Tag Archives: Credit

Carnival of Twenty Something Finances – DC Edition

Welcome to this weeks edition of the Carnival of Twenty Something Finances! Last weekend, the future Mrs and I headed down to Washington, DC to check out the famous cherry blossoms. Although it was VERY crowded, I must admit that it was an amazing time to see them. DC is a great place to see on the cheap. Most museums in the city are free and they have a great transit system. Personally, we parked outside of the city at one of the free metro stations and rode the train all day. It cost us about $5 per person and we did not have to deal with the horrendous traffic and confusing streets.

Sprinkled throughout the carnival this week are some common places to see while visiting DC. Like I mentioned before, most of these sites are free to the public. You can get away with spending very, very little compared to other cities. I advise packing a lunch for you and your family as food can be rather pricey if you purchase it from vendors. Anyway, off to the carnival!

This is a picture that we took in the midst of the trees. The cherry blossoms were at their peak this year from around March 28th through April 12th.

Editor Picks

Debt Kid shows you that getting a mortgage after foreclosure is not so simple.

Debt Ninja at Punch Debt in the Face wants to know what’s your favorite dumb but fun expense? I would have to say that mine was my iPhone. I love it with a passion but I really do not need all of the features and the added expense.

Jerry at Deal Supermarket talks about getting unplugged with frugality. This was a very creative post!

DR at The Dough Roller gives you 10 tips to declutter your finances.

The Washington Monument is the most prominent structure in DC. It was built in 1884 in honor of George Washington. It’s free to get in but make sure you get their early!

The Rest of the Field

KC Lau shows you 5 ways to take charge of your finances.

Fabulously Broke in the City shows you why a small space does not mean you put your life on hold and whine.

Bank Savings Review let’s you know about four banks that gave their TARP funds bank.

Kathryn at Out of Debt Christian has the top ways to waste money on your home.

Shaun from Learn Financial Planning shows you why being frugal is just the first step.

SVB at The Digerati Life helps you choose the best online stock brokers for cheap stock trades.

Personal Finance Analyst wants to know if saving money damages your quality of life.

Patrick at Cash Money Life tells you when you should tell your boss that you are pregnant.

The Smithsonian Institution has a ton of great free museums to see in DC. You can go to the Air and Space Museum, Museum of Natural History, Freer Gallery of Art, etc.

Mr CC at Ask Mr Credit Card let’s you know how American Express submits your credit information to the credit bureaus.

Matt at Fine-Tuned Finances compares new credit card programs for saving for college.

Ginger at Ginger Won’t Snap has some credit card fraud problems.

Peak Personal Finance has 3 smart personal finance tasks that you are probably putting off.

Diego at Bankling shares with us his top 50 economics blogs.

Big Cajun Man at Canadian Personal Finance Blog has some advice for new grads.

Patrick at Money Saving Deals gives us the lowdown on how to get up to $150 from TradeKing.

RJ at Our Financial Planner shows you the miracle of compound interest.

The Lincoln Memorial is another great (free) site to see in the city.

MoneyNing shares with your his review of Everbank.

Jeff Rose at Good Financial Cents let’s you know what to do if there is a layoff pending.

Destroy Debt shows you how to get the last drop out of many popular products.

Pinyo at Moolanomy shows you how to transfer credit card balances.

Raj at DebtGoal is cutting the bill on digital services.

Wren at True Adventures in Money Hacking shows you how to get a free car. Really!

Dan at Everyday Finance gives you the best CD yields in April.

Jim at Bargaineering shows you how to pick the best credit card.

J Money at Budgets are Sexy gives some advice on Roth IRAs vs 401ks.

Visit Arlington National Cemetery and pay your respects to the thousands of fallen soldiers. You can also view the resting place of JFK and see the Eternal Flame.

Patrick at Military Finance Network shows how the stimulus plan assists military members affrected by the mortgage meltdown.

Credit Card Assist wants to know if you have ever looked at your credit card closely.

