This week I wrote about the One Laptop Per Child program running through November 26th, well I also wanted to also mention another worthy cause called the Dollar4Life. “Dollar4Life is a grassroots approach to raising crucial funds for Prize4Life. By reaching out to one million people and asking each to contribute just one dollar, Prize4Life hopes to raise both funds and awareness of ALS (Lou Gehrig’s disease).”

One single dollar, that’s all they’re asking for, please help. (And as with One Laptop program, eBay’s helping out and processing donations via PayPal)

• MBH thinks you should major in english. It’s madness!
• NCN, the debt busting king, has the ABCDE’s of planning for debt reduction.
• JD wants to know how you make frugality fun.
• Flexo shares ten ways to save money without trying.
• Nickel says you should avoid gift cards.
• JLP has tips on how to turn $1,000 into $1M.
• FMF says index funds are still king.
• If you have an employer that has no 401k matching contribution policy, it’s okay, it’s still worth it to contribute.
• Ben talks about how to avoid paying into Social Security! (okay, it’s not really some tip or anything but it’s an interesting discussion on SS, here’s a follow up too)
• Jeremy wants to know if you’re doing anything about the falling dollar.
• Lazy Man talks more lazy finances, this time about eliminating debt.
• Golbguru is knee deep in job hunting and shares a recent interview from hell (that lasted forever).
• Sun received an email from E*Trade reassuring him that everything was okay.
• Did you know that the Blue Cash from American Express was Kiplinger’s Best Cash-Rebate Card? Read all about it on Daily Money Hack.
• Need a razor? Get the Schick Quattro Titanium Razor for free via the Daily Gratis.
• One of the keys to achieving your goals is periodically checking in on them. As Tricia at Blogging Away Debt whittles away at her debt, she checks in against her goals. If you stopped after reading the first piece about her debt (as one would likely do if they were trying to remember their progress), you might think she had fallen behind… except she hasn’t. The slowdown in debt repayment was because she bulked up their savings, something one likely wouldn’t remember unless they put it all down and looked at it in aggregate. It’s crucial to track all of your progress.
• When I used to drive up to New Jersey to see my fiancee, I used to take a couple toll-avoiding detours to help ease the cost and cut off some travel time. Michael Dresser of the Baltimore Sun published them all (some I didn’t even know) and showed how it costs the same time-wise to take the detours.

When I replaced my windows a while back, the Federal Government footed a portion of the bill. That’s right, that means everyone of you who pays your taxes in part helped fund my home renovation! (Thank you!) Well it turns out that the tax credit for energy saving home improvements is set to expire in December so if you haven’t taken advantage of it, you should! How much you are given as a tax credit depends on what you do but the maximum is $500 (with $200 maximum for windows).

What I did was get all my windows and sliding doors replaced with energy saving compliant windows and then took the $200 maximum credit for my nine windows and the remaining $300 for my three sliding doors. A $500 discount isn’t bad right? So, you have another month and a half to do something about your house if you want to take advantage of it.

If you want to read the rules and regulations straight from the horses mouth, the IRS has this writeup.

Oh, and thanks for the windows and doors, we love them!

A reader sent me the following email (with my reply):

I have just started reading your blog, and I think it has a lot of interesting points. I am going through the backlogging of entries and I wanted to know if you covered the topic of how many credit cards you have. If not, I’d like to know your take.

I don’t think I’ve talked about how many I have total (I don’t have an accurate count) but here’s an older “Whats in my wallet” type post that might interest you.

I basically use my credit cards as ways to get cash back and build my credit. I currently have three and primarily use citibank professional because it seems to give the most back. I always pay the full balance every month online, so I never incur a late charge or interest. I suspect there are always going to be bigger and better promotions for new credit cards in the future, and I was wondering if it hurts to apply to many credit cards. The only thing I can think of is that it may hurt your credit. (Also, you might get confused with so many different credit cards and forget to pay one that you rarely use. I have an online alarm on mine that alerts me if even a penny is spent on mine so I can keep track of the ones on the backburner).

