June 30, 2005
Why are long term interest rates falling while short term rates are rising?
The Federal Open Market Committee, lead by Alan Greenspan, has been methodically ratcheting up the short term Fed funds rate for the past year. Today, the Fed increased the rate another 0.25%, to 3.25%, while stating that they intended to keep increasing it to keep inflation in check.
However, long term interest rates are right where they were one year ago when the Fed funds rate was only 1.00%. That's not how it usually works - as short term rates rise, long term rates come up as well.
Why are rates actually falling on long term Treasury bonds? As this article describes, it's "clearly without recent precedent," Alan Greenspan said and it's causing some economists to worry since, if short-term rates rise higher than long term rates, crazy things can start happening to the economy.
Posted by brian at 07:33 PM | Comments (3)
June 29, 2005
The diamond racket
My girlfriend has been my girlfriend for a long time and it might be time to do the M thing. It got me thinking about how diamonds are priced and why something that is intrinsically nearly worthless (as opposed to platinum or gold or silver, which has a lot of industrial uses) sells for so much. I found a couple of great articles about the De Beers cartel and what happens when you try to sell a diamond. The articles are long, so if you want the short version, it's this: you're lucky if you can get 1/4 of the "appraised value" should you ever want to sell.
The articles are long but fascinating. For example,
The illusion had to be created that diamonds were forever -- "forever" in the sense that they should never be resold.. The other article starts from another angle - a thief trying to to steal money and launder it through diamonds:
In the fall of 1978, a thirty-two-year-old Californian computer wizard named Stanley Mark Rifkin discovered an ingenious way to become a multimillionaire overnight. While working as a consultant for the Security Pacific National bank in Los Angeles, he had learned the secret computer code that the bank used to transfer funds to other banks telegraphically at the end of each business day. With this information and his mastery of the bank's computer, he realized that he could transfer tens of millions of dollars to any bank account in America. The problem would be withdraw the money from the system. In early October, he devised a plan for siphoning this money out of the bank and converting it into Russian diamonds.
Luckily, my girlfriend doesn'tlike diamonds, which is cool with me, but now I'm having a tough time thinking of something else "really sparkly", which is what she's asked for. Tanzanite? I read on the internet (so it must be true) that it was controlled by terrorist organizations. Sapphires? Emeralds? Won't that look too much like costume jewelry. Maybe I should just go with cubic zirconia ...
Posted by brian at 05:33 AM | Comments (1)
June 28, 2005
Biggest bubble in history?
I've been reading this thread at FatWallet.com where people are discussing if a housing bubble exists or not. We don't think we can afford a house living in the San Francisco Bay Area unless we want to commute about an hour to work every day. The houses in Mountain View, California start at about $650,000 for two bed/one bath 90 year-old, 1000 sq ft houses on 5,000 sq ft lots. It's crazy.
Anyway, I found this article at The Economist, where it states,
The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops.It's a good read if you're interested not just in what's going on in the U.S. but the entire world with regard to the housing price explosion.
Another interesting piece over at Yahoo! Finance called "The Mortgage Trap" is on the lender practice of continuing to lower loan standards. The article says "interest-only" loans make up 20% of all new mortgages, though I read in the San Jose Mercury News a couple of months ago that it was as high as 50% of all new mortgages in California.
Posted by brian at 09:21 AM | Comments (0)
June 27, 2005
Free Gmail
I find myself trying so hard to convince people to convert to Gmail from Hotmail or Yahoo! mail that I saw myself in this funny bit from The Onion a few months ago:
OLYMPIA, WA—Recent Gmail convert William Ramsak, 23, said Monday that his "heart goes out to" friend Kelly Oldenburg, who still sends e-mail through an MSN Hotmail account. "I feel so bad for you, needing to squeeze into 250 MB of storage space," Ramsak wrote to Oldenburg in an e-mail. "And I hate thinking of you sorting all your old e-mail, while Gmail automatically indexes mine so they are searchable." Ramsak then asked Oldenburg when he was going to "stop being a Microstooge and join Team G."
