Friday, December 26, 2008

2008 Happy Honda Days Instant Win Contest (Win $100 Gift Card While Honda Donates Up To $100k To Charity)

I stumbled across this $100 gift card contest while browsing Hondas online. I found this contest by clicking through a banner ad at Clicking through the banner ad gets you to the following destination site. Looking at the middle left of the page you can see the "instant win" tab. Clicking on this tab will bring you to the contest entry page (here).

Summary of contest:
* Up to 5 entries
* Contest open to entry through 5 January.
* Contest entrant has chance to win $100 gift card
* Honda will donate $1 per contest registrant up to $100k divided across three charities. Each contest registrant plays a role in determining what charities receive.
* Charities are:
- Keep America Beautiful® - Road to a Cleaner America
- Little League Baseball® - Urban Initiative
- Pediatric Brain Tumor Foundation

I stumbled upon this contest because i'm constantly reading about new cars. I'll likely buy a new car within the next 1-3 years to replace my '98 Acura CL with 135k miles.

Thursday, December 25, 2008

Ten Mortgage Tips I Learned From Past Three Home Purchases

Bottom Line: I highlight some of my personal lessons learned from three home purchases conducted over the past six years.

1. Read “106 Mortgage Secrets All Home Buyers Must Lean – But Lenders Don’t Tell” by Gary Eldred, PhD. First third of book is dedicated to people that need help with credit or qualifying for expensive housing. Remainder is chocked full of level headed comments (AS APPOSED TO THE OTHER BOOKS ABOUT BECOMING A MILLIONAIRE WITH NO MONEY DOWN). The 106 secrets are summarized in the table-of-contents for a quick initial review.

2. Bad U.S. economy news is good news for you when you’re floating your rate (inverse relationship). For example: a high unemployment rate should help you get lower mortgage interest rates. Be mindful of economic news scheduled for release the week or two prior to your intended lock date and pay attention.

3. If you’re buying below fair value, a low appraisal may keep property taxes down but it’ll also make it more difficult for you to shed Private Mortgage Insurance (PMI) later because it’ll take longer to develop an 80 percent loan to value ratio. Generally, it’s best to get a full service appraisal because you have the best chance for the appraisal to come back over your purchase price.

4. If you don’t put 20% down at closing, you generally won’t be able to shed PMI for at least the first 12 months. After 12 months, you’ll generally either have to order a full service appraisal showing that the house is now worth 20% higher than the current loan balance… or you’ll have to refinance. Make sure it’s clear what your mortgage company requires for removal of PMI.

5. Generally, you’ll find that your PMI rate will depend on your FICO score, type of loan and down payment (LTV ratio). Generally PMI monthly premiums reduce with every 5% you put down.

6. If you’re in a situation where it's not likely for you to build 20% equity quickly (to get rid of PMI), consider rates for an 80/20, 80/10/10, 95/5/5 loan (LOAN/Piggy Back Loan/Down Payment). If you can’t get a good rate for one of these loan combinations, ask your loan officer if you can pay your full PMI premium up front. This will allow you to roll the premium over to your home loan and deduct both your home loan interest and a portion of your PMI premium if you itemize taxes.

7. There is generally no difference in the rate you’ll get quoted between 10 yr and 15 yr fixed loans. A 20 yr fixed doesn’t significantly improve you quoted rate (when compared to a 30 yr fixed).

8. Closings via mail: Try and make sure the closing attorney’s office gets the package from your mortgage company no less than 5 business days prior to closing. This allows them enough time to reforward you the paperwork and still allows additional time on your end.

9. Settlement Statement:
a) If doing non-local purchase via mail: Wire fees are usually valid. Remember, closing attorneys are charged wire fees on each incoming wire transfer. It sucks that you have to pay a wire fee on your end and have to cover their expenses associated with receiving your wire and the mortgage company wire transfers.
b) Title insurance premium, refer to article wrote up below on subject

10. Closed on last house (24 Feb 06) with Pentagon Federal Credit Union. There loan officers are paid by the hour (not commission). They offer great rates and do 90 DAY LOCKS for no additional fee. They also pay a good portion of your buyer closing costs. Credit Union membership is open to everybody. I paid a $20 lifetime membership fee and did all paperwork via internet, phone and mail. Locked 15yr fixed at 5.0% (1 point, 20% down paid). Be aware, that some of the rates quoted on their site require 20% down.

