If you’re a 0% balance transfer arbitrager, you probably have a couple credit cards siting in your desk drawer collecting dust because you weren’t sure whether you should cancel them after the balance transfer promotion period. Not canceling them certainly helps your credit score (lower credit utilization, longer credit history) but the downside of that was that you couldn’t reapply for those cards a few months later and take advantage of another balance transfer - or so I thought.

I was poking around the balance transfer offers of my Citi cards when I discovered that my Citi Platinum Select Mastercard, the one that dropped the cash back benefit on gas stations, supermarkets, and drugstores from 5% to 2%, listed a 12 month balance transfer offer at 0% with absolutely no fees! I had kept the card, using it only when shopping for groceries, and I’m glad that I did because this means I can get a free 0% balance transfer (i.e. no credit check). Does this mean that you should keep old cards around in the event they decide to offer you a fat balance transfer? My only expired balance transfer arbitrage play was on my Citi mtvU card which I’ve kept because it offers a nice 5% at restaurants and bookstores, but I’ve looked a couple times and haven’t seen any nice offers in there. Anyone else find a resurrected offer?

When you go to buy a house, unless you’re throwing down all cash on the deal, you’ll need to get a home appraisal. The lender requires this because they want to know that you’re not borrowing a million bucks for a $50 home because in the event their own due diligence on you is faulty (and you default), they can at least take the home and sell it for the value of the loan. If the appraisal comes back lower than the selling price, then the lender is a little wary of extending you credit because now you have no collateral to back it up. (This explanation only applies to the appraisal of an existing home, I don’t have experience with a new home)

One thing to remember is that the Home Appraisal is entirely separate from the Home Inspection. The inspection is designed to find the faults in the home that need to be addressed whereas the appraisal is merely designed to reach a value for the home. An inspection is far more rigorous in terms of going over the house with a microscope (if you get a good and capable inspector).

What You Get
Considering you usually don’t get to pick the appraiser (the lender will), you’re probably more interested in what you get for the money you’re about to spend (it’s part of the ubiquitous “closing costs”). You’ll get a report that lists out the following:

• The characteristics of your house and the land it sits on.
• Three comparable (”comps”) properties that are similar enough to your own property.
• Information about the real estate market in your general geographic area.
• Any positive or negative factors - these are the unique characteristics that differentiate you from your neighbors, your comps, etc. An example of this would be if you had a back deck but none of the comparables do, if you have significant structure issues, stuff like that.
• Miscellaneous data - The appraisal has a lot of information that you otherwise didn’t think mattered or were quantifiable.
• Photos - The appraiser may append photos of the front, read, and street view of your home as well as photos of the comparable properties.

For example, this is what my home appraiser said under “Factors that affect the marketability of the properties in the neighborhood”: The area is in good proximity of employment, shopping, schools, churches & recreation facilities. Public transportation, police & fire protection are readily available. Utilities are readily available and deemed adequate. Employment stability appears good. Properties in the neighborhood are generally well maintained; appearance & appeal to marketability are deemed as good. No detrimental conditions affect marketability were observed. So you see, there is a bit of subjectivity.

How Do They Determine Value?
Here’s is where they get to play a little with numbers. They come up with a value by either taking the average price of three comparables sold in the last few months and then adjusting for the positive or negative factors. So you see, since many of the factors a bit subjective (how valuable is that deck?) so the appraiser usually can get you an appraisal that is at least the purchase price of the home.

Rounding up some interesting posts of the week…

Flexo’s been writing a couple posts where applies financial metrics, usually used on analyzing the financials of companies, to personal finance; this time it’s using the debt to income ratio. Nickel authors an excellent post listing ten simple ways to protect yourself with regards to insurance. JLP writes a follow up to his post about the Great Annuity ripoff. FMF posts about how to keep the small spending under control when you budget. MBH did something to a roll of mint coins that was bad (I think he opened them), I’m not a coin collector so I didn’t really follow what he did but apparently hit cost him $15-$20.

Hey My Two Dollars, thanks for picking BFP for your Favorite Blog Wednesday series and for your kind words, I honestly do appreciate it. Thanks!