Apply 4 Credit wants to know if credit card protection plans are really worth the added cost.

Christian Personal Finance is giving away a free subscription of Kiplinger’s personal finance.

Investing School compares Etrade, TradeKing, and Zecco.

Mike at Money TLD lets you know that some expired foods can still be edible.

Eric at Twenties Money has five pieces of advice for twenty somethings.

BillEater shows you how to avoid debt reduction scams.

Kyle at Suburban Dollar gives you his review of CashCrate.

12 Questions With Deena Katz – Top Financial Planner

While attending Graduate school at Texas Tech, I had to opportunity to learn from one of the top financial planners in the country, Deena Katz. Deena has been in the business for many years and is recognized as one of the best CERTIFIED FINANCIAL PLANNERâ„¢ Professionals. She was recently named one of Financial Planning Magazine’s “5 Most Influential People in the Planning Business”. She is also the author or co-author of nine books on financial planning.

I appreciate the time that Deena took out of her extremely busy schedule to answer our questions. Here is the list of questions that I asked her. These questions include some of my own as well as some from readers. Deena has some great insight in her answers and I hope you appreciate her input!


YMR: What drew you to financial planning and how does it enhance your life?

Deena: My mother was a minister and a social worker, but when my father died at 39, it became clear that she was unprepared for the financial burden.  She taught me early on to be able to take care of myself, because there is a high likelihood that I would be taking care of myself at some point in my life.  That led me to the planning profession.  My first company was working with women in transition.  It is extremely fulfilling to see people learning to take financial responsibility and accomplishing their goals.  I’m passionate about it.

YMR: Why do you think many individuals are scared about the thought of using a financial planner? What can the industry do to fix this problem?

Deena: There have been some very bad incidents in past years (Madoff and Standford most recently) which have shaken the trust and confidence that people had in advisors.   This is a two-sided problem.  Many people do not have the education to recognize if something is not right, some are looking for investment opportunities that are just too good to be true.  A little greed and a little vice make a big mess.  I always tell people “Never let anyone care more about your money than you do.”  On the other side of that, I believe people should work with CFPs, who are bound to standards of ethics that are quite rigorous.  I also believe that advisors should act as fiduciaries (in the best interest of the client.)  When looking for a planner, ask how they work, how they are paid and if they are a fiduciary.   Then you can begin to develop trust.

YMR: How have you been calming down your clients over the past year? Did you have them well prepared for an event like this?

Deena: No one is really prepared for an event like this.  It’s a 6th standard deviation event.  But, if we are able to manage client expectations from the first minute they work with us, we have a better chance to keep them from jumping ship when things are rocky.  As advisors, we can never promise market returns, we should be exploring the downside of investments with them.  We should be able to “stress test” their plan, to demonstrate how bad things really have to get, before their plan is unworkable.  We need to keep them informed of what is happening in the markets, in congress, and in the economy so we can give them “our take” on it and how it affects them personally.

YMR: Do you think this economic climate will finally get people to realize that debt is bad and retirement saving should be a priority?

Deena: No.  I don’t think many folks really understand.  I am hoping that congress will start to help us focus on financial literacy so that young children get this education to prepare them for life, rather than stumbling through it, making grave mistakes, then trying to “right” everything before they retire. I think people are paying more attention, but I am not sure they have been taught successfully yet.

YMR Reader: Do you think budgets are a sexy thing right now?

Deena: I have always felt that budgets are a four-letter word…but “sexy” is not the word I think of.  The nature of many human beings is not to feel the constraints of budget, because you fight against them, the same way you fight against your parents when you are 15.  I believe in  “trade-off” spending.   The first thing you need to know is how much does it cost you to live-basics, like rent, utilities, etc.  Then you look at the variables-eating out vs. eating in, for example.   Then you can say, “I’d like to buy a new car, so if I eat in and shave off some other expenses, I can us that money to buy the car.”   With budgets you are managing money, but with trade off spending you are managing goals.

