Savings Account. Sallie Mae (NYSE:SLM), which is known for its operation in the student loan business, recently launched its own online savings account with an yield at 1.25% APY. The account is FDIC insured (FDIC Certificate number: 58177, member since November 28, 2005) with no minimum balance requirement and no monthly fee.

Here’s some other information about the Sallie Mae Savings Account:

Daily compounded interest
Sallie Mae routing/ABA number 124385119
ACH fund transfer to/from external accounts
Trial deposit account ownership verification
5-day hold period for deposit $5,000 or less, 10-day hold period for deposit more than $5,000
Maximum 6 free withdrawals per statement cycle ($10 per withdrawal over the limit)
Customer service toll free number (877) 346-2756

To be fair, 1.25% APY is a good rate (better than ING Direct, FNBO Direct), but not really that competitive (lower than Ally Bank and American Express Bank). However, if you are using Upromise like I do, then there is a little extra benefit for Sallie Mae Savings Account owners as Sallie Mae also operates Upromise. Here’s how the 10% annual match on Upromise earnings works

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

I have a Upromise 529 plan and the way I earn Upromise rebates, which are then invested in the 529 plan, is shopping through Upromise network and paying with BofA Upromise credit card. It’s not a lot of money you can make, but it doesn’t require much effort either if you already have a Upromise card and use it everyday.

Update: You may also want to check out other high-interest online savings accounts:

SmartyPig Savings Account 2.01% APY
Capital One InterestPlus Savings Account 1.25% APY
Ally Bank Online Savings Account 1.30% APY;
FNBO Direct Savings Account 1.25% APY;
EverBank Money Market Account 2.25% 3-month bonus rate, 1.51% APY for the first year.

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TurboTax 2009 Has Some Nice New Features

Sun — Fri, 26 Feb 2010 06:53:49 PST

I have been a customer of TurboTax for a few years already. When I used the software to prepare my own taxes in the past, I always got the PC version, the software that requires installation on my own PC. I know Intuit has been offering the equivalent, online tax preparation software for sometime, but I never tried the web-based version because, somehow, I feel it’s safer to have all the important personal information on my own computer than on a website. Not that I don’t trust the website in securing my personal data, it’s just a habit that’s a little hard to break.

This year, however, I decided to give the web-based TurboTax a try because I heard there are some nice improvements in the 2009 version. Though those improvements are also included in the standalone version, I also want to see how the online software works. No, I am not planning to shift permanently to the web-based software, at least not with the first try.

Anyway, the first impression when I started TurboTax Premier Online with State and E-Filing was, well, it looks just like the PC version and the procedures are also identical, as far as I can tell: I first enter our personal information, then W-2s, then 1099s.

While I was putting my W-2 into the tax software, I intentionally made an error. In Box 13, I check-marked the second option, Retirement plan. However, I omitted the amount in Box 12, D – Elective deferrals to 401(k). When I tried to continue with my filing, I got an error message like this:

It looks like the software detected there was something wrong while I was entering my information. This brings the improvement of the new version of the software: The error check occurs as the filing goes, not at the end of the process as it usually did in the past as I can remember. Since it always takes me days, if not weeks, to complete our returns, I like the instant error check feature a lot. Catching the error right away and correcting it while things are still fresh make it much easier.

It also happened to me before that there were times I wasn’t very sure about something during the process and I wanted to revisit the issue later. Going back to those places wasn’t that straightforward before since I had to remember where I left those issues myself. In the 2009 TurboTax, however, it’s easy with new Flag feature. As you can see above, I added a Flag at the place I want to back later, gave it a name, and saved it. Clicking on the Flag button at the top of the screen and selecting the name of the flag I created will take me right back to where I flagged.

Finally, the 2009 TurboTax also includes a Live Community. It’s a place where you can get your tax related questions answered. Before posting your own question, you can search through the archives to see if the same or similar question has been asked and answered before. If you can’t find the answer for your question, you can post it to the community and somebody, either users just like you or a tax experts from Intuit will provide an answer in a timely manner. It could be very helpful during the tax season.

Are you using the online version of TurboTax or the PC program? What do you think of these improvements if you have used the online version before?

