Since many states are having their first tax-free period (for hurricane preparedness) this weekend, I thought it would be helpful if someone did a recap of all the tax sales across the nation (I’m unaware of a similar list for 2008 existing anywhere), so I did searches of all the states and collected the information on any sales tax holidays they are having. Many states have scaled back the tax-free program because of projected tax revenue shortfalls (Florida canceled its spring tax sale for hurricane preparedness supplies and shortened its typically ten day school supply tax-free period to seven days) but many still have some sort of program in place.

What started as a tax holiday on clothing and shoes has now spread to multiple tax sales for some states. Some have a spring-time hurricane preparedness tax-free period, some have added an energy efficiency related tax-free period for the fall, and some have all three. Below is as comprehensive a list as I could manage and I hope you find it useful. If a state doesn’t appear, I believe it doesn’t have a sales tax holiday or it’s Alaska, Delaware, Montana, New Hampshire or Oregon and they don’t have a sales tax.

The state names link to the state’s Department of Revenue or some other resource that will fully explain every last painful detail of the tax holiday in that state, such as exceptions to the tax holiday.

• Alabama - August 1st - 3rd, covers clothing <$100 per item, computers/software/computer supplies <$750, school supplies <$50 per item, books <$30 per item.
• Connecticut - August 17th - 23rd, clothing and footwear <$300.
• Florida - August 2nd - 8th, clothing, shoes and backpacks <$50 each, school supplies <$10 each. The spring-time hurricane preparedness tax-free period was canceled for 2008 and the usual 10 day tax-free period for school supplies was scaled back to only 7 days.
• Georgia - July 31st - August 3rd, clothing <$100, computer/equipment < $1500, school supplies <$20, energy efficient appliances <$1500; there is also debate over an energy efficient related tax sale in early October.
• Iowa - August 1st - 2nd, clothing/footwear <$100 per item.
• Louisiana - May 24th - 25th, hurricane preparedness sale exempting purchases up to $1,500 for emergency items.
• Massachusetts - Has not yet established the dates of the sales tax holiday but is usually the second weekend in August, covers anything with a sale price <$2,500 with some exceptions.
• Missouri - August 1st - 2nd, clothing <$100 each, school supplies <$50 each, computer/equipment <$3500
• New Mexico - No announcement but usually first weekend in August, clothing/footwear <$100 each, school supplies <$15 each, computers <$1000 and computer equipment <$500.
• North Carolina - August 1st - 3rd, covers clothing <$100 per item, school instructional materials <$300 per item, sports & rec equipment <$50 per item, computers/software/computer supplies <$250 per item.
• Oklahoma - No announcement yet but usually a weekend in August, covers clothing/footwear <$100 each.
• Tennessee - April 25th - 27th - Clothing <$100 per item, School and Art Supplies <$100 per item, and Computers <$1500 per bundled package
• Texas - August 15th - 17th, clothing/footwear <$100, backpacks <$100; May 24 – 26 - Energy Star tax holiday, eligible items listed on website (thanks Sarah!).
• Virginia - There are three holidays for 2008 in May, August, and October. May 25th - 31st, designated hurricane preparedness equiment priced <$60 per item and portable generators priced <$1,000 per item. August 1st - 3rd, back-to-school sales tax holiday on school supplies <$20 per item and clothing & footwear <$100 per item. Finally, October 10th - 13th, energy savings sales tax holiday on Energy Star Qualified products including appliances purchased for noncommercial home or personal use <$2,500 each.
• Washington D.C. - No official announcement but it’s usually a week in August and a week in November, clothing/accessories/shoes <$100 and school supplies <$100.

If I missed a state, please let me know and I’ll add them. I thought it was funny that Maryland’s first sales tax holiday wouldn’t be until 2010… I’m not buying any clothes or shoes until then!

