This blog contains some simple tips and advice from two regular guys. We're not accountants, financial advisors, or brokers, so follow, ignore, or discuss our ideas as you see fit.

Wednesday, April 30, 2008

Reader Poll: Plans for your stimulus check?

Posted By Paul

Hi Everyone,

I thought I would try a Reader Poll to see what people planned to do with their stimulus check.

For me, well my wife and I are expecting our first child so I think we're going to use part of our check to buy a video camera and then bank the rest.

How about the rest of you? Feel free to chime in with a comment on the plans for your check.

Monday, April 28, 2008

Charity Wariness

Posted By Paul

I'm certain that I've given money to a person that said they were in need when in fact they were swindling me. I figure that it's just part of life and chalk it up to experience. I would imagine that everyone out there has been taken advantage of by someone at some point in their life.

That said I thought I would share a few true stories from my life and a few rules that I now follow because of them.

Story 1:
I was in college and a woman stopped me and told me that her car had run out of gas and she needed a few dollars. She told me she would send me a check paying me back. I gave her $10 and my PO Box at school and I ended up getting a letter trying to sell me vitamin supplements.

Story 1a:
A friend of mine did the same thing only she gave the person the address for her apartment. The person actually showed up at their front door a week later asking for more money for some other problem.

Rule I put in place because of this:
I NEVER give money to people on the street (well that's not totally true, I will buy Girl Scout cookies and I drop money into the Salvation Army kettle during the holidays, but that's really about it).

Story 2:
I had an organization call once that was collecting donations for veterans in need. I pledged, got the mailing, sent the check, and only later realized that even though the organization I donated to was called "Veterans In Need" I couldn't actually find them anywhere on the internet.

Rule I put in place:
I never pledge donations over the phone. If someone calls I'll listen and tell them that they can send me some info and I'll look it over (which lets me research them on the internet), but if they insist on a specific pledge then I don't do it. There are just too many charities out there called "Veterans Childrens Fund" or the "Cancer Help Fund" that don't do anything except collect money and put it in the bank.

Story 3:
A gentleman came by the door and was collecting for a charity that was based on helping the homeless locally. I told him that I didn't donate money to charities that I'd never heard of. He gave me a phone number and said I could call to confirm the charity. I took the number and the name of the charity and told him I'd do some research on it, and that he was welcome to come back later. I looked up the charity and sure enough it was more or less what he said it was , but it had some political affiliations that I didn't agree with, so I told him I didn't want to donate when he came back.

Rule I put in place:
I NEVER give people money when they come to the door. I'll take any pamphlet they have, or even just the name of the organization they represent so that I can look it up and make sure it is what it says it is.

One of the great articles I found on this was a guide to giving to charities that has links to places that help you research charities. Here is the article:

Safe Charitable Giving.

It's a shame that I have to be so paranoid about giving money to charity, but sadly you really have to be careful to make sure that the money you are giving is actually going where you want it and doing some good.

Friday, April 25, 2008

Found money!

Posted by Matt

Anyone who currently owns securities knows what I mean when I write about investments "losing" money; the money isn't misplaced, their investment has simply gone down in value. We do what we can to protect ourselves against that by educating ourselves and being conservative.

Unfortunately, financial losses sometimes result from plain old human error. Most of us keep a pretty close eye on our various financial instruments, but it gets more difficult as we diversify our holdings in more and more types of accounts. I was reminded of this today when I got a phone call from someone I know who told me they just "found" a large sum of money (5 figures!) for their retirement that they had either forgotten about or never knew they had.

This person made the discovery when they received a statement from the retirement plan administrator of one of their former employers. I don't know if the statements were a new offering or what, but it came out of the blue. As it happens, I worked for this same employer long ago, so I decided maybe I should give the benefit plan a call. I knew I wouldn't be receiving a statement, given that I had moved four times since leaving the employer in question.

