Tuesday, February 28, 2006

An Angle To Qualifying for Credit Unions With Restricted Membership

Bottom Line: Sometimes being only a roommate qualifies you for gaining access to credit unions with restricted fields of membership. Details below:

Was working on a separate blog entry when I encountered a customer service representative that told me a unique but common way to qualify for membership.

The bank was Navy Federal Credit Union. I've been a member for years; however, I asked can somebody qualify for membership if they are only a "roommate" of a current member. The representative said yes, you would only have to provide a proof of address. She then alluded to the case of "life partners" as an example for qualifying as only a "roommate." While i'm married, I can see where this angle could help many other people qualify for restricted fields of membership.

Recommend first asking any new credit union, that you would otherwise not qualify for, if being a roommate counts. You could then pull the "life partner" card if you feel necessary.

I've got relatives/friends all over the country. Perhaps I could do a temporary change of address with one of my magazine subscriptions (or something else). Have the friend/relative forward the bill w/ the new address back to you. Then presto, I could be considered a "temporary" roommate/resident (the friend or relative gets a couple of issues of the subscription for helping me out).

I HAVE NOT TESTED THIS ANGLE. Use method/angle at your own risk.

By the way, blogspot.com had technical difficulties. Many of my other posts may have been lost by them. If so, I will repost them shortly.

Monday, February 27, 2006

A $500 (or Less) Mutual Fund Screen

Sometimes I don't want to commit a lot of money up front to a particular investment. I'm frequently considering alternatives, sometimes with only a small initial outlay of cash. Below you'll find thirteen mutual funds that past through the filters on a screening tool I used today.

Basically, I checked for no-load funds whose annual expense ratio is at or less than the overall mutual fund market average. Additionally, I wanted to see what funds can be obtained through some of the more common discount brokers. Finally, I went with those funds that demonstrated reasonable performance over the last three years (>8.4% after tax). The following funds qualified:

Aim Basic Value (GTVRX)
American Century Value (TWADX)
Armstrong Associates (ARMSX)
AssetMark International Equity (AFIEX)
Excelsior Energy & Natural Resources (UMESX)
Excelsior Value & Restructuring (UMBIX)
GE Premier Growth Equity (GEPDX)
GE Strategic Investment Y (GESDX)
Homestead Value (HOVLX)
JP Morgan Investor Balanced AL (OGIAX)
JP Morgan Investor Growth A Loa (ONGAX)
PAW World Balanced (PAXWX)
Victory Diversified Stock (GRINX)

Yahoo Ticker Symbol Lookup

While index funds tend to be the best play over the long term, mutual funds represent a low-cost option for small investors. What do I mean by low cost? Well, if you were to buy an exchange traded fund (ETF) with $500, you'd likely spend around $10 on the initial purchase. This would yield an upfront 2% expense ($10/$500) on your investment. I feel that mutual funds represent a good method for investing up till the point you have around two grand or more... Then other alternatives could be easily blended in. I've been invested in the Excelsior Natural Resources Fund for the last year now. Opinions?

Screening Criteria

(Expense Ratio <= 1.5)
(Minimum Initial Purchase <= 500)
(No-Load Funds = Yes)
(Morningstar Rating >= Four Stars)
(3 Yr AfterTax Return (with sale) >= 8.4)
(Closed to New Investment = No)
(Sharpe Ratio (3 Year) >= 1) Definition of Sharpe Ratio
(Brokerage Availability = Ameritrade Inc.)
Or Scottrade
Or Fidelity NTF
Or Vanguard NTF
Or Schwab Retail One Source NTF
Or TDWaterhouse Retail NTF

Sunday, February 26, 2006

A Philosophy On Saving Money

Bottom Line: Below I present one unique philosophy on saving that may help you rationalize saving more in the future.

Shopping around to save money on a big ticket item (car, house, etc.) is a no-brainer, but what about shopping around for low cost low volume items?

Of course, you could never shop and save tons of money. However, there's ultimately situations where you need or want something. Sometimes, I increase my motivation to shop for deals by monetizing the money saved in terms of a "net hourly wage." I don't do this all the time; however, here's an example:

a) Looking for the Stickney and Weil 11th Ed. Accounting text book, I go to amazon.com where the best price is $94 (new).
b) I then spend four minutes at one book shopping bot and find another brand new version of the book for $82.7 at half.com.
c) By spending the extra four minutes, I save $11.30.
d) Extrapolating this out to an equivalent hourly wage you get ($11.3*60minutes/4minutes): $169.50/hr wage

This equivalent hourly wage is a bit high. However, you get the picture. Perhaps this philosophy might help you save more over the long term.

PFBlogs.org Website Review

Bottom Line: PFBlogs.org should be towards the top of everybody's favorites list and serves as an excellent starting point for reviewing blogs with relevance to finance, investing and real estate.

Time is money, and I like saving both! Sometimes when i'm online I tend to spin my wheels looking for specific content. I frequently use cnnfn, yahoo finance, mymoneyblog.com and bankdeals as an entering point for my site's research. I now see where pfblogs.org could be considered the "google news" for financial blogs.

At first glance, the site serves principally as an aggregator for blogger postings. A user can specifically select between showing only finance, real estate or investing blog postings. Furthermore, users can search the site's blog archives and connect to affiliated blogs from pfblogs.org.

Pros: 1) Continually updates content, 2) Utilizes an efficient quick-look interface where users can read the title and a brief intro for postings. This seems to be rather effective in helping the user determine whether the posting is useful or useless to them, 3) Site FAQ section is robust and easy to use.

Cons: 1) Communicating with the site webmaster is not as easy as it could be. Links for the webmaster's email address generate an invalid listing. Bloggers desiring to communicate with this site should use the webmaster prefix but only the "pfblogs.org" extension. Come to find out, the webmaster's email address is listed this way to prevent spaming from "bots." Out of respect, i've parsed his email address above using the "prefix@extension" format.

