Ever have one of those days where you crank out a bunch of things on your to-do list? I had one of those last week and it had a retirement and investing theme to it (that’s why I’m writing about it!). It consisted of kicking off the 401(k) rollover process, and researching what we needed to do to change the name on a brokerage account and consolidate multiple accounts. These all had to deal with Vanguard and, naturally, they made it painless.

One thing, above almost all else, I love about Vanguard is the fact that I can call their phone number and talk to someone in minutes. I don’t have to play the “hit 0 until the menu system gives up”-game, I just call and wait a few moments until someone picks up. Today, I spoke with a representative named Fred who was very helpful. After figuring out the exact name of the check for the rollover, I asked about changing names on accounts and consolidating them. Since I had called the rollover phone line, these questions were a bit of a curveball but he was able to help me out by linking up with Brian in brokerage services to figure out what we needed to do. That’s service. Oh, and it wasn’t outsourced to someone in a foreign country reading off a script (and they still only charge relative-pennies for their index funds!).

Rolling Over 401(k) to Vanguard

Rolling over a 401(k) to Vanguard, and I suspect any other brokerage, is painless. Simply call up your 401(k) provider and tell them that you’d like to terminate your account and initiate a Trustee to Trustee rollover. For Vanguard, the name on the check is Vanguard FTC; check with your IRA provider for their legal name (this is very important, putting the wrong name can delay the rollover process). My 401(k) provider was CitiStreet and they are required, either by their policy or my employer’s, to mail the check to me. I then forward it to Vanguard’s PO Box (Vanguard Group, PO Box 1110, Valley Forge PA 19482-1110), which will add two or three days to the process. One thing I do need to add to the check package is a Letter of Instruction indicating how they should deposit the funds. Here’s what mine said:

To Whom It May Concern:
   Included is a 401(k) rollover check that I would like deposited into my Rollover IRA account #XXXXXXXXXX. Please deposit the funds into these funds:

      50% into 0533-XXXXXXXXXX (VEIEX)
      50% into 0699-XXXXXXXXXX (VFIFX)

If there are any questions or concerns, please contact me at XXX-XXX-XXXX.

Easy as pie! Unfortunately, I did this last Thursday and missed the post-Google rally by the market on Friday… but one shouldn’t time the market!

Changing Name on Accounts

This is a bit of an extension onto the changing your maiden name after marriage because I never discussed brokerage accounts. To change your name, seek out the “Change of Ownership” section and select the reason you’re changing names - for us it’s Marriage but there are options for death, divorce, gifting, financial planning, and other. Selecting marriage will automatically select the reason “From an individual nonretirement account to a joint account” (there is only one). After that, you select the from accounts, for us it’s a mutual fund account, and then it’s onto the forms (we opted to download and print them, rather than mail which can take up to 10 days!).

send in a copy of your marriage certificate and a Letter of Instruction indicating that you want your name changed from X to Y along with a signature guarantee or medallion guarantee. You can get a signature of medallion guarantee at your local bank and it’s different than a notary. We will be mailing that form to the same PO Box 1110 as the Rollover check.

Here’s our Letter of Instruction for that one:

To Whom It May Concern:
   Please change the legal name on account #XXXXXXXXXX from Jim’s Beautiful Fiancée to Jim’s Beautiful Wife.

If there are any questions or concerns, please contact me at XXX-XXX-XXXX.

Consolidating Accounts

Lastly, we have account consolidation. At the moment, both my wife and I have accounts at Vanguard. In the near near future, we would like to consolidate those accounts into a single sign-on and be able to manage it through one account. To consolidate, we need to change the ownership of her account from an individual to a joint. To do this, there is a change of ownership form on Vanguard.com that we will need to print out and get signature guarantees for. This is necessary because we cannot consolidate accounts until I am considered an owner of the account. The signature guarantees are required because she is essentially surrendering ownership. This was all explained very plainly by Vanguard, which I appreciated.

And can you imagine, that entire phone call took about fifteen minutes (including two minutes of hold time while Fred got Brian on the line). This is why Vanguard is on the list of companies I’d promote for free.

