Discover Business is running a promotion where you can get $100 cashback after $1000 in purchases within the first three months. Discover Business was the card I decided was the best business card because it offered a 0% APY on balance transfers and purchases for 12 months, had no annual fee (rare in a business credit card), and now with this $100 cashback promotion offer… it’s certainly worth considering if you run a business.

Some other notable features of the card:

• 0% introductory APR on purchases and balance transfers,
• 5% cashback bonus on office supplies,
• 2% cashback bonus on gas purchases,
• 1% cashback on everything else.

So, who can apply for a business card? Anyone can apply, simply enter your social security number as the TIN. The beautiful thing about the United States is that anyone can be a business as a sole proprietorship and there are no additional tax implications or forms to fill out for the sole proprietorship business entity. This means that anyone can take advantage of this business card offer even if you don’t have a business.

When I was first approached to review the book titled Beating the Market, 3 Months at a Time, I thought I was looking at one of those “invest in this hot new sector, you’ll be rich in three months.” Then I saw that the publisher was Financial Times Press and that allayed my concerns some more, FT Press isn’t going to put out some day-trading, hawkerish type book and, this is something I learned later, neither of the authors are your BS snake-oil salesmen types.

The book isn’t about day-trading, though Gerald Appel is well known for his technical analysis and marketing timing (Gerald Appel created the Moving Average Convergence / Divergence technical indicator), but about active investing and how it can yield higher returns than “buy and hold” strategies. By active investing, they mean that you can use their strategy to review your portfolio once ever three months (rather than the often advised once a year rebalancing act). So, through active investing and a one hour review every three months, you can beat the market with their proven investing plan. That’s the promise they’re making.

Basic Investing Education

Beating the Market begins by educating the reader on how to put together an investment portfolio, what your goals should be, how you should approach it, and is generally a good primer on investing in general. For example, it’s important to note that you want to get a rate of return greater than the risk-free investments you have available to you. I could put my funds in an E*Trade Online Savings account and get 3.15% risk-free, so my investments have to beat that. (usually the benchmark is money market funds and 90-day T-bills) Another goal is to manage the risk of your investments, something individual investors are notoriously bad at. Emerging markets are always hot and can return big double digit returns, but they can also lose big doubt digits… are you getting enough return for the risk you’re taking?

It Gets Complicated, Quickly

After the eight page primer on putting together a winning investment portfolio, the books slices right into diversification and risk management. I don’t want to recap the entire book but the topics it covers run the gamut from discussing ETFs and emerging markets, to the purpose of bonds in your portfolio, to special bond market investments, and end with discussions of retirement, planning for the political impacts, and an appendix chock full of resources. There is even a chapter called the Definitive Portfolio in which they build out a well diversified example portfolio with a mix of two types of bonds, two types of ETFs, and one overseas component.

The Investing Plan

So what’s this plan I spoke of earlier? The plan is the whole book. By understanding all the pieces of your portfolio (including risks, investment profiles, and all the nitty gritty described in each chapter) and how diversification works to reduce your risk, you can actively participate in the management of your portfolio without having to pay a manager 1-2% of your investments. That’s what active means in their plan, not day trading.

There’s a lot of information in this book and it’s definitely one I will be reading more closely over the next few weeks. There are discussions about high yield “junk” bonds and about the international markets that I glossed over, two things I know very little about, so if you have it at the library or bookstore (I tend to borrow all my books from the library) I wholeheartedly recommend that you pick it up.

Many people see the retail industry slumping this year because of the continuing credit crisis, meaning Americans can’t borrow as much to continue our spendy ways, and increased prices across the board, meaning Americans can’t buy as much with the money they still have. Either way, there are only a few ways that a retailer bankruptcy actually affects you. First, let’s take a look at what actually happens when a retailer goes bankrupt. Then, we’ll talk about how this affects you.

