Monday, February 27, 2006

TiVo Bad, Must Change...

TiVo revolutionized the way people watch TV. Ask anyone with a TiVo, and they'll say they can't live without it. I've read posts where people cry when their TiVo dies because they missed their favorite shows and lost what they were saving. But folks, I hate to say it, but I have to, TiVo is bad. It's a bad investment that is. Instead, I would recommend a DVR from your cable provider. Now Dish and DirectTV may be a little different, but in my area we have Time Warner which has two DVRs, one regular and one HD. I'm not into the specs too much, but it does cost about $6.00 more per month. The interface is different from TiVo, but the HD box I use has more than enough space for me (~40hrs HD), 2 tuners (watch one, record one or record 2 tv shows at same time), and the performance is very good--not much lag. $6.00 x 12 months = $72.00 per year TiVo service ~$13.00 per month + the TiVo box, which can be had for $50 after rebates, or even if it's free, TiVo still comes out to more. Now let's say you get the lifetime membership, sure after about 4 years, you'll break even...if your TiVo doesn't break first! And it'll be way outdated by then. DVRs from the cable company are always under warranty, and you can request a free upgrade anytime...if they have a new model that comes out. Of course no more modding your TiVo to a terabyte, but hey life is give and take. In the long run, I really hope TiVo beats the marketplace and comes out with something cool. They created this market, I hope they are still here many years from now.

Free Social Security Report

The Social Security Statement is offered by the US government. If you haven't requested it already, I would definitely recommend it. I do it maybe once a year. Pretty cool service if you ask me! Our tax dollars at work, at least US citizens tax dollars anyway. Let's just hope it's still there when we are eligible ;).

Using an "IRA rollover" As a Short-term Loan...

Just read an interesting article on IRAs, and in it, I happened to stumble over an excerpt that caught my eye:
Using an IRA Rollover As a Short-Term Borrowing Source Every so often you may face a temporary cash crunch when you desperately need some extra dough, but just for a short time. You will have the necessary cash in a month or so, but that doesn't help right now. A potential solution is "borrowing" from your IRA account, which can be done with virtually zero paperwork, no delays from balky loan officers, and no interest charge. You simply withdraw the needed funds and make sure you then replace the money within 60 days. You are considered to have made a tax-free IRA rollover. The money can be deposited back into the same IRA account it came from or into a different account, but each account can receive only one of these rollover deposits during any 365-day period. ("Direct" or "trustee-to-trustee" rollovers from another IRA into the account in question don't count for purposes of the one-year waiting period rule, nor do rollovers of distributions from qualified retirement plans.) But remember: If these guidelines are violated, you are considered to have made a taxable IRA withdrawal, and you may owe the 10% premature withdrawal penalty.
Kind of an interesting proposition. If you need cash for a few days, this would be a legitimate option...and you can do it once a year. Seems a little fishy to me though. Is it legal? Yes. Is it abusing the purpose of a rollover? I dunno.

Tax Audit, Ever a Refund? Anyone?

As the tax deadline approaches, I was thinking about IRS audits and wondered, do they ever audit and find you overpaid? I would think it could...but has it ever really happened?