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Squeezing One Last Deduction out of 2009

Yolander Prinzel — Thu, 25 Feb 2010 06:52:34 PST

Surprisingly, many people do not realize that they can still get one last deduction out of 2009 even though their current calendar reads 2010. No, this isn’t fantasy or traffic grasping SEO hype — there really is one way for you to still get another deduction on your 2009 taxes. Ready? Here goes:

If you want to get just one more 2009 tax deduction then make a contribution to your already existing IRA account on or before April 15th, 2010.

It’s All In The Details

One of the most important points to note about this deduction is that, in order to take advantage of it, you must have had the IRA you make a contribution to opened in or before 2009. That means you cannot open an IRA account in 2010 and then fund it in 2010 while receiving a deduction for 2009.

The second point to make note of is the deadline to make this contribution. If you plan to make a contribution to a SEP, Roth or traditional IRA that was created in or before 2009 then you only have until April 15th to do so. In most cases, making a deductible contribution means that you must have the money in your IRA account by April 15th. If you mail it or bring it into your broker’s office on April 15th it may not be deductible for 2009. Your CPA is a great resource for determining whether or not your broker’s constructive receipt or an April 15th postmark is enough to get the deduction.

2009 Contribution Limits Still Apply

In case you are wondering, you can make contributions to both your Roth and traditional IRA and deduct the entire amount as long as you stay within 2009 contribution limits, which are:

$5,000 (cumulative) for a Roth or traditional IRA if you are under age 50 and $6,000 if you are 50 or over.
The lesser of $46,000 OR 25% of your income (up to $230,000) to your SEP regardless of your age.

In order to ensure that you get the deduction for 2009, be sure to mark the memo line of your check “Contribution for 2009.”

Don’t Forget To Direct the Funds

Now, while you are rushing to make that last minute deduction, don’t forget that the money inside an IRA will not necessarily invest itself. If your IRA is part of a managed account then you may be paying a fee to have financial decisions made for you, in which case your account manager or broker will likely invest the funds according to your risk tolerance and existing investments. If your account is not a managed account then your contribution may just be sitting in a money market until you call your brokerage firm and have the money invested. If you have a broker, chances are he or she will call you when they see the money come in but if you are using an online brokerage firm you may need to be proactive about the incoming funds.

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CARD Act Aims To Finally Protect Consumers

David Dierking — Wed, 24 Feb 2010 06:51:06 PST

Last year, President Obama finally pushed legislation through Congress that is aimed at protecting American consumers from the unscrupulous practices of credit card companies. This week, the new credit card law finally takes effect.

On Monday, February 22^nd, the Credit Card Accountability, Responsibility and Disclosure Act (the CARD Act, for short) begins guarding credit card users from many of the common complaints levied against card companies such as being unfairly dinged with rate increases or charged exorbitant fees. It’s not a complete solution and there will be negatives for some cardholders but all in all this piece of legislation is a step in the right direction.

Consumers will immediately see a number of changes to their card agreements. The biggest change may come from card companies’ inability to make unannounced rate hikes. Issuers will no longer be able to make major rate increases on outstanding card balances and, additionally, must provide 45 days notice before making any type of significant change to your account. That includes increasing the rates on your line of credit, imposing additional fees to your account or changing the terms of the cardholder agreement. These changes are a big win for individuals who carry a credit card balance.

But not every practice has been reformed. There are some things that card issuers can still do. For example, there’s no cap on the interest rate charged to new customers (First Premier Bank made news recently with a 79.9% APR on its Premier Bankcard). Card issuers are also still allowed to reduce your credit line or close your account altogether without any type of notice. This has already taken place for many consumers and can be expected to continue.

So who comes out on the losing end with the CARD Act? That would be consumers who pay off their credit cards on time every month. Sounds a little unfair, right? People who pay off their full balance every month don’t incur late fees or interest charges in the first place so any rate changes associated with their cards are going to go largely unnoticed.

But credit card companies will be looking for ways to replace the lost revenue that came from fee and interest income. That lost revenue could be recovered in the form of higher annual fees, increased inactivity fees and lower rewards program benefits. It turns out that those who manage their credit card debt the best will be the ones who benefit the least. No good deed goes unpunished I suppose.