Retailers Going Bankrupt

When a retailer goes bankrupt, it’s almost irrelevant to the consumer what type of bankruptcy protection they file for because the effects are the same. Chapter 11 means they want to soldier on, restructure their debts, and try to get back on its feet. Chapter 7 means the business is kaput, everything is going to be liquidated, and there’s no hope for the company.

How This Affects You

Gift Cards: Either way, a retailer in bankruptcy protection will see all of its gift cards frozen and made worthless. This is the greatest impact on the consumer and one reason why I argue that you shouldn’t hold onto gift cards. When Linens ‘n Things and Sharper Image filed bankruptcy earlier this year, both froze gift cards. There are exceptions and those often occur in the case of Chapter 11 bankruptcies, where the retailer will still honor gift cards, because they want to keep good will. If they freeze gift cards but still keep stores open, it’s less likely that consumers will shop there after they’ve been “screwed.”

Another scenario is when those gift cards are made worthless by the bankrupt retailer, other retailers may swoop in and offer discounts to those holding the worthless gift cards. It’s akin to airlines offering fare discounts to those holding bankrupt airline tickets.

Liquidation Sales: Just because the retailer is going under doesn’t mean you’ll find any good deals. CompUSA’s liquidation sales were awful, Shaper Image liquidation sales were awful, and Bombay liquidation sales were awful. When the items were overpriced in the first place, it’s hard to justify paying “normal” price for something you can never return. However, there are always deals to be found if you’re diligent but don’t expect a fire sale just because the retailer is bankrupt.

Returns: You’re probably out of luck on returns with a bankrupt retailer. Any purchases you make after they’ve declared are definitely not returnable, in fact they will probably put up huge signs in the store indicating “all sales are final” and “no returns.” As for purchases before they went bankrupt, you might be able to return it but I doubt it. If the retailer is really going away, there’s no reason to accept the return. If the retailer is restructuring, you might be able to return it but I wouldn’t bet on it.

A retailer going bankrupt is never a good thing, even if you’re a bargain-hunter swooping in, because a lot of people will have lost gift card value (in the case of Linens ‘n Things, ~400,000 lost around $42M in gift card value!), the sales will probably suck, and you lose another sales-tax, income-tax paying shop in your neighborhood.

(Photo by paul keleher)

On relatively inexpensive things, it’s oftentimes good enough to get a decent deal rather than hold out for the absolute best deal ever.

Every once in a long while, usually around large sporting events or during the hot summer months, my local Giant Food has a great deal of five 12-packs of soda for ten dollars. At $2 a pack, this brings the price per can of soda down to less than 17 cents a piece. This is compared to a regular price of $3.99 a 12-pack (I think, but I can’t be certain because I’ve never purchased it at full price before) which turns that seventeen cent piece of caffeinated heaven into a nearly 34 cent David Bach-worthy indulgence (okay, there was a bit of hyperbole involved there but you catch my drift). Those five for $10 deals aren’t very frequent and oftentimes Giant Food throws its customers a bone and offers the 12-packs at three for $10 or sometimes four for $10. At those prices, the unit cost of a can is only slightly lower but don’t carry the stigma of full price.

My strategy for weathering the droughts between good soda deals was to not purchase soda at all. It’s arguably better health-wise to skip the soda (one of my friends doesn’t drink soda on the advice of his dentist because the acidity damages your enamel if you let it linger) so I often go for more coffee when it’s cooler or plain water when it’s hotter. However, every so often I’ll crave a soda and then drop $1.29 for one of the plastic 20 oz. bottles. The end result is that it’s either feast or famine… I either get the deal and buy cans at seventeen cents or a bottle at over seven times the price (ignore the fact that I get eight more ounces because it’s not really relevant for the purposes of this discussion).

So lately I’ve been following my own maxim of getting a decent deal in the absence of the best deal. The five for $10 isn’t always available, but the 3 for $10 and the 4 for $10 is usually available and I pick up one to hold me over. By spending a little more, I prevent myself from going all the way over to the other extreme and get more value for my dollar in the long run.