It hurts to apply to a lot in part because companies realize you have a lot of credit and wonder why you need so much. If you plan on buying anything big, that requires a loan, I’d recommend against apply for credit cards for bonuses or for their lucrative limited time cash back bonuses. Ultimately the hit you take on your credit and the effect is has on whatever rate you’d get on a loan doesn’t make it a sensible decision. On a technical note, it’s the number of hard inquiries, the frequency of those inquiries in the last 30/60 days, and the average age of a line of credit that is negative against you. Some positives, if you get credit, is that you have a lower debt to total credit ratio (since you’ll have more credit). Ultimately, those bonuses and cash back just don’t match up against a higher loan rate.

Also, what about those store credit cards that offer you better rewards when you use them in their stores?

As for store credit cards, I don’t have loyalty to any one store so I don’t use any loyalty cards (some programs, yes, but credit cards, no). If you really want that 10% a purchase, I’d apply to a card with a gift card after purchase because you usually get more out of those.

Money checked out Kelley Blue Book and picked out a nice top ten list of cars that retained the most value after five years. The bulk of the cars on the list are not domestics, in fact only Chevy makes an appearance with the extremely popular Corvette. The other cars on the list are owned by either Japanese or European car companies!

Toyota and VW control 60% of the list with the Scions and the Corolla representing Toyota and three VW models rounding out the top ten. As expected, a majority of the Japanese cars are on the list because of their reliability; most of the other cars are there because of high demand for other reasons. For example, KBB supposed that despite VW’s history of questionable reliability, three of their vehicles made the list.

One thing to note, KBB did identify some contradictory information. When talking about the Jetta, they said “Despite Volkswagen’s spotty reputation for reliability – the brand fairs poorly in J.D. Powers’ annual rankings of long-term dependability – its cars hold their value well.” Then in talking about the Rabbit, they said that “Volkswagen’s certified pre-owned program, recently rated the best by Intellichoice.com, may help boost resale values in the long term.”

Top Ten Cars (Retained Value)

1. Chevrolet Corvette – 50% retained
2. Honda Civic Sedan – 52%, reliability
3. Infiniti G37 – 52%
4. Mini Cooper – 52%
5. Scion tC – 52%
6. Scion xB – 52%
7. Toyota Corolla – 52%
8. Volkswagen Eos – 52%
9. Volkswagen Jetta – 52%
10. Volkswagen Rabbit – 51%

Source: Money

“Many professionals in the field consider mystery
shopping a part-time activity, at best.”
                           – FTC.gov
Take that quote, from an Federal Trade Commission article on the Secrets of Mystery Shopping, to heart and you’ll be able to sniff out a lot of mystery shopping scams without the help of the red flags I’ve listed below. The bottom line is that mystery shopping is a side pursuit at best and anytime you hear any promises or comments hinting that they can offer you more will be a good sign that you’re dealing with a bad company. If you’re one for lists, the following might be helpful but nothing beats your “gut feeling.”