Wednesday, December 24, 2008

45 Frugal Yet Romantic Ideas For You and Your Mate

First off, this post is not directly related to finance. However, it can be useful to you financially, especially if you want a few frugal yet romantic ideas, or you simply want to stimulate an existing relationship/marriage.

Ideas are taken from a brochure that I kept from my early college years titled “101 Ways to Eroticize Safer Sex.” The brochure was handed out by my Alma Mater’s peer health advocates group.

56 of the 101 ways to eroticize safer sex were excluded because they were either specific to the area of the University or not as tame/clean as what I’d like to post on this blog. Listed, in no particular order:

(1) Dance together in your room
(2) Go horseback riding
(3) Comb each other’s hair
(4) Play Frisbee
(5) Give flowers for no specific reason
(6) Take a hot air balloon ride
(7) Go to a music festival
(8) Hang out at a bookstore or music store
(9) Play board games
(10) Kiss each other slowly
(11) Take a sauna together
(12) Wear each other’s boxers
(13) Build sand castles
(14) Finger paint each other
(15) Take a nap together
(16) Give Eskimo or butterfly kisses
(17) Go hiking together
(18) Play wrestle
(19) Share a lollipop
(20) Give each other a foot and hand massage
(21) Listen to each other’s heart beat
(22) Watch the sun rise/sunset
(23) Leave a rose on your mate’s windshield
(24) Bring your mate breakfast in bed
(25) Drink a cappuccino at an outdoor café
(26) Read Shakespearean sonnets
(27) Go to an aquarium or zoo
(28) Take a carriage ride
(29) Play putt-putt golf
(30) Go dancing
(31) Go bowling
(32) Make bread together
(33) Cook a candle light dinner together
(34) Go kite flying
(35) Stay overnight in a bed and breakfast
(36) Rollerblade together
(37) Take a stroll in the rain
(38) Surprise your mate with a bouquet of balloons
(39) Take a walking tour of area attractions
(40) Swing on a porch
(41) Go bicycling together
(42) Leave each other love notes
(43) Swing in a hammock
(44) Sip hot chocolate w/ marshmallows by the fireplace
(45) Flirt with one another

Tuesday, December 23, 2008

Recommended Articles From My Blogroll

Today is a snow day for my wife and I in the Pacific Northwest and i'm able to catch up on some new article posts. Please enjoy the following articles/posts from authors on my blogroll.

Dual Income No Kids: "Bail out for Santa"

Budgets are Sexy: "Am i a Grandpa if i get my nephew a Savings Bond?" Good article about something of interest to myself. All of his recent posts are relatively interesting.

Master Your Card: "11 Reasons Why The Economy is Going to Get Worse Before it Gets Better"

Money for Military: "Get Your Free Credit Report to Start 2009"

Everyday Finance: "A Legitimate High Yield Stock you can Take to the Bank." The author writes about one of three stocks i'm investing in, Dow Chemical (DOW).

The Digerati Life: "Money Saving Ideas From The Ultimate Cheapskate's Road Map to Riches"

Save and Conquer: "401(k) Match Being Reduced or Eliminated" Article covers one area of the economic down turn.

Fiscal Zen: "Four Tools to Help You Make the Most of Ebay"

Miss Thrifty: "How to clean wallpaper - with bread"

Monday, December 22, 2008

Sticking to Basics Eases Financial Stress

Gregory Karp of the Chicago Times writes an easy to follow article titled "Sticking to Basics Eases Financial Stress." The article makes sense and integrates well with my own developing financial philosophy.

Karp cites a Synovate survey and emphasizes that people who follow three basic rules of money management are less stressed. The rules are:

* Have an emergency cash fund. Of those surveyed who did not have a six-month emergency fund, 90 percent felt stressed. This compares with 78 percent of all people surveyed feeling stressed. Finally, of those with a six-month emergency fund, only 56 percent felt stressed.

