Banking 
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FDIC Asks to Temporarily Increase Deposit Limits

Federal Deposit Insurance Corporation SealFDIC Chairman Sheila Bair has requested that Congress give her agency the authority to raise the $100,000 FDIC insurance limit to some unspecified amount, to be determined by Congress. In 2005, Congress voted to peg that $100,000 limit to inflation but that doesn’t kick in until 2011. Until then the limit stays at $100,000.

Will insurance premiums be raised? I’m not a banking expert or an insurance expert, but I know that if the protection limit is raised then there’s going to be greater pressure on the coffers of the FDIC if and when banks fail. The FDIC doesn’t need that, it’s under enough pressure. :) Unless premiums are increased, you’re putting a greater burden on the shoulder of taxpayers.

Who does this benefit? In all honesty, I think it benefits no one unless FDIC insurance coverage premiums are increased. With the very public failures of WaMu and Wachovia and IndyMac, the average person who reads the newspaper or watches the television is acutely aware of the FDIC limit and likely has been spurred to action. Fortunately for many of those who bank at those institutions, your money was protected even beyond the FDIC limits. (if you haven’t moved your funds around so that you’re under the $100k limit, what are you waiting for? Don’t be like this woman who lost $20k)

For the very wealthy, I assume they have financial advisers who handle all this complicated banking stuff and have them spread across as many banks as they need to be to stay underneath the limit. Raising the limit really doesn’t have an appreciable effect for the consumer (it might reduce the amount of paperwork as the rich will need fewer accounts!).

But then again, personal finance is more about psychology than it is about the math. If this move settles some people’s minds, then it’s a Good Thing.

FDIC asks to boost deposit limits [CNN Money]


 Investing 
1
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Consider Your Job In Asset Allocation

Gold BarsHere’s an idea I spotted in the lasted issue of Money Magazine:

Consider your job as an asset in investment asset allocation decisions.

The gist of the article was that when you’re young, your greatest asset is your human capital. That is, your ability to take your time and turn it into money (salary, commissions, etc.) is your greatest asset. As you get older and accumulate other assets, your financial assets will begin taking up a larger and larger piece of your portfolio. It’s the old adage of making your money work for you. As this happens, remember to treat your job and your income as an asset when you make decisions about your asset allocation.

(Click to continue reading…)


 Frugal Living 
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Dominate Economic Fear With Frugality

As you not doubt have heard or read, the bailout bill never made it out of the House yesterday. The Dow was down seven hundred and seventy-seven points. 777. No very lucky. That’s a lot of points (single largest point loss ever and fourth larges percentage-wise). If you missed the roller-coaster ride, count yourself lucky because you and I and probably everyone you know (certainly most of the people I know anyway), none of us have any control over the matter. So rather than sweat the stuff we can’t control, start concentrating with something you can – being smart with your money.

Last week I had the pleasure of chatting once again with Lynnae of BeingFrugal.net, Steve over at Brip Blap, and Tess Vigeland of Marketplace Money in this interview. In our little discussion, Tess asked us what we thought the future would bring and Lynnae had a great answer. She said that she hopes this will bring out a new era of frugality as people ratchet back their consumer spending and boost their savings. She thinks that our years of excess are coming back to haunt us and hopes this will spur more people to save, rather than spend their last dollar.

Steve responded by saying that while frugality is important, looking to generate more income is another component of wealth management that we shouldn’t forget. While I agree with Steve, I think that we’re in an era where it’ll be far easier to spend less than it is to earn more. While you need to do all things in moderation and in balance (you can’t just be frugal, just as you can’t just focus on earning more money), right now frugality is the easier thing to focus on.

Being frugal is something that anyone can do and it can help you manage your fear of the economic unknown. No one can say where the stock market will go tomorrow, but you have all the say in where your next dollar will go. Will it go to your bank account where you can earn interest or will it go to your favorite store in the mall?

You don’t have to make your detergent or bake your bread or split two-ply toilet paper or buy a toothpaste roller to squeeze out ever last ounce, there are plenty of simple and fun things you can do to save money. Try cooking more meals and eating out less. Try line drying your clothes rather than using the dryer. Heck, if you need tips, check out Lynnae’s blog because it’s chock full of them! Or read the Festival of Frugality every week for great tips from all of the blogosphere’s frugal bloggers.

Control what you can, let the rest go where they’ll go.


 Banking 
0
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What Happens To CDs After Bank Failure

JPMorgan Chase BranchWith the very public and very large failure of WaMu, you might be wondering what happens to all those nice, fat 12-month 5% APY certificate of deposits you may have recently opened. In the case of WaMu, it appears as though JPMorgan Chase will be honor those CDs to term. If you review the FDIC’s FAQ on the WaMu takeover, “JPMorgan Chase accepted Washington Mutual’s interest bearing accounts including CD’s at the contract rate; therefore, they are not waiving early withdrawal penalties.” That means the CD’s will stay the same (in fact, you probably could open a 5% APY CD right now and it would still be honored, though you can close to that high of a CD rate at other banks).

