That’s right, according to The Consumerist, who received an email from a reader, the Amazon Price Drop guarantee is gone for items purchased after September 1st, 2008. Booo!

Here’s the email:

Hello from Amazon.com.

Thank you for contacting us to take advantage of our Post-Order Price Guarantee.

I’ve confirmed that we now offer a greater discount on item than at the time you placed your order.

Since your purchase shipped within the past 30 days, I’ve requested a refund of $5.78 to the original payment method used for your order.

This amount reflects the difference between the price you were originally charged for the item and the current price offered by Amazon.com. This refund should be processed in the next few days.

Only orders placed before September 1, 2008 are eligible for a price difference refund under the Post-Order Price Guarantee policy. As of September 1, 2008 we are no longer offering discounts if prices change on our website after you make a purchase.

Thank you for shopping at Amazon.com—we hope you’ll visit us again soon.

Shucks.

Can’t contribute to a Roth IRA? There’s a workaround.

I was speaking my accountant a few weeks ago when we began discussing retirement options. One of the ideas we discussed was to contribute to a non-deductible Traditional IRA with the plan of converting it into a Roth IRA in 2010. Prior to 2010, if you earned more than $100,000 MAGI, you cannot convert a Traditional IRA to a Roth IRA. This limit is the same whether you’re married or single (boo!). Starting in 2010, that rule disappears so anyone of any income can convert (more on the 2010 traditional IRA conversion income limit loophole).

Right now, my wife and I cannot contribute to a Roth IRA and so we lose access to one of the greatest retirement vehicles available. Fortunately she has access to a 401(k) and I have access to a SEP-IRA, so we do have pre-tax retirement accounts; we just don’t have post-tax vehicles like the Roth IRA. So how do we get some? Use that loophole!

Here is our strategy to take advantage of the 2010 rule change, we will both contribute to non-deductible Traditional IRAs and then convert them, nearly tax free, to Roth IRAs in 2010. It’s nearly tax free because we would still be responsible for taxes on any appreciation the IRAs saw. In talking with my accountant, this strategy works but he gave me some pointers to ensure we don’t run into any headaches.

• Separate the Traditional IRAs from any other retirement assets. He advised that we open separate accounts from both each other (this is required, you can’t have a joint IRA) and from any other retirement assets. This will give us the greatest flexibility in the future. If we were to mix our non-deductible Traditional IRA with my SEP-IRA (I took a deduction for those contributions), I can’t decide to convert just the “non-deductible” part of that mix.
• Remember to file IRS Form 8606. My accountant said that a lot of filers who go the DIY route often fail to submit this form and this can cause big headaches down the road. Form 8606 covers non-deductible IRAs and it’s the only way you can tell the IRS that you contributed to a non-deductible Traditional IRA; they won’t know otherwise. Deductible IRA contributions are recorded as a deduction and the IRS doesn’t care about Roth IRAs.
• You don’t have to convert all at once. This is more an explanation of the rule than advice on what to do but you don’t have to convert all the assets in one shot. You can spread it across two years. This wouldn’t matter to us for our non-deductible Traditional IRAs but if we opt to convert any of our Rollover IRAs, we could spread the damage across two years.

Now we have to hope that the rule doesn’t change or those non-deductible Traditional IRA dollars will be taxed again… in 40-something years.

Has anyone else looked into this?

(Photo: scottwills)

One of the biggest concerns people have about online banks is that, for many of them, you can only access them through the web. With these simple techniques, you can mitigate the severity of that risk and take advantage of their high yields without putting yourself in a bad situation.

Recent Online Bank Access Problems

First, is this even a valid concern? I think so.

HSBC’s high yield online bank system has run into a couple problems recently. First, in March, they forgot to renew their SSL certificate on their UK bank website. Then just this past August, HSBC had site outage issues again for HSBC Direct customers. I received two emails explaining that everything was OK, they were sorry things got all fouled up, and that they’d take responsibility for any fees or penalties that resulted from being unable to access my account. (Oh, and Nickel just told me about how they had catastrophic computer failures in 2005 too!)

Does that mean you should avoid HSBC? Not necessarily, their problems aren’t uniquely there’s. It could happen to any bank. Emigrant Direct had problems after a site redesign that left people unable to access their account for three or four days. That’s a long time if you need to withdraw money and it underscores one of the dangers of having all your money in a high yield savings account whose only access is through the web.