All your emails that are threaded together stay together, so it's easier to keep track of conversations - they don't get scattered among the rest of your email sorted by something silly like date & time. You can search all your emails, too. For example, you can type in "recipe" and you'll be able to instantly find that fruit cake recipe your mom sent to you last Christmas. Plus, you get over 2 GB in storage and counting. How can you go wrong? Wow, I'm like a commercial for GMail.
The fact that you can search your email has been very helpful – I typed in "phone number" the other day to look to quickly find an email where a friend had sent me their phone number. Without the search feature, I would've had to open about 20 emails from him to find that number.
This Motley Fool article discusses how Google makes money from the ads that run alongside the email text, but I've found the ads pretty unobtrusive.
While Gmail is in Beta testing (over a year now), to sign up requires an invitation from another member. I have around 50 invitations that I'd be happy to send out to anyone who wants them – just send an email to moneybb@gmail.com.
Posted by brian at 06:44 PM | Comments (0)
June 24, 2005
You can sell anything on eBay
I was trying to find the checkbook at the end of the month to write the rent check and stumbled across a pack of twelve drink coupons for Southwest airlines. (They come with a Rapid Rewards voucher). You can trade them for beer or wine (three coupons) or mixed drinks (four coupons) instead of paying $3 or $4 to go along with your two packs of dry (or, if you're lucky, honey) roasted peanuts. Since I always ask for orange juice and my girlfriend nearly always gets ginger ale, I thought I might as well chuck them out. But then I had a crazy idea - maybe I could sell them on eBay.
I asked my woman how much I should sell them for and she told me to get off the computer for the 3rd time in the last 20 minutes and take out the trash, so I knew I had to come up with something fast. I logged onto eBay (I had bought some Steve Kerr basketball cards a couple of years ago and remarkably remembered my userid) and searched for Southwest airline drink coupons.
I couldn't believe it when about 20 listings came up for this exact same thing. So I copied and pasted someone else's picture, wrote up three short sentences, and listed them for $0.75. eBay charged the credit card $0.35.
I took out the trash and when I came back in five minutes I was disappointed to find out that no one had bid on them. After hitting "refresh" about 100 times in the next 10 minutes and not even seeing the free counter indicate someone had looked at them, I gave up and went to bed thinking my $0.35 listing fee was down the drain.
The next morning, I had two bids and the price was up to $2.51! Crazy, I thought. When I came home from work to check again (okay, okay, I might've checked the price at work a couple times), the bid was an astounding $3.76. I couldn't believe people would actually (1) search for drink coupons and (2) buy them in order to save a few bucks on something they could buy for half the price anyway by hitting the grocery store before the airport and carrying in their purse/briefcase/backpack.
Once the bid hit $5.26, I was positively beaming. I had to say my girlfriend was mildly impressed with my entrepreneurismship. Anyway, it closed two days later at $7.51 plus $1.00 for shipping (which, I'm happy to say, I refunded to the bidder, who I slightly felt sorry for, since all I had to do was plop the coupons into an envelope and slap on a stamp). Taking out the price of the 37 cent stamp and eBay's cut, I made $6.79. Oh yeah, that's TAX-FREE money, baby.
Now I'm looking at some of the other junk clogging up the drawer with the checkbook and trying to figure out if anyone will buy some unopened packs of Post-It notes or eight pre-sharpened No. 2 pencils held together sturdily with a fully-functional, genuine rubber band.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=6540872984&ssPageName=ADME:B:EOAS:US:3
Posted by brian at 08:31 PM | Comments (1)
June 23, 2005
The Roth 401(k) is coming - will your employer offer it?
Starting January 1, 2006, employers will be able to offer employees funding into a Roth 401(k). It will be similar to the current Roth IRA - you'll be able to put in after tax money and then withdraw it tax free at retirement. (With traditional 401(k)s and IRAs, you're not taxed on your contributions, with the trade-off of being taxed when you withdraw it at retirement).
You might not even be able to take advantage, though - as of late 2004, only one third of 198 companies that responded to a survey by an employee benefits consulting firm said that they were planning to offer the Roth 401(k).
If you're in a low tax bracket now and expect to be taxed at a higher rate in retirement, you'd be better off in a Roth 401(k) rather than a traditional 401(k) since you can pay the lower taxes on your money now and withdraw it tax-free later.