After 5 minutes of navigating voice menus, I spoke with someone who informed me that yes, I ALSO had money in an account with them: $283.06, to be exact. Not exactly the treasure chest that my friend discovered, but "better than a sharp stick in the eye", as my mother always said. I was really shocked that ANYTHING was left. When I changed employers, I executed a rollover from my 403b account into my new employers 401k, but there was money left behind somehow. The rep I spoke with couldn't explain it, but did promise to send me the appropriate forms to roll the remaining money over. With any luck, I'll get it all out this time.

Is there a moral to this story? It was a new situation for me, so the lesson I learned is that I should always make sure I get a closing statement showing a zero balance whenever I move money out of an account. I recently closed a credit union account that I was no longer using and received a receipt on the spot, but obviously some transactions bear watching a little more closely.

As for my friend, that's a lesson on an entirely different level. Get a file cabinet, get a spreadsheet, do whatever you have to do to get all of your financial information into one place and keep track of it!

Thursday, April 24, 2008

Article: Tax rebates start arriving Monday

Posted By Paul

I just read that tax rebates will start arriving on Monday.

Here is the article from CNN describing the distribution process.

Tax rebates to start arriving Monday

If you don't have any specific plans for your rebate, then you may want to read my previous post:

What to do with $500

Savings Bonds and CD's starting to look good.

Posted By Paul

So has anyone else out there noticed that the interest rates for internet savings accounts have fallen to the point where it's harder and harder to get excited about them?

In fact my experimental investments such as my savings bonds and my CD ladders are starting to look really good (or at least better than my basic savings accounts). By locking in rates for the CD's and the savings bonds the somewhat blah rates of 2007 are beating the current rates on my savings account.

In fact Matt's wife forwarded this article to me on Clark Howard:

Buy Series I Bonds Before April Ends.

The article puzzled me a little bit since it says:

"Beginning in October, the rate will bump up to 6.06% for the following 6 months. That's a very competitive rate."

That struck me as odd. If you read my post on savings bonds you'll see that the I Bond rate is a mix of a fixed rate and an inflation rate. I don't see how you could predict the future rate of the bonds unless you knew both numbers in advance.

If you read the comments on the article you'll see a lot of discussion on the merits of this article, but the point I wanted to get across is that I learned something very useful and that is:

The argument that you shouldn't invest in CD's or savings bonds or other 'locked in rate' investments today solely because you can get the same rate with a savings account without having to lock your money away ASSUMES that the savings account rates of tomorrow will either be higher or the same as they are today.

For example, some of my emergency fund is in CD's that are locked in at 4.9% and even if I factor in the penalty of cashing the CD out early they're making a better return than my savings account.

So what does this mean? I guess it means that I'm going to watch the savings bonds rates very closely and maybe get some more if the fixed rate ever gets up to a nice amount. In addition, the next time that CD rates get up to a nice level I'll consider locking in again to take advantage of that (and now that I've seen it in action I totally get the idea behind the CD ladder).

Tuesday, April 22, 2008

What things are FDIC insured?

Posted By Paul

Most people out there are familiar with the concept of savings that are insured by the FDIC (Federal Deposit Insurance Corporation) and for those deposits:

"The FDIC protects depositors against the loss of their deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government."

Which essentially means that your deposits are guaranteed by the US Government.

Matt posted some FDIC info in his post:

Money insurance and POD Accounts

But I decided to look around and see if there was a good summary of what kind of accounts are FDIC insured and what exactly that means. I found this page at the FDIC.gov website that has a good summary if you're every wondering if your deposits qualify:


Friday, April 18, 2008

Article: Frugal Living

Posted By Paul

I found an article on CNN that is all about making frugal choices:

Frugal living more about priorities than sacrifice

I liked how the article says that being frugal wasn't about sacrifice, but about priorities. The article talks about how saving money by being frugal lets you spend it on other things that might be important to you.

I also really liked a quote from the article:

"It really doesn't matter what you make. It matters what you spend."

Which is so true.

Monday, April 14, 2008

"Fixed" Mortgage, Be Careful

Posted By Paul

I was listening to a story where people are getting mailings for fixed mortgages at a great rate. They get excited and quickly do the paperwork, and feel like they got a great deal, and then 6 months later their interest rate shoots up.