Let’s focus on the good though. Overall, the CARD Act is a positive step for the credit card industry. It won’t prevent every abusive practice but it undoubtedly puts consumers in a more advantageous position than they were in previously. Analysts have already been keeping an eye on card issuers to see if and to what degree they may try to find ways to circumvent the new law to their advantage. Many big issuers seem to be ready to comply with the spirit of the law but there will be others out there that will try to skirt the rules. Be sure to keep a close eye on your cardholder agreement to see exactly what your card issuer will and will not do.

And this isn’t an invitation to spend freely without consequence. If you pay late or pay less than the entire balance, you’ll still incur fees and interest charges. There’s no law that will protect you from that but for those of you who have gotten dinged from a card issuer in the past, the gray skies should be lifting this week.

Photo credit: TheTruthAbout…

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Switching to Virginia Education Savings Trust (VEST) Plan

Sun — Tue, 23 Feb 2010 06:27:51 PST

When I opened the 529 college savings plan for our first daughter in 2005, the plan offered by New Jersey was never an option to me because there is not tax benefit for using NJ 529 plan even for the state residents. But that wasn’t all. What really made me stay away from NJ college savings plan, called New Jersey Best College Savings Plan that is managed by Franklin Templeton, was the poor performance of the plan and high cost of investing with plan. In fact, Morningstar has rated the plan as one of the worst 529 plans for years. Eventually, I went with two plans that also offer extra incentives: UPromise 529 Plan and Fidelity UNIQUE Plan. Both are tied to credit cards that I use often, the Bank of America UPromise Card (1% cash back) and Fidelity 529 College Rewards Card (2% cash back), so I can turn cash back earned from using the cards into savings for college. While it’s nice to have that extra money invested without much effort since I use the credit card for almost every purchase anyway, I have to admit now that the choice wasn’t the best that I could have made back then. Therefore, when it was time to get another 529 account for the younger one, I did my research more thoroughly and settled with Ohio CollegeAdvantage 529 Plan. So far, I am very happy with the Ohio plan, not only because the plan’s low cost and wide selection of funds, but also the periodic referral bonus offers, which has provided a huge boost to the account’s growth last year.

All the above investment decisions were made when we were living in New Jersey.

Now that we have settled in Virginia, it’s time to make some adjustments to our 529 plans. Unlike the state of New Jersey, Virginia offers a better option for saving for college and tax incentive for using the state sponsored program. Currently, Virginia has four college savings plans: Virginia Prepaid Education Program (VPEP), Virginia Education Savings Trust (VEST), CollegeAmerica and CollegeWealth. The plan I chose is the Virginia Education Savings Trust (VEST) because

It’s a direct-sold college savings plan that is open for enrollment all year long;
It offers a wide selection of low-cost investments, including stocks (domestic and international), bonds, TIPS, and REIT;
It was selected as one of the best 529 plans by Morningstar;
We can deduct up to $4,000 per year per account in Virginia income tax.

VEST Investment Portfolios

The tax benefit alone isn’t enough for me to make the switch. Fortunately, that’s not only benefit the VEST plan offers. The main advantage of the plan, in my opinion, is its investment choices. VEST plan has two types of porfolios: Age-based evolving portfolios and non-evolving portfolios.

The age-based evolving portfolios consist a total of nine portfolios: Eastern Shore, Alleghany, Chesapeake, Potomac, Southside, Blue Ridge, and Piedmont. With the age-based portfolios, as we know, the asset allocations, mainly between stock and fixed income, of each portfolio evolves as the beneficiary’s age approaches the age for college. It works a lot similar to the way that life-cycle funds work. For age-based evolving portfolios, the underlying investments include large-cap, small-cap/mid-cap domestic equity funds, foreign equity funds and fixed income funds, managed by Vanguard, Templeton, Capital Research and Management, INVESCO, etc.

On the other hand, non-evolving portfolios include ten portfolios: Aggressive Portfolio, Moderate Portfolio, Conservative Portfolio, Money Market Portfolio, Total Stock Market Index Portfolio, Total Bond Market Index Portfolio, Total International Stock Index Portfolio, Inflation-Protected Securities Portfolio, REIT Index Portfolio, and Socially Targeted Investment Portfolio, all but the last one are made of Vanguard index funds.

