Money For Your Old Cell Phone

Posted By Paul

A while back I heard of a web page that lets you trade in old cell phones and iPods for cash.

The page is:

http://www.flipswap.com/

Conveniently I had two old cell phones that were just sitting in my desk drawer collecting dust.

I went online and found out that I could get about $15 for both cell phones. I decided to give it a try.

I registered and traded in both phones. The registration was easy, and the trade in process consisted of a page where you told them the model of your phone and answered some basic questions about its condition. Based on that info they tell you how much they will give you for it.

Then it was an easy thing to print out a mailing label from their page. I taped the label on the envelope and dropped it in the mail.

It took about a month to go from dropping the envelope in the mail to actually getting my payout (I chose an option of getting Amazon store credit since I figured that would save me some time since I wouldn't have to wait for them to print and mail a check).

So I got rid of two cell phones I had no use for, and made about $15 (minus the cost of the envelope).

Overall the process was very cool. I received emails from flipswap when my phones were received and inspected. My only complaint is that once I got the "received and inspected" email I was not sure how to actually get my Amazon credit. I waited a week to see if I would receive an email gift certificate, but nothing. I was about to email their tech support when I discovered that by checking the status of my Flipswap trade I could see an Amazon gift certificate code that gave me my credit.

In addition to cash or Amazon credit you can also choose to donate your money to charity.

Some phones don't have enough resale value to justify a payout and those only give you the 'plant a tree' option where Flipswap recycles the phone and plants a tree.

Overall I would highly recommend Flipswap. Instead of having your old phones sit in a drawer you can trade them in for cash or at the very least recycle them.

Article: Beware of free financial advice.

Posted By Paul

Great article today on some of the things to watch out for when considering financial planners.

First some excerpts that I found interesting:

"Your bank may be very good and you may even play golf with your banker. Make no mistake that a bank is also in business to make money. So if your bank is giving investment advice, you can be pretty sure there is something in it for them. They may not charge you by the hour but they are making money nonetheless." -and- "What I consider to be abuses fall under two categories:

First, there are the expensive mutual funds with front-end or back-end loads. These pay handsome commissions to the banks and, of course, have a great track record of under performing no-load mutual funds.

Second, there are the ever-popular permanent insurance policies that come in flavors such as whole life, variable annuities and universal life. These are even bigger cash cows to the banks that partner to sell them."

Here is the full article:
Beware of free financial advice

To add a little advice of my own:

I have heard people say that their financial planners are great, and best of all, they work for free. This reminds me of an earlier post:

Know Their Agenda: Some great advice I got.

The short version: OF COURSE they aren't working for free, the question is HOW are they getting paid.

I think that the most common way that financial advisers make their money is by recommending funds that have loads and fees associated with them.

What bothers me is that it is SO easy to check mutual funds to see if their fees are excessive or not.

I don't think there's anything wrong with having an adviser, knowing that you are paying them through mutual fund fees, and being okay with that. I just worry that people out there think that somehow the adviser really is working for free.

If you have an adviser that you think is working "for free" then you might want to take a look at the following articles:

A Few Quick Tips On Mutual Funds

What are you really paying for advice?

Paying an adviser doesn't mean you are getting swindled, but paying an adviser AND NOT KNOWING IT seems like a bad idea all around.

No money down, no interest, NO WAY

Posted by Matt

Let me share a brief story about a family member who asked me for input on the purchase of a new laptop computer. She found a no down payment, no interest deal from a major electronics store in our area and wanted to know if I thought it was a good deal. I checked it out and it was a nice machine for a great price, but I had to take issue with the deferred payment plan.

First of all, I couldn't determine the exact rules of the deal, even after reading the fine print. The ad banner said no interest, but sometimes this actually means "no interest if you pay the debt off by a set deadline, otherwise a ridiculously high interest rate is retroactively applied for the interval between the purchase date and the deadline." I'm paraphrasing here.