YMR Reader: The buy and hold strategy has been around for decades. Do you feel that same strategy applies to the Gen X and Y generation?

Deena: I do not believe that modern portfolio theory is dead.  I further believe that you can’t  make market returns unless you are in the market.  Look what has happened in the last two weeks— If you missed one day, you missed a 6 ½ % run up.  Right now, I have no reason to change my investment philosophy.

YMR: Speaking of generations, do you think the baby boomer generation is prepared for retirement? Why or why not?

Deena: Baby Boomers are not prepared, but they don’t really want to retire either. Further, if all of us did retire, we would not have a big enough work force to carry on.  Boomers may not stay with their current jobs, but may work at something they love, for less money.  They will postpone retirement because they have to, even though they will not admit that’s the reason.

YMR Reader: Asset allocation has been preached extensively after the dot.com bubble, yet even diversified balanced portfolios took a significant hit with the recent economic meltdown. How do you address that to those concerned?

Deena: See #6 above.

YMR Reader: Speaking of asset allocation, what do you recommend people do with their retirement accounts? I would like an answer for new hires, mid-range employees and close to retirement employees.

Deena: First, the younger you are, the more time you have to let your portfolio grow.  I suggest a low-cost S&P 500 index.  Leave it alone.  As you continue to add money, eventually you should buy small cap and international-all index.  Mid range employees, you may want to add some fixed income, probably around 20% max.  As you get closer to retirement, you may have 60% equities, depending upon when you will need to start withdrawing from them. You want low-cost selections, because the fund expenses come right off the return.

YMR Reader: The economy has my wife feeling a bit insecure even though we’ve got a sizable emergency fund built up, and we have no debt. The question is, once we’ve completed our emergency fund, what path should we take? Should we start investing in the stock market like it’s on clearance, save in a high yield savings account, or should we be paying extra on our mortgage? Or a combination of those things?

Deena: Some leverage is good, so I would not start paying down the mortgage unless your interest rate is so high that you cannot beat it by investing your money elsewhere.  If your mortgage interest is low, invest in the market, because it is on sale.  I would suggest that you in invest index mutual funds because they are cheaper (less expenses).  Try Vanguard’s S&P Index fund for starters.

YMR Reader: My wife and I are in the market to buy a new home. We’ve saved up a sizable amount and we are selling our current co-op to use mostly as a down payment on a new place. Our credit is also impeccable. Still…how can we tell if we can truly afford it? Is there a metric/guide we can go by?

Deena: Bankrate.com has a calculator that can help you get your arms around that.  I don’t like “rules of thumb” because they are made for average situations and I believe you deserve solutions that are unique to you.

YMR: Now a fun question! How are you liking semi-retirement in Texas?

I am not semi-retired!  I am working 24/7, but loving it.  I love Lubbock, it’s just the right size community for me.  I love the school, my fellow faculty and most of the students.  I can’t imagine doing anything else. In fact, we’ve opened up a branch office of Evensky & Katz here in Lubbock and we are in for the long haul.

Many thanks to Deena for allowing me to interview her!

Weekly Roundup – March 29th

Welcome to this weeks roundup! There were plenty of great articles this week around the PF Blogosphere. Last week I posted infrequently and I apologize for that. I hope to get a full week of articles done today and you can expect to see my Q&A with Deena Katz (the top financial planner) on Wednesday. She has responded to my questions and I am excited for you all to read it. Anyway, enjoy these great reads!

Great Reads

Ben at Trees Full of Money witnessed a credit card fiasco at a Target checkout counter. Needless to say, this article really made me angry for some reason. You can see my response in the comments of his post.

Trent at The Simple Dollar thinks that most time management is rubbish. Head over there to see the ten things that work best for him.

Pinyo at Moolanomy has some extra income ideas for college students and recent graduates. I especially like the one on selling class notes. I wish I would have thought of that when I was in school!