After examining both types of portfolios, I decided to use funds in the non-evolving portfolios category to build my own portfolio in order to, I hope, boost the growth of the portfolio when our kids are both more than 10 years away from college. The four funds I chose are: Vanguard Total Stock Market Index Fund (50%), Vanguard Total International Stock Index Fund (33%), Vanguard REIT Index Fund (8%) and Vanguard Total Bond Market Index Fund (9%). Right now, the portfolio invests heavily in stocks as you can see from the above asset allocations. Going forward, I will have to the adjust the allocation of the portfolio myself as the portfolio is not evolving “automatically”. It’s an additional job that I will need to do myself, but it gives me the flexibility I want in building the portfolio. Will this be a good strategy or a bad one? Only time will tell

VEST Costs

When selecting an investment, whether it’s a regular investment such as a mutual fund, or an investment for college like the 529 plan, cost is always a top concern to me. Since most of VEST’s underlying funds are low-cost Vanguard index funds, the overall cost of investing in VEST plan is rather low. For example, the total annual fees for age-based portfolio range from 0.35% (Piedmont Portfolio) to 0.53% (Eastern Shore Portfolio). For non-evolving portfolios, the Socially Targeted Portfolio has the highest cost at 1.0%%. All other Vanguard funds are quite cheap, with costs from 0.30% (Total Stock Market Index Fund) to 0.52% (Total International Stock Index Fund).

In addition, VEST plan also charges an one-time application fee of $25 for each new account. Other fees include

Account cancellation: $25
Change of beneficiary: $10
Rollover to another QTP: $25
Change of account owner: $10
Non-sufficient funds: $25
Expedited distribution: $50

Overall, it seems that investing with VEST plan costs a little bit more than doing so with the Ohio CollegeAdvantage plan, especially for age-based portfolio, and Ohio plan doesn’t charge account setup as the VA plan does. However, both plans are rather cheap to own and both offer great investment choices. What makes the VA plan even sweeter is the $4,000 per account annual Virginia tax deduction. It will make that little additional cost worth it.

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Creating a Home Directory

Shannon M. Medisky — Mon, 22 Feb 2010 06:18:14 PST

Anyone who believes in the old adage, “An ounce of prevention is worth a pound of cure,” will also agree that the best way to save money is by managing what you already have well. Without some kind of organization in place, this can be easier said than done. That’s where a home directory comes in handy.

Years ago when I was put on bed rest in my fourth month of pregnancy, I was left with many, many hours to sit and wonder and worry about our finances. With a new baby on the way ready to suck every last cent from our already tightly squeezed budget, I was determined to turn a blind eye on our financial situation no longer. Knowing I would likely not find a better time to devote to this endeavor anytime soon, I grabbed the phone, the pile of bills and a notepad and began taking diligent notes.

Many pages and much chicken scratching later, I knew there must be a better way to keep all of this important information organized. Fortunately, as it turns out, I was right, and it didn’t cost me one-red cent, either. With a small, old 3-ring notebook and a few pieces of paper, I was able to make household tool with lasting value. So if you’re finding yourself enticed by such tools available for sale online and in the stores, keep your money right where it is, with you, and instead create a home directory of the “DIY” variety.

A home directory is tool that helps you manage everything related to your home and your household life. It’s a tool that helps you track outstanding debts and ongoing payments as well as saves you time when you quickly need to find a plethora of information. It can also be a real family safety net as well. Should a family member become unavailable, with a home directory, all the important information is readily accessible to anyone who may need it. For this very reason, it’s vitally important to keep it picked up and protected from theft.

To begin, gather all of your creditors’ information including due dates, account numbers, contact information and amounts due. Other information also worth considering for inclusion are pharmacy phone numbers, doctors’ contact information, phone numbers for children’s schools and even your car’s VIN and license information. If you’re like me and sometimes forget or misplace password and/or login information, consider adding a page just for that information as well. Next, create a page or listing for each so that it can easily be incorporated and/or later removed from the directory. Designating an entire page for each ensures that you will have plenty of space for recording important information, including making notes of any phone calls made to creditors. For ease of use later, clearly label each page with the contact’s name in the upper right-hand corner as this will make finding that contact’s information later much easier. One word of warning, however, for information that may change frequently, consider using a pencil rather than a pen.