Why? Apparently mortgage companies can to refer to a rate as "fixed" and call a mortgage a "Fixed Mortgage" even if they mean that the rate is fixed for the first 6 months and then adjusts. If you're not careful and don't read the fine print, then you could accidentally sign up for an adjustable mortgage when you THOUGHT you were getting a fixed mortgage.

I actually received one of these mailing recently that had big letters declaring a fixed mortgage rate that was low enough that I got pretty excited. Once I read the mailing closely it was easy to find the part where it said that the rate will adjust, but I could see a situation where someone might get the mailing, see the phrase "Fixed mortgage" and the rate and immediately call to take advantage of it without actually reading all the info.

What's the moral? READ THE FINE PRINT, and be wary of anything that seems too good to be true.

Wednesday, April 9, 2008

Telecom 2008, part three: Grand Central

Posted by Matt

My apologies, I'm delivering my final telecom post a bit late. Before I get started describing Grand Central, let me give a quick update to what I posted about the Vonage Annual Pay plan last week. I decided to dig into it a bit more before signing up and I'm glad I did. It's a racket! Here's the fine print:

No refund for early termination. Automatic renewal of annual plan unless customer provides timely notice.

I couldn't believe this and so I called the billing center to make sure that I understood it correctly. They confirmed that if I signed up for this plan and decided to discontinue my Vonage service next month, I would receive NO refund. Not only that, but they'll automatically lock you in for another year of this crappy deal. Steer clear!

Back to the good stuff; if you haven't already heard the news, Google acquired a company called GrandCentral. This company will provide you with a free phone number that you can program to ring you at multiple locations. There are a TON of other great features, but that's the biggest one and also the one that I'm going to use to try to save some money.

Here's what I'm planning. I'll give out my GrandCentral number to everyone I know and then set up the service to forward all callers to all of my phones simultaneously. My hope is that doing this will allow me to drastically reduce the amount of minutes I spend on my cell phone (which is not all that much time anyway) because I'll be able to take the bulk of my calls on my home and work lines. I should really only need to use my cell phone when I'm out and about. I'm already on the plan with the minimum number of minutes, but if I can consistently and significantly reduce my cell usage, I'm going to try out a pay-as-I-go plan.

As always, I'll let you know how that goes. If it never comes to fruition, I'll still appreciate having a single, central number.

Telecom 2008, part two: Cell phone

Posted by Matt

Okay, so I'm set up with VoIP. It just so happens that during the process, I lost my cell phone. I was tempted to not replace it, but ultimately agreed with my wife that it is nice for us to be able to reach each other anywhere. However, I was still a month away from being eligible for a telephone upgrade discount. I definitely didn't want to pay for a full price phone, so what was I to do?

One of the Verizon salespeople had a good suggestion. He suggested I look around and ask around to find an old phone that I could use temporarily, and I discovered one of my wife's old cell phones in our son's toy box. It was initially retired after he threw it into a tub full of water, but it must have dried out after my wife got a new phone because it was working when I checked it. The battery was very weak, so I could only get about 5 minutes of talk time on it between chargings, but I decided I could get by with that for a month. This saved me from paying retail price for a new phone, so when the time comes for you to upgrade, consider hanging on to your old cell phone as a backup.
If your backup has the same problem that mine did (weak battery), you can work around it by programming three of the phone's buttons for call forwarding. When I went to work each morning, I hit one button to speed dial the codes and numbers that would send all my cell phone calls to work. When I got in the car to go home, I would hit the second button to "unforward" my calls (route them to the cell phone). When I got home, I hit the third button to forward calls to the VoIP line.

This worked very well, and I was briefly excited when I thought that I could use this strategy to reduce my cell phone bill. If I can forward all my cell calls, could I get by with a cheaper rate plan? Unfortunately, I called the cell company and discovered that I get charged for the talk time of any call that is directed to the cell number, even if it is forwarded somewhere else. Drat!

I finally reached my upgrade date this week and not a moment too soon; the interim cell phone died completely over the weekend. I ordered a new "Chocolate" phone from Verizon. I have to pay for it, but it comes with a rebate that will pay the cost back. So now I have three phone numbers (work, home, cell) and I'm paying for two sets of phone service. It doesn't feel very frugal, so I'm still scheming.
Check back later this week for my next and final telecom report.