Pete at Bible Money Matters wants to know if you are emotionally invested in your credit card.

Frugal Dad talks about the new Discover card for teens that creates bad habits.

I hope you enjoyed these great posts! I look forward to your comments this week!

Saturday Sneak-Peak: StretchyDollar.com

Welcome to the first edition of Saturday Sneak-Peak! Every Saturday, I will be exploring a personal finance blog and giving a brief review. My major intent of this new adventure is to expose everyone to new and/or obscure blogs. Up this week is StretchyDollar.com. Jeff has been a frequent commenter on YMR and I greatly appreciate it.

Jeff is a twenty-something blogger who started StretchyDollar as an outlet for his ideas and as a place to interact with other people in similar situations. Although Jeff has only been blogging for three months, there are plenty of great articles over there to check out. Here are a few of my favorites:

10 Financial Commandments for Your 20s

Get (Real) Rewards for Searching the Internet

I also asked Jeff a few questions to help you get to know him. Here they are:

What have you liked most about blogging so far?

I enjoy blogging for two main reasons:

1. Meeting and networking with awesome people who have interests similar to you who can teach you a lot. It’s fun to connect with people and share a part of you with them.
2. To learn through ‘teaching’. I enjoy researching and learning something, and then trying to present it in an interesting and understandable way.

What have you disliked most about blogging so far?

It’s not a dislike, per say, but the hardest thing for me so far has been coming up with a great idea for a post and then seeing it executed better somewhere else. I’ve had a couple ideas that I thought would be cool, and then I see someone else do a great job writing about that topic and I feel like I shouldn’t do it because I wouldn’t do it justice, or they would just think I was copying them. It’s difficult sometimes to come up with ideas that I think people would be interested in actually reading.

What has been your worst financial decision so far and how did you learn from it?

Due to a landlord problem, my wife and I were backed into a corner and due to a lack of time had to rent an apartment we couldn’t really afford. We made it work for a couple of months off of gifts from our reception (it was right after we got married) and extra money that my wife had, but in the end we had to move. It wrecked us financially, and we were on the ropes for a bit, using credit card advances just to get by. It took us months to really fully recover from it, and we missed out on some great financial opportunities because the money wasn’t there. It was really the thing that got me interested in learning about personal finance. The main concept that I learned from that experience was to plan ahead and do my research, and to live well within my means. Just because I think I can afford something doesn’t mean I really can.

Which of your posts did you have the most fun writing?

That’s a tough question – I’ve enjoyed writing each post for different reasons. I’d have to say the most fun was maybe one of the first I posted on StretchyDollar.com – ‘The Value of a Vision.’ It talks about having an overall plan/dream about what you want your finances to be, and then working towards it. Most people really don’t want to be financially strong, because they aren’t willing to put in the hard work and make the sacrifices to make it happen. If you can decide, have a goal, and works towards it, anything is possible.

I want to send out a big thanks to Jeff for letting me interview him. Head over there today and be sure to check out his posts and comment on ones that connect with you.

Do you know of a blog that you would like to see on Saturday Sneak-Peak? Head over to my contact page and submit the name/URL of the blog. You can submit your own blog if you like.

Buying a New Car? Cash Rebate vs 0% Financing Spreadsheet

I think the toughest part about buying a new car is selecting a model. When I searched for my most recent car, it took me months to figure out which one I wanted. I even feel like I settled on my Chevy Malibu because I was just tired of shopping. Whatever car you end up selecting, there comes a time when you have to choose between the cash rebate and the super low financing rate (typically 0%).

Do you find yourself searching for topics such as this every day? By subscribing to this site, you can get FREE updates in your inbox daily. Why not give it a try? You can unsubscribe at any time and it’s FREE. You can subscribe via RSS or you can subscribe via email.