* Pay off credit cards in full

* Use a household budget. Similar results were found linking credit cards and household budgets to stress levels.

Karp's article can be found here. The remaining is my opinion...

Many people waste time focusing on exciting money making ventures and focus less on the simple things. Take for instance credit cards, people who carry a non o% APY credit card balance have no business investing in the stock market. Pay off your credit card.

The importance of a household budget varies depending on whether or not you are naturally frugal. I don't use a household budget at all. But, I'm an inherently frugal person. If you're prone to overspending, work on developing a manageable budget that focuses on saving for lifetime goals.

As for investing, focus on securing your future. Is your house or car paid off? If not, a majority of your free cash flow should go towards paying off these items. Are you or your spouse in an upwardly mobile career? If not, some of your free cash flow should be spent on career related education and training to make you competitive for higher wages and / or more satisfying work. Finally, speculative investments should take up no more than 20% of your free cash flow.

I will likely have people disagree with my 2009 household financial goals. In 2009 my household does not plan on contributing to a ROTH IRA. Instead, we are focusing our extra cash flow to pay off one of our three investment properties within the next two years. We feel it is important to pay off our houses during a down economy. Our 6-8 year payoff plan is as follows:

* House 1 (1400 sq ft @ 5.875% 30 yr fixed): $50.6k in mortgage debt with an estimated payoff date in Dec 2010.

* House 2 (1900 sq ft @ 5.5% 15 yr fixed): $91k in mortgage debt with an estimated payoff date no later than Dec 2013.

* House 3 (3100 sq ft @ 5% 15 yr fixed): $151.5k in mortgage debt with an estimated payoff date no later than Dec 2016.

The primary reason for focusing on our mortgage debt is the fact that it's a sure thing and in this economy, good renters are not. The one thing that may complicate our house pay off goals is unforseen maintenance expenses. We remain open to selling any or all of our houses if we get the price we want. Otherwise, we'll continue to carry them and the remaining $293k in mortgage debt associated with them.

Despite my emphasis on paying off our houses, i'm still speculative in other areas. I'm investing all of my blog earnings in peer-to-peer lending site So far, i've invested $125 in blog earnings in a 11.43% net interest bearing loan portfolio diversified across five loans. One can establish a LendingClub account through the below ad.

Try it Now! Join Lending Club.

I'm also investing $150 a month across three dividend reinvestment plans (DRIPS): Dow Chemical (DOW), 3M (MMM) and Exxon Mobil (XOM). I started all three of my DRIPS through and corresponding agent companies Bank of New York Mellon, Wells Fargo Bank and, respectively.

Tuesday, December 16, 2008

Bernard "Bernie" Madoff Ponzi Scheme Victims (Including Estimated Victim Losses)

Below is an initial list of victims of the Bernard “Bernie” Madoff Ponzi scheme orchestrated at Bernard L. Madoff Investment Securities LLC. Initial list adapted from Wikipedia article and expanded to show a total of $32.7 billion in estimated losses. Individual losses noted before each item listed below. Variance may exist due to round off error and currency exchange rates used in calculations at time of posting.

Feel free to link to this post. It will be updated periodically as additional information comes forward.

(7.5 B) Fairfield Sentry Ltd, a hedge fund run by Walter Noel's Fairfield Greenwich Group (Note 1).

(3.5 B) Kingate Global Fund Ltd, a hedge fund run by Kingate Management Ltd (Note 1).

(3.3 B) Tremont Capital Management (Note 2)

(3.21 B) Banco Santander, ticker STD, (through its “Optimal Fund”) Note 1.

(1.8 B) Ascot Partners hedge fund. Source: Diana Henriques and Alex Berenson at NY Times

(~1.8 B or slightly less) J. Ezra Merkin, chairman of GMAC, and founder of Ascot Partners hedge fund (Note 1).

(1.4 B) Access International Advisors LLC and clients (through its "American Selection" fund, traded as "LUXALPHA SICAV"). Source: Saijel Kishan at Bloomberg. Also, the fund manager, Rene-Thierry Magon de la Villehuchet, was found dead this Tuesday after an apparent suicide (Chicago Tribune source).