1. An application fee is a sure sign that your mystery shopping company is a fraud. What job would ask you to pay an application fee? The answer is none.
2. Requiring that you be certified, likely by them, is another sign that you’re being taken for a ride. Essentially anything that makes you pay out of pocket to join is a sign that you’re being scammed.
3. Selling access to a job list or company list also falls into the “pay out of pocket” category.
4. Asking for lots of personal information. If someone asks for your social security number, it’s likely a scam. The most they’ll ask is for your name and your address so they can mail you a check. Some will ask for a bank account to direct deposit funds but that will always be optional if they are legitimate. If they require that you give them a social security number or your bank account, it’s likely a scam.
5. They contact you because of a resume you posted on a job website. Legitimate mystery shoppers won’t contact you like this, only scammers will scour employment websites for marks.
6. Guaranteeing that you will get jobs is another red flag. There’s no way a company can guarantee that they’ll get enough shopping jobs and to make that promise is a sign that they’re not above board.
7. You get to keep thousands of dollars in merchandise. Imagine if you ran a company and wanted to see how your staff was performing, would you give away thousands in dollars of merchandise, in addition to the fees, to do so? No, and actual companies don’t either.
8. Promises of how it’ll take only a few minutes a day. The reality of it is that the actual shopping may take 10-15 minutes but the reporting often takes much longer.
9. Promises of how you’ll earn thousands in your spare time (or even a more modest $30/hr). While the potential to make thousands is there, the fact of the matter is you’ll need a tremendous amount of spare time to earn that much money. The pay from a mystery shop simply isn’t that great compared to the time it takes to complete it.
10. They are internationally based. You have far less protection when dealing with an international company and they have more latitude in screwing you if they want to, there are plenty of companies in your home country that you don’t need to deal international.
11. You will never handle lots of money. One popular scam, after you’ve signed up, is to deposit a huge check (over $1 is huge) into your account and then have you wire that money out to another account. This is a twist on a popular fake international check scam that’s all the rage (this is why Dr. Smith in [insert international company here] emailed you the other day and wants your help and will give you $1,000 for you to cash his $20,000 check). You will never handle lots of money because what company would pay you $20 to deposit a $10,000 check? Let’s say you walk away with it (or the hundreds of other shoppers they hired for this job), they don’t want to deal with that hassle. Here’s a Consumer Reports article about this type of scam.
12. They’re not in the Mystery Shopper Providers Association. The MSPA represents 180 companies, while being a member doesn’t guarantee they’re legitimate, there are enough companies in there that you can find one there and at least get the comfort of knowing the MSPA has seen their name.

Finally, always check with the Better Business Bureau or the Federal Trade Commission to see if the company you’re thinking about working with is legit. It never hurts to do that with any company you plan on dealing with, whether you’re paying them or they’re paying you.

After hearing about a company, BARE International (sounds like a strip club or something), on the local news the other day, I signed up to see what the deal was. Overall, I get the sense that legitimate mystery shopping isn’t a way to make a ton of money. I’ll show an example below of one that I applied for (not yet accepted), in which I’d earn $12 for approximately 15-20 minutes of work (I’m doing it because it’s convenient). The local news story explained how legitimate mystery shopping companies won’t advertise on pop-ups or have you pay an application fee, basically they don’t do the shady things you see all over the place advertising mystery shopping. They also explained how you aren’t getting rich or keeping thousands of dollars of free merchandise, that just isn’t how business works, and that most of it is pretty modest. Overall, I don’t think I’ll do many of these, but enough to get a flavor for it and I’ll take you all along for the ride!

After signing up, the first order of business was to submit an “Extended Profile” which included the expected demographic/area questions but also asked two “mystery shopper” mission type questions. The two they gave me were “Why do you think Mystery Shopping is necessary?” and ” What do you think constitutes good Customer Service in a business?” I just put in some reasonable response and they let me on their way.

Periodically (as in like 10 times a day), you’ll get emails from BARE International telling you about the mystery shopping jobs you can sign up for. It’ll give you a general description, the location of the job, the type of shopping involved, and the payout. If you want to do it, you simply apply and they tell you if you’ve been accepted.

Here’s one that I applied for:

EASY BANK AUDIT ASSIGNMENT- may be done while you do your regular banking!

You do not need to be a XXXXXXXXXXX customer to perform these assignments!

These assignments take about 15-20 minutes in the branch. If chosen, you need to go into a banking center to see what information a Teller and a Personal Banker give you regarding specific investment information such as stock trading, bonds, and equity information. Evaluators will be provided with specific scenarios to choose from.

You will be paid $12.00 for your completed report with supporting proof of visit. YOU MUST GET THE NAMES OF THE ASSOCIATE YOU INTERACT WITH! NO REPORT WILL BE ACCEPTED WITHOUT THE APPROPRIATE NAMES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Our client is interested in receiving reports quickly so you will need to complete your online report within 12 hours of your visit (SAME DAY) and your proof of visit must be submitted by 9am EST on the day following your visit.