(photo by pulpolux)

I think that the key to finding a good cable company is identifying which ones have the best local technicians. The call centers will always be spotty, I’m sure those folks are overstaffed and overwhelmed (especially if they’re located internationally, if you’ve ever seen the documentaries), so their performance is always going to vary depending on when in their shift you call. Get lucky and get someone just beginning their shift, you’ll probably get 100% accuracy. Find someone who just ended a horrible 30 minute call with a customer bitching at them… probably not the best time to get them. So the discriminator should be the local technicians (since services will vary little, unless it’s Comcast downsampling HD!) and I wanted to give a ringing endorsement to the local technicians in the Howard County area (I have no idea how their areas are segregated). I’ve had two calls (installation and one repair) and each went very well.

My most recent one began the other day when my wireless connection to the Verizon-provided cable modem and router went down. I turned on my XBox 360 to see if the connection is still good because it’s connected via ethernet cable (I could’ve brought my computer down and connected it but I figured if all was well, I could squeeze in a couple games of Call of Duty 4 for my trouble :)) but that connection was down as well. So, I called up Verizon and we went through the process of resetting the router, resetting the box outside (not sure what it’s called), and then checking the settings on my computer (traceroutes, pings, resets, the works). All fail. No biggie, electronics fail all the time.

That’s when the Verizon tech said that the problem was probably the coaxial connector on the cable modem/router. The explanation seemed a bit off, since I could ping the IP of the box outside (meaning the signal went through that connector), but the end result was that they’d mail me a new cable modem/router which was a good thing. The modem was supposed to arrive on Monday but when I called that night, the CSR on the phone let it slip that perhaps the last CSR didn’t complete the shipment order. What’s funny is that when I asked him directly whether the package was shipped, he would give me evasive answers (I didn’t ask more than once, I just thought it was funny he’d respond like taht). Anyway, the end result was that a local technician would be out the next day.

So a lackluster performance by the call center but once again the local technicians came through. The woman arrived first thing in the morning and got to work. We tested out everything, swapped out the cable router, and still no wireless or wired connection. She reset the box outside, still no good. She played with the settings on my computer, which I had jacked up trying to get the XBox to use my computer as a wireless modem - I couldn’t figure it out. Still nothing. Eventually we tried the XBox again and then finally the computer connected without a problem. Apparently we just didn’t wait long enough for the box to fully cycle when we tried to connect the first time. Either way, she said that she’d stick around until everything was up and running.

Now, I don’t consider that above and beyond service, but given all the complaints people have about technicians (like sleeping on the job), I figured a story about how a technician that showed up on time, was courteous and did a thorough job, would be a nice change of pace.

Thumbs up Verizon, please keep it up.

If you’re a buyer of Series I Savings Bonds, you probably already know this. If you haven’t been paying much attention to them, it might be time to perk up because Series I bonds are looking pretty good given right now. So good that I decided to purchase some of them.

Opening Treasury Direct Account

Fortunately, I opened up a Treasury Direct account a while back and had my bank account linked up so I could skip the setup process. I don’t know if the setup process still only takes five minutes, as I had written, or if it was more complicated now. I do know that Treasury Direct will be sending out new access cards for security purposes, so perhaps the setup process is a little more involved now. Regardless, I was able to find my login credentials (if you lose them, getting your ID requires a tremendous amount of information, the government doesn’t mess around)

If you aren’t familiar with Series I Bonds or Treasury Direct, you can review this primer on them, it should get you up to speed. Everything is still accurate except the annual limit per SSN has been lowered from $30,000 to $10,000 ($5k online, $5k in paper).

New Rates

The Series I Bonds’ interest rate is calculated through a fixed rate and a semiannual inflation rate. The fixed rate is announced every May and November and is valid for all bonds issued during the six month period after the announcement and is valid for the life of the bond. Last November, the announced fixed rate was 1.20%. The inflation portion is also announced every May and November and is based on the CPI-U (Consumer Price Index for all Urban Consumers) and can be reasonably predicted. It’s predicted that the announced inflation portion of the rate will be approximately 2.416%.

If you take that to be true, using the total rate calculation, you’ll get an annual rate of 6.06% - which is nearly double most online savings accounts. That’s why we’re getting some Series I Bonds. By purchasing in April, we lock in the fixed rate portion of 1.2%. This gets us 4.38% for six months then 6.06% for another six months, with the future unknown. What’s nice is that the interest is federal tax deferred (until you cash in the bond) and state & local tax free, so the effective rate is a little higher depending on your state taxes.