(1.4 B) Fortis Bank Netherlands (Note 2).

(1.08 B) Union Bancaire Privee and clients. Source: Reuters

(~1 B or less) HSBC, ticker HBC (Note 1).

(0.935 B) Benbassat & Cie, Swiss private bank. Source: Daily Intel

(0.633 B) Natixis and clients. Source: Guerrera, Sender at Financial Times

(0.624 B) Royal Bank of Scotland, ticker RBS (Note 1).

(0.484 B) BNP Paribas (Note 1).

(0.042 B) Fairfield Connecticut public employees pension fund. Source: Hartford Courant

(0.41 B) BBVA, Spain’s second-largest bank (Note 1).

(0.4 B) Fix Asset Management (Note 1).

(0.36 B) Man Group and clients (Note 1).

(0.33 B) Reichmuth and Co’s Reichmuth Matterhorn fund (Note 1).

(0.302 B) Nomura Holdings and clients (Note 1).

(0.28 B) Maxam Capital Management (including Maxam Absolute Return Fund), run by Sandra Manzke; Manzke has stated that Maxam has been "wiped out" and will close as a result of the losses (Note 1).

(0.28 B) Pioneer Alternative Investments (Note 1).

(0.23 B) EIM Group (Note 1).

(3.3 B) Tremont Capital Management (Note 2)

(0.188 B) M&B Capital Partners. Source: Westbrook & Kishan at Bloomberg

(0.145 B) Carl Shapiro’s charitable foundation (Note 1).

(0.14 B) Axa (Note 1).

(0.137 B) Aozora Bank. Source: Reuters

(0.104 B) Unicredit. Source: Catan & Bryan-Low of WSJ

(0.1 B to 0.11 B) Yeshiva University. Source: Strom at NYT

(0.107 B) Dexia SA (Note 2).

(0.066 B) Nordea Bank AB (Note 2).

(0.05 B) Banque Bénédict Hentsch and clients (Note 1).

(0.05 B) Korea Life Insurance (Note 1).

(0.005 B) North Shore-Long Island Jewis Health System (Note 1).

(0.04 B) Royal Bank of Canada, ticker RY (Note 2).

(0.03 B) Mortimer Zuckerman Charity(Note 2).

(0.029 B) Avram and Carol Goldberg, former owners of the Stop & Shop supermarket chain. Source: Daily Intel

(0.021 B) Bramdean Alternatives hedge fund run by Nicola Horlick of London. Source: Ian King of The Times

(0.019 B) Madoff Family Foundation (Note 1).

(0.018 B) Jewish Community Foundation of Los Angeles. Source: Daily Intel

(0.014 B) Groupama (Note 2).

(0.014 B) Harel Insurance Investments and Financial Services (Note 1).

(~0.014 B, or less) Societe Generale (Note 1).

(0.012 B) Massachusetts state pension. Source: Healy & Syre at Boston Globe

(0.012 B) Phoenix Holdings (Note 2).

(0.011 B) Banco Popolare. Source: Catan & Bryan-Low of WSJ

(0.011 B) Richard Spring of Boca Raton, FL. Source: Urbina at NYT

(0.01 B) Jewish Federation of Greater Washington. Source: Strom at NYT

(0.009 B) Korea Teachers' Pension (Note 1).

(0.008 B) Robert I. Lappin Charitable Foundation (Salem, Massachusetts) Charity founded by New Jersey Senator Frank Lautenberg (Note 1).

(0.007 B) Technion (Note 2).

(0.006 B) Julian J. Levitt Foundation, Texas (Note 1).

(0.006 B) The Ramaz School. Source: Strom at NYT

(~ 0.005 B, or less) NPB Neue Privat Bank (Zurich) and clients (Note 1).

(0.004 B) The SAR Academy, a Jewish School. Source: Strom at NYT

(0.004) CNP Assurances (Note 2).

(0.001 B) Clal Insurance (Note 2).

(~ 0.001 B) Mediobanca (Note 2).