I asked "If you don't have the money to buy the computer right now, but you think you'll have it by the deadline, why not wait and save up?" The answer was along the lines of "why wait, when I can have it right now?" I could only caution about unexpected financial emergencies.

My wife Leah added a final argument against the deferred payment plan that she heard about when listening to Clark Howard on the radio: they can drag down your credit score! If you're not familiar with credit scores, one of the big criteria used is how much credit a person is using compared to how much they have available, and deferred payment plans show up as accounts with 100% utilization (aka "maxed out"). Clark warns:

You may find you'll get higher interest rates when insurers check credit scores or even lose job offers if employers check scores.

Ideally, I think people should keep cash on hand in savings accounts for purchases like these. I'd even consider taking money out of an emergency savings account for an expense like this (rather than a deferred payment plan), as long as the withdrawal would be a relatively small in comparison to the savings balance and I felt I would be able to replace it quickly.

I also encouraged my family member to consider what other options were available. I suggested that she share her spouse's laptop for a while, start saving, and watch for even better sales after the holidays. I think she is going to give this a shot and who knows, sharing a laptop might end up being the best solution for the long term.

If you find yourself contemplating a deferred payment plan, ask yourself these three questions:

1. Do I have to make this purchase right now?
2. Is it worth the extra financial risk and the negative effect on my credit score?
3. Do I have any better options?

If you ask me, the answer to #3 is always yes.

Topic Revisited: Investing In Gold

Posted By Paul

My next revisiting of an earlier post is an article I wrote on August 24, 2007 entitled:

Investing in gold

So now that it is over a year since that first post, have my feelings on gold changed?

In some ways they have quite a bit. I still feel like gold should be viewed as an investment with its own risks, and that these risks really aren't all that different from investing in individual securities.

It seems like recently there has been a lot of talk of using a gold as a way to avoid the craziness of the stock market.

I would have to agree with this article:

Buying gold as a safe haven

Which essentially says that buying gold as a way to avoid crazy fluctuations in your investment doesn't make much sense.

Also, after buying a few ounces of gold I seem to have noticed that at least for me the gold I have purchased has become less and less of an investment.

For example, when my son was born I decided to go out and buy a gold coin minted in the year of his birth. My hope is to some day give it to him as an heirloom gift.

This essentially means that I never plan on selling the coin, and more importantly I hope that my son values the history of it and doesn't view it as a savings bond that should be cashed in when he needs a few extra bucks.

So by not planning on ever selling this coin, it has ceased to become a financial investment. I suppose that if things ever got so dire that I needed the money I could sell the coin, but I really don't plan to do that.

Here is another example: The first gold coin that I bought (which I purchased after writing the first gold post) has no historical or sentimental value to me. So I could consider that an investment in that I could sell it at a moment's notice without any feeling of loss. However as time goes by the coins interest to me as an investment and its interest to me as a collectible gets blurry.

This to me is one danger of investing in gold coins or other precious metals. They are pretty, and kinda cool looking, so it's not hard to start thinking of them as collectibles, not investments.

After reading the final paragraph of my first post on gold:

"Overall, my advice is that if you are interested in gold and have a little extra cash and want to buy a coin or two, go for it. I'd suggest that you view gold (or any other precious metal) as more of a hobby than an investment. If you want to take all of your savings and put it into gold, think twice, and then if it still seems like a good idea think a third time. "


I think that advice has held up well. I have purchased some coins (mostly silver and a little gold) and consider it more of a hobby than an investment. I would definitely not recommend sinking your life savings into a chest of coins as a way to avoid a crazy market (you'll just end up agonizing over the price of gold instead of agonizing over the stock market).

If you ever do want to put some money into gold purely as an investment I would suggest purchasing shares in a gold fund (see my earlier post for info on that). You don't have to store the gold anywhere, you don't have to worry about your investment turning into collectibles that you end up keeping forever and when you want to sell them you don't have to find a coin store.