Redemption Rules

The only important rules about Series I bonds is that you can’t redeem them for one year and if you redeem it before it’s five years old, you surrender 3 months of interest (most recent three months). Also, in case you were interested, savings bonds are nontransferable so don’t buy them off anyone. And lastly, when you redeem the bonds you will receive a 1099-INT.

If you want more information, here’s the Treasury Direct page on Series I Bonds, which includes a list of historical rates (fixed and inflation) as well as the equation they use to calculate the composite earning rate.

(photo by allyrose18)

There are dozens and dozens of online banks offering all manner of savings and checking accounts. Some banks you’ve heard of before and some you’ve never heard of. Makes you wonder what the best online bank is huh? Before you ever deal with any bank of any kind, online or in person, be sure to double check that they have FDIC insurance (lookup) and that they’re a legitimate bank. That being said, all of the banks on this list are legitimate, have FDIC insurance, and have been in the business of banking for a few years. These aren’t no-names but their names may not be familiar to you (if you read a lot of personal finance, all of these names will be recognizable) and they’re all banks that I’ve dealt with personally or talked extensively with someone who has dealt with them personally.

#1. ING Direct

For the longest time, ING Direct did not have the best of rates. While other banks were up in the 5’s, they were in the 4’s. When others were in the 4’s, they were in the 3’s. Now that the others are in the 3’s, it’s glad to see ING Direct is still in the 3’s. I’m a fan of ING Direct because of how easy they make everything. Their interface is intuitive, fast, and I can easily refer other people to take advantage of their $25 new account bonus. I can commit funds to a CD in minutes and then manage it all in one place. To be completely frank, interest rate is an important factor but not the most important factor when the rates differ by fifty basis points (half a percent on $1,000 is a mere $5, plus it’s taxed!), it’s about reliability and consistency and they’ve delivered on both.

ING Direct also has a promotion where you can get $25 if you open a new account and deposit $250, the only caveat is that an existing member has to refer you. You can visit this ING Direct $25 new account promotion referral page for a list of referral links. The referrer gets $10 for referring you.

#2. E*Trade

E*Trade, known more as a discount broker than as a bank, takes the number 2 spot in my list of top online savings banks because you can link your savings account to a brokerage account and instantly transfer funds between the two. If you’re an impulsive gambler and like to plow money into penny stocks, you don’t want an E*Trade online savings account or its 3.01% interest rate because you’ll probably turn it into a -100% interest rate account. That being said, the appeal of this account for me is the speed and convenience of being able to transfer between the two without having to wait several days for an ACH transfer. If you have more than $5k and fancy a checking account, they have a checking account earning 3.25%.

#3. HSBC Direct

How could I put HSBC Direct, the online bank rated 2006 Best Overall Online Bank by Kiplinger’s Personal Finance, at third? Sometimes that first mover advantage is difficult to overcome. Many banks appeared before HSBC but none had HSBC’s brand name power but once you have a high yield savings account, is there a real need to get another one? I actually do not have an HSBC account but many of my friends do and they say that it’s definitely one of the best in terms of features (and rates, they’ve been consistently one of the highest interest rates since their inception). The minimum amount you need to deposit to get the best rate is $1, which is the same as some other banks but E*Trade (checking) requires at least $5,000; so a minimum of $1 is not true across the board.

#4. Washington Mutual (WaMu)

If you are not comfortable with a completely online experience and there are no HSBCs near you, you might want to consider Washington Mutual and their Free Checking account as an option. You can link up your regular Wamu accounts, get free checks for life, cash-back on your debit card purchases, no monthly account fees, and the awesomely powerful 3.30% APY interest rate on a checking account. For me, I already have a checking account and the desire to have such a flexible and lucrative checking account isn’t enough for me to open up another one (plus there isn’t a branch near me, on the biggest advantages of a B&M type place).