If you’re on Blogspot and want to get away, Flexo at Consumerism Commentary has put together a free service where you can get a free personal finance blog at MyPFBlogs.com. It’s entirely free and gives you the power of Wordpress, not crappy limited Blogspot.

This past week was the week of lists, first was Yan with the Top 30 Personal Finance Blogs by Feedburner subscription counts, then I stole that idea and applied it to Alexa and created the Alexa’s Top 60 Personal Finance Bloggers (which I’ll update every three or six months), then Will of Wise Bread put together a Top 100 Most Popular Personal Finance Blogs by del.icio.us links, then Sun used trusty Technorati to create his list of Top 65 PF Blogs by Technorati, then finally there was a Top 100 that popped out of nowhere but contained categorical listings (it’s a pretty arbitrary list). Whew, that’s a lot of top X lists!

I started using Akismet, a much lauded anti-spam plugin that comes with Wordpress now, and some of your comments have been marked as spam without my knowledge, so, if you leave a comment and don’t see it appear within a couple hours, please send me an email with the name you used to leave the comment and I’ll try to pull it out of moderation. Thanks!

PayPal is offering (it’s supposed to start in 2007 but you can’t get one yet) these slick new SecureID tags that will definitely help improve security in PayPal accounts. The idea behind SecureID is that it will display a six digit number that changes every thirty seconds and that number will be required every single time you log into your account. Why is this more secure? Well security comes down to three things - what you know, what you have, and who you are. Your user name and password satisfy the ‘what you know’ part and the key will satisfy the ‘what you have’ part.

This will protect you against phishing because even if thieves find out your user name and password, without the SecureID code they cannot access your account.

The key is only $5.00 but it’s absolutely free for Business accounts!

PayPal Security Key Site (thanks Consumerist!)

This post was authored by a friend of mine, Melissa, who just recently went through the process of refinancing her adjustable rate mortgage loan. I asked her to write about it since I know a lot of people are probably going through this process as well (and I won’t be going through this myself) and she was kind enough to oblige.

When I bought my house back in 2004 I didn’t have a lot of options for loans. I had no money to put down on the house and a fairly limited credit history – I was happy just to be able to buy a house so long as I could get approved of a loan. Of the limited selection of loans available, I chose a 3/1 ARM program with an interest rate of 6.625%. While I wasn’t crazy about an ARM, I told myself that if I decided to stay in this house for longer than 3 years then I would just refinance. Additionally, my loan had a 2 year soft prepayment penalty, so I had to reach the 2 year mark before I could even think about refinancing or else I would face a ridiculous penalty payment.

One of the first rules that I have heard with respect to refinancing is that it’s generally not worthwhile unless you can drop at least 1% on your interest rate. Having an ARM that was going to readjust to over 8% by the fall and potentially higher after that, I knew that I was going to refinance regardless of what rate I could get. As luck would have it, however, the timing on my refinancing has worked out reasonably well. At the start of December, interest rates were at a 10 month low and I was able to get a rate of 5.75% with only half a point on the loan (a standard 30 year fixed rate loan). However, the lower interest rate comes with the cost of refinancing, which for me included around $1100 in fees to my lender ($1000 of which was for the 0.5 point rate buy down), $400 for the appraisal and $1200 in fees to the title company. Also included in the refinancing costs were payments for the escrow account to be set up with my new lender for taxes and hazard insurance. I don’t really count these in closing costs because that’s not really money “lost” like all the fees that are charged and shortly after refinancing, I received my old escrow balance from my previous lender anyhow. So all in all, I spent approximately $2700 to refinance to a point where I’m now saving $100/month over my previous mortgage payment. Since I plan on owning the house for at least two more years, this expense was worthwhile.

