Investment Plan For The Bear Market

October 21, 2008

It seems like every other personal finance blogger has already commented on the bear market. I’ve been rather lucky with the timing of my down payment saving as I would have been maximizing my retirement investments this past year. So instead of keeping all of my recent savings in cash for a down payment, I would have been funding an individual 401k and my Roth IRA. For this reason I haven’t been hit very hard by this bear market. Since my down payment has been completed, I will be trying to maximize my retirement accounts by the 2008 income tax deadline.

The major downturn in the stock market has left stocks at huge discounts. I am currently invested in one of Vanguard’s Target Retirement Funds through my Roth IRA. In early 2007 I invested the maximum into the fund at a price around $22/share. The fund is currently at $16/share. The fund had never been below $20/share since inception.

When I first invested in the account my $5,000 only counted for 227 shares, whereas if I invested the same $5,000 today I would have 312 shares. When those 312 shares return to $22/share my $5,000 investment will be worth $6,864.

This is just one example of how depressed stock prices have become. My goal is to fully fund my Roth IRA and an individual 401k for 2008 as soon as possible. I want to make sure I get in when the stock market is on sale.

A little disclaimer before I wrap everything up. I have no idea when the market will turn around. I don’t know if it will drop again in the near future. I don’t claim to know the future of the stock market. I’m not trying to time the market. I also don’t recommend investing money that you will need in the next five years.

What I do know is the stock market hasn’t been this cheap in 5 years. From everything I have read, the best thing that could happen to a young investor is to have a bear market when you enter the work force. It will take time for the market to recover, but stocks have tumbled before and new highs will be reached in the future. Don’t let fear dictate your investment plan as it can severely diminish your returns.

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National City Checking Account Deal

October 20, 2008

National City is offering an online promotion that gives you $150 when you open a new personal checking account with direct deposit. Now that my major savings goal for a down payment is finished, I will be saving for several smaller goals. Additionally, I have several monthly payments to make, which might be easier to keep track of with separate savings accounts. And who can’t use an extra $150.

Offer Details

There are a few rules and requirements to qualify for the $150.

  • Open a new personal checking account prior to October 22, 2008
  • Account must be funded by $50 not currently deposited
  • Have a direct deposit to your checking account of $250 or more within 60 days of opening the account
  • Receive a Visa CheckCard issued within 60 days of opening the account
  • One bonus per household without a pre-existing National City checking account
  • $150 bones will be credited within 60 days of meeting the criteria

Checking Account Options

National City has five available checking account options. Three of them have monthly fees that require account values of either $10,000 or $1,500 (depending on the account) to avoid the fees. I can’t guarantee that I will maintain either of these levels. That leaves me with either the free checking or free checking plus accounts. All National City checking accounts have the following free features:

  • Unlimited transactions
  • Visa CheckCard
  • Online banking and bill payment
  • Online statements
  • Check safekeeping
  • Online check images
  • Telephone banking
  • Switch service

The free checking and free checking plus accounts also have the following benefits:

  • Free unlimited use of National City ATMs
  • No minimum balance
  • No maintenance fees
  • A rewards points system for everyday banking
  • Free switch service to painlessly switch accounts

It appears as though there are two major differences between the free checking and free checking plus. Free checking plus provides free checks on select styles with one box per order. Also, the free checking plus account offers free unlimited use of non-National City ATMs as long as you do one of the following: 1) direct deposit of your paycheck, 2) online bill payment or 3) ACH payment. As long as both have no fees, I might as well go with the one with more options.

Account Setup

The process for setting up the account is extremely simple. I clicked on the apply now button for the free checking plus account from the promotion page. The first step is confirming the account selected is corrected. Second, you fill out personal information, which requires your SSN and driver’s license or state ID. Next, you download a bunch of account information and terms and save it somewhere on your computer. A confirmation of your identity is done using the standard personal information question session where they ask about cars, mortgages, addresses and relatives. Finally, you have to decide on a method to fund your account with a minimum of $50. The options are a transfer from an existing National City account, mailing a check or at a branch. I selected at a branch as there is one very close to my condo.

My account application is pending, most likely because I am funding at a branch. An account specialist will contact me within 1-2 business days.

Conclusion

Opening the account took about ten minutes, which is not a lot of time to spend while making $150. I will set up a split direct deposit with HR so that I deposit the minimum required to receive the $150. So far I have been pleased with the ease of access and availability of information on the National City website. In the upcoming months I’m sure I will discover if I enjoy this bank more than my current brick and mortar bank, Harris.

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My First CVS Trip

October 16, 2008

Putting together my new coffee table and end tables took way longer than I expected, so here’s a quick post regarding my first CVS trip with ECBs.

CVS

I recently posted about the CVS ECB deal. As a quick reminder, CVS offers weekly and monthly sales where certain items offer Extra Care Bucks when you buy them. These ECBs can be used as cash on your next visit. For my first month I will be following along with The Thrifty Mama as she writes a series of posts describing how to get started using the ECBs.

