Cash or Charge ...

Closed My TD Amertirade Account

2006-05-02T15:49:00.000-07:00

Received a letter from TD Ameritrade about new fee structure for my account. I had this account for a while, actually opened with Datek which was acquired by Ameritrade. Once in a while I did some Stock/ETF purchases in this account. They have made some improvements, like:

Lowered the commission, now it is $9.99 for all stock and options trades.
Removed the requirement for minimum balance to avoid maintenance fees.
And now you have access to local branches.

On the downside:

I was hoping they will lower the fees to same level as Scottrade, Firstrade and a couple of other discount brokerages, considering some like Tradeking are offering it even cheaper.
They increased the transaction fee to buy mutual funds. Well they have more than 1300 no transaction fee funds, but if you want to buy funds from Vangaurd, Fidelity or Dodge and Cox through them it will cost you $49.99, which is kind of steep.

Since they have a cheaper option called Izone ( used to be freetrade.com), I decided to open an account with them and do an internal transfer of my all Ameritrade account holdings to Izone. It didn't cost anything to do an internal transfer and I think Izone should be fine for now, till I figure out a better option.

More to Retirement Than Just The Number

2006-04-19T14:14:00.000-07:00

Few weeks back I posted my thoughts on why I don't think making or not making that "magical" number is that important in your journey towards the retirement. How there are a number of other aspects affecting your life after retirement, and what's on my priority list. I'm not sure how many people would agree or disagree with me on that, but here is a wonderful article saying there is "More to retirement planning than having enough cash", worth reading.

ING Direct $25 Account Opening Bonus

2006-04-17T11:07:00.000-07:00

I have an Orange Savings Account with ING Direct, it is currently paying 4.00% Annual Percentage Yield on this FDIC-insured savings account. They have a refer a friend program: if my friend opens an account with minimum $250, they will deposit a $25 bonus in his/her new account and a $10 thank you bonus in my account.

I have a few referrals left to give to people to open new accounts with the $25 bonus. Below are the referral links you can use to open an account with an initial deposit of $250 or more and you'll get the bonus.

Each link can only be used once, so before opening the account please verify (which is pretty easy) that link is not already used. To verify when you get to the next page, check the text at the top. If it says:

"The link you've used to open a new Orange Savings Account has either expired, or has already been used. This is no longer a valid referral link."

Then it is already used, pick a different one. If you find that all the links are used, leave me a note or send me an email.

ING Direct $25 Account Opening Bonus
ING Direct $25 Account Opening Bonus
ING Direct $25 Account Opening Bonus
ING Direct $25 Account Opening Bonus
~~ING Direct $25 Account Opening Bonus~~ (Used)

Once again, when you use these links to open account, and fund the account with an initial deposit of at least $250, you'll get a $25 bonus, and I'll get $10 from ING Direct for referring you.

Contributed to My Roth IRA for 2005

2006-04-17T08:39:00.000-07:00

Other than filing my taxes last Friday I made a contribution of $4,000 to my Roth IRA account. Between paying my federal and state tax bills and couple of other expenses, things started to get little tight so I decided to use cash sitting in my taxable investment account for this contribution. After this contribution my balance in Roth IRA stands at $11,364.28, currently all of it is invested in Vanguard 500 Index Fund at Vanguard. Considering that all your earnings in Roth IRA are tax-exempt, and if a need arises it allows you to withdraw your contributions without any tax or penalty anytime, I see no reason why one shouldn't put money in Roth IRA (only exception could be 401(k) accounts where your employer makes a matching contribution). Since you are allowed to contribute only small amount every year towards your Roth IRA, and if your earnings go up in future, due to income limitations you may not be be able to contribute to it, it should be wise to open a Roth IRA as early as possible in your career. Today is the last day to make a contribution for 2005.

Click here and here to find out more about Roth IRA or compare it with other retirement options.

Expanding My Blogroll

2006-04-15T12:22:00.000-07:00

There are many wonderful blogs out there that are worth exploring, some of these bloggers have been posting for a long time. What is really interesting how different things in our life are associated with our personal finances, how money is linked with just about everything in our lives. These blogs talk about it, some describe about how they are coming out of debts, some discuss living frugally, and some are about same "old" idea of building wealth. I have added a few more blogs to my list and plan on keep expanding as I find other blogs I read/like. Last but not least Happy Easter to everyone.

