Start of my free money making experiment

I've decided to start this even though I have not received the funds I need to actually start it. Yes, basically I'm cheating. But this is only for the beginning and the original amounts will be compensated for in a future transfer (basically I'll pay myself back and it will be like I never cheated at all). It's really just a head start.

Anyway, the first order of business was to open a ShareBuilder account. The main reason is because of the promotions they offer. I transferred $200, made one stupid mistake trade (losing an unnecessary $11.95), and then some other trades. I then used a promotion code to get $50 free. This money will take a few weeks to be credited to my account, but that's ok. So as of market closing yesterday my account is worth $181.44. Add the $50 and it's worth $231.44. So far I've made $31.44. Not bad for being a week or so in. Once some balance transfer stuff gets worked out, I'll be on my way.

How much can I make from nothing?

In a previous post I talked about trying to make as much money as possible from nothing except good credit and special deals. To make it as clear as possible (especially for myself) I've decided on a few rules.

1. Any free promotional money is considered free and can be used for anything.
2. Gifts of money do not count. They were meant to be used for something that I would get enjoyment out of, so it can not be used.
3. Gift cards obtained from any offer (or from redeeming points towards gift cards for this experiment) do count as free money. If the only thing I can recieve is a gift card, I can get a gift card for purchases I would normally make (a restaurant we frequent, or clothing store, etc.) take the equivalent amount of cash and put it into one of my "investment" accounts.

For now I think that is all of the rules that are necessary. My "investment" accounts will be any accounts that contain either balance transfers used for this experiment, or money gained from promotions. These could include Certificate of Deposits (CDs), high-yield bank accounts, investment accounts containing stocks, etc.

I think this will be fun, and hopefully I will gain something from it (hopefully some knowledge, and some money would be nice as well).

Why bother with a prenup?

Prenuptials can make a lot of sense for a lot of people. With divorce rates increasing in industrialized countries (although the US may have reached the peak in the 1970's) and the increase concerns on security, protecting yourself would be best.

On the financial side, most people do not need them. They are best for couples that have significant assetts individually to make sure that they do not lose anything that was theres before the marriage occurred. I think that all individual assetts before marriage should be the sole possession of that individual (unless they decide otherwise). After marriage, I think things should be done together. If there is an agreement that one person works and the other stays home to take care of the kids or something, then the one person's income is for the whole family. If they both work, all of their earnings and assetts that are gained after marriage are shared between them. If they file for a divorce, all assetts after the wedding should be split evenly. You should not need a prenup to decide this, although unfortunately you do.

A prenup in many ways can erode trust between two people. Why start a marriage where you're already planning for the possibility of failure?

I believe that lately prenups have lost their way. People are using them to put strict and often ridiculous policies onto their marriages. I read somewhere a few months ago about a couple in Florida that was older (50's or 60's) who decided to get a prenup before they were married. They divorced within a year because at least one of the parties did not uphold the agreement. The agreements that weren't upheld were ridiculous things like "so and so must give a back rub everyday" and "so and so must cook a healthy dinner every Tuesday night" and more ridiculous crap like that. If you need to take control of the marriage like that before you take your vows, then in my opinion, you have no right to be getting married.

For people with significant assetts and little knowledge of the person they're marrying, a prenup is a geat idea. For regular people, it's a waste of time and money.

Too much, too little time

Things have been going crazy with wedding plans and holidays and everything in mind. Plus watching more and more of our money flying away faster than it comes in. Unfortunately, it's mostly for things that are partly out of my control. We're doing decently well, considering. We set a reasonable budget for gifts and I think we'll get under that. I also requested no presents from my fiance for my birthday since I'm a terrible gift receiver and I'd rather not see the money go away (unless she knows I'll love it). And luckily, December is my 3 paycheck month so all of the gift money is coming from that which makes it a lot easier. So the next month is going to be hectic. blah.

Visa doesn't allow minimum purchases

This article from Boston.com talks about the fact that Visa and Mastercard do not allow vendors to force a minimum purchase. Who knew??? (The story is about parking meters, but that's not as important.) You see it everywhere from small shops, to liquor stores, to even some chain restaurants.

I knew that stores do that because the cost of allowing credit card purchases can take away from profit, and I even understood it for some places. Now that I know that vendors are breaking the rules set by the credit card companies, it's nice to know that I can use my card whenever. Sometimes I only need $5 worth of stuff and I don't have cash, I don't want to buy $15 worth of stuff, and to go to an ATM is going to cost an extra $2 or so. Maybe I'm excited because I can fight someone on it if I need to. All those times that they forced you to buy a damn package of gum to get you over the limit when you hate gum, or chips when you're on the Atkins Diet, you don't need to do it anymore! Fight back. make them call the credit card company and stand there until you can only pay for what you want.