#5. Emigrant Direct

Emigrant Direct probably has the least amount of branding power compared to the rest but they were the second online bank account I opened because they had competitive rates. Their CD buying process is also quite simple, not as simple as ING Direct, but their online account system looks and acts a little dated. One knock against them, which was the big bonus for ING Direct, was their reliability. When they revamped their system, it went down for a few days. That’s not what you want in a bank where the only access is online access.

Current Rates

• ING: 3.00% APY
• E*Trade: 3.25% checking, $5,000 min (3.01% savings, no min)
• HSBC Direct: 3.05%
• WaMu: 3.30%
• Emigrant Direct: 2.75% APY

There you have it, my five top online banks (though one was brokerage first and several of them have brick & mortar presences) according to my experience with them or my research of them. Please feel free to share your opinion and vote for which of these banks (or ones I left off the list) you think makes for the best online bank. (If you’re interested, Five Cent Nickel did a reader’s poll and has his list of best online banks)

If you weren’t a fan of President Bush and believed he, and politicians in general, only pushed for tax breaks for the rich then you’ll want to pay close attention to a recently Fortune that sheds some light onto the little footnote on the 2008 tax stimulus package. Most people focus on the tax stimulus check they’ll be receiving in a month or two, I know I did because that’s what affects us and most Americans. Fortunately, we have people like Allan Sloan focusing on all parts, including the little piece about raising the “maximum size of a ‘conforming’ mortgage to $729,750 from the previous cap of $417,000.”

What the heck does that mean? A conforming loan is one that Fannie Mae and Freddie Mac can buy. Since they can buy them, the interest rates on the loans are generally lower because they’re less risky. If a bank knows it can sell it to Fannie Mae and Freddie Mac, they can charge less in interest. The spread these days, according to Fortune, is a significant 1.27%.

My friends that share a half-million dollar mortgage, and those who own homes that are worth more than $417,000 but less than $729,750, benefit the most from this. Borrowers have access to lower interest rates and thus are able to purchase “more house.” (Nothing changes for those above the $729,750 amount)

For example, for the monthly mortgage payment of $1,500 can get you a $250,188 loan at 6.00% or a $219,448 loan at 7.27% - that’s a difference in the purchase price of $30,740! And, it obviously gets bigger as your amounts get higher. This makes homes in that range more affordable and thus helps increase their value. That’s stimulus people!

Allan goes on to recognize that the boost will expire at the end of the year, since it was designed to help stimulate the economy, but he suspects it will remain. I just wanted to highlight this piece of the package since very few people discuss it and Allan does a great job. His ending quote is a gem as well - “The one thing I liked about the stimulus package was that the government had enough sense to not send money to people like me. But then it turns around and hands me a housing subsidy. I’ll gratefully accept the gift. But that’s no way to run a country.”

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The 149th Carnival of Personal Finance is now available, I submitted my post on laddering CDs for your emergency fund.

When Patrick at Cash Money Life tagged me for this meme, he said that I probably had a couple little “hustles” going on the side when I was in college. I have no idea how he knew, though I had hinted about them in the past (selling stuff on ebay, online poker and blackjack), I don’t think I ever really wrote them all out in their full glory. I had some pretty lucrative things going, in college student terms, and it certainly easily sustained my lifestyle. However, the number one best financial move in college made the rest pale in comparison.

The number one best financial move I did in college was to graduate a semester early. That one move alone saved the cost of one semester’s tuition at Carnegie Mellon University, located in Pittsburgh, PA; which amounted to somewhere in the neighborhood of $15,000 plus room, board, food, whatever. I was able to do that because I always loaded myself up with classes, with AP classes in high school and then regular classes in college, and always pushed myself to the limit for those three and a half years. I don’t think all my little side projects, in total, earned close to that.