Tomorrow is Earth Day, so why not start off the week with an environmental friendly post? When most people think of being green, their brains immediately jump to organic foods and recycling. Organic foods can be expensive, recycling can be a pain, and many come to the same conclusion as famed philosopher Kermit The Frog, who once sang, “It’s not easy bein’ green.” In all fairness, what Kermit was singing about was entirely different but it perfectly sums up what many people think of environmentally conscious living - it’s not easy. That’s because many focus on the difficult and expensive aspects of going green, because we commonly associate difficulty and expense with impact, rather than the relatively easy things we can do that can still make a difference. In fact, many of the easy things can save the Earth and a few dollars (and even a few pounds!).

Reuse Plastic Containers

Most people think recycle, recycle, recycle - but remember the mantra is actually reduce, reuse, recycle. Reusing plastic containers, when it’s safe to do so, is a great way to reduce the amount of plastic we consume as a whole. When we order take-out food from the local Indian restaurant, our meals come in plastic containers we can then turn into lunch boxes. While it’s great to also recycle, some municipalities don’t take certain types of plastic so reusing is the only option, besides throwing them away. Reusing plastic containers helps your wallet because you don’t have to buy these containers yourself! Plus, I always get the feeling that those Glad or Tupperware containers are overpriced anyway.

No More Bottled Water

I understand it’s convenient, I understand it’s healthy, and I understand you think your tap water tastes like crap. But every single year 29283094293 plastic bottles are thrown out and the poor penguins are choking on them. If you think my random number is an exaggeration, it’s actually not too far off because the Clean Air Council estimates that Americans throw away 2.5 million plastic bottles every hour (that’s 21,900,000,000 a year). Can you imagine that? No, I can’t either.

Want a good reason for your wallet? The cost of tap water, even if you add in a filter, is microscopic compared to the cost of bottled water. Buy a reusable water bottle, a filter, and fill your own each day and you can save yourself some serious money. If you buy a $1 bottle of water each day, that’s $365 a year you can spend on anything else. And you don’t contribute to this ridiculous level of wastefulness.

No Prepackaged or Premade Food

We love convenience right? We love throwing a Healthy Choice or Stouffer’s freezer/TV dinner into the microwave and eating it for our lunch or dinner. The only problem is that you introduce a paper box and a likely non-recycleable plastic container into the trash. Plus, to be honest, it’s really really not good for you. The amount of sodium in a typical meal like that, even if you can get it for a buck when it’s on sale, is ridiculous. If you consume that much sodium on a regular basis, it’ll have significant negative effects on your body (high blood pressure, heart disease) which will definitely impact your wallet in medical costs down the road. Instead of going with the prepackaged or premade foods, check out allrecipes.com and try making your own meals. You’ll find them more fulfilling (who eats only one of those meals anyway?), healthier, and perhaps even cheaper.

Carpool

You can’t have a list about being green and saving green if you didn’t throw in carpooling. The secret to cutting your gasoline bill by 20% is to carpool once a week. Brilliant right? That’s because saving on gasoline is not difficult, people just don’t want to be inconvenienced and the best way to do that is to strategically pick the day you’re going to carpool. By consuming less fuel, you contribute less in greenhouse gases, reduce the demand for petrol, and you save yourself some money each time you hop in a rideshare. Considering how many people complain about fuel prices, it’s amazing there aren’t more carpoolers.

Eat Less Red Meat

How could I, editor of Grill Maestro and lover of red meat, possible endorse the idea that we eat less red meat? I do this because I read in a recent Ode magazine article that stated a single cow produces as much as 132 gallons of methane a day! The United Nations Food and Agriculture Organization calculated that the livestock industry accounts for 18 percent of all greenhouse gas emissions, compared to 13.5% produced by all of the world’s transportation. That’s downright amazing. And meat is hardly cheap too, chicken on sale is $1.99 around us and beef is far more expensive (obviously depending on the cut). I don’t think I’d ever go vegetarian, ever, but consuming less red meat is something we’ve done accidentally given the rise in prices and changing food preferences.