A bit harsh?

This was taken from Boston.com today.


A bit harsh?

Dog vs. Train

Generally I think most people are stupid, but I think it's because everyone is really fighting for themselves as crazy as their ideas are for anyone else.

Anyway, this has to do with a new commuter rail line they're putting in in Massachusetts. The Boston Globe has an article about the increased costs of the line because of the lawsuits and settlements they're dealing with. Interesting that there were 18 legal challenges to the line, and the T won all of them. But this comes at a cost, and so you're going to hear the same people that went forward with the legal challenges, complaining about the cost of the project.

The best part of this whole article:

"T officials also said that they seriously considered a woman's request to have the T pay for Prozac for her dog, who she said would be traumatized by the train noise. The woman's claim was eventually denied."

What a waste of time and money.

The electric bill was wrong damnit

I like it when I'm right, especially when someone tells me I'm wrong and I prove them to be an idiot.

My electric bill last month wasn't too bad considering we used the AC for a week or more. 71 kWh. I was happy with it, but we still took further measures to reduce it more. When I looked at my bill online on tuesday it was for 120 kWh. I was pissed considering we were very conservative as usual and we didn't use the AC or anything, so it was completely wrong. I knew it wasn't the electric company, because that just wouldn't make sense. So I called my new landlord and asked him if my electric box was hooked up to more than just my apartment. He insisted it wasn't and tried to remind me that I had an electric stove, which I then reminded him that it was gas, and then he tried to say that they have a fixed rate that they always charge, but this bill was way above that. Anyway, he said we could use the box and turn everything off just so that we could be confident it's only for our apartment.

So yesterday I did that, and of course it wasn't just for my apartment, but also include the common stairways and lobby lights. Now I'm just waiting for the reduction in rent.

Sharebuilder...

For some reason I decided this morning to open a ShareBuilder account. I'm not exactly sure why, considering I have basically no money to invest. It may have to do with the lack of sleep caused by the upstairs neighbors, or to really busy week. I even transferred money, but I guess I will at least get $50 promotional money, which I could invest. After all, it's not like it's coming out of my bank account. I should find out if my money gains interest while sitting there without me buying stocks. That would be good to know.

Anyway, I now have a ShareBuilder account that I really don't know what to do with. Maybe I'll finally try one of those free 30 day trials at the Motley Fool. I've been wanting to do that, but without money to invest, I've had no reason.

Ah! I'm such an idiot. I was thinking the other day about trying to see how much money I can make off of free money. My initial idea was to use credit card balance transfers, except I applied for a card and got rejected basically (not because of bad credit but because I just moved and so they're questioning where I live and I don't have utility bills to send them to prove that at the moment). So I thought that was a no go for a while, but I can just start off with this $50. It will take a lot longer to gain any decent amount without large chunks of free money, although that may be solved by a recent credit card offer that was received in the mail yesterday.

So I guess my new thoughts will be on to see how much I can make from free money. excellent.

My fake stock portfolio

I know this sounds crazy, having a fake stock portfolio and all, but I have my reasons.

Unfortunately, I don't have enough money to invest in stocks at the moment, but I would like it if I did. Since I spend too much time thinking about stock picks and what would be best (and generally being bored), I decided to put together a fake portfolio. Even though I read a lot, I still am not quite sure what I'm doing. So I looked around the net, did some reading, eventually picked a group of stocks, and then made a portfolio on Yahoo! Finance with about $5000 worth of my stock choices. This doesn't take into account fees and stuff, but it's really just an experiment to see if what I found would actually be as good as talked about.

So far the experiment has shown me a better example of the daily ups and downs of the market. It has also shown me that just because a company is talked about highly does not mean that the future for that company is bright. And even if I think there's hope in the company, doesn't mean that there really is. Overall, my portfolio has done reasonably well and I wish I had the money at the time to make the purchases. But for now it's just fake money that I can cheer on when I'm bored.

Original price of stocks: $4976.65
Price as of the end of the day (11-13): $5334.40
Increase since the beginning of October: 7.70%

My largest percent change at the moment is 18.42%, my lowest is -4.23%. I have 2 stocks that have lost value (1 less than 1%), and 8 stocks that have gained value (2 less than 1% and 3 of which have gone up by more than 15%).

Mortgage Accelerator

Here is an article from Yahoo! that talks about a new type of mortgage in the U.S. that has been used in Australia and the UK. Basically you use a HELOC to desposit your paycheck and use it to pay expenses. Everything left over pays your mortgage. This all assumes you are disciplined with your finances and that you have a positive cash flow. There is an annual fee, but it may be worth it if you save more than that on interest. Just an other option to try and pay as little in interest as possible.