Cash Rebates

Cash rebates are exactly what they sound like. Many automotive companies offer cash back when you purchase one of their new cars. If you see a commercial for a new car that offers $2,000 cash back, you can expect at least $2,000 off the MSRP. There are several types of rebates so make sure you know about all of them. You can get rebates for being a recent graduate, being in the military, etc. Make sure you negotiate the lowest price before mentioning any rebates. This will ensure you receive the best deal possible. You can find a list of current rebates at this site.

Special Financing

Many companies also offer the chance to get great financing rates through their company. Many companies, especially right now, offer 0% financing for a couple of years. Even if they do not offer 0% rates, they usually still offer rates lower than you can get through traditional banks.

Which Offer to Choose

Now comes the part where you need to figure out which one to choose. Here are the options which you will need to pick from:

1. Pay Cash for the Whole Car

In this case you should obviously take the cash rebates. You should also be proud of the fact that you will own the car free and clear. Congratulations!

2. Take the Cash Rebate and Finance the Car at an Outside Bank

With this option, you need to figure out if the amount of the rebate will be greater than the amount of the interest expense of the outside loan. For example, let’s say you need to borrow $15,000 for the new car and you can get a 60 month loan at your credit union at 5%. Over the term of the loan you will pay $1,984 in interest. So for this example, if the rebates are greater than $1,984 you should take the rebate and finance it at the outside bank. You can search for auto loan rates in your area at Bankrate.com. Also consider joining a credit union. They always seem to have great rates. You can use the spreadsheet at the end of this post to calculate the interest expense. It will also tell you which option to choose.

3. Pass on the Cash Rebate and Finance the Car at the Special 0% Rate

If the rebates are smaller than the interest expense you calculated for #2 (using the spreadsheet at the end of this post), you should use the 0% financing (assuming you qualify).

I should note that many companies are offering cash rebates PLUS 0% financing right now due to the economy. If that is the case, you should obviously take both.

Spreadsheet to Help You Choose

Use the following spreadsheet to help you choose the best option for you. Be sure to read the comments in the spreadsheet so you get all of the numbers in the right spot. Enjoy!

How to Get Free Auto Insurance Quotes and Purchase Online

Every six months you can find me surfing the web for auto insurance. Call me weird, but I always need to know I am getting the best price. If I had to guess, I would say that I have changed my auto insurance carrier seven times over the past nine years. Is that bad or am I just a good shopper? Anyway, I thought I would share with you my routine for shopping for auto insurance and things to look for. Currently, I am with Progressive and I have been pleased so far. Please keep in mind that none of these companies paid me to write about this. I also do not receive anything if you visit their site, so please feel free to visit them!

Check Your Current Policy

When six months rolls around (sometimes sooner), I will double-check to make sure that the coverage is still what I would like it to be. If for some reason the company lowered my limits, I make sure to get a new quote for the coverage amounts that I like. Here are the coverage amounts that I currently carry:

Bodily Injury Protection: $100,000 per person / $300,000 per accident

Property Damage: $100,000 per accident

Uninsured Motorist: Same limits as personal protection

Medical: $2,500

Comprehensive: $50 deductible

Collision: $500 deductible

I keep the bodily injury quite high because the cost of medical care is high. It’s that plain and simple. I will never buy less than $100,000 in property damage due to the high costs of vehicles today. For example, if I were in an at-fault accident with two other SUV vehicles, I would have caused damages (considering both were totaled) of around $50,000 if I am lucky. I really do not want to have to pay for any additional amounts out of pocket. I just keep the uninsured motorist coverage the same as my personal coverage due to the same reasons above.

In regards to deductibles, I keep my comprehensive very low because it just does not cost that much more to have it close to $0. Also, why have a $500 comprehensive deductible when you will use it for mostly inexpensive things? In terms of the collision deductible, I would like to have the deductible at $1000 because I could save around 15% on my policy. However, my credit union forces me to have at-the-most a $500 deductible. Anyone else have that problem?

Before you move onto the next section, make sure you obtain a new insurance quote from your current carrier. Their pricing structures may have changed.