The beauty of creating one yourself is that you can tailor it to your own needs and household habits. There is a variety of different ways to organize the pages, so choose a method that works best for you as any other way would be less effective. From strictly alphabetizing the pages by contact name to dividing the directory into smaller sections such as “house,” “car,” and “medical,” doesn’t matter how you organize it, the result is the same – a great, easy way to effectively organize all matters of finance and home. (Click here to download and print your own home directory pages for free.)

(To download and print a worksheet of this topic, click here.)

Photo credit: mag3737

Original Post on The Sun's Financial Diary

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Creating a Home Directory

Sometimes, The Best Lessons Learned in Life Are Learned The Hard Way

Guest — Fri, 19 Feb 2010 06:40:23 PST

If there were one phrase in life that sums up lessons learned the hard way, it would be the infamous “I told you so.” At one point or another, you were informed by a friend, family member, or a professional, exactly what you should do, disregarded it, and paid the price. So for your entertainment, I would like to share with you a terrible decision that I made not once but three times, simply because I’m a glutton for punishment.

Four years ago, I purchased a 2003 Ford Mustang, which was somewhat “tricked out” with a five year extended bumper-to-bumper warranty from eBay for $14,500 cash. It was the first car I’ve ever called my own and at the time I bought it, it had 23,000 miles on it. The car was in excellent shape, inspected, and only had one previous owner, who kept it garaged in the state of Florida, where I live now. Since owning the car, I make sure to take good care of it and have it fully inspected and tuned up at least twice a year. Since I work from home and don’t travel often, I have only added 20,000 miles to this car since purchasing it, so to me it’s still like new.

In June of 2009, I was driving to work when all of a sudden my left front tire blew out completely. Instantly I smelled the sulfur from burning rubber and luckily for me was right in front of Biscayne Tire and Auto, of which I had never been a patron of before. A young man named Raul came out to inspect my car and explained two things to me, of which one I listened to and one did not. The first thing he said was that I should probably have all four tires replaced because the other three showed significant wear and I would be a ticking time-bomb if I chose to ignore the problem. The second thing he told me was that because I have special rims, I would need to order special tires that kept the “muscle car” look and each front tire would cost $235, each back tire, $285. I don’t know about you, but spending over $1,000 for four pieces of rubber was definitely not in my budget and while I probably (maybe) could have scrounged around to make it work, I decided to get the immediate problem fixed and when the time came, take care of the other tires. After all, Raul was probably trying to sell me something I didn’t want and I’m pretty sure it wouldn’t be the first time a mechanic was less than honest.

So I went on my merry way, upset that my tires were so gosh-darn expensive. As a few weeks progressed, I forgot completely about the issue as my Mustang was back to running smoothly. In August of 2009, wouldn’t you know it, I experienced a second tire blowout. This time it was the front left tire and too far away from Biscayne Tire and Auto, forcing me to call a tow. I was able to drive the car back to my apartment, as I was only a few minutes out. Now you might be thinking, “Michael, why don’t you simply put the spare tire on, ride it out to the auto shop and save yourself the expense of calling a tow truck?” Indeed this thought crossed my mind, however I am amateurish at best in auto repair, even with something as simple as a flat tire, so I called the number on the back of my Citibank credit card, because MasterCard offers AAA assistance at a very discounted rate. I waited, and waited, and waited for SIX hours and finally some 18 year old kid showed up and could not change my tire either, because once again, my special rims and wheels required a special bolt removal device, of which he did not bring with him. How awesome!

So that night, I called a tow truck to come and pick up the Mustang, and the next morning he showed up promptly and dropped me and my ride off at the infamous Biscayne Tire and Auto. Raul must have ran out from whatever he was doing because his face was the first to greet me and while the last thing I wanted to see was his smile from cheek to cheek, it was somewhat amusing. He kindly reminded me that I should have the back two tires replaced as well but once again, I did not have the funds to cough it up, barely being able to have this second tire replaced. Raul pompously and deservedly told me we would once again cross paths very soon and set me on my way. The tow truck cost me $75 and a good day’s worth of time, so at this point my lesson learned was only minimal. I knew I could do better.