Here’s what you should do to bulletproof your high yield savings account strategy, so that if you lose access to an account, your entire financial network doesn’t come to a screeching (expensive) halt.

Use A Brick & Mortar Bank

Washington Mutual has a great rate, 3.75% APY, and physical locations you can go to. If all else fails and the internet implodes, you can visit a branch and still have access to your money. The fact that it’s a B&M bank doesn’t mean it’s any safer or that it’s any better than one without branches, but the mere fact is you can get to it in a pinch makes it more accessible. Physically going is your backup to online access in the event it fails.

Use One With Debit or ATM Access

E*Trade Bank gives you a debit card and it’s not the only one. The debit card gives you access to your funds without the need for the web. I’m not a fan of debit cards but they make sense as a backup plan if you really need to get to funds locked up in an online savings account. You can also use the debit cards at an ATM if you need to get a big chunk of it, though you probably will face ATM fees. Again, this is a backup to online access and I wouldn’t make it your primary means of fund access.

Link External Accounts Both Ways

Just because the bank’s website is down doesn’t mean the bank itself is down, so you can still initiate transfers out of the account from your own banks. When I open a new account, as I did recently with FNBO Direct, I always add external transfer links to a couple other banks. One thing I will always try to do is make sure the links are two-way, meaning I go to the other bank and create the same link.

This way I can transfer money between the accounts from either bank’s transfer system (when possible, some places won’t let you link out to non-checking accounts). If I needed my funds in HSBC Direct when the site was down, I could have gone to my ING Direct account and withdrawn the HSBC Direct funds that way.

Spread Assets Across Multiple Banks

The chances of a bank’s online system going down is pretty small, the chances of the online systems of two banks going down is microscopic. That’s why I’ve advocated spreading your savings across multiple online banks. Right now you have so many options (WaMu offers 3.75% APY, FNBO Direct and HSBC Direct offer 3.50% APY, etc.) that you don’t have to give up much interest to spread your funds around.

With one, or more, of those techniques, you drastically reduce the impact of any one bank’s website going down. You can’t personally do anything to prevent it from happening, but you can easily mitigate the severity.

While I was researching the differences among thrifts, banks, and credit unions, I stumbled onto a bunch of bank failure related trivia that piqued my interest.

Most of the states are pulled from a listing available at the FDIC’s page for bank failures. To reach the search function, click on the “Bank & Thrift Failures” link in the blue menu located at the top. You can search by year, I just pulled down everything from 1934 to present and pushed it to an Excel spreadsheet. I added some razzle and dazzle (pulled out state names, used pivot tables) to augment the trivia I found online. You can download the spreadsheet (FDIC Bank Failures Data) and play with it yourself if you’d like (I pulled out the pivot tables for the sake of download size).

General FDIC Trivia

1. The Federal Deposit Insurance Corporation was created by The Banking Act of 1935, also known as the second Glass-Steagall Act of 1933.
2. Initially, the FDIC insured deposits up to $5,000. Today, it insures deposits up to $100,000.
3. $5,000 in 1933 dollars is worth $84,601.54 in 2008 dollars, so FDIC insurance coverage limits have exceeded inflation (according to the BLS’s inflation calculator).
4. The FDIC also insures IRAs up to $250,000.
5. At the end of 2007, the FDIC reported that its insurance fund had about $52 billion. By the end of the second quarter of 2008, that balance fell to $45.2 billion, it’s estimated that IndyMac will cost the FDIC approximately $6-8 billion.
6. As of June 2007 [PDF], the FDIC was insuring 7,350 commercial banks and 1,244 savings institutions - 8,594 total.
7. In 1998, it was insuring 8,982 commercial banks and 1,729 savings institutions for a total of 10,711 financial institutions.
8. As of June 2007 [PDF], the total assets at FDIC insured banks exceeded $12 trillion ($12,257,000,000,000 to be exact).
9. Deposits at those banks [PDF] were a more pedestrian $6.6 trillion ($6,695,000,000 to be exact).