I applied for it because it happened to be my bank, the location was right by my house, and I need to go to that bank in the next few days to make a deposit. I’ll let you all know if I get accepted.

When Flexo was giving away a SumoLounge Omni, I kind of wanted to win it but I knew I probably wasn’t going to win it so I asked Andrew at SumoLounge if they’d send me one and the obliged. No, the review I am about to write was not a part of any agreement, nor is the giveaway that will soon be announced, but I thought it would be fun to give away something hip and trendy, as opposed to personal finance books. So, what does a bean bag chair have to do with personal finance? Absolutely nothing. If you’re okay with that, onto what I think about the SumoLounge Omni.

Before receiving it, I half assumed that it would be similar to one of the bean bags chairs from my childhood. Back then, they were basically amorphous bags of polyester and nylon filled with little beans. When the Omni arrived, it was hardly amorphous and it really surprised me. The Omni is made from a sturdy (I hesitate to call it tough, but it’s not a slipper smooth polyester either) nylon that holds its shape (with the help of the beans). I actually found a perfect spot for it, in front of my television as I own 6 year olds at Halo 3 (I’d probably be playing Call of Duty 4 if it wasn’t for my XBox going blind), where I used to slide in an office chair. When my fiancée first saw the bean bag, she told me that it’s was probably an absolute certainty that I’d be gone to her for a long long time (she wasn’t complaining, just noting!).

If you’re looking for the hip urban look, I think these chairs look really cool in bunches in the corner. I think the color choices are really vibrant and at a scant $129 a pop (it sounds expensive at first but these things are huge) with no shipping, it’s not a bad idea to furnish with. It will also make you seem much cooler than you probably are. I was going to take some pictures of the chair and me in it but I had some friends come over and I snapped pictures of them instead, here’s one:

Okay I lied, they have more photos though…

(Photo courtesy of SumoLounge)

This morning I did a bit of an apples to oranges comparison of a 401(k) and a high yield savings account, showing that the two would meet two years and two months out given a set of probably unreasonable assumptions. It was apples to oranges because the risk involved in investing in the stock market simply isn’t anywhere near the risk involved in saving money in a high yield savings account. So, I took Anne’s suggestion and compared a pre-tax account, in this case the 401(k) again, and a post-tax account.

Results? 401(k) never catches up. Despite starting with more money, $133 vs $100, 401(k) can never get over 25% the marginal tax rate + 10% penalty hit that it takes when you extract funds from it (not a loan, a straight up withdrawal). If you plan on pulling out your 401(k) funds to buy a house, don’t put them in there in the first place. Make the minimum contribution to get your match, then put the rest somewhere else.

Assumptions

• Better is defined as the approach that ends up with the most amount of gain.
• You are in the 25% marginal tax bracket.
• Both accounts return 11% a year, or 0.8735% each month, compounded monthly.
• There is no 401(k) contribution match by your employer. An employer match will bring in the breakeven point and raise the value of the 401(k).

Pretty Charts!

The chart below plots the growth of the brokerage account versus the 401(k) account. The value shown is the final extracted value, but growth is based on the non-extracted value. For example, with the 401(k), it’s the pre-tax dollar amount that is being compounded but the graph is showing that value reduced by 35% (25% tax, 10% penalty). The brokerage account line is growing based on its unrealized gains but the value shown is the realized gain, minus long term or short term capital gains. If you’ll notice the little hitch in the purple line at around month 12, that’s because the brokerage account tax rate fell from 25% (short term capital gains) to 15% (long term capital gains).

If you’re interested in the Excel spreadsheet I played with to reach these simplistic conclusions, I’ve made them available here. Please check it out and let me know if you see any mistakes I may have made.