The WaMu example is an example of a best case scenario, where nothing happens except the name of the bank on the statements. The best case scenario is that a bank acquires the deposits of your failed bank and continues to honor the CD’s terms as JPMorgan Chase does. (Of course, this depends on what your definition of best case is, if you got locked into a long term low interest rate from a few years back, maybe best case is they cancel all the CDs!)

Not all cases end this way, but even the worst case scenario is no big deal. The worst case scenario is that the FDIC is named the receiver, no bank buys the deposits, and they terminate the CD. Even in the worst case, you get all of your insured money back (just a little earlier than you anticipated).

Or, skip all the CD hullabaloo and stick the funds in one of several very popular and totally liquid high yield savings accounts.

(Photo: thetruthabout)


 Credit 
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Tricking Credit Card Customers Into Taking Cash Advances

The whole story revolves around how these two call center account managers for MBNA, now a subsidiary of Bank of America, would hard sell credit card customers on expensive cash advances. The piece goes into how they would use all sorts of hard sell tactics, preying on the financial weaknesses of callers, finding any angle to try to wedge a nice fat cash advance in there. There was also the obligatory swing at credit card companies and their terms & conditions, which include the 0% cash advance or balance transfer jumping to the default rate of 28% if they missed a payment, “even by a day.” (Late is late, a minute, a day, a year… it’s still late)

(Click to continue reading…)


 Reviews 
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Mint.com Review: Beautiful Money Management Tool

Mint - Free Online Money Management ToolOverall, I was very impressed with both the feature set and beauty of Mint.com. While aesthetics isn’t the reason why you use a tool like Mint, having a smooth interface certain improves the user experience and I, for one, appreciated how responsive the site was. It makes heavy use of AJAX, which allows you to navigate the site while the back-end does its information gathering.

(Click to continue reading…)


 Frugal Living 
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Garden Update: 174.5 oz. of Vegetables

It’s been quite a while since the last garden update and I’m happy to report that our total haul of vegetables is now a respectable 174.5 oz. according to our trust free Stamps.com postage scale.

Here’s the breakdown:

  • 22 oz. Roma Tomatoes
  • 3.9 oz Patio Tomatoes
  • 73.9 oz. Beefsteak Tomatoes
  • 1.4 oz Green Peppers
  • 8.8 oz. Red Peppers
  • 61.5 oz. Eggplants
  • 3 oz. Cayenne

The total value, according to recent vegetable prices, is about $20 compared to about $98 spent on planters, plants, and soil (this doesn’t include labor or water).At first, when I saw how many ounces we’d gotten, I thought we would easily break even… obviously I don’t know how much stuff costs at the per ounce level because we’re only about a quarter of the way there. 174.5 ounces sounds very impressive but it’s really not a lot compared to the hauls I’ve seen others get.

I think the biggest handicap for us is the fact that everything is in planters. The tomato plants have a tremendous amount of potential that simply is wasted on pots. While the pots are pretty big, nothing beats the ground and letting tomatoes grow to their full potential.

But, you play the cards you’re dealt and so far we’re doing pretty good as novice gardeners. (There are plenty of everything hanging off the plants, so we haven’t finished harvesting yet)


 Personal Finance 
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Roundup: Budgets, Banks & Mortgage Companies

As people, we often think we have a good handle on things but, when we finally put pen to paper, we discover we aren’t as informed or accurate as we’d like to believe! David at My Two Dollars recently created their first budget and discovered they were off – by a lot. “It is unbelievable how much money you spend when you start tracking each and every dime! You always think of the big things; rent, mortgage, cars, insurance, food – but what about the incidentals that rarely get included in budgets when you are trying to sort out how much you can spend.”

SVB has a positive bank stock story to tell. Her former employer was one of the still solvent banks and a part of her 401k was held in that bank’s stock. After a 7% jump one day, she decided to sell her entire position in anticipation of a rollover. Since a rollover would result in the sale of all those assets, it’s better to make the decision now rather than let the paperwork do the deciding.

What can you expect if your mortgage company fails? In a nutshell, nothing. Just keep paying and wait for more info.

Lazy Man is still away on vacation traveling the world but I wanted to point you towards a guest post I wrote there about whether you can trust online banks. Funny part about Lazy Man’s vacation is that it comes at a time when the financial world is imploding, how inconsiderate of them!

Earlier this week I gave 40 money tips for college students but I wish I saw Broke Grad Student’s post on 10 ways to get free food, because then I’d be able to claim fifty money tips!

And last but not least, in the gasoline strapped South, Nickel saved himself a lot of gas just by slowing down. In an totally unscientific study, Nickel found that dropping his speed from 75 to 65 improved his gas mileage by a whopping 28%. Lesson of the day? Drive slower!


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