We were cleaning around the house a couple weeks ago when my fiancee noticed that the wall by the shower was showing some water damage. When we cut out the piece of drywall, we also noticed that some of the tile on the floor were raised and uneven and popped them up as well. While the water damage wasn’t severe, you always want to catch these types of things as early as possible because mold growth and the like is something that can be handled easily when small, not so easily when much larger. We also weren’t happy with the existing tile anyway so ripping those up didn’t cause any heartache. The only part of the process that gave me some concern was the part about removing and reinstalling the toilet… mostly because it’s gross. (anyone who has ever done this can attest to it, that wax ring ceases to be a “ring” and ceases to look like anything but the epitome of grossness)

The tiles came up pretty easily, we cleaned up the subfloor nicely, and as we were going to install the tile, I quickly learned that the little tile cutting device I had was terribly inadequate. It was one of those hand scoring and cracking devices but with 12″ x 12″ tiles, the cracks would make it straight about two inches and then bent off on some weird angles. Anyway, I borrowed a friend’s wet saw (which must be used outside!) and was able to make some nice cuts with that.

The project itself, once we got going, took about three hours to complete with some waiting in between but now the bathroom looks spiffy! The old tiles were this dingy dirty inch by inch white tile that comes in sheets and the new ones are just painted ceramic (like the $1.50 a square foot variety from Home Depot) but they make all the difference. The bathroom is pretty small, maybe about five feet by five feet, but the project was fun (even the toilet part) and didn’t cost us a pretty penny.

Hedge funds have been getting a ton of notoriety lately because of their gigantic returns and people are going nuts over them and their fantastic returns. The short description of a hedge fund is that a limited number of individuals (accredited investors) are allowed to invest in a hedge fund and, because they are open only to accredited investors, they aren’t regulated by anyone such as the SEC. As such, they are basically free to invest whatever they want (subject to whatever agreements they made with investors) and they’re paid based on asset size and performance and they’re paid very handsomely. They’re generally riskier than a mutual fund but usually you don’t care because you want the rewards.

With risk, comes reward. And for the poor souls who invested in Bear Stearns’ High-Grade Structured Credit Enhanced Leveraged Fund and High-Grade Structured Credit Fund, they were told last week that they done. Finished. The High-Grade Structured Credit Enhanced Leveraged Fund was now worthless, losing essentially all $638 million, and the High-Grade Structured Credit Fund lost 91% of its $925 million – all because they were highly leveraged in the sub-prime lending industry. For those of you keeping score at home, that’s over $1.4 billion dollars lost. One point four billion dollars.

With risk comes reward… but don’t forget the risk.

Accredited Investor: In the US, for someone to be an accredited investor, they must satisfy some qualifications according to the Securities Act of 1933. The qualifications are that you must have net worth of $1M or have made at least $200k each of the last two years ($300k if you’re married) and can expect to earn that much this year.

According to Flexo, when you use ING Direct’s bill-paying check service, the funds are debited from your account immediately – not when the check clears. That’s a different of at least a few days because of how long it typically takes for a letter to reach its destination (2-3 days) and how long it takes for it to clear (1 day with Check 21). He asked whether other banks were the same and I can say definitely that’s not how it works at Bank of America, the only bank I’ve ever used the billpaying feature at.

With Bank of America, you enter in the destination address, payee, and a desired delivery date. I recently sent some money and a Bank of America representative actually called me up to confirm I had initiated the transaction (and not some thief). Incidentally, from what I can recall, he simply asked me for the destination and the payee so even if it was a phishing attempt he would’ve gotten zero useful information (plus he provided all the payment information anyway like the amount). The transaction was authorized, the check was sent, and the funds weren’t actually withdrawn from my account until the check was cashed.

You might ask “what’s the big deal?” It’s not really a big deal but it’s the principle of the matter. When you write a paper check, the funds aren’t withdrawn until the check is cashed and you are continuing to earn interest. Why shouldn’t ING’s system this way too?

A commenter on Consumerism Commentary said that Bank of America debits immediately too but my memory says differently, anyone care to corroborate either of the stories?

So you’ve been dinged with a late fee or some other penalty on your credit card account with Citi or Chase or whatever. You called them up, ready to play the “please remove the fee or I’m canceling the card” game when they call your bluff and say that you can cancel, they’re still taking the fee. Well, what can you do? Do you tuck your tail between your legs and run, living to fight another credit card battle another day?