When it comes to saving for a house, is it better to contribute pre-tax into a 401(k) and withdrawing it (taking the 10% penalty) or contribute it post-tax into a high yield savings account? The trade off is that a 401(k) will grow more, start with a bigger pot, but take an extra 10% hit on the way out. A high yield savings account starts with a smaller balance, takes an earnings tax each year, but doesn’t face a 10% penalty at the end. According to my analysis, after three years of growth, contributing to a 401(k) comes out 6% ahead compared to a high yield savings account (my assumptions and an explanation of my analysis to follow). The break-even point is at around two years and two months.

What does this mean? If your sole concern is saving and earning the most to put down towards a house, with no consideration towards retirement, then contribute to your 401(k) if your target date is at least two years and two months into the future. I believe that to be short-sighted because retirement is far more important than whether you own or rent, but that’s a decision you have to make. *One other option to consider is that you can contribute to a 401(k) and then borrow from it at prime + 1-2%, so these are by no means the only two options you have.

Assumptions

• Better is defined as the approach that ends up with the most amount of short term gain, this analysis gives no consideration towards retirement goals, which I believe is far more important than buying a home.
• You are in the 25% marginal tax bracket.
• The 401(k) would return 11% a year, or 0.8735% each month, compounded monthly.
• The High Yield Savings would return 4.75% a year, or 0.3875% each month, compounded monthly.
• There is no 401(k) contribution match by your employer. An employer match will bring in the breakeven point and raise the value of the 401(k).

Explanation of Approach & Spreadsheet

I assumed that you would contribute $100 in the beginning of January (once) to your high yield savings account and you would contribute $133.33 to your 401(k), that’s the pre-tax equivalent of $100 if you are in the 25% marginal tax bracket.

Pretty Charts!

The chart below compares the growth between the high yield savings account and the 401(k). You’ll notice the dips at the end of each year in the HYS, that’s when income tax is levied on the interest earnings. The 401(k) line reflects the post-tax value of the 401(k) balance, that is after a 25%+10% reduction (25% marginal tax rate, 10% penalty). The 401(k) growth is calculated using its pre-tax value but the chart is charting it’s post-tax and post-penalty value. You can see that the lines intersect around the 2 year, 2 month point (X-axis 25 or 26), when income tax is levied on the HYS.

If you’re interested in the Excel spreadsheet I played with to reach these simplistic conclusions, I’ve made them available here. Please check it out and let me know if you see any mistakes I may have made.

Need to absolutely reach your brokerage right now? Here’s a handy resources of all the brokerages I am aware of, their phone numbers, hours of operation, and a link to the brokerage’s contact page. On that page you’ll usually find a Fax number, overnight mail address, regular mail address, email addresses, and sometimes even an online chat. In many cases, there are multiple telephone numbers listed, I chose the one for existing brokerage clients (if that’s not what you need, just hit up the link and you’ll find the whole list).

Brokerage	Phone Number	Hours of Operation	Contact
Charles Schwab	800-435-4000	24/7	link
E*Trade	800-ETRADE-1	7AM-Midnight ET	link
Fidelity	800-544-6666	Unknown	link
Firstrade	800-869-8800	8:30AM-9PM ET M-F	link
Merrill Lynch	800-MERRILL	24/7	link
optionsXpress	888-280-8020	9AM-5:30 ET M-F	link
Scottrade	800-619-SAVE	Unknown	link
Sharebuilder	800-747-2537	8AM-9PM ET M-F	link
TDAmeritrade	800-669-3900	7AM-8PM ET M-F	link
T. Rowe Price	800-225-7720	8AM-8PM ET M-F	link
TradeKing	877-495-5464	8AM–6PM ET M-F	link
UBS	None	Online only	link
Vanguard	877-662-7447	24/7	link
Wachovia Securities	877-879-2495	8AM-8PM ET M-F	link
WellsTrade	800-TRADERS	24/7	link
Zecco.com	909-657-6655	9AM-6PM (EST) M-F	link

Did I miss your brokerage? Let me know and I’ll add their phone number.