TOTAL: $32.698 B

** Below is a listing of others mentioned online or on TV to have losses but without losses disclosed. Inclusion of some individuals below in the above total should be carefully done since in some cases the losses may be from "client" interests in one of the above.**

(1.) The Chais Family Foundation, Encino, CA.

(2.) Elise Wiesal Foundation for Humanity, losses unconfirmed

(3.) Joyce Greenberg and family, losses in multi-millions. Source: CNBC, 16 Dec

(4.) Notz, Stucki & Cie – undetermined (Note 1).

(5.) Lombard Odier Darier Hentsch & Cie

(6.) Palm Beach Country Club

(7.) Sterling Equities, Inc. led by New York Mets co-owner Fred Wilpon

(8.) Judy and Fred Wilpon Family Foundation

(9.) Stephen Spielberg’s charity, the Wunderkinder Foundation

(10.) Stephen Abbott (San Francisco lawyer) and family, hundreds of thousands. Source: Ross at San Francisco Chronicle

(11.) Norman Braman, former owner of the Philadelphia Eagles football team

(12.) Englebardt family of Los Angeles and elsewhere

(13.) Leonard Feinstein, co-founder of Bed Bath & Beyond Inc.

(14.) Stephen A. Fine, president of Biltrite Corp.

(15.) Jerome Fisher, founder of Nine West

(16.) Helfman family of Miami and elsewhere

(17.) Robert Jaffe and family (see also father-in-law Carl & Ruth Shapiro) of Palm Beach and elsewhere

(18.) Saul Katz, co-owner of the New York Mets

(19.) Irwin Kellner, chief economist for, of Port Washington, N.Y.

(20.) Susan Leavitt of Tampa Bay, Florida

(21.) Loeb family

(22.) Ira Rennert (billionaire), mentioned by Vicky Ward of Vanity Fair on CNBC on December 12, 2008 as being "heavily, heavily invested" with Madoff Ira Roth and family of New Jersey

(23.) Vincent Tchenguiz, UK real estate investor

(24.) Thyssen Family (including Thybo International fund)

(25.) Lawrence Velvel, dean of the Massachusetts School of Law

(26.) JEHTFoundation

(27.) Leonard Litwin

(28.) Mirabaud & Cie

(29.) Swiss bank Syz SA

(30.) Frontbridge

(31.) Lombard Odier

(32.) Gabriel Capital Partners' Ascot Fund Ltd.

Note 1: Jamie Dunkley at
Note 2: Westbrook & Kishan at Bloomberg

Monday, December 15, 2008

Lending Club: What I'm Using for my Loan Porfolio Performance Benchmark

I've blogged extensively about Prosper peer-2-peer lending in 2006 and have learned a lot from my experiences with the lending site. With Prosper in its quiet period, I have already funded four loans with LendingClub. My first impression with LendingClub was tainted by my unfamiliarity with it. Prosper has a far better search mechanism and better presentation of listings, but i'm beginning to think that this is all the PROS associated with Prosper. I'm beginning to warm up to LendingClub.

I'm using LendingClub to reinvest earnings from my blog. Later this week, I will roll another $25 of blog earnings into LendingClub. At Prosper, my loan portfolio has had horrible performance. According to LendingStats, only 73% of my loans are / were performing loans and my estimated ROI is 6.4%. At such a low rate, I might have been better off just paying off my highest interest rate mortgage (5.875%) and reinvesting my previously used Prosper Loan searching / funding time in some other area.

I must admit, I was pretty aggressive with Prosper lending. At sometimes, I was down right careless. Since 2007, I have regrouped into a more conservative lending style. I'm now implementing my more conservative lending strategy from scratch at LendingClub. I believe I will do better at this site. My initial two reasons to believe this reside in the fact that I can minimize risk at LendingClub by risking only $25 per loan vice the Prosper minimum of $50. Also, it appears that the LendingClub's vetting of applicants is better than at Prosper's site.

Now to the point referenced in the subject line... I was reviewing CNBC and found a great story about Capital One delinquency rates (article). LendingClub lenders should keep their eyes and ears open to all credit card company news on delinquency / write-off rates. At Capital One, the company is reporting a write-off percentage rate of 6.98% and a 30 day delinquent rate of 4.7%. At first, one might say it makes great sense to use these numbers as a yard stick to measure their own LendingClub account performance. Don't rely on this early on. Wait until your loan portfolio matures before you start measuring up to this.