The new Roth 401(k) has some extra benefits over a Roth IRA. For one, you'll be able to contribute a whole lot more after-tax dollars into retirement plans, let the money grow tax-free, and not pay taxes on it when you take it out. The Roth IRA only lets you add $4,000 this year and $5,000 next year, but with the Roth 401(k), you'll be able to contribute $15,000 per year, or $20,000 per year if you're over age 50. Plus, there are no income limitations for the Roth 401(k) like those that exist for the Roth IRA (contributions are phased out on the Roth IRA starting at $95,000 for single and $150,000 for joint filers).
If you want a Roth 401(k) option, you have to talk to your employer. Employers may be concerned with the costs of the new plans and educating their employees. They will be more likely to add it if their employees want it and intend to participate.
For more details, check out this article at Bankrate.com.
Posted by brian at 06:41 AM | Comments (0)
June 22, 2005
Now THAT'S a caffeine addiction
Thousands of students are heavily in debt because of their coffee addiction. Well, maybe just this one silly student that has run up $110,000 in law school debt, approximately half of which comes from interest on her $3 Starbucks lattes (okay, I'm making that last part up - the article doesn't say how much of it comes from tasty beverages).
Luckily, I don't like coffee and like credit card debt even less, so I'll probably never succumb to "Bankruptcy by Beans".
Still, the article made me think about how much small purchases over time can add up.
For example, one $3 cup o' joe every weekday costs about $750 a year. If you instead stole your coffee from work and invested that money at 6% a year, you'd have over $4,000 in five years. You could pay for a super duper teeth whitening at the dentist to remove all those coffee stains and probably still have enough left over to take the office to lunch.
The best part of the article has to be that Jeffrey Hanson, a director of a borrower education service, hands out fliers that detail the "real cost" of lattes purchased with borrowed money.. Man, oh man, I hope this organization is not receiving my tax dollars.
If you want to do some silly calculations for yourself, I found a guy out there who has waaay too much time on his hands and put together a fancy calculator to show how much you'd save by cutting back on a few bucks here and there.
And if you want a sticker for your credit card showing a steaming espresso drink, a dollar sign and a question mark, contact Jeffrey Hanson at Access Group.
Posted by brian at 01:23 PM | Comments (0)
June 21, 2005
Bank of America is not completely horrible
I used to hate Bank of America. Well, hate might be too strong to describe feelings towards a bank, but I just didn't like them because of the fees they charge for simple things like checking accounts and overdraft fees and fees to park at their branches (okay, I lied about the last one). They also have something silly called the Money Return Visa, where they give you back 10% of your interest charges every year. That's right - if you're willing to carry a balance to essentially borrow money at insane rates of up to 29.99%, they'll rebate you 1/10 of that money. No thanks. That's why when I signed up for a new checking account with them, I had every intention of pocketing the sign up money, closing the account, and laughing maniacally after essentially stealing their cash.
I got the ATM card and had no intention of using it until we went on vacation and found out we could withdraw cash at Barclay's in the U.K. with absolutely no fees. Even Washington Mutual, which runs all those ads about free banking, charges $3 for overseas ATM withdrawls. So that was pretty cool. Then I've found myself using their ATMs back home, because, well, they're everywhere. It's so darn convenient. And they won't charge me any fees for Campus Edge checking for at least six months (even though I'm not in school anymore - but they don't check enrollment when you fill out an application). On top of that, I can conveniently pay off my Fleet Visa, which turned into a Bank of America Visa when Fleet sold out to the evil, err, mildly annoying, Bank of America a few months ago, by moving money from checking to the Visa on the website.
So I'm actually giving them a good test drive. I'm not saying I'll be applying for their cheesy "POWER REWARDS!" card anytime soon, but I'm happy to say that I didn't just steal the money and run (maybe I'm starting to feel a little guilty about earning all this free sign up money in my old age).
Of couse, when that six month trial runs out on the Campus Edge checking account and I have to keep a minimum balance earning no interest, I might re-think things.