Of course, that financial move isn’t at all interesting and is borderline boasting (”oh look how smart Jim is!” we won’t go into what my grades were, shhhh!), so let me tell you about the most interesting of the side jobs I had:

Selling on eBay: eBay had started to get big and the whole “Buy Hot Deals from Fatwallet and resell on eBay” was still in its nascent stages. Whenever I see someone trying to make money, I try to figure out how that person is making money and then try to do it and then improve on it. So I saw these great deals on eBay for brand new products and so I investigated where they must be getting these great deals. Some were getting them wholesale (I didn’t want to get a tax ID and go through that process so I skipped it) but some were just buying stuff that was cheaper after rebate and then selling it on eBay. I did that a couple times before I realized the effort wasn’t worth it.

Eventually, I realized that what you needed to do was find products on sale where the eventual buyer wouldn’t be searching the Fatwallet forums or other deal sites. Computer and electronics shoppers are savvy enough to search the forums for a deal so eBay margins on those items is much lower. If you want DVDs, hats, and sports jerseys… those shoppers go to eBay first. Over the course of a year or so I sold maybe a eighty Michael Jordan Wizards jerseys, fifty John Deere hats (this was after Ashton Kutcher made them popular on Punk’d), and who knows how many DVD sets (my fiancee likes telling the story about how we ripped open a package from Canada of Band of Brother Gift Sets and then shoving them into packages for the post office because I was late on shipping them).

Eventually it got to the point where I was tired of looking at the eBay completed sale pages to try to figure out how much something could sell for and I put that Carnegie Mellon Computer Science education to good use. It took a few hours but I put together a Java application that went onto the eBay website and screen scraped the text off the completed auction pages. It collected the last two hundred auctions and then ran some simple statistic numbers. It told me percentage sold, average sale price, standard deviation, range, and who knows what else. I just wanted to know, in a few seconds, whether I could make money with a deal. It eventually started collecting the names of bidders, repeat bidders, losing bidders, and other information that would tell me how many people out there still want this stuff. So if someone was a losing bidder many times, I know at least one person is going to probably want this.

I actually sold the tool, after converting it from a Java app with a GUI to strictly command line, to a PhD candidate friend of a friend for $500, the first, and only, time I had sold a piece of software for money. It was pretty cool! Now eBay’s systems make the tool useless as they now require login, sanitize much of the bidder information, and otherwise make data collection difficult for people who don’t use their API. It was still a ton of fun though and I learned quite a bit from doing it.

So there you have it, both the smartest and the most interesting financial move I made in college. The smartest overall move, of course, was meeting my lovely wife!

If you ever wanted to buy shares of L’Oreal, you probably were introduced to the idea of an American Depository Receipt. American Depository Receipts, or ADRs, are constructs that allow you to purchase ownership interest (stock) in foreign companies on the domestic stock market.

It’s actually a pretty simple construct. The ADR is a certificate issued by a US depository bank and represents a share (could be a fraction, whole, or multiple shares) of a foreign stock the bank is holding overseas. The ADRs are issued in terms of US dollars but the underlying security is still held in the country of origin’s currency. The whole point of ADRs is that it makes it easier and more convenient to own foreign shares. Instead of having to open a brokerage account overseas, transfer the funds, convert them into the local currency, and then make the purchase - you just buy an ADR. (that’s just one-way, so double that headache). You can tell if a stock is traded as an ADR because it will generally have (ADR) next to its name (as L’Oreal does on Google Finance).

From the operations perspective of yourself, the investor, there is no difference between buying and selling shares of stock and ADRs. You just need to be aware that in addition to all the risks associated with investing in the domestic stock market, you’re introducing currency and country risk into your portfolio. Currency risk refers to the exchange rate of the dollar and the local currency. Country risk refers to the risk associated with changes in the local country’s economy. In the domestic stock market, all holdings are in dollar and you’re contained within the US economy (for the most part, though the World Is Flat) so you don’t have to account for currency and country risk (from the local country).

(If you want to get technical, an ADR is the actual certificate where as an American Depository Share, ADS, is the actual share. An ADR can represent multiple ADSs. In colloquial use, ADR refers to both.)

According to Wikipedia, the first ADR was introduced by JPMorgan in 1927 for a British retailer named Selfridges&Co. The largest depository bank is the Bank of New york Mellon.