I might try buying a few shares in a gold fund at some point, but I would definitely say that my days of purchasing gold coins "as a pure investment" are over.

Topic Revisited: Mortage Backed Securities

Posted By Paul

Considering the recent economic times I thought it would be a good exercise to revisit some of the earlier Frugalize posts regarding various investment vehicles. My goal is to look at the post and see if the information in it is still accurate considering the very different economic landscape from just a short year ago.

I thought I would start with the posting about:

Mortgage Backed Securities

If you've read the earlier post, one specific item I mentioned was:

"One problem is what if Joe B can't pay his mortgage? Well you have the house as collateral so that helps, and of course in a real MBS you are just one small part of a large conglomeration of mortgages so the risk of any one person defaulting on their loan is diluted."

This statement seems especially interesting in current times.

When I wrote the first article I found my information by doing some simple research on google. I did a similar thing today and an article on riskglossary.com had a very interesting paragraph that specifically mentioned how MBS were behaving in the last 8 years:

"Starting in the early 2000s, private label MBS were increasingly issued with little or no credit enhancement and on pools of risky sub-prime mortgages. For the first time, MBS posed significant credit risk. Because credit risk made these instruments fundamentally different from earlier mortgage pass-throughs, many market participants avoided calling them MBS, preferring to label them asset-backed securities instead. Volume in these risky instruments grew rapidly until 2007, when defaults accelerated and the market values of the instruments plunged. This caused a liquidity crisis that spilled into other segments of the capital markets. A number of hedge funds with leveraged exposures to sub-prime mortgages folded."

(for the full article that this came from click here)

It seems that the risk level of MBS were in some cases much higher than people suspected. I never invested in MBS but it would seem that people who did would have had a very rough time in the last year. I guess it just goes to show you that one year can make a big difference in the perceived risk of a particular investment.

If anyone out there has experienced the MBS roller-coaster first hand I would be very interested in hearing about it.

Where the rubber meets the road

Posted by Matt

I just had new tires put on my car and thought I would share the details of my shopping experience, which was much more complicated than I initially expected. Before I get into that, however, I wanted to point out that maintaining your tires properly prolongs their lifespan, which is the easiest way to save money on them. I have recurring reminders on my google calendar to check my tire pressure monthly (see the box on "Tire Inflation" here) and get the tires rotated and brakes inspected (annually, which corresponds to every 7500 miles) at my favorite local shop.

The shop mechanic who last rotated my tires was the person who actually recommended new tires, but I didn't take his word for it. I checked the wear bars and also used the coin tests. My tires hadn't worn perfectly evenly, but they were close and one of them definitely needed replacing.

So, I went back to the tire shop and they gave me a list showing tires from their inventory that were compatible with my car.

I ask whether any of the tires on the list were designated as "low rolling resistance" tires, as I had heard that this could save money by improving gas mileage, but the clerk didn't seem to know anything about this. I also asked about the age of their inventory, but was reassured that the shop sold enough tires that they didn't have a problem with tires aging on the shelf.

The list of available tires was short, but unfortunately, I wasn't quite sure how to comparison shop. I found a very helpful article on HowStuffWorks that helped me interpret the sidewall codes used by the tire industry to categorize their tires.

Here's an example from my shopping list: P195/60R15 87T M+S
P - Type of tire (passenger)
195 - width of the tire across the tread in millimeters
60 - Aspect ratio of the sidewall compared to the width
R - Radial construction
15 - Diameter of the rim in inches
87 - Tire's load rating
T - Tire's speed rating
M+S - Mud+Snow, meaning the tire is suitable for all-season driving

All of the codes my shopping list were similar (because they primarily describe sizing) but I noticed one important variable: the speed rating. The "T" in the code for these tires means that they are rated as safe to drive up to 118mph. The other tires on my shopping list were rated "H", meaning they were safe up to 130mph. This didn't really concern me, as I don't plan on driving anywhere near 118mph, much less 130, but the shop told me that the T-rated tires would last for 70k miles, whereas the H-rated tire sets would last between 40k and 50k miles. The explanation from About.com:

The faster a tire can go, the softer the rubber compound they use to make it (softer rubber grips dry pavement better), so the tire will wear out faster than a "slower" rated tire.