Or I could quit drinking soda and stick with tap water, which costs nearly nothing.

One of my good friends has an opportunity to work on a client engagement in London, England, and started asking me about international medical insurance options for his ladyfriend. He will have medical insurance through his employer but his ladyfriend, if she chooses to live in England while he’s on this half-year engagement, will not have any medical insurance because they aren’t married and because she’ll have left her job. So, in chatting it up with him, the question of international medical insurance came up and he asked if I, in my infinite wisdom, could do a little research on his behalf and maybe write about it.

International medical insurance, or travel medical insurance, is pretty straightforward in terms of its offering and I was surprised at how cheap it was. The first step though is to see if you qualify for an ISIC Card because it gives you access to discounts and some supplemental insurance. Also, they recommend that you purchase travel insurance because it often includes some basic medical and accident coverage. If you are “a full-time student, a teacher or are under 26 years old,” then you’re eligible for the card.

Now, onto the insurance…

Abroad-Only Coverage vs. Both

Abroad-only coverage means that you only have medical insurance coverage outside the United States. The Both option refers to medical coverage in the United States and abroad. The advantage of Abroad-only coverage is in cost because medical services abroad are often cheaper and Abroad-only coverage doesn’t not let you return to the United States for treatment. The advantage of both Abroad and Domestic coverage is that you can always return to the US to receive treatment though the coverage will always be more expensive than abroad only. One significant disadvantage of Abroad-only coverage is that it will not cover pre-existing conditions.

Abroad-Only Insurance Providers

If you already have insurance, the best option is to talk to your provider to see if they offer international coverage. If they don’t (or if you just want to review your options, there are several international insurance providers that cater to the travel and study abroad demographic. If you want the “both” option, your best bet is to use an insurance search engine to get a few names of US insurers and call them up for more information.

Cultural Insurance Services International - This program covers study abroad candidates with affordable temporary health insurance. My friend will not be studying abroad, which is one of the requirements, but if you are, this is certainly a reputable site references by many universities. (Highway to Health, Inc. is another well-regarded student insurance provider)

Gateway Plans - This is a more comprehensive medical insurance provider that isn’t restricted to only students studying abroad. In fact, Gateway offers plans for US citizens traveling abroad, internationals traveling to the US, and almost everything else in between. For my friend traveling to the UK, she’ll likely want the Gateway International plan. The Gateway International plans will cover you for a minimum of 15 days to a maximum of 180, or six months. The plan rates seems pretty straightforward, with $100,000 of coverage for only $4 a day. (Wallach & Company, Inc. is another well-regarded insurance provider)

Does anyone have any first-hand experience dealing with travel medical insurance or something similar? I’m afraid I’ve never actually purchased any so my research is based solely on Google and numerous university study abroad websites, nothing beats first hand.

I discovered this detailed real estate blog called Matrix and this incredible set of mortgage-related heatmaps used by Bernanke in his last speech. Heatmaps are the quickest way to get a “snapshot” of a situation and these go through so many permutations that you can get a really good sense of what’s going on (and there are so many maps!). I had no idea unemployment concentrations were dispersed the way they are and how badly hit the Michigan area has been lately given the major auto manufacturer’s financial woes.

My last employer recently offered a Roth 401(k), which is essentially a tax-free version of the tax-deferred 401(k), though employer contributions are tax-deferred. It’s an interesting concept that has been around for a few years but hasn’t been adopted too widely, probably because of the paperwork. If I had a choice, I’d split my contributions evenly between the two and give myself some diversification.

Trent has received numerous complaints that he writes about the same stuff over and over again and that it’s getting old. Unfortunately for all you excitement hounds, personal finance is repetitive, it is conceptually easy, and “slow and steady” does win the race. It’s the chase of excitement, having that fancy car so you can drive it fast, throwing some money at a high flying potential stock, or that huge flat panel television - that’s the stuff that derails your trek to your personal finance goal. Spend less than you earn, contribute to your 401(k) and save for retirement, ensure you have proper and adequate insurance, blah blah blah - it’s repetitive but it works. Michael Jordan once said he shot a thousand free throws a day. How’s that for repetitive?