Deposit Insurance



10. FDIC insurance does not protect the contents of safe deposit boxes (but your homeowners insurance might).
11. When two banks merge, your assets are insured separately for six months. So if you have $100,000 at Bank A and $100,000 at Bank B and Bank A bought Bank B, you would have $200,000 of coverage for six months. After six months, you’re covered only up to $100,000 by FDIC insurance.
12. When two banks merge, any Certificates of Deposit that are opened or renewed within that 6 month period are considered separately insured. Those opened or renewed after the six month period are insured under the same umbrella.
13. FDIC insurance assets in an insured bank in the United States and it does not matter if the account holder is a resident or citizen of the United States.
14. Year with the Fewest Failures: 2005 and 2006 - no banks failed.
15. Year with the Most Failures: 1989 - 534 banks failed that year.
16. The Bank Insurance Fund (BIF) insures commercial banks and the Savings Association Insurance fund (SAIF) insures deposits at S&Ls/thrifts. They were merged in 2006 by the The Federal Deposit Insurance Reform Act of 2005 to form the Deposit Insurance Fund (DIF). (in case you’re wondering what the insurance fund column stood for)
17. 2227 of the banks listed were insured by BIF.
18. 1325 of the banks listed were insured by SAIF.
19. 11 of the banks were insured by DIF, all within the last year and a half after the two funds were merged.
20. The bank with the lowest FDIC certificate number was East Gadsden Bank (#40) and they folded on New Year’s Eve in 1980 (12/31/1980).
21. 488 of the failures don’t even have FDIC certificate numbers (the ones that failed in the 1930’s and 40’s).
22. The bank failure with the highest FDIC certificate number was Best Bank (#91189) and they went kaput on July 23rd, 1998.

S&L Crisis

23. During the Savings & Loan crisis, 747 savings & loans failed between 1986 to 1995.
24. You thought that was bad? Overall, 2,377 banks failed.
25. At the peak in 1988-1989, a bank failed every 1.38 days!
26. The Lincoln Savings & Loan failure revealed what later became to be known as the Keating Five political scandal.
27. Charles Keating was the head of Lincoln Savings & Loan and made $300,000 in political contributions to the Keating Five in the 1980s. There were also an additional hundreds of thousands in gifts and trips that weren’t accounted or paid for (back then the rules were a little laxer). Oops.
28. The Keating Five were Alan Cranston, Don Riegle, Dennis DeConcini, John Glenn, and John McCain. Cranston, Riegle, and DeConcini’s political careers ended, Glenn and McCain were cleared of wrongdoing and merely rebuked by the Senate Ethics Committee for using “poor judgment” in intervening with federal regulators on behalf of Keating.
29. John McCain was the sole Republican among the Keating Five.
30. That’s the same John McCain as the one running for President on the Republican ticket.
31. John Glenn was the first American to orbit the Earth and most recently the oldest man to go into space.

State by State Fails



32. Texas has had the most bank failures with 898 failures from 1934 to 2008.
33. California came in second with 223 failures.
34. Oklahoma was third with 175 failures.
35. Guam had a bank failure, American S&LA located in Dededo, Guam in 1984.
36. And the Virgin Islands didn’t want to be left out of the list, they had their one and only bank failure in 1975 when The People’s Bank of the Virgin Islands closed up shop with a little under $15M in assets.
37. Delaware had the fewest number of failures with only two failures (one in 1976 and one in 1988).
38. The other single digit bank failure states are Idaho (6), Maine (6), Nevada (5), Rhode Island (6), and Vermont (5). Washington D.C., not a state, has had only 8 failures.

Smallest, Largest & In Betweens

39. The smallest bank failure ever was The Briggsdale State Bank located in Briggsdale, CO in February 1938.
40. Briggsdale State Bank had $14,000 in assets.
41. The largest bank failure ever was Continental Illinois Bank in 1984.
42. Continental Illinois Bank had $39,956,956,000 in assets (”too big to fail!“).
43. 153 banks don’t have total asset sizes listed!
44. 194 of the banks that failed had over $1,000,000,000 in assets at the time of failure.
45. The failure was blamed largely on bad loans purchased from the failed Penn Square Bank of Oklahoma. The origins of those loans was from the Oklahoma and Texas oil boom in the 70s and 80s. There was a big of fraud mixed in there as well.
46. Continental Illinois Bank was bailed out by the Fed and limped along for ten years with 80% Fed ownership until it was bought by the predecessor to Bank of America in 1994.
47. Bank of America recently bought Countrywide Financial… which has a lot of bad mortgage loans. History has a funny way of repeating itself… (it gets better)



48. The largest thrift failure ever, and third largest bank failure, was IndyMac Bank’s shuttering this year.
49. IndyMac Bank was founded as Countrywide Mortgage Investment in 1985 (yep, that same Countrywide) and used to collateralize Countrywide Financial loans that were too big to be sold to Freddie Mac and Fannie Mae.
50. The MAC in IndyMac stands for Mortgage Corporation (much like how Freddie Mac and Farmer Mac are named).