Bag Your Lunch

Bagging your lunch is better for the environment because you don’t need to drive somewhere to eat and you don’t have all the waste associated with the restaurant. For your wallet, saving yourself that $6-$10 lunch each day is going to translate very nicely to your bottom line and you’ll probably be eating healthier if you cook the food yourself. There’s a reason why so many restaurants are fighting new regulations regarding nutritional information - their food is terrible for you. Super Size Me may have been a gross exaggeration but the point is still clear, fast food restaurants are horrible for you and the fact that they don’t want to list nutritional information on the menu is proof positive they know it too. So, save yourself a few dollars, save yourself the gas, and save your arteries!

Buy Stuff Online

I once gave 8 reasons I do my shopping online and reason #5 was that online shopping meant less driving. Less driving, of course, means less fuel. Now, the trade-off here is that companies will have to ship you the packages, which will mean more driving on their part. I believe that since they are shipping packages anyway and are on optimized schedules and driving routes, their consumption, after you factor in how they won’t need to ship that product to their stores, will be less than yours. I think there will never be a provable answer to this but I’m confident that shopping online is better for the environment.

There you go, seven easy ways you can be green and save green - just try one this week and see how easy is and good it feels!

Links updated July 15th, 2008.
Welcome to the self-service $25 ING Direct signup promotion center at Blueprint for Financial Prosperity. I’ve written on numerous occasions about how ING Direct will give you a $25 bonus for opening either a checking or savings account through a referral and depositing $250, so I’ve set up this page to allow readers to help themselves to the referrals (I get $10 for each referral). In the past I asked for you to contact me, then I emailed out the referrals… no more, this is far easier!

Below, you will see a series of links to ING Direct and each one is an account referral link good for one $25 bonus per new customer only. Each link will only work for one new account so if you click the link and it says “We’re sorry, but the referral link within the email you received has expired and is no longer valid. We recommend that you contact the sender and ask them to re-send the referral email. Or click ‘Continue’ to proceed with the application process without the account opening bonus.” then please move onto the next one. As links are used, I’ll clean up the page such that only the good links are left.

If you use an expired link, you will not get the bonus.

Lastly, if you do not deposit $250, you won’t get the bonus. If you still want an account, please use this link.

ING Direct Savings Accounts

1. ING Direct $25 Savings New Account Opening Bonus
2. ING Direct $25 Savings New Account Opening Bonus
3. ING Direct $25 Savings New Account Opening Bonus
4. ING Direct $25 Savings New Account Opening Bonus
5. ING Direct $25 Savings New Account Opening Bonus
6. ING Direct $25 Savings New Account Opening Bonus
7. ING Direct $25 Savings New Account Opening Bonus
8. ING Direct $25 Savings New Account Opening Bonus
9. ING Direct $25 Savings New Account Opening Bonus
10. ING Direct $25 Savings New Account Opening Bonus
11. ING Direct $25 Savings New Account Opening Bonus
12. ING Direct $25 Savings New Account Opening Bonus
13. ING Direct $25 Savings New Account Opening Bonus
14. ING Direct $25 Savings New Account Opening Bonus
15. ING Direct $25 Savings New Account Opening Bonus
16. ING Direct $25 Savings New Account Opening Bonus
17. ING Direct $25 Savings New Account Opening Bonus
18. ING Direct $25 Savings New Account Opening Bonus
19. ING Direct $25 Savings New Account Opening Bonus
20. ING Direct $25 Savings New Account Opening Bonus

My friends thank you for using one of their links!

The talk of middle class has come up a lot lately, in part because there’s no clear definition of middle class, but Lazy Man shared his thoughts this week on the topic and I thought this quote was a gem: “… unless you love what you do exchanging time for money is a losing proposition.” I think that many of us grew up in situations where money wasn’t abundant and saw education and a job as a way to more money. Whether it was brilliant parenting or actual fact, I grew up thinking we didn’t have much money (books were my toys) but we still considered ourselves “middle class” be we didn’t go hungry, we didn’t struggle to pay bills, and we were otherwise living comfortable and happy lives by any standards. As a result, I saw a job, which was attained through strong academic performance, as the way ensure I could provide for my family. The point of getting a job was to earn money, survive, and then thrive. In my jobs, I was exchanging time for money for something that I enjoyed but can’t say I loved. Now I am exchanging time for money for something I do love and I think I’m much happier because of it. (The italicized sentences in the paragraph were ones that were originally accidentally deleted in the editing process when I first published this post)