Posted by brian at 05:27 AM | Comments (0)
June 20, 2005
Discover the Card that keeps on giving
Discover Card isn't accepted by some merchants and even though they were one of the first companies to heavily promote the idea of cash back credit cards, the amount they pay in cash back is no longer near the top of the list - their tiered structure means you don't start earning 1% cash back until you've spent $3,000 in a year, whereas it's not hard to find half a dozen cards that pay 1% cash back on the first dollar spent. Still, I use Discover more than any other card because of one of the sweetest features in all of credit card land: free cash advances that earn cash back.
When you go to certain grocery stores, like Safeway or Ralph's or Nob Hill in California, you can add $30 or $50 to your bill at checkout and it is treated like a purchase. That means you will get charged no transaction fees. So if you buy $50 in groceries and get $50 cash back, once you've reached the $3,000 in spending plateau, you'll earn $1 on that purchase (1% x $100 = $1). Of course, you don't want to carry a balance - then you're just borrowing more money at some obscene rate, but as long as you pay your balance in full every month, it's an easy way to earn a few bucks every month.
Then you can turn around and put that $50 cash in the bank (or sometimes it ends up in my girlfriend's pocket, if I'm not looking) and earn a little interest until you have to pay the bill.
Since we go to Blockbuster (I can't believe I just admitted that), we turn our $20 in cash back into 10 movie rentals using the "Cashback Bonus Award Partners". It adds up really fast if you get $50 each time at the grocery store. When my girlfriend and I shop together, we split up the food and both get $50 on the same card, so we earn $1 just on the $100 in cash we borrow from Discover.
I don't know all the stores that offer this feature, but Food Lion, Jewel, and Dominick's do. Vons and Pavilions used to, but I haven't been to those stores in a while.
I've made purchases for as little as $0.75 (pack of gum) and added on the $50 to "earn" the $0.50. I don't know how many times you can do this in a given period before Discover has a problem with it, but I know it's more than 22 times in 30 days and more than 4 times in one day (personal records).
Another nice thing about Discover is their willingness to give you free money to use the account. I have two cards, and use one exclusively for about a year, then call up and ask for balance transfer offers on the one I haven't used. The last two times I've done this I got deals: first, a 9 month, 0% APR balance transfer offer with no fees. Then two months ago, they gave me $1 every time I used the card over the next two months, up to a maximum of $25.
Finally, they offer 5% cash back on certain types of merchants throughout the year. For the summer, they're giving 5% cash back on gasoline purchases.
I'd be curious to know what else people have managed to earn from Discover and who else does this grocery trick.
Posted by brian at 08:48 PM | Comments (1)
June 19, 2005
No love for dimes
I used to collect coins when I was little. I loved finding wheatback pennies and bicentennial quarters in my change. I ended up saving about 50 pennies and $25 worth of quarters, which I think is pretty good since I didn't have much money to spend in the first place to generate change. My major income sources were birthday cash ($10 from my grandma on my birthday and $5 from my grandma on my brother's birthday - she didn't want one of us to feel left out) and the money I split with my brother when we recycled aluminum cans.
I still have all the quarters. In fact, a few weeks ago I was doing laundry and ran out of quarters for the machine downstairs. I was tempted to use a couple of the quarters from the collection - after, all, they're not rare or anything and worth exactly $0.25 - but luckily, after scrounging around for 15 minutes, I finally found two in the cupholder in my girlfriend's car and didn't have to make a tough decision.
Pennies.org is a website devoted to the love of the penny. I'm ashamed to say a congressman from the great state of Arizona introduced legislation to get rid of the penny. These penny lovers even put together a top ten list of reasons to keep the penny (although reasons #7 and #8 are the same, but since the other eight reasons sound pretty good, I'll let it slide).
A google search shows people really love their pennies and new state quarters. Nickels don't seem to be collected as much, but I just found a shiny new "Westward Journey" nickel in my change and I think it's great, so I'm pulling it out of circulation.
Where are the new dimes, though? Does the U.S. Mint have a plan for upgrading these? Why do we get new nickels and quarters and $20 bills but no new dimes? In the course of my exhausting 10 minutes of coin research, I stumbled across the "Dimes Must Die" page. This guy builds up a good case for getting rid of the dime. I don't know if he mentioned it on his site that in Las Vegas you can gamble pennies, nickels, quarters, half dollars, and dollars in the slot machines, but no dimes.
It all adds up to one thing - no love for dimes.