Friday, February 24, 2006

My Top 5 Financial Blunders

1. Buying a new car, first year model. Financial loss: $4000.00 Sometimes treating yourself is okay in moderation. As much as the urge to get something I really, really want pushes me towards something, I usually do okay, and think about it. In this case, I really wanted a new car because it was reintroduced after being discontinued for 8 years. Unfortunately this binge purchase costed me a hefty $4000.00. I paid a premium for a car that was in demand when it was first released. I didn't regret buying the car, just when and for how much. Lesson learned: Sleep on it. Never buy cars when they are introduced. 2. Roth IRA at a full service brokerage. Financial loss: $3000.00 When the stock market was booming, I just knew I wanted a Roth. Didn't do much research and went with a brokerage because I knew someone there. I didn't educate myself about the fees involved. Nor did I think about what if the person I knew left the brokerage? Lesson learned: Learn about all the fees involved with any account. Don't open an account with someone you know just because you know them, you still have to do your homework. 3. Speeding. Financial loss: $1500.00 No excuses here. Just shouldn't have done it. Ticket, ~$250. Insurance increase for 3 years, ~$1250. Lesson learned: Don't be stupid. 4. Selling stocks too early. Financial loss: $ a lot This one is tough. I have a habit of eating my losses too early. Patience is something I need to learn when it comes to the stock market. It seems everytime I sell, stocks go up. I should post when I sell :). Lesson learned: Beats me...I don't have an idea how I'm going to change my habit here. Maybe set a low sell point? 5. Investing on gut. Financial loss: $ a lot I need to educate myself on stocks and the industry. I know some basics, but I often find myself buying stocks because: a/ I know someone working there, b/ I like their products, c/ I read some article about a hot new stock. Lesson learned: Research the industry. Read more than one article. Look at the financials of the company and its competition. That's it for top 5 financial blunders...for now. Hope I can avoid em all in the future.

Overpaid & Underpaid positions

So I know this is a senstive topic. Many readers may belong to fields I list as overpaid or underpaid, but there are always exceptions. I'm just writing my thoughts, however misguided they may be. If that's the case, please comment. I'd like to learn more. So here we go: Overpaid 1. Actors, Actresses, Musicians, Models, Pro athletes. Being gifted with amazing talents is great. Being beautiful is a blessing. Having the ability to portray someone else, superb. But worth millions of dollars? I don't think so. Sadly, it seems no matter what happens this won't change. 2. Dock workers (aka Stevedores) Unions probably have a lot of blame for their pay. Stevedores command a lot of pay and power. Too much so in my opinion. They control what comes in and out of the country, and should they strike, we're all screwed. I've heard that many get paid as much as $60-80/hr not including overtime. 3. Executives of public corporations I'm sure everyone has heard about how grossly overpaid CEOs are at companies whos stocks are underperforming. CEOs definitely deserve to be well payed, but getting paid over a few million is a little out of whack. Underpaid 1. Teachers (K-12) This field deserves to be paid more. Even with only 8 months of work, which by the way entails hours of overtime grading, planning, and meeting with kids and parents, they are underpaid. Teaching should be a profession that people fight to enter, much like law or medicine. Our kids are our future. 2. Public Servants (Fire, Police) Putting their lives at risk everyday, public servants like fire fighters and police deserve to get paid for the work they do plus the risks they take. Some abuse their power, but for the most part, they serve the public and deserve to be paid more. 3. Janitors That's right...they do jobs that no one else wants, just like garbage collectors, but get paid much less. A little off topic of this article, but I do believe unions are no longer a good thing. With a global economy and government laws that protect workers, it seems like unions should lose power. Look at our automotive industry which is in shambles...I do believe unions are partly to blame.

In the Beginning. My Financial Story.

I remember sitting at my parent's store playing with my Mongoose bike when an old man with a simple brief case would come by. My mom would hand the guy a check, and he gave her a receipt. Off he went. Then a month later, he'd come back. Samething. A mysterious blue book passed back and forth. When I turned about 10 or so, I realized my mom was putting money away in my passbook savings first! With a real "book" with each deposit neatly printed. That was the start. A fascination with saving. In the early 90's I got my first ATM card and a checkings account! What a thrill. Instead of having to go and see a teller, I can now use a cool machine to get money anywhere I wanted. Fees were not that common, if I recall. And if they were around, it was a fifty cent fee. I think I even wrote myself a one million dollar's stored away some place. Maybe one day I can cash it! Then in the mid 90's, I got my first credit card, $500 credit limit, secured. I was absolutely thrilled! Funny now that I think about it. 18 years later, I'm thinking about car loans, mortgages, 401Ks, roth IRAs, stocks, high yield interest accounts, dividends, recyling, freebies, and...retirement! I hope my blog is able to help people avoid some of the mistakes I've made and learn a bit. I hope I can learn too by thinking about my finances a little more and hearing from folks that take the time to read. I consider myself very fortunate to be able to worry about how much to save rather than whether I can save. Enjoy.