Plonkee has a short story about how she keeps forgetting her keys at work and how stupidity is costing her dreams, one £6 (or £1.50) chop at a time. I think it’s a telling story because a lot of people do this, we go through our daily process and often hit these little financial road bumps. If we’re tired, we just plow on through with the power of the purse; if we’re not, perhaps we make the long trek back to get our keys. However, we hit these road bumps all the time. So the solution really is to look back at your daily routine and see if you can plow through the road bumps without the use of money. So think of the last “stupid” expenses you had and how you can avoid them next time.

Sometimes it’s called “F U money” (you can figure it out) and sometimes it’s called “walk away money” (as in walk away from it all), but Trent discusses how you can calculate that number (three versions, only the last of which I consider F U money). I think it helps with goal setting and gives you something to shoot for, rather than day-in and day-out of work work work. Like Lazy Man said, you can’t exchange time for money… you lose every time.

Anabelle from Debt Free Revolution did an entertaining BlogTalkRadio show with Duane Lester with this description “Becoming debt free is a long term goal of mine, and honestly, it should be for everyone. Anabell of Debt Free Revolution talks with us about how to accomplish it.”

And I leave you with this cute story from Mrs. Micah from her one year anniversary.

Okay I lied, I just saw this great video on failure:

(Photo by benimoto)

If you’ve ever lamented the fact that you signed a 30 year fixed mortgage instead of a 15 year fixed mortgage (it was one of 8 regrets of 2007 for Trent of The Simple Dollar) because of how much money you could’ve saved, don’t. I’m going to do some simple Dinkytown.net (using this fixed mortgage loan calculator) math to show that the difference between prepaying a 30 year fixed mortgage and a 15 year fixed mortgage is big. The current rates on Bankrate (as of early morning on April 16th, 2008) for a 30 year fixed mortgage is 5.62% and for a 15 year fixed mortgage is 5.20%, so we’ll be using those. Rates have since changed but the analysis still holds.

If you had a $300,000 mortgage and made additional payments (~$677) onto the 5.62% 30-year mortgage such that the payments matched the 5.20% 15-year mortgage (~$2403), the difference in total cost (principal and interest) is ~$19,153 pre-tax across fifteen years. After you discount it by your marginal tax rate (say 25%), divide it across the 180 months, it’s only $79.80 a month. $80 difference on a $2403 mortgage payment is 3.3%.

You might say: “Jim, you’re just conveniently ignoring the $19,153 and focusing on the smaller monthly number of $80 - that’s just mathematical hocus-pocus. I’m upset about the $19,153! Also, $80 might not be a lot to you Mr. Money-bags, but I’d rather have that money than give it to a mortgage company.”

To which I would respond: “Ah, good point, but let us calculate the present value of that $80 a month and see how much it’s really ‘worth’ to us today. As for the $80, I too would rather have it in my pocket, but I’m not going to cry over spilled milk.”

If you assume that inflation will be at 4% a year, 180 payments of $79.80 is worth approximately $10,788 today (if I did it right in my TI BA-II Plus calculator). It’s a $10,788 difference on a $300,000 mortgage. Ten thousands dollars isn’t a trivial amount of money, but that’s the cost of having the flexibility to make the 30 year payment into a 15 year payment if you want to. If you have a 15 year mortgage, you are required to make that payment.

Lastly, if you still are bothered about the difference, you can always refinance.

(someone please check my math!)

I always read about how Bank of America sucks this, and Bank of America sucks that, but never had experience the suck that is Bank of America first hand. I opened an account with them a year ago with my then-fiancée because they had a branch within walking distance of my house and because they have ATMs essentially everywhere. I looked past the Bank of America horror stories because, honestly, every company has its bad moments. Well, today I met a bad enough moment to make me can Bank of America and go with M&T Bank. (I opened up a personal and business account with them because a good friend of mine works in their new business development side)

No, they didn’t screw me out of $23049823049 in fees or otherwise hosed me by being unreasonable - they did something far worse because it wasn’t some technical glitch or some procedural hangup. They’re going to lose me as a customer because they were rude. When there are as many choices as there are in the world, you can’t even mess up like that. Sorry!