Taxes Are Done, Will Be Mailed Today

2006-04-14T11:59:00.000-07:00

Finally I'm done with our taxes, like last couple of years I used TurboTax ( application version) to do the "dirty" work. Since I knew that I owe money on both federal and state I decided to file it later than sooner. I printed and signed them last night and they will be mailed today.
Here is what we paid:

16.88 % of income to the federal.
5.72 % of income to state ( California).

If I include Social Security and Medicare taxes, we paid around 31.11 % ( yikes!!) of our income to the government. But when you compare it with what percentage of income people in some of the other countries pay, it doesn't look that bad. Though they get many more social services than us, such as secure pensions and health care. So take your pick... I have firm believe that government is not best spender/investor of our money.

Thank You Laws of Finance

2006-04-13T12:37:00.000-07:00

I got my sitemeter weekly report today and suddenly number of visits were increased in last 24 hours. I was quite sure I didn't spill any gems of wisdom on this site, and after a little more digging I found out that blogger who writes Laws of Finance added a link to this blog. Thank you for adding me to your blogroll. Also welcome to all the "Laws of Finance" readers.

On a similar note, every now and then I get emails from other PF bloggers about exchanging the links. But they hardly provide any more information about what they write. Quite frankly my blogroll is about what other blogs I like to follow, so if you want me to add you to the list, please let me know what you write about, and if I start reading your blog regularly I'll definitely add a link to you. Last but not least all of you who read this blog please feel free to give any comments/suggestions on this blog.

Simple Steps To Begin Investing

2006-04-12T15:57:00.000-07:00

Albert Crenshaw at the Washington Post has an excellent article on investing. If you are a "personal finance expert" you may find his advice quite basic, but if you are someone young just joining the work force it is well worth reading it. Some of the points I liked are:

His emphasizes for young people about how time is on their side.
He kind of outlines what should be the order of saving and investing, and how you should be doing it. He goes into quite detail about checking accounts, 401(k), Roth IRA.
And I liked his first law of holes :)

A long article but work reading, I would say again a must read for anyone just entering the workforce.

Selfless-Selfish Frugality Tip: Save Gas

2006-04-12T08:31:00.000-07:00

Canadian Canadian Capitalist is hosting Festival of Frugality #18, which lists a number of posts from various bloggers on how to make your dollar go further. I didn't see anyone talk about rising gas prices. Gas prices are climbing almost every week and in many parts of the country ( like here in bay area) we are already paying close to $3.00 for a gallon of unleaded. If that isn't enough there are predictions that it is going to go higher during summer driving season. Considering these high gas prices there is no doubt saving gas == saving $$$. But as I see saving gas has number of other "perks" (feel free to add to this list) that go beyond your wallet, such as:

It is good for the environment, I think the most straightforward benefit would be by burning less gas we reduce the production of greenhouse gases, which reduces global warming. But there are other indirect benefits too, like if we reduce gas consumption it'll reduce gas production which actually requires energy to produce. Also it'll reduce oil drilling which again uses energy, and not only that by less new drillings it leaves more space to live, for people and animals, which reduces deforestation.
It is patriotic, U.S. relies on imported oil, we imported 9.713 million barrels per day in January of this year. A large part of our trade deficit is due to oil import, by saving gas we'll reduce oil import which will make us less reliant on other countries
It may reduce geopolitical tensions.. which may save more gas ( did you see those big gas guzzling humvees patrolling streets of Baghdad).
Did I say it saves you money.... my little ( comparatively speaking) Toyota Corolla would cost me over $1,100.00 ( ouch!!), if I drive 12,000 miles this year and fill up at current average prices in San Francisco bay area, $2.85. My plan is to reduce my gas purchase by at least 10% this year.

Here are some tips for saving gas that work.. and don't worry during summer you can roll the windows up and turn the A/C on, it's not that bad.