Tuesday, April 8, 2008

Telecom 2008, part one: VoIP

Posted by Matt

Are any of our readers telecommuters? I've been able to work at home for several years now, but one limitation was always my reluctance to use my cell phone for teleconferences (or t-cons, as we call them in my company). I carry my cellphone somewhat reluctantly and use it sparingly, so I only have a 450 minute plan; well short of how much time I spend on t-cons in a month (or a busy week).

Luckily, my employer does pay for my Internet access, so when I determined that I would need a land line once again (after being "cell only" for years), I decided to check out what types of VoIP deals were available. If you're not familiar with VoIP, it is essentially a phone connection that uses the Internet instead of traditional phone lines.

I checked out several options including Verizon VoiceWing (because Verizon is my Internet service provider), ClearDigitalVoice and Vonage. I elected not to pursue Skype or MagicJack (even though they may be cheaper options) because I didn't want to be tied to a computer for phone calls. I included fax line options in my research as my wife also works from home occasionally and does a lot of faxing.

I wish I could give a recommendation for a "best plan", but I ended up choosing Vonage because it was the lowest price option that fit for our needs. We chose the unlimited residential option so we wouldn't have to worry about minutes and added on basic fax service (unlimited incoming, 250 minutes outgoing) for a total of about $35/month. I haven't had a traditional land line for many years now, but from what I remember, this sounds like a pretty competitive price. I should also mention that we paid around $40 in activation fees for the phone and fax lines, but we also received a credit for two months of phone service and received the hardware (router) for free.

Don't worry about setup, even if you're not a techie. It was pretty simple, just a few quick connections. I was relieved to find that I could use the Vonage router (that the standard phone and our fax machine plug into) in concert with our existing Verizon modem/router device.

After setting up, we quickly determined the service quality to be adequate, but were glad that Vonage offered a 30 day guarantee, just in case. It's not a bad idea to test your connection here before signing up for service, as VoIP works best over high-capacity connections (we have 15Mbps fiber optic).

One final Vonage money-saver that we haven't invoked yet (but still may) is an option to pre-pay the bill for a full-year in exchange for a 20% discount.

I've been working from home more often since getting the phone line installed, but haven't determined if the savings in fuel costs completely offsets the phone costs yet. Regardless, it still hurts my frugal mind to pay for both land and cellular service, so I came up with some ideas to cut down my cellular phone bill. Be sure to check my next telecom post(s) later this week.

Friday, April 4, 2008

Budgeting With No Receipts

Posted By Paul

I heard a very interesting tip for budgeting that a friend of mine is using. The situation is that they are hoping to set up some real budget rules AND stick to them. Part of the work is that they want to dramatically reduce the amount of money they spend on meals out. This is a busy family with a child, so it's easy to pick up a dinner here or a lunch there.

So their plan is that they are going to determine how much they can spend on their meals out for the next 3 months and they are going to buy gift cards at the various restaurants they frequent that total that amount.

The idea is that once the gift cards are empty, then they're done eating out.

One downside to this system is that it assumes that you go to just a few restaurants, but I would bet that many busy families with children (especially if they have children that are picky eaters) could come up with a short list of restaurants that they go to 90% of the time.

Another downside is that if you come in under budget you can't turn the gift cards back into cash, but assuming that the gift cards are ways to set a limit and make sure you don't exceed it, then this isn't such a bad idea. I do like the fact that if you're not the kind of person who likes to save and track receipts, this system gives you a simple way to set a limit and stick to it.

I had never heard of this system before, has anyone else out there tried it?

Tuesday, April 1, 2008

Article: Why you're a big sucker.

Posted By Paul

No this is not an April Fool's joke. It's an article I came across at CNN Money written by a behavioral economist that talks about the psychology of making purchases and how much of human nature involves illogical spending choices.

I liked the fact that the author concludes with:

"What's the seller trying to do here?"

Which reminded me of my posting:

Know Their Agenda

Read the full article on CNN Money by going here