In September of 2009, just one month after having replaced the front left tire, the Mrs. and I were returning home from an Argentinean steak house when my back left tire felt a little “off”. Before you go thinking that if I have enough money to go out to steakhouses, I have enough money to pay for four new tires, think again, as I shamelessly whipped out my Restaurant.com $25 gift card, which cut the bill in half. Anyway, I pulled the car over just to find that I had a nail the size of Rhode Island logged pretty well into the tire. Luckily, I was able to drive the car home and woke up bright and early the next morning to meet my new best friend Raul at the auto shop. Once again, his grin reminded me of just how stupid I am. Even though this probably would have happened even if I had purchased a new tire, I would have been able to plug the nail hole instead of replacing the tire completely. After shelling out $285 bucks for one back left tire, Raul begged me to get the last tire replaced. To be honest, I could have had the last tire replaced but pride, principle, and stupidity ran through my mind, which caused me to laugh off his suggestion and inform him that I would never see him again.

Up until yesterday, my idiotic decisions had only cost me $75 and a couple days worth of inconvenience and travel. Avoiding accidents and other potential disasters, I’d say I got off easy. Then, driving home from a dentist appointment, I stopped at a red light where, as is routine in Miami, a homeless man walked up to my car asking for a donation. His words seemed to take an unusual turn when he told me he loved Mustangs and Fords in general and that my back left tire seemed to be a little flat. I informed him that this tire was somewhat new and that there is no way anything is wrong with it. He smiled and went on his way but I had the thought in the back of my mind that he could be right. After about 15 minutes of interstate driving, I began to lose control of the car and once again had the awful smell of sulfur permeate through the car. Daytime traffic on I-95 was light, so I was able to get the car over to the right shoulder, pissed off that (1) I was forewarned of this event and (2) lost a tire that I just replaced a few months ago! I got out of the car and was SHOCKED to see that the tire in question was just fine. Two seconds later my relief turned into pain when I found my back right tire ripped into shreds. The most expensive of my indiscretions, I lost $95 for the tow truck and a days worth of work as it took hours to get the right kind of tow to help us out. Back tire blowouts require a bed truck because the car can’t roll on its back tires. The first FOUR tows that we’re sent out to us were of no use, but like the cliché goes “Fifth times a charm.”

So what did I learn from this? Well the first and most obvious lesson is that when a professional suggests I need something done, I should either listen, or get a second opinion to confirm the first. Idiots like me cause accidents that can be avoided and bad decisions are usually a result of earlier bad decisions. The second and less obvious lesson is that even though the consequences of my actions were on the lighter side, they could have been FAR worse. Before making another decision like this, I need to think about the possible consequences and realize that I’m not always going to be this lucky. That is if you can call this little experience “lucky”.

This guest post comes from Michael, a contributing editor of the Dough Roller, a personal finance and investing blog, and Credit Card Offers IQ, a credit card review site.

Photo credit: itmpa

Original Post on The Sun's Financial Diary

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Sometimes, The Best Lessons Learned in Life Are Learned The Hard Way

TurboTax Deluxe, H&R Block At Home Deluxe Giveaway

Sun — Thu, 18 Feb 2010 10:23:34 PST

Have you filed your 2009 taxes yet?

I haven’t. I have received most of the tax documents already, but haven’t started the process because, like what happened in the past few years, I don’t expect to have a refund this year. So I am not that hurry, but I did get my tax software already.

If you are not one of those early birds who already got their refunds, you probably even haven’t purchased your tax software yet. If that’s the case, then here’s your chance to get a free tax software. Thanks to the generous donation from Intuit and H&R Block, two largest tax software providers, I am able to offer FIVE copies of tax software, 2 copies of TurboTax Deluxe and 3 copies of At Home Deluxe, for free to readers of this blog. The TurboTax is an online version, while At Home is a PC program, both including state and e-filing.

To enter this giveaway, simply leave a comment at this post before February 25th. Five lucky winners will be selected on the 25th to receive the free tax software.

Original Post on The Sun's Financial Diary

Special bonus offers

TurboTax Deluxe, H&R Block At Home Deluxe Giveaway