I decided that my first trip should be exactly as recommended by The Thrifty Mama. I printed out two coupons for Nature’s Bounty products at this LINK. In order to print out two coupons you will be prompted to download the coupon printer program, which allows the printer to print barcodes for scanning purposes. Also, you will have to hit back in your browser to print the coupon a second time. The coupon is good for $2.00 off any Nature’s Bounty product. CVS is offering a Buy One Get One free (BOGO) deal on Nature’s Bounty vitamins with 2 ECBs when you purchase two.

I bought two bottles of Vitamin D that were $4.79 each. After the two coupons and the BOGO deal, the remaining total was $0.79. After factoring in 2.25% sales tax (which is remarkably low), I had to pay $0.90 out of pocket. In return I received 2 ECBs, which are equivalent to cash at CVS. The ECBs print out on your receipt with a barcode and an expiration date (always one month after your purchase). In total, the two bottles of Vitamins should have cost $9.80. With the BOGO and two coupons, I paid $0.90. Additionally, I received 2 ECBs, which means I made $1.10 and brought home two bottles of Vitamins.

Thanks to The Thrifty Mama for putting together this start-up series about CVS. I am looking forward to having more time to try and tailor my CVS trips to my own liking and start adding to my stash of ECBs.

Total out of pocket: $0.90

Total ECBs earned: $2.00

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Comcast Promotion For New Accounts

October 16, 2008

About a month ago I began researching my cable and internet options for my condo. I looked at Comcast, Wide Open West (WOW), Verizon Fios, AT&T and DirectTV. Verizon Fios and WOW were not available in my area. That narrowed it down to either Comcast or an AT&T/DirectTv combo. My familiarity with the Comcast cable platform with respect to HD channels and DVR combined with a great promotional rebate made the choice very easy.

Comcast Rebate Promotion

I found the deal at this link. There are two options. You can sign up online via that website or you can call the number provided and talk to a representative to help you set up your deal. They have triple play packages that include rebates for digital cable, high-speed internet and digital voice. They also have the option to mix and match the single service offers. I was able to put together a deal for digital cable and high-speed internet for $66, which is a great deal for my area. The representative I talked to set up my deal, took my information, sent me a confirmation e-mail and forwarded me to another representative. This second representative finalized the transaction, helped me add upgrades like HD and DVR and scheduled my installation.

Rebate

The rebates were offered through homes.org, and the form was fairly straight forward. I printed out the promotion redemption form and filled in my personal information. I had to mail the filled out form and a copy of my first bill to the promotional mailing address. It was as simple as that.

There were a few rules regarding the time line of ordering, activation and submission of the form. The service had to be ordered during the period of July 1, 2008 and October 31, 2008. The service had to be activated within 30 days of order date. Finally, the redemption form and supporting documents had to be postmarked no later than 60 days after service activation.

Conclusion

Overall it was a very straight forward process. I received a $75 rebate for both digital cable and high-speed internet. The $150 more than covers the $115 for installation. This rebate in itself coupled with the great 12-month introductory rate might be well worth looking into switching cable companies. Also, according to the website even larger rebates are possible with the varying triple play packages. They even advertise free after rebate modems and wireless routers. I have always been a fan of my Comcast service. I’m not looking forward to the increased rates after my 12-month introductory period. Hopefully I can call and threaten to cancel or switch to another company and extend my introductory rates.

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Frugally Purchasing New Furniture For My Condo

October 14, 2008

Recently I closed on my first home, a new construction condo. In college I lived in my fraternity house for my four years, which prevented me from buying any furniture. After graduating and moving into an apartment with a buddy, I had to purchase a mattress and box spring, but everything else was provided by my roommate. After moving into my condo, I had a lot of furniture to buy. Fortunately, my parents decided it was time to get new family room furniture, so I received a set of furniture that consisted of one leather couch, one leather chair, one leather recliner and one fabric chair. Other than my parents furniture, my mattress and box spring, a cheap computer desk and a drunken garbage picked coffee table, I had no furniture to fill out a 2 bed, 2 bath condo.

I set out on a journey to buy new furniture as frugally as possible (the down payment cost a pretty penny). Usually new furniture and frugally don’t go together, and I’m not talking about “new to me”. Most frequently frugally purchasing furniture requires craigslist, garage sales or resale stores. I was of the mind set that I wanted new furniture to match my new condo, but I did not want to pay top dollar.

One of my Mom’s favorite hobbies is to go to open houses, watch HGTV, visit resale stores and furniture stores going out of business. I had never personally been to a “going out of business” sale. One of those everything must go types of sales that you hear about on tv. There was a Bassett furniture store that was liquidating the sales room and the warehouse. Apparently they had too many Bassett stores in the same area and decided to liquidate the one closest to my parent’s house.