I plan on using the Capital One write-off rate as a yard stick going forward. If I don't beat Capital One after one year at lending, i'll likely quit. My next goal after beating Capital One will be to have a net return of 8.4%. We'll see how things work out.

You can use the button below if you want to set up an account at LendingClub and test your lending skills.

Try it Now! Join Lending Club.

Sunday, December 14, 2008

U.S. Household Debt Drops For The First Time Ever

The Federal Reserve announced on Thursday that household debt decreased for the first time since the Fed started keeping this data over 50 years ago. For the period of July - September, households reduced their debt by an annual rate of 0.8 percent.

The Associated press reports:

"The decline in household debt levels is evidence of the severe credit squeeze that is occurring as banks, saddled by billions of dollars of losses in mortgage debt, have tightened lending standards and made it harder for people to get loans."

"Mortgage debt fell at an annual rate of 2.4 percent in the third quarter, the largest decline on record."

Additional details can be found the Associated Press article here.

Wednesday, December 10, 2008

GMAC Fails to Meet Conditions to Convert to Bank

I would be very skeptical of keeping any money in a GMAC bank account over FDIC insured limits. Check out this article from Bloomberg.

"By Ari Levy
Dec. 10 (Bloomberg) -- GMAC LLC, the auto and consumer lender seeking federal aid, failed to obtain enough capital to become a bank holding company and may abandon the effort, casting new doubt on the company’s ability to survive.

A debt exchange by GMAC and its Residential Capital mortgage unit designed to bolster the company’s finances didn’t attract enough participation, GMAC said today in a statement. So far, GMAC remains short of assembling $30 billion in regulatory capital that Federal Reserve requires, and the regulator has said the conversion won’t be approved if the requirement isn’t met.

GMAC has pinned its hopes for recovery on its plan to become a bank holding company and gain access to federal rescue programs. The Detroit-based company gave debt holders another three days to consider its exchange offer, adding that if it doesn’t complete the swaps and win Fed approval by Dec. 31, “it would have a near-term material adverse effect on GMAC’s business, results of operations, and financial position.”

Less than 25 percent of GMAC and ResCap’s existing debt covered by the exchange offer has been tendered, the statement said. GMAC needs about 75 percent participation for the plan to work, the statement said.

Sunday, December 07, 2008

Real Unemployment Rate Rises to 12.2% (Not Seasonally Adjusted) at End of November 2008

A couple weeks ago I discussed the U.S. unemployment rate and its two overlooked components of "marginally attached workers" or "employed part time for economic reasons." Please see my November 24th article for additional background.

Turbulent Market for My Rental Properties

Last night I received news that my tenants at my newest and largest house will be breaking there lease early due to job relocation of both tenants. This comes just two months after filling my smallest of three rental properties, which didn't draw rent since January 2008 and required $15k in rehab work. I recently started making payments of $2300 over mortgage on my smallest rental property. This accelerated payment plan would have allowed for paying off the smallest property in only 5 years. Unfortunately, this will be placed on the back burner until my largest house is under a new contract.

My wife and I have three rental properties (3100 sq ft, 1900 sq ft and 1450 sq ft houses). We're in no hurry to sell them, but are nonetheless entertaining both sale and rental contracts each time our rental properties are empty. Our focus going forward is to pay off each of our rental properties ($296k balance due) and pay off our retirement home before I retire from the military. This goal isn't that lofty since it's likely we'll retire in the south east where properties are more reasonably priced.

Friday, December 05, 2008

Money Saving Hobby: Coupon Clipping

I came across an inspirational article related to coupon clipping. Coupon clipping? LOL, yes. The story is about Carol-Ann Mendoza a 31 year old stay at home mom. Carol quit her job 11 years ago to focus on raising her two children. Her and her husband now have four children.

Carol is described as a having OCD, obsessive coupon disorder. She runs a coupon clipping club that meets once a month for what sounds to be a fun event. At her meetings she has door prizes, ice tea, pies and what sounds like a great social atmosphere. Her coupon clipping meetings focus on combing through each attendees' reject pile as well as putting out tips and strategies to save money.