Posted by brian at 10:09 AM | Comments (2)
June 18, 2005
$30 last month, $20 this month, $20 more next month?
My girlfriend ordered a couple of CDs from amazon.com and almost got them for free since she applied for the Amazon.com Platinum Visa Card and got a $30 discount. (You also get 0% APR for 6 months, which is nice, and no annual fee, of course).
I thought, hey, free CDs, so after she told me about it I went to amazon.com and did the same thing. I thought I would be really cute and see how quickly I could close the account after opening it - could it be as fast as a week? As soon as the card arrived (about a week later), I paid the bill, waited a couple of days for them to receive payment, and closed the account. It actually took 14 days between the time I did my amazon order and the time I closed the account, but I think I could've made it in 10 days if I would've been on top of everything.
Anyway, I wish I didn't do that because a month later, Chase (the bank behind the Amazon Visa) sent my girlfriend a check for $20 to try out their credit protection service - you know, the "service" where you pay $0.79 per $100 so that Chase will make your minimum payment of, say, $10 for three months, if you get hit by a bus or something and can't afford that $30. (Maybe that's not exactly how it works, but I think that's the gist of it).
So of course she cashed the check. In about a week, she'll call Chase to cancel the service. When I did this with Citibank, they offered a $20 gas card to keep the service another month, so I accepted (I kept a $0 balance, so I didn't end up paying anything). Maybe Chase will do something similar.
So in the end, she got 2 CDs, I got 2 CDs, and we ended up with about $10 after shipping and handling. Thanks amazon.com!
Posted by brian at 10:24 PM | Comments (1)
Frequent flying sucks
Wow, you really don't get much on airplanes anymore. I know Southwest has always handed out peanuts (how come I always get dry roasted instead of honey roasted? Am I not stowing my tray fast enough upon landing?), but now it seems like all the airlines are charging $5 for soggy sandwiches and stale cookies. Anyway, I guess I finally need to sign up for some frequent flyer programs for all those miles I'm racking up by flying to Detroit for work (yeah! Detroit in February is the bestest!!).
Flyertalk apparently tells you all the ins-and-outs of earning free stuff from the airlines. They actually have a dining section forum - I was too scared to look. You've gotta be pretty pathetic to post things about airline food.
Oops, I just re-read my own message. Dammit.
Posted by brian at 02:01 AM | Comments (0)
June 17, 2005
Cutting cell phone taxes
With nation wide cell phone plans, it doesn't really matter what your billing address is as far as what the cell phone company charges you but it DOES matter when it comes to what you get taxed. And that's something you can change without really moving.
Apparently California is the 9th worse state when it comes to adding on taxes to cell phone bills. I'm paying an extra $8 or so every month to the state on my $60 shared plan when, if I still lived in Arizona, I could be paying around $6.50. Better yet, if I moved to Las Vegas (um, yeah), Nevada would only ask for less than a buck.
I wish I would've thought of this first, but since most cell phone companies base your taxes on your billing address, it means you can duck taxes by shifting your billing address to a cheap state and starting paperless billing. You won't even have to change your phone number.
I called Cingular today and the CSR said I could change my billing address, keep my numbers, and my phone plans wouldn't be affected. My parents live in Hawaii, which is pretty good for cell phone taxes, so I think I'm going to just use my parents address for billing purposes and send a little money to our 50th state.
Posted by brian at 07:56 PM | Comments (1)
June 16, 2005
Bring back Steve Kerr! Steve Kerr!
How can the Spurs look so dominating in the first two games and then completely fall apart in the second two games? Do they miss San Antonio that much? Is Mason, the ridiculous public address announcer in the Palace, who probably has never even played basketball, throwing them off?
I know Sean Elliott and Steve Kerr are a little old now, but they might want to think about bringing back those Wildcats to get the job done on Sunday night.
Posted by brian at 09:53 PM | Comments (1)
June 14, 2005
I tried stopping junk mail and it sort of worked
The Direct Marketing Association has a cheesy looking website (ok, so my site isn't exactly the slickest), and it didn't give me that warm fuzzy feeling that it was going to work when I signed up for their junk mail removal service.