Today, I went to a Bank of America branch to make some check deposits. When I walked up to the counter with my checks, the first thing the teller asks me is if I had counted the amount. I responded “No” because I wanted them to double check my math, as they always do. The responded with a bit of a roll of her eye and then asked me if I filled out a deposit slip. Again I said no, deposit slips are useless anyway. When she counts them up, she’ll print out a slip that goes with the checks and the deposit slip is just a wasted branch on a tree we’d otherwise like to keep around. This is what has happened the other half dozen times I’ve gone in to deposit a bunch of checks (and didn’t want to you the mechanized paper-cut maker of an ATM they have), the teller simply adds them up for you and you’re on your way.

So she pulled out a deposit slip and told me to fill out my name and address on the slip (useless!). Then she put a calculator in my face and told me to add up the checks. All of this was pretty terse and borderline rude but I was content to let it go. As I added up the checks and showed her the calculator, she proceeds to read out the numbers really loudly over and over again. Is there no sense of privacy? I can understand her reading them back softly, but she was speaking more than normal indoor voice.

Okay fine, whatever, at this point the interaction hadn’t gone great but it was hardly worth closing an account over. Then she looks at my balance and tried to sell me on a certificate of deposit. I politely declined. She persisted by saying I was losing money by putting my money in a regular checking account. She’s right, but I still politely declined. Then she proceeded to start talking to the customer waiting behind me! No good bye, no thank you have a nice day, nothing.

That, Bank of America, was the proverbial straw. Keep that lousy $6 you got for giving me an interest rate of 1.0%, which is essentially paying an annual fee anyway, and keep your other worthless products. We’re outta here.

It’s amazing they didn’t make it out of the first round of the Consumerist 2007 Worst Company in America contest (Verizon was a formidable opponent), but you guys should lock up the first round in 2008 against a cupcake like Toys R Us.

Update: Some people have said that I’m being a baby, that I over-reacted, (one guy said he’d punch me) and I respect all of your opinions (maybe I am a baby, but there are plenty of banking options that are more polite) and thank you for sharing them. I actually wanted to touch on the topic of over-reaction. What’s “worse” of a reaction, closing my account or calling out that teller to their manager? If anything, asking to speak to the bank manager and telling them the teller was rude seems to be like a greater over-reaction than closing an account. Thoughts on that?

There are plenty of articles out there discussing the importance of emergency funds and how to set one up, so this is not going to be one of those. I assume that you already understand all that good stuff (if not, check out these great articles in an MBN writing project). Here, I’ll discuss a strategy to maximize your emergency fund’s interest earnings so that you can lessen the pain of not having the funds in an investment account. The strategy is quite simple and works off the assumption that you are using the emergency fund to cover month to month expenses and not an enormous cost that is in the multiples of a month, though it can handle that too.

The Strategy

Ladder certificates of deposit so that you can maximize your interest earnings, minimize risk, and still have access to your funds when you need them. To ladder CDs, you purchase CDs for the amount of each month of savings but with different maturity periods so that one CD comes due each month. Let me us a real life example with ING Direct CDs (though I’d shop around for rates, I picked ING because they make opening a CD a cinch) to illustrate this. Also, for the sake of simplicity, let’s say you’ve saved up 13 months of savings of $13,000, which means 12 months will constantly be cycled into laddered CDs with one month sitting in a high yield online savings account.