No, you pull out your big hammer and give that company a good whack. If you have another card with that issuer, call up that card and tell them you want to cancel. When they ask why, tell them that it’s because they refused to refund a piddly little charge on your other card. If they let you cancel, then start canceling all the cards from that issuer and see how quickly their tune changes. If they let you cancel every single one of those cards, don’t fret… just apply for a new one! There are plenty of credit cards with application bonus offers so you don’t have to worry about getting a new card (remember, with credit cards, you are in charge, not them!)

The back story, in case you didn’t click through, was that Amazon’s credit card (tempted by the dollar off purchase offer) charged Jethro’s wife for a late fee because of payment timing and they refused to refund the charge. Jethro called up and wanted to cancel his 4 year old Chase card and Chase offered to refund the late fee on the Amazon.com card. In this case, the 4 year old Chase card was the big hammer and Jethro swung like a champ.

3 months. 6 months. 12 months. How many months of worth of expenses do you have saved up in your emergency fund? How many should you have?

I think it’s difficult to peg down a specific number until you take full stock of your situation so any expert who claims that any time period is for you, besides that you probably want a minimum of 3 months, is just giving you an answer to be rid of you or hasn’t thought it through yet.

First, let us consider the major reasons why you would need to dip into your emergency fund:

• Medical emergency.
• Loss of job.
• Forgotten maintenance or unforeseen repair expenses.

Again, those are major reasons, there are plenty of other smaller reasons for the emergency fund but those three are the biggest and most frequent events so I’m going to focus on those. In all instances, the emergency fund is meant as a temporary funding source that should cover those events so that you can pay for those things without having to take out a loan.

Now, let’s say we start with the general advice of 6 months. How likely are you to have a medical emergency, loss of a job, or maintenance/repair expense? You’ll have to decide that on your own! If you have a family history of a medical condition and your age suggests you might be susceptible, you might want to add a few months. If you’ve noticed a recent downturn in the job market in your area, you might want to add a couple months breathing room in case you are let go. If you have an older car or an older home, you might want to add a month or two just in case you need to replace something like a water heater. Consider your particular situation and adjust as necessary.

What about some mitigating factors?

• Spouse has a job.
• Renting out a room in your home.
• Insurance.
• Other income.

The bulk of the mitigating factors are sources of income not directly tied to your full time job. The reason they are mitigating factors is because if you do lose your job, they represent another source of income that can help cover your daily living costs. The danger is in putting too much of an emphasis on these mitigating factors, especially in the case where they’ve been fully integrated into your budget.

An example of this would be in renting out a room in your home, if the rent is 100% going towards the mortgage and you’re depending on it to make payments, then it’s not really a mitigating factor. In fact, I would call it an extenuating factor because if the renter leaves, you’re stuck paying more for the mortgage.

So, examine your own situation before blindly listening to advice of a 3, 6, 9 month emergency fund because it may be too much or too little for your situation. We currently have a three month emergency fund sitting in a high yield bank account, earning 5%, which is perfect for our needs. How about yourself? Any good (common) mitigating factors?

What do you do when a dog has eaten your money? Well, you wait until it comes out, then you soak it, wash it, rinse it, and repeat a lot. Ewww…

But what if it’s been damaged or mutilated to the point where you can no longer use it? That’s when you call in the Bureau of Engraving and Printing to get a replacement.

If you have more than 50% of the bill, just mail it “Registered Mail, Return Receipt Requested” (or personally deliver it) to the Bureau of Engraving and Printing along with a letter explaining the estimated value of the bill and how it got that way. If you have less than 50%, do the same but you better do a much better job with the letter as they have to believe that the rest of the bill has been destroyed.

If the damaged money are bills, send it to:

Department of the Treasury

Bureau of Engraving and Printing

Office of Currency Standards

P. O. Box 37048

Washington, D. C. 20013

If they are coins, send it to:

Superintendent

U. S. Mint

Post Office Box 400

Philadelphia, PA. 19105

If they aren’t damaged or mutilated and they’re just dirty, defaced, worn out, or a little torn, then bring them back to your bank for a replacement. This only applies if you can definitely tell what the value of it is and it’s clearly more than 50%, though the site doesn’t really tell you what “clearly more” really is. If it’s a little corner tear, that’s probably clearly more.