Looking back on the refinancing experience there are a few things that I learned along the way that are worth noting:

• In the state of Maryland (not sure about other states) you have 3 days after your settlement during which you can change your mind completely about refinancing. If you go through the whole refinance process on Monday you could change your mind Thursday afternoon and go right back to the refinancing drawing board.
• When you refinance your home your original title insurance policy does not cover your refinanced loan. In most cases you can get a reissue rate for your title insurance (roughly $200 savings for me) rather than have to pay the full initial price, but this still wound up being the most significant expense I had with the title company
• I mentioned this above, but it’s worth noting again that your new lender will in most cases require you to pay money towards a new escrow account with them. In my situation, the lender escrowed 8 months worth of hazard insurance and 3 months worth of taxes (the number of months here depends on when your taxes and hazard insurance were last paid) at settlement. I was rolling all of my settlement costs into the cost of my loan, so this wasn’t a huge concern to me, but for anyone wishing to pay closing costs up front, this is something to consider.
• Your previous lender is required to submit to you the money in your old escrow account within 30 days. Between this check and the fact that you skip a month of mortgage payments, this can be a nice boost to your bank account.
• There are different types of loans for refinancing. I won’t pretend to know them all, but I went with a “rate and term” refinance where I’m simply shopping for a new rate and not looking to get a lot of cash back. With a rate and term refinance, you can still get a small percentage of your total loan back in cash (I think around 1%) which I elected to do. If you’re looking for more cash back you would have a different style of loan and would have different interest rates to go along with it.
• Because I was on the edge of needing to pay PMI, I wound up getting my house appraised early in the process. The first lender that I talked to ordered the appraisal and had I gone with his loan the appraisal would have been free. However, in the next week I changed my mind and was able to pay for the cost of the appraisal directly and then have it reassigned to a different lender. Some lenders do not allow their appraisals to be reassigned and I was fortunate to be able to do this. In hindsight, I may have been better off waiting on the appraisal until I was 100% sure that I had the best loan out there.
• I wound up refinancing with Wells Fargo and initially locked in at 5.875%. After I locked in the interest rate dropped slightly and I was able to utilize Wells Fargo’s one time float down policy to the current rate of 5.75%. If you refinance with a broker, they can most likely just find a new loan if rates drop after you lock in, but if you like knowing exactly what fees you’re going to pay before refinancing (i.e. a bank, not a broker) then finding one with a policy like this can be helpful.

Living with debt is difficult, but instead of complaining and lamenting, Tricia has taken to blogging about it at her site, Blogging Away Debt, as a way to motivate herself and educate others. When she wrote her latest balance report, I saw that she managed to get the interest rate of her credit card debt lowered from an aggregate of 20% to only 5% - so I asked her if she’d be willing to write about it, and she was. This is a real life experience, not hollow advice written by writers who aren’t in debt but pretending they are, so if you’re dealing with debt, this is the article for you. Want proof it works? Tricia has chopped off over $14,000 in credit card debt in a little over a year.

Jim noticed my post the other day on how much I am paying in finance charges monthly. He asked if I would write an article on how I managed to reduce my finance charges from over $400 to $100. It took about five months to reduce them that far, and here’s how I did it.

1.) Tried calling my credit cards to see if they would lower my interest rates

The first time I tried calling my highest interest rate credit card (16.49%), they wouldn’t lower my interest rate. There were no available special rates for me. It finally did work for me once I started aggressively paying off my debt and I was able to get my rate lowered to 13.9%. Even if you can only shave 1% off of your interest rate, the few minutes it takes to make the call can be worth it. If it doesn’t work the first time, keep calling back monthly.

2.) Paid off as much of our debt as I could

Part of the reason I wasn’t a “good” customer in the eyes of my credit card companies was because my credit cards were almost maxed out. That meant my debt to utilization was almost at the maximum. At the start of my debt reduction journey, I was fortunate to have just started a new position and with that position it meant a higher salary. We kept living the frugal way we had been living and we paid off as much of our debt as we could with leftover income. Extra money from side jobs and our tax refund also went towards our debt.

3.) Worked to increase my credit score

My credit score wasn’t horrible. It was at 711 when I first started my debt reduction journey last year. While the biggest negative factor with my score was the fact I had so much credit utilized, I still made sure that all of my bills were paid on time and I didn’t close any credit lines. Paying bills late and closing credit lines can bring down your score.