Rounding off with credit cards

I was reading some of the comments from a post on All Financial Matters about tipping, and I noticed a lot of people talking about rounding up for their credit card. This may make things easier, but with certain cards this may not be getting the best "bang for your buck." It's being picky about change, but a lot of change can add up.

The most obvious problem would be with a card that rounds off your purchases and puts the change in a savings account. If you go out a lot and round off for the tip, then you're missing out on that change.

You can also miss out on certain rewards cards. A card that gives double miles for dining out would be an example. Say you often go out to the same restaurant and you order the same thing all the time and the bill comes to $21. You generally tip 18%, so the bill plus tip equals $24.78. You round up the amount so it's an even $25. You would get 50 miles total for the purchase. If you paid just the $24.78, double that you would get the same 50 miles for the purchase (49.56, and then they round up to the nearest dollar when it is over 50 cents). That last mile, although minimal would be for 44% less than the others. Plus you would have an extra 22 cents. This isn't much, over time it will add up.

Credit cards paid off

We only had a balance on one of our credit cards for our honeymoon, but finally that's all paid off. No more credit card debt! Now hopefully we can put more into savings.

Investing in CD's

If you have money that you don't need right away, but you would prefer not to risk losing any of it, a Certificate of Deposit (CD) may be the best choice. You could use it for your emergency fund, house downpayment, or other reserves that you don't plan on using in the near future.

The advantage of CDs compared to savings accounts is that you can generally get a higher yield. Right now you can find CDs that will return 5.65% in interest a year. The disadvantage, though, is that when you put your money in a CD it basically is unusable until the CD matures. This isn't true for all types of CDs, but it is for a traditional CD.

Although you may want to have an emergency fund and other funds more accessible, a CD should not be forgotten. It depends on your goals and assetts. For myself, I would prefer to have about 6 months to a year of income in my emergency fund.

To make this work using CDs, I would make a CD Ladder. Basically you set up several CDs so that one matures on a regular basis. An option for a year's worth of income in an emergency fund would be a CD Ladder where a CD matures every 3 months. Here's an example:
Say you have $20,000 in your emergency fund. You figure that will cover you for a year. To start a CD Ladder, deposit $5000 into 3 month, 6 month, 9 month, and 1 year CDs. Once each one matures, use the money to start a 1 year CD. After the first year, you will be getting a decent rate on your money, and $5000+ interest will be available to you every 3 months if you need it. The longer the period of maturity for the CD, usually the higher the interest. This may not be worth it though, and getting a CD over 5 years is generally a bad idea (just in case the interest goes up, you'll miss out). But several variations of this ladder will give you available money at set times, and a decent yield.

I will post more about CDs later.

Necessary Expense Account - How to deal with unexpected expenses?

A post from Matt at To One Million and Beyond reminded me of a post I was thinking about.

Generally we think about the short term and can plan for what we know. Sometimes things get missed like oil changes and tune-ups to cars, birthday gifts, and doctor visits. Since we're on a very strict budget at the moment, we can't afford to handle a huge unexpected expense. We could go into our savings, but even that right now is too low, and we prefer not to put anything on the credit card that is going to sit for a while.

To avoid these types of surprises, we've created a Necessary Expense Account (NEA) in the bank with our checking account to allow for instant transfers. We started this because my fiance needs to buy contacts about once every three months, her haircuts are about once every 6 weeks, car repairs happen whenever they happen, and same with doctor's appointments.

To cover these items we have added a few items to our budget like "Contacts", "Haircut", "Doctor", etc. We don't put in the full amount needed to cover for each event, but it's spread out enough that we won't be short. For example, we always put in about $15 a month for doctor visits. Although we will not spend $180 a year on doctor visits, this will cover any emergency room visits or unexpected visits as well. We only put in about $35 dollars a month for haircuts. This amount will not cover a haircut every 6-8 weeks (or whenever it happens), but with the extra from other areas, we're sure to have enough to make up the difference. I also put in the extra money from expense checks from work in this account (I will elaborate more in a future post) to help cover car repairs.

We figure if we have a bad year, maybe we won't be able to cover everything this way, but so far we're doing ok. We also have capped the amount in the account at $2000 (if for some reason it reaches that high), figuring that that is enough to cover any car repairs we may have and other necessities.

Holiday shopping

Here is a good list fo things from ConsumerReports.org to keep in mind this holiday season while you go shopping.

One of the things that is crazy is the amount of unused gift cards there are (about $972 Million last year). That's pure profit for the retail companies. So maybe we should avoid wasting our money on them this year?

What happened to my stack of cash?