Online Savings Accounts...The Good and the Bad.

Online savings accounts are the recent craze...seems that what ING started has taken off and now there are tons of online savings accounts with ING, HSBC, and Emigrant in the spotlight. Personally, I stick to the big names, and have not ventured too much into the lesser known or regional banks just because I like knowing my money is going to be there. Even with FDIC insurance, I just don't want to deal with something I just don't feel comfortable with. I have an ING and a HSBC account, so I'll compare the two. I've been with ING for over a year now, it's a great account. The interface is simple and easy to use, opening additional CDs are amazingly easy, viewing your interest daily is a nice touch, and their site is pretty secure. I only have two complaints about ING, first their interest rates have slowly fallen behind. Their "Winter Savings" program is nice, but only for new money and for 3 months, not that great in my opinion. My second complaint is that their customer service is not open 24 hours a day. It's not critical, but I like being able to call on the weekends and late at night. With HSBC, I've only been using them for a month or so. The process of opening an account is, for the most part, straightfoward. The only "gotcha" that I wish I knew before opening is that I should choose "ATM Card." Other than that, it was smooth sailing. I did receive my $25 bonus for opening the account, which you can get by going here and entering "start" as the promo code. Be sure to check the expiration, at the time I'm writing this, the promo will end on 4/30/06. Their interface is a little more tricky and cluttered. Their bank to bank transfer system is also more complicated then INGs. They do offer higher rates than ING though, which is why I ultimately ended up opening the account. If you asked me to choose, I'd say it's a toss up. If you like interest, then HSBC. If you want a cleaner, more polished experience, ING. If you decide on opening an ING account, let me refer'll get you $25, and I'll get $10. Just shoot me an email, financial dot freedumb at gmail dot com.

02.2006 - Net Worth

As of February 8, 2006, my net worth is $156,575.39. Physical assets like car and personal items were not included. Assets (type - amount - % of total assets): Cash - $84,596.47 - 47.19% Stocks - $20,751.99 - 11.58% Retirement - $73,933.32 - 41.24% (Combination of stocks, cash) Liabilities: Credit Cards - $6,100 (Mostly 0% interest) Car Loan - $16,606.39 @ 4.25% I'm a fairly conservative person, although considering my age, I should be more aggressive. I've found I sleep better knowing my money is growing safely, albeit not in large amounts. As time goes on, I may change. Posting my net worth is a little uncomfortable. But for sometime now, I've been enjoying blogs like 2million's and Neo's Nest Egg, so I thought I should contribute too. There are so many good blogs out there. I don't have a fancy application to track my finances. All I do is use an Excel spreadsheet with two main sections, Assets and Liabilities. Every month, I go through my accounts and update the spreadsheet. I like it, and it works for me. I plan on posting my net worth montly, but we'll see how that goes :). I do hope that I can invest in my own home and more stocks later., is it worth it?

As a lender: High returns. An interesting way to use cash. A great social experiment. As a borrower: You request rates. Chance of a loan, where banks and credit unions declined. A great social experiment. With all the investment vehicles out there, why would someone want to lend money to people you don't know? Conceptually, I think is a great idea--help your fellow person out, in return you get good karma? I call BS. Folks lend money because there's a high interest return. Reading the requests for money on the site is a little disturbing with a picture of the family, or use of a child, people try and get sympathy, which in turn leads to people lending money at a lower interest rate to high risk individuals. Yes, on occassion the person on the other side might be someone out of their luck honestly trying to make a mends, but I bet there are just as many scammers. Ah the whole idea is just odd. And besides, why would I want the world to know I need money? For those who are doing it, good for you. For me, I'll stay away...for now.