Month 1: If you look at the ING Direct CDs, you’ll see that they offer 6 month, 9 month, and 12 month CDs (the rates are unimportant). Right now you need to find a CD that matures in 1 month, 2 months, 3 months, etc, but that will be impossible. The solution then is to buy one six month CD, one 9 month CD, and one 12 month CD. This sets you up to have three of your twelve months covered.
Month 2: Next month, you purchase another 6, 9, and 12 month CD. This sets you up to have half of the twelve months covered since the first set of 6-9-12 have now become 5-8-11. This puts your six CDs maturing in 5-6-8-9-11-12 months and your on-hand cash at seven months worth.
Month 3: You starting to see the pattern? Buying another 6-9-12 puts your total collection of 9 CDs at maturity dates of 4-5-6-7-8-9-10-11-12. At this point you also still have four months in cash sitting in your account.
Month 4: Now the pattern changes, since your CDs have now matured an additional year, you are looking at maturity rates of 3-4-5-6-7-8-9-10-11 months, but you can’t buy a CD of less than 3 months so you can only add an additional 12 month CD. This leaves you with three months of cash on hand and CDs maturing in 3-12 months.
Month 5: Add another 12 month CD to bring your full collection to 2-3-4-5-6-7-8-9-10-11-12, leaving you with 2 months of cash on hand.
Month 6: Add another 12 month CD and now you have a fully laddered 12 month CD structure in place, with 1-2-3-4-5-6-7-8-9-10-11-12 month maturity CDs! You still have one month of cash on hand.
Month 7: The first of your CDs has now matured and you’ll roll that into a new 12 month CD so that you have the full collection and still have a month’s worth of expenses in cash on hand. You will repeat this over and over and over …

Weaknesses

The primary weakness with this strategy is that you only have a month’s worth of expenses on hand. This lets you weather emergencies that cost less than a month’s expenses and those that have recurring costs, such as job loss. If you lose your job, you’re fine with this strategy because each month you’ll have access to another month’s worth of expenses as a CD matures. One mitigating factor about emergencies with a large cost, you can usually cancel your CD early and surrender the interest you would’ve earned, so laddering may be okay in that situation.

CDs with different maturity periods: What if your bank doesn’t offer 3 and 6 month periods? If you only have a 12 month period, then buy one year-long CD a month for a full year and you can the same laddering. The setup time will be longer and you surrender a bit of interest but there’s nothing you can do.

I hope you all were able to follow this explanation, it’s hard explaining something like that in text and I’m not an artist so it will have to do!

Sometimes you do your taxes on April 14th or 15th and you discover you owe the IRS (you actually owe the United States Treasury, the IRS is just there to bust your kneecaps if you don’t) more than what you can get your hands on in one day. Maybe you put too many exemptions or you underpaid your estimated taxes, whatever the case, you’re in a pickle and you need some help. The IRS sympathizes. They aren’t heartless automatons there just to suck the marrow from your bones, they’re willing to lend you a hand and let you pay off what you owe in installments. Here how you set that up. (and investigate why you had this shortfall so you don’t have to do it again next year!)

You have two options in setting up an installment agreement, through an online payment agreement webapp or through the telephone. Before you set up the installment agreement, you have to do some homework and make sure you can pay the one-time setup fees.

How Much?

To set up the payment plan, you have to first figure out how much you owe. If you don’t know, you can call the IRS to request copies of your tax returns so you can figure that out. The total amount should be the original tax you owe, plus penalties and interest. It may help to get an accountant or someone experienced with this type of math to help you out.

Request the Plan

After you have the amount, you can set up the installment plan in one of two ways:

• Call the IRS at 1-800-829-1040.
• Use the Online Payment Agreement Application. You can only use this if you owe less than $25,000. If you owe more, you have to call.

There is the third option of filling out Form 9465: Installment Agreement Request and mailing it in but that takes longer, every day that passes is more interest and penalties tacked on. It’s better to use the online or call options.

Fees

According to Form 9465, there is a one-time fee based on how you plan on paying:

• Direct debit installment agreement - $52
• Payroll deduction installment agreement - $105
• Online payment agreement - $105

Rejection!

There is a possibility the IRS could request your request for an installment agreement but they do say that if you owe less than $10,000 and you 1) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment plan in the last five years, and 2) the IRS determines you can’t pay the tax owed in full and you prove it, and 3) you agree to pay the full amount you owe within 3 years and comply with tax laws; then you will be okay.

Basically, it sounds like as long as you aren’t screwing with the IRS, have your ducks in a row, and aren’t trying to pull one over on them, they’ll approve it.

(Photo by alykat)