If you have an euros sitting around, or if you're in Europe and you have a pile stashed in your mattress, this article from Yahoo! News gives a good reason to put it in a bank. It would suck to lose everything.

Playing the Travel Website Game

Paying for travel is always a hassle, especially when you're trying to find the best deal. The travel websites like Expedia.com, Orbitz.com, Travelocity, etc. all give discounts here and there, but getting the best prices isn't always easy. Some of these may be obvious, but it's good to review.

First, these are from my own experiences:

1. If you check a website for prices and they're high or they seem to be increasing as you do your research, do not buy the ticket. Wait a few days and go back and usually the price is lower. This was a frustrating discovery.

2. If you're going to a resort where you can book your flight and resort stay all on their website, first research other sites and airlines. On one vacation we saved about $300 by buying our tickets separately from the resort.

3. Be flexible about your dates. This seems obvious, but remember this when you're planning on using frequent flier miles as well. We were able to buy our honeymoon plane tickets using 70,000 miles by flying into a major city (then we bought tickets on a local airline for the second 30 minute flight) and by waiting 2 extra days, rather than for 140,000 miles.

And now the more obvious stuff that is repeated a lot of places, but worth reiterating:

1. Always check the airline's website before you purchase through one of these services. Even better, check the airlines that are not on these services. Sometimes the smaller airlines like Southwest and JetBlue have better prices.

2. Look at packages. It can often be cheaper to get everything together than separate. This is not always true though. Check out hotels for their own special deals that may not be shown on a travel website.

3. Travel during low peak times. Some airlines show what off-peak days are (usually Wednesday, Saturday, etc.). This also means on holidays when fewer people seem to want to fly.

(I'm not promoting any site, airline, etc. I'm just giving information about my experiences and thoughts)

Networth

As you can see on the right, I've put up our networth... a wonderful -$1,966. It really could be worse, so I'm not too worried. A huge amount of the debt we have is from the student loans my fiance is using through this summer. A lot of that won't be doing anything for a while. I did not include credit card debt on one car because it's the card I use for everyday expenses and bills (a miles card), so it's paid off every month anyway. I also did not include our checking account because that is usually emptied every month because of our expenses. I plan on putting a buffer in there at some point, but for now it is what it is. Also for expenses, I added my fiance's engagement ring and her harp, since both are valuable and have to be insured separately. I'm not sure of the actual prices, but it is a good estimate. I will find out more when we change insurance in a few weeks.

So that's the starting point.

On a side note, having the new neighbors upstairs moving in at 11 pm last night with they're loudness and vacuuming has gotten my fiance to really want a house. I'm not sure how we can really start saving for one now, but the thoughts are there.

Plug-in Hybrids

This is a decent article on Yahoo! from Forbes Auto about plug-in hybrids. I read something a few months ago about how there's a company in Italy that will take a Mini Cooper, cut it and expand it, and make it into a plug-in hybrid (the whole things costs like $60k). I think it's all a great idea, they just need to make it cheaper. If I could get an Escape Plug-in hybrid for $25k, I would probably do it.

Also about batteries, they're doing research into how to make an "instant charge" battery. Using the idea of appliances where you charge a battery instantly to use it. They just haven't figured out how to make it work for larger things, and for longer periods. But if they did, imagine the money that could be saved when you don't have to take hours to charge something.

Get a tax return or put it in your paycheck?

I was reading this article from Blueprint for Financial Prosperity and it made me think of something that's been on my mind for a while. If you can't ahndle your money, is taking 0 exemptions on your W-4 a better decision?

Since I took my new job I knew that I needed to get as much out of my paycheck as possible to make ends meet. Usually I do 0 exemptions on my W-4, a habit learned from my parents. Since I knew I had already paid about the amount of tax that was expected of me for this year, I took one exemption.

Thinking about it, and reading many articles about how you're better off getting your money in your paycheck than letting Uncle Sam get interest on it has put me somewhat at odds. I think this decision really has to deal with what type of person you are.

If you are:
Good with budgeting: If you can figure out how much your taxes are going to be, you can prepare correctly figure out how much per paycheck that is, and set that aside. You'll gain interest, you won't owe the government anything at tax time, and everyone's happy.

On the other extreme
Spend money as it comes in: This would be a time to maybe consider taking 0 exemptions. If it comes in your paycheck you'll probably spend it. If you are this type of person you probably already have savings problems, so getting that once a year tax refund might be good. It would be a good time to decide that you can save it, and put it away in a ROTH IRA or a CD or something where you won't touch it.

It's too bad that you can't ask the government to electronically deposit your refund into an IRA account. That would help boost your retirement, especially since the average refund is something like $2000.

The people that are between this would just have to decide what would be best. Making that extra interest on your money may be nice, but it will still be nothing if you don't save.