My fiancee and I have some money in a Vanguard mutual fund account that we’ve earmarked for future use (some of it is for a wedding, but mostly it’s for a rainy day) and one feature I like about the account is that it has free checkwriting. This isn’t anything special, many brokerages offer this feature, but it does require that you keep the some money in a bond or money market asset. You can’t write a check and have it auto-debited from a regular mutual fund account.

To set this up, you have to first select a money market account to give checkwriting privileges to. I took a quick look at the money market funds offered, there are four taxable money market funds and six tax-exempt money market funds (plus close to two dozen bond funds of both taxable and tax-exempt types), and at first couldn’t really see much of a discernible difference among them.

The only obvious difference is that the returns on the taxable money market funds are higher than the returns on the tax-exempt money market funds, which makes a little bit of sense because they’ll be much closer after taxes are concerned. The one year average of the four taxable funds ranged from 4.88% to 5.22% compared to 3.50% to 3.6% for the tax-exempt funds. When you consider the underlying construction of money market funds are that they invest in short term market instruments like CDs, commercial paper, bank notes, etc; the differences between one money market fund and another will just be in the level of risk it accepts.

Either way, I think I’m just going to pick Vanguard Prime Money Market Fund (VMMXX) because it has the highest return. All of the taxable fund expense ratios are 0.29% and the minimums are all $3k with the exception of the Admiral Treasury Money Market fund. It has an expense ratio of 0.13% but a minimum of $50k.

If they offered a Maryland Tax-Exempt money market fund, I probably would’ve chose that one but they don’t. They only offer California, New Jersey, New York, Ohio, and Pennsylvania. The beauty of those funds are that they are tax-exempt in those states plus federal income taxes. If you live outside of those states, you would only be shielded against federal income taxes.

After you pick a fund and add some money to it, setting up the checkwriting is a cinch. Simply go to your Account Profile and click on Checkwriting underneath Manage my accounts. They will ask to confirm that you want to establish Checkwriting. Click Yes and a separate PDF will open up containing a form you must fill out and mail in (because it contains signatures maybe? I don’t understand why it can’t be faxed).

Just some quick rules about the checkwriting, the check must be greater than $250 and Vanguard doesn’t withhold any taxes, even though it’s considered a distribution. It’ll be reported on a 1099-R. By setting up this checkwriting, we can avoid the need to transfer money from Vanguard to our Bank of America account before writing a check – thus saving ourselves a 3-4 day wait. Checkwriting is awesome!

I don’t know how many of you folks also read my nascent grilling blog, Grill Maestro, but I recently wrote about how I was going to buy a Weber Smokey Mountain Smoker… well I did and yesterday it was delivered. Installation took about ten minutes so this weekend, specifically tomorrow probably, I’m gonna smoke me up some goodies.

Now, onto the weekly goodies…

• Flexo writes about gap year between high school and college where rising freshmen take a year off to travel the world and expand their horizons. Not a bad idea if you can finance it with something other than credit cards.
• JLP answers a reader question about whether to pay off credit cards or student loans.
• FMF reminds us that insurance should be used to handle the big losses, not every loss.
• MBH handles a sticky subject, home value and net worth.
• Nickel writes about how Discover is changing their Open Road card rewards program. We have the card and say “BOO” to that.
• Ben has carpal tunnel and it’s expeeeensive.
• Henry spent two and a half hours on the phone with mortgages companies and came away with 10 mortgage lessons. Save yourself two and a half hours by reading his list.
• Jeremy explains how achievement is directly tied to setting clear goals.
• That Toyota Scion commercial with the weird cartoon demons didn’t work well on Lazy Man, sounds like he’ll never buy a Toyota because of it. PR Oops. (I have a Toyota and I found that commercial creepy, I mean cartoon heads are being cut off… maybe that’s a sign that I’m old and not understanding “cool.”)
• Golbguru’s third used car buying tip is how to inspect a used car.
• Dow busted 14k. Sell sell sell!
• SVB shares five ways credit card companies dupe kids.
• Tricia shares 20 dates for under $20.
• Are you maxing out your 401k? If so, great! If not, why not!?
• Did you know in some states your deductible on your homeowners can’t be greater than 1% of the value of your home? I think it’s a ridiculous rule, those damn insurance lobbyists.