4.) Took advantage of balance transfer offers

Every balance transfer that arrived in the mail was carefully scrutinized. How much is the interest rate? How long does the rate last? How much is the balance transfer fee? After getting those key pieces of information, I compared that offer to my current situation. If the balance transfer fee wasn’t too high and the offer lasted long enough (for me it was 6 months), I would shift my debt from card to card. (BFP’s list of cards with 12 month 0% balance transfer offers)

5.) Used my husband’s cards

Between my husband and I, we only have one joint credit card. The rest are either in his name or my name. For the most part, our credit card debt was evenly split. I strategically used one of his cards to take some of the balance from my cards so I could increase my credit score by decreasing my debt to utilization ratio. That helped me obtain a new credit card with a nice “0% interest for 12 months with no balance transfer fee” offer. That card is holding almost $7,000 of our credit card debt at 0%. If you have a spouse, this is definitely something you can
keep in mind when shuffling around debt.

6.) Looked around for other ways to decrease my interest rates

Since I was blogging and learning about finances, I heard about Prosper.com. It’s a site where everyday people go to lend and borrow money. With the guidance of another blogger, I decided to list a loan on Prosper to see what happened. At this point, all of my debt was under 9.9% except for $3,500 sitting at 13%. I placed a listing for $3,500 and a week later I had a Prosper loan at a 9.9% interest rate. All of my debt was now under 10%.

And that is where my debt stands today. All of it is under 10% and a majority of the debt is at 5.9% and 0%. Jim did a rough calculation and figured out that I’m “only paying around 5% in interest to service $25,000 in essentially unsecured debt.”

While I am pleased at my overall interest rate, I am always on the lookout for better interest rate offers. In the meantime I am still paying off more debt and working to raise my credit score. Paying less in finance charges means more of my payments are going towards my principal balances

Tricia also blogs at Quicken Head.

I know this is somewhat elementary stuff but I’ve been getting a lot of searchers looking for these contribution limits and they’re going to pages that don’t display it in a convenient and easily scannable format - thus, I’ve written this entirely new post to address these limits.

Contribution Limits:

Roth IRA Income Phase-out:

Some rules:

• The Over 50 Limit takes into account a catch-up contribution you’re allowed to make if you turned 50 at any point during the year, so if you turned 50 on December 31st, then you’re allowed to contribute the Over 50 Limit. Your contribution is also limited by your income, you are permitted to contribute the lesser of your income or the limit (so if you made $500 in income, you’re only allowed to contribute $500 to your IRA).
• Traditional and Roth IRAs share the same limits, thus if you contribute $1,000 in 2008 to your Traditional IRA, you may only contribute an additional $3,000 to your Roth IRA (assuming you’re under 50).
• The Roth IRA income phase-out is linear, so if you are Married Filing Jointly, under 50, and your total income were $164,000 (2008), you are permitted to contribute $2,500 to your Roth IRA. There are two special cases though: 1) when calculating your limit, round up to the nearest $10; 2) If your limit is under $200 but still positive, round up to $200.

Near the end of January, I’d decided that I’d be removing hard numbers from my net worth reviews because I felt that it was nothing more than chest-thumping that added nothing to the discussion. I know some of you mentioned that you enjoyed watching the progress of one of your peers or that you wanted to see whether the personal finance stuff I believed in were actually working, unfortunately neither argument (or any of the others presented) were strong enough to convince me that listing a dollar figure was better than not listing one. The plan now is that after a few months of not even discussing the net worth numbers, I’ll move towards percentages (that way none of you math wizards can figure out the hard numbers).

That being said, I have to say that January was another strong month financially for various reasons:

• My fiancee was promoted again (it’s like her second promotion in six months, I’ve actually never been promoted). Her meteoric rise from a “technician” (I don’t really know their job titles but this was essentially a temp job) working second shift to project manager of that product line took little more than a year. While I don’t talk much about what she does, I figure this is as good a place as any to celebrate!
• Blogging income is still growing, thank you everyone for reading and commenting (I just went full feeds too). It was exciting seeing this site mentioned in the New York Times this past weekend, I always get excited when cool things like that happen.
• I began dabbling in PPC (I spent less than $10 in January) so affiliate income may become a more significant source of revenue in the future once I get my tracking down.