The T-rated tires were priced a little higher, but only until I made the comparison fair by computing how many dollars it would cost me per mile of service life:

Warranty (Miles)	Price	Miles per dollar
40,000	247.96	161.32
45,000	307.64	146.27
50,000	337.80	148.02
70,000	356.80	196.19

Based on this, the high mileage tire looks like a great deal. This is just what the shop clerk told me, but I'm always skeptical of the sales pitch, of course. I also worried that I would sell the car before going another 70,000 miles (which equates to about ten years of driving for me) but decided to gamble. Who knows how long I'll have to wait for an affordable electric car?

Next, I decided I should check online prices, but I didn't find any cheaper deals, especially considering that I would have to pay for shipping (around $50) and then pay to have the tires mounted/balanced/installed.

The tire shop also wanted to sell me siping for an additional $50, but I declined based mostly on a Consumer Reports article indicating that siping was most helpful in snow and ice conditions, which I don't encounter often.

The only real bad news in this story is that the quotes that the clerk initially offered me had expired by the time I had finished doing all of this analysis! Luckily, it was very simple to apply the lessons learned to pick from their current inventory list and I'm satisfied that I still found a good deal. Barring any advances in tire technology in the next 10 years (what are the odds?), I should be well prepared for the next set, too.

Is Your Money Where It Should Be?

Posted By Paul

If I can find any silver lining in the current crazy economic times it is the fact that it has provided me with a reminder that I need to be careful about where my money is.

Here are some examples I've been hearing about where people learned lessons by the current fall in the market:

1) I have friends who were hoping to retire soon, but their nest egg was in very aggressive funds. When the stock market dropped, their nest egg shrunk, so now they need to postpone retirement until they can afford it.

2) I have other friends who have a 529 college savings plan for their child. Their child will be off to college soon so they were surprised when their college savings shrunk dramatically right when they were hoping to use it.

3) As I have mentioned in earlier posts, I keep part of my "rainy day fund" in what I view as pretty conservative stocks. Though conservative, these equities are still part of the stock market and they have not been immune to the recent drops.

It's one thing to fill out questionnaires about 'risk tolerance' and quite another to actually watch your investment shrink day after day.

So here are some things that I've been looking at as I do a risk tolerance gut-check for my investments.

1) For retirement funds, I'm where I should be. Sure it's hard to watch the balance of my retirement accounts fall, but I am going to try to keep in mind that it's not like I have plans to access that money any time soon. I need to think long term. One way to make sure that your investments match your retirement timeline is to use a target date retirement fund. Another choice is to periodically view and re-evaluate where your money is relative to your retirement timeline.

2) As a new father I've been looking into 529 savings plans. I noticed that the 529 plan that I'm looking into has a target date fund as well. You give it the expected years until college and it transitions the contents of the funds to less aggressive investments as the years go by. I plan on trying this as a way to make sure that my risk tapers off as we get closer to the time where we'll need the money.

3) There was a great comment on a previous post: Economic Chaos: So Now What? The comment was that it wasn't a very good idea to count securities as part of my rainy day fund. I can't argue with the sense that the whole point of a rainy day fund is to have money available at a moment's notice when you need it, which means that you should have it in a very low risk investment. So I'm going to stop viewing my stocks as part of my rainy day fund, and instead I'm going to work on increasing my rainy day fund by adding to my savings account and CD's. I'm going to keep my stocks because they are still doing fine for me, I'm just not going to count them as part of my rainy day fund.

So hopefully no one out there has been burned too badly by the stock market drop, but if nothing else this drop has been a great object lesson on making sure that your investments REALLY match your risk tolerance.