Still, I filled out the form, mailed it in about 3 months ago, and I'd have to say my mailbox is looking a whole lot emptier. It actually worked.
This is a good thing that the volume has been cut down, because my mail carrier enjoys cramming, folding, and shredding our mail into the little box and the more junk mail he puts in the box means the more the occasional postcard or letter from my mom gets ruined.
The problem now is that when I fill out forms on websites (big mistake) I don't usually put in my real name if I don't have to and invariably my fake name and real address get sent out to marketers, so now I get a lot of junk mail for Brian Fakir, Art Vandeleigh, and Steve Kerr. The form linked above only works for a specific name, not a general address - so it sort of works.
Posted by brian at 08:20 PM | Comments (0)
I love you, Comcast Cable
Dear Comcast Cable:
Thank you very much for being so lazy. It sure has saved me a lot of money. When I told you I wanted Limited Basic, I didn't really mean it. That's why I'm so glad you never bothered to switch my service from Extended Basic back to Limited Basic on the box/switch/magic solenoid at my apartment complex but did have the energy to lower the price from Extended Basic to Limited Basic.
I just hope you don't catch on because we can't live without our Law and Order on Tuesday and Wednesday nights on TNT. But since it's been like this since November, I'm sure you're not going to bother double-checking.
After all, it's not like we're stealing - we told you to switch our service back and charge us the lower amount - I guess you just haven't gotten around to it yet. I'm telling all my friends to try it, too, and if you actually do change the price AND remember to change the box, well, they can just change it right back.
Oh yeah, and when my cable modem "promotional rate" of $29.99 per month expires at the end of these six months and goes back to $45.99 per month, I fully expect you to extend the deal another six months, just like you have the last THREE times I called and threatened to stop service altogether and sign up for SBC DSL at $29.99 per month. Comcast, you're so silly - I don't even have a landline to get DSL if I wanted to.
What's that? My neighbor has an unsecured wireless router that I can tap into? We can even split the $29.99 fee between us and I don't have to pay you for cable modem at all? Wow, Comcast, I love you.
Posted by brian at 07:46 PM | Comments (0)
$100 incentive to get a Chase card
I've stopped applying for credit cards when the deal is only $20 or so. I guess I'm getting lazy in my old age. But this latest one is too good to pass up: $100 credit after one purchase on a new Sony card.
This card is offered through Bankone/Chase. It was first offered for Mother's Day and I was too late to sign up but it got offered again for Father's Day, though the offer is good until August 31, 2005.
http://www.sonycard.sony.com/dad/
The other nice features are 0% APR for 12 months and you earn points for Sony stuff on purchases, too:
* Earn 1 point per $1 spent on everyday purchases
* Earn 3 points per $1 spent on Sony products
* Earn 8 points per $1 spent at My Sony when you use your Sony Card**
Posted by brian at 09:30 AM | Comments (0)
June 12, 2005
Insurance on my cell phone? Are you crazy??
I always thought insurance is to help cover losses that would wreak havoc on someone's finances if they didn't have insurance. For example, auto insurance, home insurance, and sometimes life insurance all make sense to me. If things go disastrously wrong, you need some back-up.
The expectation for all insurance is that you're going to lose money. That is, the insurance companies have figured out how often people's homes burn down or someone slips in the driveway trying to carry in a 50 lb box of Cheerios from Costco, for example, and how much they have to pay, and then make sure they charge you enough in home owner's insurance to make a profit. That means you don't expect to collect more in insurance than premiums.
So why would I want cell phone insurance? I just got a $100 cell phone and when I called to activate it the CSR "HIGHLY RECOMMENDED" insurance ... on something that costs $100!! Again, you don't expect to collect more than the money you pay out for the insurance. What a scam this is. Of course people go for it - I would love to know how much money the cell phone companies make from this stuff.
Anyway, here's a nice list of other horrible types of insurance.
Posted by brian at 07:08 PM | Comments (0)
June 10, 2005
The new home page
I finally got around to updating the website after about a year of slacking off. I hope you like the new blog. The Forum section is still where you can find the free money bonuses and other deals, but this section should let me post more random things that I think are interesting and that I hope you guys find interesting, too.
Brian
Posted by brian at 03:18 PM | Comments (0)