Nickel wrote a bit about his asset allocation this week and it’s something I am hoping to review sometime next week. I’ve input all the data I have into Vanguard’s Portfolio Watch and now I just have to figure out what my goals are so I can set things up correctly once and for all.

Housing doesn’t always go up. Sometimes it comes down. Hard. (scroll down to the story of the house that sold for $505k in 2006 and is now on the market for $177,495 - ouch)

Lastly, if you like heatmaps and those first dozen weren’t enough, here’s a cool one about all the pieces of inflation on the New York Times, my new BFF, courtesy of Consumerist (who got it from Nathan). Not surprisingly, that big red area is gas.

Have a great weekend!

Earlier this week Nickel sent me this awesome video about someone building a ridiculously posh treehouse in their backyard. The video’s background music is If I Had A Million Dollars done by the Barenaked Ladies Bluegrass Tribute (I think!) and so I thought to ask a few personal finance bloggers what they’d do if they had a million dollars. Would they build a treehouse in their yard?

Surprisingly none of them wanted to build a treehouse in their yard. In fact, the vast majority did exactly what responsible pfbloggers always advise people to do, pay off debt, save for the future, and then spend a little of the rest on yourself. Here’s what they said:

Flexo said:

Start a foundation promoting arts education, a million is just enough to get it started.

Paid Twice said:

I’d get out of debt, buy my parents a house where we live, pay taxes, give 10% away, and whatever is left, put into retirement and college savings for the kids.

Nickel said:

If a million dollars suddenly fell into my lap, I’d invest the vast majority of it. The concept of “financial freedom” is very attractive to me, so I’d focus on building up that nest egg. I’m not saying that I’ll necessarily quit my job when we reach that magical crossover point, but it’s hard to put a price on being in a position to make that decision.

JD said:

I would leave it in the bank. I’m old and boring.That’s not quite true. I’d put it in index funds until it reached $2-$4 million, then go all Suze Orman and shit, putting it into bonds and living off the proceeds.

Lynnae said:

[I double posted one quote and managed to lose Lynnaes....]

MrsMicah said:

Get out of debt, buy a house, help out our parents, give some to church/charity, and invest the rest.

MoneyWatch said:

Pay off mortgage (approx $300k) save $300k invest $300k and spend the rest - holiday, car etc.

NCN said:

I would purchase a nice home on a few acres, and put the remainder in savings. Over time, I would use the savings to pay for kids college and future ‘major purchases”. And, I have one or two close friends / family members that I would like to help.
I might upgrade a few things in our house, but the last thing I need is more ’stuff’. I’d use it as a major-league security blanket. We’re homebodies, but we might be inclined to take an extra vacation or two a year, if we had that kind of money in the bank.

Trent said:

Put it in something that earned a very secure 4-5% in perpetuity - t-bills or something - and then basically stop worrying about the day-to-day crunch of my life.

Cap said:

If I’d ever win the lottery or receive some large windfall, I’d love to be able say some grand things such as I’ll properly invest it and make it grow so that I can help notable foundations or charities. But when I really think about it, I think realistically I’d take care of my immediate loved ones first. It’s a bit strange… when I was much younger; I would most likely dream of the wild things I can acquire from winning the lottery. These days, as long as my family and loved ones are happy and content with their life, I’ll feel pretty rich — regardless of our material possession. This may sound like a cheesy canned response, but it’s the cheesy truth!

What would I do with a million dollars? I’d replace the roof to our house, buy my lovely wife a Prius, then invest the rest in a good mix of income generating stock market investments and subsidize our current income with the earnings. A million bucks is a nice chunk of change and makes for a good “life subsidy.”

What would you do with a million?