Time to Start the Quotes

I typically have several sites that I check every few months for auto insurance. In this section I will list the sites that I visit and my general experience (price, obtaining a quote) with them.

Progressive

As I mentioned before, Progressive is my current carrier. So, far I have had a good experience with them. They were my carrier several years ago as well but of course, they were outbid a few months later so I switched. Obtaining a quote from Progressive is very easy. All you have to do is enter a few bits of information and you are all set for an accurate quote. They even offer to show you the prices of some of their competitors. However, I have never gone off of what they said. Can you really trust another insurance company to give you a quote for another company? I would rather do the digging myself. One of the main reasons I decided to go with Progressive is their MyRate Program. This program is for conservative drivers like myself. You basically install a tracker in your car that measures your distance and time traveled as well as your braking and acceleration. It then compares your driving to others in your rate class and gives you a discount accordingly (that is if you are below the average). My discount so far is about 5% at renewal (I have only been using it for a few weeks). All in all, I would recommend Progressive to anyone.

Geico

Before Progressive, my auto insurance carrier was Geico. They are well known for their commercials with the gecko. When I first purchased a policy from them it was very easy. Their quote system is very similar to Progressive. I only switched from them because Progressive’s quote was about $100 cheaper for six months and I also wanted to try the MyRate program. If you happen to find a cheaper quote with another company, make sure you call your current company first and see if they can negotiate with you on the price. Most companies will be willing to do this with you rather than see you go.

Esurance

Esurance is a fairly new auto insurance company. They are the ones with the animated (which I think are a little corny) commercials. Since the commercials are animated, I guess it allows them to produce cheaper insurance. I used Esurance for a few months and their quotes were quite low compared to some others. However, when I moved to Texas, their rates became more expensive and I could no longer use them. I would encourage you to check them out. They are very competitive right now and it does not hurt to get a quote.

State Farm

I have heard very good things about State Farm and their service. However, every time I get a quote there, they are always way more expensive than some of the others. I am talking about 25% higher. Maybe it is because I am in a strange rate class right now (young male). You may have more luck than me so be sure to check them out as well. Even though I never get a great quote from them, I still check. If you are someone who needs personal service, you may want to purchase from them even though they may be a fraction more expensive. They have many agents that you can see in your area.

Allstate

My first insurer was Allstate. Looking back, I could have probably saved quite a bit of money had I shopped around before I went with them. However, everyone in the family used them and I figured why not. I really did not know much about auto insurance back then. As soon as I went to college and became interested in personal finance, I started shopping around and got some pretty good deals. Allstate has quite a few good features such as accident forgiveness, deductible rewards, etc., but most of them are just a gimmick and add additional costs to the policy. Every time I quote with them now, they are even more expensive than State Farm. However, your circumstances may be different so be sure to at least get a quote from them.

Those are all of the companies that I get a quote from. I know there are probable plenty of other companies, but by the time I am done with quotes for these few, I have reached my maximum utility for auto insurance. There more than likely was a quote that I was comfortable paying for.

Time to Buy!

When you find a quote/company that you like, they make it very easy to purchase. Once you receive a quote, they automatically give you the option to purchase the insurance on the spot. Many companies even give you a discount for buying online.

Other Things to Consider

I figured I would give some additional brief tips to help you save some money on auto insurance.

1. Keep all of your policies with one company. If you have your homeowners, umbrella, renters and auto policy all at the same company, you will receive a discount on all of them.

2. Increase your deductibles. If you are allowed by your finance company (if you finance), raise your deductibles in order in increase your savings.

3. Find some discounts. Many auto insurance companies offer different types of discounts. They range from being a good student to belonging to a union. Make sure you ask your company if you are getting all of the discounts you are entitled to.

4. Drive a low-profile car. Drive a fast car? Chances are you are paying more due to that fact.

Anyone else have a company that they have used in the past? Did you get some good quotes from them?