Checking Account Solution

2006-04-11T12:04:00.000-07:00

Last week I wrote about my frustration with my local bank, and that I'm looking for switching to an Online Checking Account with "decent" services. After looking and comparing a few of them I found a checking account with USAA should meet my requirements. I have known about them for a while, but always thought their services are for the people with military affiliations. But based on information from one of FW forums, "anyone can bank with USAA, even those with no military affiliation at all". I called their number 1-800-531-2265 and after answering several questions including personal information, I got my member number. You need the member number to access their website and get details about different type of accounts. Some of the things that make USAA checking account stand out are:

No minimum or average balance requirements.
No monthly service fees.
Free bill pay (no balance or direct deposit requirements).
Free checks for the life of the account (custom blue USAA non-duplicate checks, one box per order).
ATM card and Debit MasterCard both available, Debit MasterCard gives you 0.5% rebate on all non-PIN purchases.
No ATM fees or charges.
Automatic ATM fee refunds, when using other banks' ATMs — up to $15 a month.
Free postage-paid deposit envelopes and slips.
Online ACH transfer system to move money to/from other banks.
Last but not least I heard really good things about their customer service.

I haven't opened the account yet, but thinking about it. I don't think they pay any interest on balance in checking account, so if I keep an average balance of around $2000.00 with them it'll cost me somewhere between $60.00 and $75.00 (compared to other banks which offer interest checking accounts). But I think not having many of the hassles will be priceless :)

Note: Let me know your experience in banking with USAA.

Tax deadline: April 17th

2006-04-11T11:11:00.000-07:00

This is a note to myself and other procrastinators like me, that tax day is April 17th this year. I'm "more or less" done with my taxes, but since I owe a big chunk of dough to Uncle Sam I'm no hurry to mail it. Till couple of years back I used to live close to main Post Office in San Jose and it used to be a zoo around midnight, worth a visit without paying for ticket :)

Why I Don't Want Signature Debit Cards

2006-04-07T14:13:00.000-07:00

I see more and more people using their debit cards and just singing the receipts instead of using their PIN number, in 2003 ( most recent year for which I could find the accurate data) US consumers spent over $82 billion using their MasterCard signature-debit cards and I'm sure it must have grown since then. There is nothing wrong in using debit card for purchases, if you believe this as a way to "curb" your spending habits. But there is a reason why banks are putting Visa and MasterCard logo on them and asking us to sign the receipts instead of entering the PIN number. They are charging high fees to merchants/stores for these signed transactions. You can say how does it matter if bank gets the money or stores keeps that in their pocket. Since such transactions costs more to the stores they increase the prices and it end up affecting our pockets. If instead of signing your receipt you entered your PIN the store will avoid these fees. They may decide to pass on some of these savings to the customers, but I really doubt any bank would do that. When was the last time a bank voluntarily reduced your interest rates on a credit card since you have been paying such obscenely high interest rates months after months.

I always ask for ATM/Debit cards without the Visa/MasterCard logo though every now and then banks try to sneak in the card with little logo on the side. Couple of times they even mailed me debit cards with logo saying they have "updated the card design". Other then what I said above a non-logo card gives me some peace of mind. If I loose it, without a PIN number I don't think anyone can use the card. I know that on a debit card my liability under federal law is limited to $50, but only if I notify the issuer within two business days of discovering the card's loss or theft. It could jump to $500 if I don't realize it for a few days. And even this cap is lifted if I wait more than 60 days from the time my bank statement was mailed, so why should I take risk for banks to make the profit.

Note: There are a number of reasons I prefer using credit cards for my payments, I'll need another post to list all of them but some of them can be found here.

Thank You Citi!!

2006-04-06T18:59:00.000-07:00

Few days back I received my cashback check for my Citibank Dividend Platinum Select Card from Citibank. The check for $171.31 took a week and half to get to me, after I requested it online. In last two and half years I have received over $400.00 back from them. I wouldn't say its really free money but I think comes pretty close to it. This is my main card for my everyday expenses except the purchases at Costco where I end up using American Express Blue Cash.