Department of Coincidences Maybe (bonus!)

51. Finally, and I kid you not, the first bank failure listed on the FDIC search tool, if you search all the way back to 1934, was “BANK OF AMERICA TRUST CO.” of Pittsburgh, PA on 4/19/1934. Hmm…

If you want more trivia, the FDIC has a whole bunch of fun information in their Learning Bank.

For all intents and purposes to the consumer, there is little difference among thrifts, commercial banks, and credit unions. The financial services they all offer will be similar and you probably don’t even know if the financial institution you’re banking with is a thrift or commercial bank (Washington Mutual is technically a savings and loan and the largest one). In fact, the only real notable difference between thrifts/banks & credit unions has to deal with depository insurance. Thrifts and commercial banks are covered by FDIC, credit unions are covered by NCUA, though both are covered to the same limit of $100,000 per person per financial institution.

Now, for the academics and trivia buffs out there, here’s a little more on their differences.

Thrifts

Thrifts, probably better known as savings and loan institutions (mostly because of the S&L crisis in the 1980s and 90s when 747 banks failed), originated as institutions that deal only with savings accounts and mortgage loans (hence savings & loans). Nowadays, they’ve broadened their financial offerings such that the only differences are in business dealings. By law, thrifts may lend up to 20% of their assets to commercial loans and only half of that can be used on small business loans. Also, in order to obtain advances from the Federal Home Loan Bank, thrifts must meet a ‘qualified thrift lender test.’ That test requires that 65% of its assets must be in mortgage and consumer-related assets. In plain English, they’re just restricted to keeping most of their lending in the mortgage and consumer arenas.

By the way, IndyMac Bank was a thrift bank and the largest at the time it failed (it was also the second largest bank failure ever, second to Continental Illinois Bank in 1984)

Credit Unions

A credit union is cooperative bank that is privately owned and controlled by its members, the account holders. The purpose of the cooperative is to provide credit and financial services at reasonable rates and that’s why you’ll often find better loan rates at credit unions. Another requirement of credit unions is that there must be a restriction on who can join based on its “field of membership.”

What’s also interesting about credit unions is that each depositor is given a vote in the board of director elections and each member is considered an “owner” of the credit union. The elected board of directors is charged with the responsibility of setting policies governing interest rates and other services.

Other than that, the only other major difference is in vocabulary. A savings account is called a share account, a checking account is called a share draft account, and certificates of deposit are known as share term certificates. The “share” is a reminder that everyone is an owner in the union.

Lastly, deposits are insured by the National Credit Union Administration up to $100,000.

Commercial Banks

A commercial bank is “everything else.” The term is really just a way to distinguish a bank as most consumers recognize it (savings and checking accounts, ATMs, etc.) from an investment bank, like a Merill Lynch or a Lehman. As I mentioned before, the deposit insurance that governs your assets at these banks is the FDIC and that covers you up to $100,000 (there are certain ways to extend that limit).

Those are the basic differences from a layman’s perspective, there are actually far more differences when you get into the specifics (here’s an intriguing Economic Letter out of the Federal Reserve Bank of San Francisco detailing some differences between bank charters and thrift charters). I skipped over those because they weren’t as interesting and didn’t really have much bearing on how consumers are affected.

(Photos: Thrift sign by zieak, BofA ATM by neubie, and Credit Union by Consumerist)

I hope you enjoyed reading this series as much as I enjoyed writing it. While there are certainly more than seven horrible personal finance “things” you can do, the seven I outlined jumped out at me as things you shouldn’t miss if you could avoid it.

The 7 Deadly Sins of Personal Finance

1. Skipping Emergency Funds
2. Raiding Retirement
3. Don’t Budget
4. Don’t Plan For The Future
5. Don’t Get Adequate Insurance
6. Being Penny Wise, Pound Foolish
7. Don’t Enjoy Life

There were a few others that I thought about but passed on, many of which became fodder for the Devil’s Advocate posts, but if there is one you think really trumps one of the seven above… please tell me in the comments.