2) The website does not add significantly to existing blog search engines. Reason resides in the fact that it searches only a catalog of blogs which request to be listed on their site. Don't get me wrong, the site is quite effective. It is the best site i've found to display personal finance blog content in a one-stop shop- then-surf approach.

Title Insurance

My wife and I saved $220 or thirty-three percent on title insurance for the house we bought this past Friday (24 Feb). It's our third house. To qualify for the rate reduction we had to get some basic information from the seller: 1) title insurance company they used, 2) amount of coverage they paid for.

The sellers were able to tell us the correct title company name. However, they over-estimated their coverage. No problem, I called the local field office for that title company and identified myself as the buyer of the property and noted the sellers. The title insurance representative pulled up the last title insurance policy (listed under seller's name) and was able to quote me the correct amount of their policy coverage.

The person was very helpful and told me that I would qualify for a $220 reduction in premium. She also mentioned that the attorney i'm using for closing had closed on the house i'm buying in 2003. Thus, my closing attorney should have the documents on hand to show proof of prior coverage.

I promptly called our closing attorney to straighten this out. Their office handles forty closings a month. You would think that verifying past coverage and giving clients the best rate possible would be standard operating procedure (SOP). In my case, it wasn't. Recommend keeping this in mind next time you buy a house.

For further information, see this interesting Kiplingers article on title insurance.

Saturday, February 25, 2006

Alternatives to Zillow

Inside Angle To Qualifying for New Credit Union

Ever see a CD or money market rate that you couldn't pass up? Some of my favorite blogs report great credit union (CU) rates; however, the credit union's field of membership is restricted to certain employees or residents of a particular geographic area.

Consider this angle for qualifying for a CU with a geographically constrained field of membershp: 1) Set up a mail box at a local shipping and receiving store (i.e. UPS Store, etc) near the credit union of interest; 2) File a change of address form with the US Postal Service on the mail box you just set up; 3) Apply for the CD or Money Market account with the new credit union; 4) Change your address on record with the credit union shortly after successfully opening up the account; 5) Cancel your mail box at the local shipping and receiving store.

I HAVE NOT YET TRIED THIS. However, I have set up a mail box with a shipping and receiving store completely via the mail before. I'll probably try this when I find a credit union that can beat penfed's best rate (6% CD) by about 20%. A 20% higher yield CD would have a rate of 7.2% and would help offset the time and money invested in qualifying for the new credit union. Of course, somebody trying this with a small amount of money would probably need a much higher rate of return than than the 20% I mentioned; likewise, somebody with a higher amount of money could probably work with a lower marginal gain in yield. Something to consider though...


Hello. Consider this my first post towards blogging the journey of my wife and I towards financial freedom. My blogging goal is to collect and convey wisdom on the subject of personal finance. I personnally view the use of personal finance blogs as an excellent source of entertainment and education which can aid an end user's own financial due diligence.

Where I am, where I came from, where i'm going? Just three years ago I went through a divorce. I took on all the debt of my ex and had a net worth of about $14000 in the red. Thirty three months later I remarried. Today, we save aggressively and invest moderately. Our goal is to retire with an annual passive income of $80,000/yr (adjusted annually for inflation). Retiring at the age of 47 is a secondary goal for me. I ultimately consider both of us as members of the "rat race." Once I reach 47, I'll do whatever makes us(me) happy and exit the "rat race." If it's continuing my career, blogging or handing out shopping carts at wal-mart... whatever makes us happy, i'll do it. My wife will retire whenever she wants to.

I view NET WORTH as important but SECONDARY to level of passive income. In reporting our passive income, I report what my wife and I would collect if we retired NOW. I follow the following rules:

a) Stock Assets: Contributes to passive income only through dividend yield.
b) Bond Assets: Contributes to passive income only through coupon (yield).
c) Money Market Assets: Subtract unsecured debt then report passive income as the net interest income.
d) Investment Property: Annual net cash flow
e) Military pension: I assume that I will serve until i'm at least retirement eligible (20 years). For presentation purposes, I ignore the 20 years of minimum service rule and report what I would collect now based on current years of service. Otherwise, I follow all other military rules for calculating pension - Pension equals 2.5% per year of service times the running average of last three year's base salary.
f) Other: I ignore it unless it provides a source of passive income.

Using these rules, our net annual passive income would be $16,779 if we retired today, 21% of our ultimate goal.

Rule of 72: Determining Compound Interest

Rule of 72: If you divide 72 by the interest rate on your debt or investment, the answer is approximately the number of periods to double the original quantity. For instance, if you were to invest $100 at 9% per year, then your investment would be worth $200 after 8 years. For further information, see wikipedia rule of 72.

Credit Albert Einstein with discovering this rule. Albert Einstein called compound interest the most powerful force in the universe and characterized it as the greatest mathematical discovery of all time.

Please ignore words below please:
High Yield Money Market, High Yield Money Market, High Yield Money Market, High Yield Money Market, High Yield Money Market, Ebay, Ebay, Ebay, Ebay, Ebay, Amazon, Amazon, Amazon, Amazon, Amazon, CD, CD, CD, CD, CD, DSL, DSL, DSL, DSL, DSL, VOIP, VOIP, VOIP, VOIP, VOIP, WIRELESS, WIRELESS, WIRELESS, WIRELESS, WIRELESS, morningstar, morningstar, morningstar, morningstar, morningstar, wsj, wsj, wsj, wsj, wsj, HSBC Direct, HSBC Direct, HSBC Direct, HSBC Direct, ING Direct, ING Direct, ING direct, ING Direct