In addition to running "Frugal Mamas" club meetings, she also runs the website Frugal-Mammas. Carol is also known for random acts of kindness such as snooping others' shopping carts and handing them coupons for their items. Carol shares the following tips and sites for saving:

Tips to save

- Look for BOGO (buy one, get one) deals and couple them with two manufacturer coupons.
- Don't be embarrassed to ask your friends for their extra coupons. They are like money.
- Price shop. Wal-Mart will match any price if you bring in a competitor's ad.
- Stick to your shopping list so you aren't tempted to buy full-priced items.
- Check out Sweetbay and Winn-Dixie for discounted meat. The stores usually cut prices in the mornings on meat about to expire.
- Leave the kids and husband at home when you shop. They often sneak noncoupon items into the cart.
- Give your two cents about a product by calling the manufacturer. They'll often send you coupons or free stuff.
- If a store is out of a sale item, ask for a raincheck.
- Never try to pass an expired coupon. That's cheating.

Useful Web sites

The full article written by Susan Thurston of the St. Petersburg Times can be found here. While I didn't write it up in the main body above, here's another great but separate coupon clipping article.

Thursday, December 04, 2008

Better Things Come To Those Who Wait-Avoid Tax Refund Anticipation Loans

The holiday season is in full swing and before we know it we will be ushering in a new year. After the excitement of ringing in the New Year on January 1st, many people turn their attention to the upcoming tax season. If you are one of the millions of Americans who is anxiously awaiting a tax refund to stimulate your own economic situation, you may be tempted to rush that payment from Uncle Sam by taking advantage of a tax anticipation loan. However in the world of high interest loans, this one is almost at the top of the scale, comparable to payday loans since they are often targeted toward the working poor who really can't afford to lose another dollar.

What is a Refund Anticipation Loan (RAL)?
Basically a RAL is a third party loan offered by your tax preparer in order for you to receive you tax refund quickly. The reason this type of loan appears predatory in nature is the fact that unlike years ago when you had up to several weeks to receive you return via mail, most refunds presently can be received in as little as a few days up to two weeks. For some people who are desperately waiting for cash to pay bills or cover living expenses, the need for money will tempt them to accept an offer of receiving their cash almost immediately, but for that “convenience” they can expect to pay up to triple digits in interest rates for an extremely short term loan. Unlike payday loans (short term loans advanced to anyone having a checking account and a job) which are considered high risk, RAL loans are very low risk. You don't have to pay cash up front and all the fees are taken out of the refund which is guaranteed money as long as your taxes are filed correctly and you do not have any outstanding debts that may result in a deduction from your refund.

Who are the players in this loan game?
Tax preparers make up the large majority of businesses offering RALs, however they are not alone. Are you looking for another car or perhaps a new big screen TV? Many vendors offer incentives that include using your pending tax return in exchange for big ticket items. They prey on individuals that are looking for or are in need of money immediately. Anyone expecting a refund from the IRS can qualify for this type of advance. Most individuals that accept a RAL qualify for the low income Earned Income Tax Credit (EITC). Sadly, many of the individuals don't even realize that they are taking out a “loan” and either through misrepresentation or simply by not understanding the terms, think the process is part of their tax preparation. EITC qualifying families make up over half of the people receiving RALs from commercial tax preparers.

Alternatives to RALs?
Does it make sense to pay to borrow your own money? The resounding answer is NO! There are few cases where having the money just a few days earlier is worth the cost. The best alternative to get you cash quickly is to file your tax return electronically and opt to have the refund deposited directly into your checking or savings account. If you need assistance preparing your taxes, consider using the free tax preparation service through the IRS. The Volunteer Income Tax Assistance Program (VITA) offers free tax help for moderate to low income taxpayers (earning $40,000 or less) who would otherwise normally use commercial tax preparers for their tax returns.

Unlike the trillions of dollars the government is currently handing out in the form of bailouts, your income tax return is not money being given to you for free. It is money that you worked hard to earn that the government has been nice enough to hold for you in. You've waited all year for this cash. The high interest expenses of RALs really are not worth the cost to receive your money days earlier.