Some things on the horizon that I might be talking more about in the near future:

• Taxes naturally, specifically all the taxes I’ll need to pay on the self-employment income. I’ll also be investigating the use of a tax professional in the area so that will make for some thrilling reading if you’re into taxes.
• While I won’t blog much about the wedding planning, it’s certainly on the brain. While expensive, everything seems to be priced within reason with the exception of freaking photographers. Why does it cost $3000+ to get someone to spend 4-6 hours taking photos and the end product being a 24 page book and some blown up shots? $3000 for a really nice reception hall rent, sure I’ll buy it (you have all sorts of costs), but getting me to shell out three large for the photographer is going to be a little tough.

Hot off the fun that Yan’s Top 30 Personal Finance bloggers by Feedburner subscriptions post generated, I thought that I’d put up a top sixty personal finance bloggers according to Alexa’s scoring system. Why sixty? Well, originally I wanted to just put Top 50 but after I went through the list on pfblogs.org and my own sidebar, I reached 61 blogs with Alexa rankings under 1,000,000 so I figured I’d trim it down to an even sixty.

I wouldn’t read too much into this, it’s just fun (you can game Alexa by installing the toolbar, but the toolbar is junk), and I hope you enjoy seeing where your rankings stand against your peers. Enjoy!

1. The Simple Dollar - 26,130
2. I Will Teach You To Be Rich - 29,633
3. Get Rich Slowly - 33,907
4. Blueprint for Financial Prosperity - 33,933
5. PF Advice - 37,097
6. My Money Blog - 37,833
7. Wise Bread - 38,201
8. Consumerism Commentary - 41,158
9. Five Cent Nickel - 46,454
10. Free Money Finance - 49,705
11. Fat Pitch Financials - 84,079
12. All Financial Matters - 92,119
13. Pro Bargain Hunter - 97,227
14. Lazy Man and Money - 107,184
15. Mighty Bargain Hunter - 113,103
16. Boston Gal’s Open Wallet - 129,989
17. Binary Dollar - 134,563
18. My 1st Million at 33 - 137,695
19. Experiments in Finance - 145,171
20. 2million - 157,364
21. The Digerati Life - 157,607
22. Blogging Away Debt - 171,936
23. No Credit Needed - 175,116
24. Stop Buying Crap - 180,851
25. The Suns Financial Diary - 202,059
26. Finandom - 214,724
27. Money, Matter, and More Musings - 217,941
28. Mom Advice - 229,807
29. Clever Dude - 234,381
30. No Limits Ladies. - 268,307
31. Make Love, Not Debt - 274,513
32. Money Musings - 275,297
33. My Two Dollars - 293,745
34. Its Just Money - 312,497
35. Everybody Loves Your Money - 336,875
36. GenX Finance - 346,029
37. My Open Wallet - 363,473
38. Tired But Happy - 361,081
39. Young and Broke - 361,541
40. Mapgirl’s Fiscal Challenge - 399,533
41. The Frugal Duchess - 402,420
42. The Finance Journey - 413,330
43. Queer Cents - 412,412
44. Getting Green - 424,025
45. Hustler Money Blog - 437,348
46. Savvy Saver - 443,245
47. Blunt Money - 505,521
48. My Money Forest - 519,117
49. Not Made of Money - 519,160
50. Searchlight Crusade - 546,661
51. Canadian Capitalist - 558,031
52. The Dividend Guy - 569,795
53. My Finance Journey - 575,316
54. Get Rich Slick - 579,684
55. Frank the Financially Savvy Atheist - 590,917
56. My Retirement Blog - 615,614
57. Becoming & Staying Debt Free - 736,986
58. Don’t Mess With Taxes - 779,615
59. Rate Ladder - 826,654
60. The Weight of Money - 839,799

Ha! I wouldn’t cheat #62 like that and leave them off the list… position 61 was held by One Frugal Girl with a ranking of 864,921 (still got linked!).

Some that I missed initially… grrrr… sorry folks:
11. Neville’s Financial Blog - 80,846
14. Punny Money - 97,378
18. Money Smart Life - 135,992
47. Money and Values - 505,402

Alexa scores current as of 5:41p February 6th-ish.