Happy Labor Day! Did you know that the holiday originated in 1882 by the Central Labor Union of New York City? It didn’t become a federal holiday until 1894. It’s also the symbolic end of summer, which means all the beer taps change their seasonal Sam Adams brews from Summer Ale to Oktoberfest (though we went to Champps yesterday and they jumped the gun by a day). I am a fan of that Summer Ale (and all wheat beers really).

Enjoy the day off everyone!

(Photo: avlxyz)

I was playing around with this new site Wordle and putting in the sites of some other personal finance blogs

They make the cloud based on your RSS feed so it takes whatever you’ve been writing about lately, not a entire site survey (with over 2,200 articles, that would take forever), so it looks like I’ve been writing a lot about emergency funds, investing in index funds, and stealing Obama’s thunder and the use of the word ‘can.’ Yes, I can.

But this is no fun if I just do my site right? I had to see what others would look like so I played with it some more and made clouds for The Simple Dollar (there it is to the right, probably my favorite of the bunch I made and that thumbnail doesn’t do it justice), The Digerati Life, Five Cent Nickel, Get Rich Slowly, Consumerism Commentary, CNN Money, and a few more.

If you want to see the fruits of my minor diversionary labor, check out my gallery on Wordle.

Sometime in the last month or so, (or longer, I have no idea honestly) a new high yield savings bank appeared with little fanfare or press: Dollar Savings Direct. It’s a division of Emigrant Bank, FDIC Certificate #12054, which is the same parent company of Emigrant Direct. On the face of it, it appears there’s little difference besides interest rate and minimums. Dollar Savings Direct has a higher APY at 3.75% but has a minimum balance of $1,000 but no fees (if your balance falls under the minimum, you earn only 1%). If you go to their respective homepages, they’re designed with nearly the same elements (layout is the same except on Dollar Savings you have a picture of Benjamin Franklin versus a patriotic top hat, the buttons are basically the same, color-schemes, etc).

What’s the deal? Well, I called Dollar Savings Direct and chatted with a very nice CSR who explained the whole story. She confirmed that there was no difference other than APY and minimums, that was interesting. She also explained that Dollar Savings Direct was merely Banco Fortuna, Emigrant Bank’s foray into the Spanish-speaking banking market, rebranded in English. I suppose Emigrant’s foray wasn’t as productive as they had hoped. If you visit the Banco Fortuna homepage, it redirects you to Dollar Savings Direct, confirming the CSR’s explanation.

So, from someone who didn’t know about Banco Fortuna (or that it was going away), it appeared as though Emigrant Bank was trying to get more deposits without having to pay their existing Emigrant Direct customers. It now appears that isn’t the case.

The last question I had for the CSR was whether I could transfer between the two accounts and she said no. They were two separate banks, despite having the same FDIC certificate, so to transfer funds you’d need a checking account intermediary.

If you need a high yield savings account, I’d go with Washington Mutual (offering 3.75% APY too) or FNBO Direct. I don’t see how Emigrant Bank can offer two different rates on essentially the same product for much longer.

I picked up a copy of Quicken last year to help with our family’s personal finances and perhaps assist in the accounting of my fledgling little business. This year, Quicken has released yet another version update, Quicken 2009 is slated for a September 10th release, and offered some handsome discounts for those looking to upgrade or use the software for the first time.

Quicken 2009 New Features

I’ve read people talk about how they hated all these yearly updates because they offered little in upgrades. Well, in scouring the web for more information, I stumbled on this job posting in which Intuit, makers of Quicken, is “planning a major redesign of the product, and we are looking for a senior user interaction designer for 6-9 month.” Who knows what that means though.

There are additional portfolio planning features added, a whole new help system (with screens for each page), as well as adding more banks to its system. Quicken 2009 will now interface with over 6,000 institutions from banks to brokerages to PayPal.

Quicken 2009 Coupons Codes

• Quicken Deluxe 2009 ($59.99 $44.99 - 25% discount)
• Quicken Premier 2009 ($89.99 $71.99 - 20% discount)
• Quicken Home & Business 2009 ($99.99 $79.99 - 20% discount)
• Quicken Home and Inventory Manager ($29.99 $23.99 - 20% discount)
• Quicken Mac ($49.99 $33.99 - 23% discount)
• Quicken Medical Expense Manager ($69.99 $44.79 - 36% discount)
• Quicken Rental Property Manager ($149.99 $119.99 - 20% discount)
• Quicken Online (60 day free trial, then $2.99/month)