Trisha Wagner is a freelance writer for, a debt community featuring debt forums. Trisha writes regularly on the topics of getting out of debt and personal finance.

Wednesday, December 03, 2008

Dollar-Smart Santa

Brett Arends of the Wall Street Journal had a great article this past week titled "Dollar-smart Santa." I was looking for some Cheap Christmas party themes and stumbled upon Mr Arends article. Unfortunately, I can't find it at google news so I will share the highlights with you.

(1.) Feeling nostalgic? Then consider buying a stock certificate in Ford or GM. I personally would avoid GM because they're the worst off financially. Anyways, you can get the certificate via one of two means. Buy the stock via your broker and ask for it issued in certificate form and in the name of a specific recipient. Or, you can go to and buy most any stock for gifting purposes. I used OneShare previously when I bought a share of stock for my niece and it worked out fine.

(2.) Consider a Netflix subscription. "It costs as little as $5 a month, or $60 a year. Compare that with cable TV, which can cost more than $1,000 a year."

(3.) An internet phone, or an adapter. "Is grandma still paying $900 a year for her old-fashioned landline? If she has broadband internet, she could pay almost nothing. Consider a phone connected to Skype..."

(4.) "Buy grandma a webcam. Set her up with a google talk account that lets her make and receive video calls to grandchildren." Set up is about 1/2 hr. Cost about $70 for a good camera like the Logitech QuickCam Pro 9000.

(5.) Can you bake? Then make somebody a pie.

(6.) Starbucks Gold Card. "Spend $25 on a 'gold' membership card, and you can get one free coffee - and 10 percent off everything for a year. That's a $100 saving on your latte a day."

(7.) Gift of labor

(8.) Gift card

(9.) Thermos jug. The user can bring soup to work and save about $700 or so over the course of year if they stop buying sandwiches at work. If they don't bring in soup, they can always bring in their favorite coffee blend and save money there too.

(10.) "Short on cash? Give frequent-flier miles. Some airline programs, such as JetBlue and United allow you to transfer miles directly. Others, including Alaska Airlines, will let you use miles to help someone else buy a flight."

Tuesday, December 02, 2008

A Frugal Christmas Idea: White Elephant Gift Exchanges

White Elephant gift exchanges are a great frugal party theme for Christmas. This sort of gift exchange can be done at work or home parties. It's cheap and fun. Other names for this include: Yankee Swap, Barona Gift Exchange, Thieving Secret Santa, Selfish Santa, Nasty Christmas, Dirty Santa, Scrooge's Christmas, Rob Your Neighbor, Thieving Elves or Chinese Auction.

Picture a white elephant. It's big and because of its white color it stands out. In a household, it has absolutely no purpose but to get in your way. A lot of people hold white elephant gift exchanges around the Christmas holidays. I've done it once at work last year and have scheduled to do it and my new job.

You can google it and find a number rule variations. Here's the rules in a nut shell. Gift value should be capped at a predetermined value. We used $20. People bring in gift wrapped items from their house that they absolutely don't want. Some people will go out and buy a gift if they can't find anything good at home. Before the gift exchange starts, everybody picks a number from a hat. Now that you established the order, you can start the actual exchange. The number one person selects a gift from the pile of wrapped gifts and opens it. Now, the next person has the option to steal any previously unwrapped gift or unwrap a new gift. If somebody has their gift stolen from them, then they take a gift from the unwrapped pile and open it.

Each person goes through picking or stealing gifts until you're out of gifts. We used a cap of three on the number of times a gift can stolen, but this can be varied.

When I did this last year, I picked out what I thought was the best gift. It was an over sized Starbucks coffee mug with some coffee. Somebody obviously didn't have a white elephant gift to bring in from home and went out and bought this. However, somebody after me decided that they liked it and stole it when their turn came. This then happened two more times because others liked the Starbucks gift. I ended up getting stuck with a scented candle. While I ended up with a gift that I didn't like, I thoroughly enjoyed the event theme.

For other white elephant rules you can refer to this wiki article and this google search.