I have been using Citibank credit cards for almost 8 years now, I started with a regular Citicard (they called it silver card), then got upgraded to "Platinum" and later went through various rewards cards. One thing I really liked during all the upgrades and changes they never changed my account number. I have had other credit cards too and I would say their customer service is just far better. Recently following Jonathon's experience I decided to get some cash using 0% APR balance transfer. Since one of the card he mentions is from Citibank so I decided to go for it. I got an instant approval with credit limit of $10,500.00, and once I requested a check for balance transfer it took less than a week and I had money in my checking account.

Thank you Citi, for such wonderful service and "free money".

Do I Really Need A Brick And Mortar Bank?

2006-04-05T23:06:00.000-07:00

Few years back I opened online savings account with ING, I had many doubts at that time including, how easy would it be to transfer money between my regular checking account with local bank and ING, I knew they were FDIC insured but still what if they packed off one day, how long would it take to get my money back. Since those were the dark days of lay offs in Silicon Valley, there was no sure way of knowing when I may need my emergency fund. I would check my account every few days just to make sure money was there ;-) Fortunately I never needed to withdraw that emergency fund, and over a period of time it became the place to park any available cash. Recently I opened another savings account with HSBC Direct, well they are offering better interest rates.

Now all these years I always kept one or more checking account with local brik and mortar banks. But considering how rarely I use anything beyond their ATMs, I am wondering should I just move to totally online banking. Here are some of the things I started to feel like hassles with local bank:

Direct deposit or high minimum balance requirement to avoid monthly fees.
Currently I use Wells Fargo and they charge a monthly fee for bill pay, unless I agree to maintain minimum $5000.00 in my checking account.
They have fees for a number of other "services".
ATMs, though one major advantage with a big bank like Wells Fargo is their ATM networks but every now and then I end up driving quite a bit looking for one of their ATMs.
They have some random rules for putting holds on checks, recently I got a check from Citibank for refund because of 0% balance transfer and they put a hold for 15 days on it.

Looking at these points I'm thinking should I just go with an online only bank for my checking business too. Here are some basic requirements I have:

ACH transfer capability to/from other banks.
Free Bill Pay.
No minimum balance. Though I always keep some money but prefer not to have any minimum balance requirement.
No ATM charges and also refund fees charged by other banks for using their ATMs.
A simple and free way for making deposits, don't mind mailing checks.
Overall a hassle free dealing, so I don't go looking for customer service :)

Anything beyond this will be just wonderful.

I'm still not sure if online only checking account would be as seamless as savings accounts. So any pitfalls I should be aware of? Second I’m looking for suggestions for a good online bank based on your experiences.

Investment Gems

2006-04-04T11:24:00.000-07:00

Taylor Larimore, one of Vanguard Diehards, has put together a list of some wonderful investment books for individual investors. Currently I'm reading "A Random Walk Down Wall Street" by Burton Malkiel it gives some amazing insight about how you should be doing asset planning. I'm planning on writing a review once I'm done with it. In the meantime checkout the list and if you like, share your favorite :)

Woohoo! ... I'm The Winner

2006-04-04T10:36:00.000-07:00

JLP @ AllFinancialMatters had a contest about “alternative” URLs for his blog. He had to change it from allthingsfinancialblog.com due to some trademark infringement issue, it seems that “All Things Financial” is a registered trademark belonging to First National Corporation, you can go here to read more about it. I guess once the whole issue got sorted, he shared other URLs with us he considered for switching from allthingsfinancialblog.com and started this contest. Last night I got an email from JLP and...... you guessed it right, it says I'm the winner. Click here to see the announcement. Thank you JLP for making me "the winner" :)

Added Blogroll and Links

2006-04-03T15:57:00.000-07:00

Finally adding a Blogroll. There are a few finance blogs that I follow on regular basis so I'm going to start with them. I was wondering if I should list them in the order how often I read them or just list them alphabetically. Not to "offend" anyone :) I'm going to list them alphabetically.

There is a default link section in template, to fill that up right now I'm just going to list the financial websites I visit to get my daily dose of "misinformation", though I'm still wondering if there can be a better use of this section.

Why Supermarket Overcharging Me?

2006-04-03T13:54:00.000-07:00

I don't know how long but as far as I can remember but many things I only bought from supermarkets milk, cereal, bread, cookies are some of them. And I always thought other than Costco, supermarkets were the best places ( from price point of view) to buy these items since it is there main business.

Yesterday afternoon I was at Wal-Mart to pick up some AAA batteries and couple of other things. My wife had given me a "short" list of few other things to buy from Safeway on my way back. I was just walking towards check out counter at Wal-Mart I saw they had cereal there including one I was going to buy, Honey Bunches Of Oats with Almonds, thinking why to make extra stop at Safeway let me see if other things from Safeway list are available here. After checking couple of aisles I found almost everything there, which was kind of surprising for me since this Wal-Mart doesn't sell groceries but I guess being Wal-Mart they stock up with all your daily needs. What was more surprising that the prices on almost all the items were lower and I mean considerably lower compared to Safeway, like the box of cereal was $2.28 which Safeway sells for $4.49 and Lay's chips were $2.00 which Safeway sells for $2.99. Similarly other items were cheaper too.

* Let me add a caveat here above are regular prices at both the stores, you may find better prices at Safeway during sales every now and then.

But my question is why should Safeway be charging me higher prices? I'm not talking about any Mom and Pop business here. Considering their size and market share in grocery business I'm sure they should be paying pretty close to what Wal-Mart pays to Kraft Foods (manufacturer of Post brand of cereals), Pepsi and General Mills. I would understand if it was something that is not part of regular grocery items such as batteries, packing materials, silverware may be even shoe polish and there were charging extra for carrying it. But on items like cereals, breads, chips.. I didn't expect that. May be next time I should check pharmacy for beer and liquor store for my Tylenol.

NBC's Deal Or No Deal

2006-04-01T10:35:00.000-08:00

There wasn't much on TV last night so I watched Deal Or No Deal on NBC. After watching it a few times over last few weeks, I think the the show is all about greed, fear and basic human attachment with money. You may say that there isn't any skill required on contestant's part but I would say making right decision under the conditions require some judgment skills. I was trying to understand how banker makes the offer, usually it is be a little less than mean of all the unopened cases. To make the contestant play longer the banker offers are significantly lower than mean at the start of a game but gap reduces as contestant opens more cases. Here is an article on wikipedia, where someone optimal strategy for maximum return. I would say strategy is fine but what is really driving the contestants is human psychological factors such as greed, fear, embarrassment and also the pressure from the audience or friends and that show is really all about that.

Statistically there is a possibility that someone would win highest prize (a cool million dollars) but considering human factor I see that happening only in one case if the last two remaining cases are for three quarter million and million dollars. I'm sure we'll hear about it once this happens :)

Retirement: Is The "Number" Really That Important?

2006-03-30T18:45:00.000-08:00

A few days back Make Love, Not Debt asked "Why The Rush To Retire?". Couple of bloggers responded with what exactly they mean by retirement, that what they want to do is not that financially rewarding and having financial freedom would be wonderful etc. One thing which I observed most of PF bloggers have a "number" in mind for retirement , sometime very precise such as a Jonathon over at MyMoneyBlog thinks $1,500,000 would be pretty good, Boston Gal Jane Dough went even higher $3,376,500, good luck to both of them and I'm pretty sure they will get there.

Every now and then I tried to come up with the "Number" for myself based on different retirement calculators it varies somewhere between $2,500,000 (simple life) and $4,000,000 ( well if I go with a little less simple life). But then I always ask what if I don't get to this "number",is is that important? Would it be that bad? In reallity the "number" is just another desire. May be I should list all my desires when I retire and see where this "Number" fits among those desires. Here is my list (in the order I desire them):

Family: I think it would wonderful to be surrounded by a bunch of children, grandchildren, nephew, nieces every now and then.
Good friends: I think friends are important at every stage of life but are really important when you have all the time in life. We can't not only share our past but still plan for the future.
Good health: I very much want to enjoy those golden years healthy. I don't want to die in poor health few years after I retire.
Self respect: I want to live feeling like I'm doing something worthwhile, returning something to society, not just waiting for that final day.
May be the "Number": To have everything else that I desire :)

Best Cashback Card

2006-03-29T12:03:00.000-08:00

Part of their Ultimate Savings Guide Kiplinger's has an article on cashback credit cards. To determine which cards are most rewarding, they took a generic spending scenario by assuming that one spends $35 a week on gas, $100 a week on groceries and $1,000 a month on everything else, including $100 at the drugstore and $100 to watch movies, at home or at the theater. The winner is:
Chase Rewards Plus Visa, which gives a 5% rebate on all the basics -- gas, groceries and drugstore items -- plus 1% on other purchases.Total annual rebate in this scenario is: $493. (Not a pocket change).
The runner up is *my current Cashback card*, Citi Dividend Platinum Select. (5% rebate on purchases of gas, groceries and drugstore items, plus 1% on everything else.) Annual rebate cap of $300.
Since I don't reach that $300 annual cap, I think I'll stick with Citi card. I used to have a Chase Perfect Card till a few years back which gave pretty nice cashback at that time but I wasn't very impressed with their customer service. The worst case was when they didn't update my billing address in their recoreds though I updated through their website.

Citibank Offers 4.5% e-Savings Account

2006-03-29T09:06:00.000-08:00

We have a brick and mortar bank with competitive offer for a high-yield savings account. Citibank just re-introduced its e-Savings Account with the very competitive rate of 4.50% APY. It seems they waited till Fed increased the interest rates. No minimum balance is required but to open a Citibank e-Savings Account you must have or open a checking account, you can choose from Citibank EZ Checking, Citibank Account, Citibank Everything Counts Account or CitiGold Account relationship package. I currently have Citibank EZ Checking account and I see a number of advantage with opening an e-Savings account:

You have access to your money via ATM or local Citibank branches in your area. They have quite wide physical branch network, check if there is one near you.

*I am assuming* Transferring money from your Citi checking account to savings account will be immediate and will not take days as it does with online savings account.

Their website has far better user interface when compared to HSBCdirect, Emigrant Direct and ING.

Also if you are doing 0% balance transfers and putting money in a savings account to earn interest for a year or so. Citibank offers some of the best 0% balance transfers offers, it will be much easier to setup minimum monthly payments from your savings account to credit card.

If you have any Citi credit card it will qualify towards minimum balance requirement for checking account.

Overall it looks like a good total banking package.

Fed Increases Interest Rate to 4.75 Percent

2006-03-28T13:56:00.000-08:00

Today Federal Open Market Committee voted unanimously to raise the benchmark federal funds rate target a quarter percentage point to 4.75 percent. This is 15th straight hike and it stands at the highest level since April 2001. Now for an average consumer since it influences prime rate it'll make any kind of borrowing such as credit cards, home equity lines and second mortgage rates, attached to prime rates more expensive. At the same time it'll have a positive affect on interest rates for CDs, MMAs.

It is quite possible that during this year there will be another one or two increases of quarter percentage points before Feds put a hold. In my opinion it will be a good time to move some money to long term (2-3 years) CDs, it may give better returns as compared to equities.

There Are 8.9 Million Millionaires In America

2006-03-28T11:30:00.000-08:00

According to CNN Money there are 8.9 million households in America worth $1 million or more excluding their primary residences. The best part is number keeps climbing year over year (except a few years when any large scale bubble bursts) and is at the record level today.

Here are couple of interesting statistics from the article that stand out:

Forty-six percent of those surveyed have invested in real estate like a second home or rental properties. So if this housing bubble bursts we may see a drop in coming year or two.

The median age of the head of millionaire households is 58. So most of them made it good old way "Earn, Save and Invest wisely". If we take out Hollywood celebrities and Google employees ( look at the table based on counties on right) the median age may even go higher. I guess if all keep following same path we'll be there some day.

Howdy!!

2006-03-27T12:16:00.000-08:00

Here is my first post. After thinking for many months about starting a personal blog I finally decided to do it. I'm in my early thirties, living in San Francisco bay area, employed in a technology company. I’m by no means an expert on anything and I don’t claim to be, this blog will be about things I come across for a happy and prosperous life.

So here I say Hello World!!