Buying from a high quality manufacturer going through a liquidation is how to frugally buy new furniture. Every item was drastically reduced. I found a bedroom set that consisted of a wood frame, dresser with mirror, highboy dresser and night stand for $2,400, which included tax, delivery and set-up. The original price was well over $5,000. Additionally, I found a small (which is the only size that will fit well) dining room table and four chairs for $460, marked down from $790. Finally, I bought a coffee table and two matching end tables for $156, marked down from $230. My current coffee table is being converted to a tv stand.

I am very pleased with my high quality new furniture that was purchased at severely reduced prices. Liquidation sales are a very frugal option for purchasing new furniture. Basically, the salesman has a certain number of days before the lease is up and everything has to be sold or packaged up and shipped to another store. It is much more profitable to sell the furniture rather than ship it to another store. The best part of the whole liquidation sale is that it was accompanied with a 6 month no interest, no payments financing deal. However, I would not accept a financing deal without having the funds to pay it off. If you are even a day late, the interest that would have been added during the 6 months (interest rate above 20%) is immediately charged.

The best example of how desperate the salesman are to sell the furniture is how much he kept lowering the price as we debated purchasing the furniture. Since the store was so close to my parent’s house, my Mom and I decided to walk to the store. We were planning on going home and thinking it over when it started raining extremely hard. We took a seat on a couch to wait out the storm. As we were sitting the salesman walked by and reduced the price two more times. After the second time we decided it was too good of a deal to pass up.

If you’re looking for new furniture at great prices, I recommend liquidation sales. I should be able to buy all of my furniture for well below the $7,500 first-time home buyer tax credit. Now what do I do with the remainder?

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Jumping Into the CVS and Walgreens Game

October 13, 2008

I don’t have a lot of experience with CVS and Walgreens. I know exactly what I can buy at CVS and Walgreens. If I’m coming down with a cold or ate too much at dinner I might swing by the nearest drugstore for some Cold-eeze or Pepto Bismol. If I have a candy craving or a just finished a softball game I might make a drugstore run for Wildberry Skittles or Gatorade. Despite the close proximity of both a CVS and a Walgreens, I’ve never tried to take advantage of the unique deals both stores offer. I recently stumbled upon the CVS and Walgreen cash back and rebate programs that when coupled with coupons can be considered stealing. I will be starting to take advantage of these programs and will try to explain how they work below.

CVS

CVS uses “Extra Care Bucks” (ECBs) as a form of cash back on purchases. The first step towards taking advantage of the ECBs is to sign up for a Extra Care CVS card. This can be done either online or at the store. You also need to sync your CVS card with an online account. The online account provides you with coupons and extra savings, as well as a simple way to check your ECBs.

This program is pretty simple. Weekly and monthly fliers can be found at your local CVS that contain numerous savings. Most importantly they feature products that are free after ECBs. For example, the week of 10/5 to 10/11 contained an ad for a “free” Vitamin Water. You pay $2.29 out of pocket and receive $2.29 in ECBs, which may be used as cash for future purchases.

Each week/month there are a few free after ECB deals. The idea is to use money out of pocket initially for CVS purchases and then use ECBs for future purchases, which also replenish your ECBs. After a few weeks you should have enough ECBs built up to take advantage of these deals with no money out of pocket.

Walgreens

Walgreens uses a similar program that relies mostly on rebates. Every month a new EasySaver catalog is available both online and in-store. The EasySaver catalog contains rebates that make products either free or nearly free.

The Walgreens rebate program is similar to the CVS ECB program in that you have to put up cash out of pocket initially and then the rebates from previous purchases are used for subsequent purchases. For example, this month’s EasySaver catalog has a free after rebate deal on Extreme Energy 6-Hour Shot. You spend the money out of pocket initially, fill out the rebate form online and receive the rebate to use on future purchases.

Walgreens has an extra deal that involves getting your rebates in the form of Walgreens gift cards. If you take your rebates in the form of Walgreens gift cards you get 10% extra. The idea is to pay out of pocket initially and continue rolling the rebates onto a Walgreens gift cards with the extra 10% until you are no longer paying out of pocket.

Coupons

Each drugstore provides weekly and monthly deals that are free after rebate or ECB, but to really take advantage of these deals you have to start clipping and saving coupons. There are numerous deals at both stores that are not free after ECB or rebates, but still provide ECBs and rebates. When these deals are combined with coupons you can make the deals free and sometimes you can even make money.

I am by no means a coupon expert as I have never saved or used a coupon, but I intend to start in order to take full advantage of the CVS and Walgreens games. As far as I know, which isn’t very much regarding coupons, coupons can be found as inserts in newspapers (mostly Sundays), online at coupon sites, online at manufacturer sites and at participating stores. Additionally, signing up for savings via e-mail can frequently lead to $4 off $20 in purchases or something similar.

Conclusion

I am hoping to begin my CVS and Walgreens games this week. I will provide updates on my purchases and progress in building up rebates and ECBs, as well as anything more that I learn about the intricacies of the programs. I learned a good deal about CVS and Walgreens deals from Money Saving Mom and The Thrifty Mama. Both of these sites will provide you with significantly more information regarding couponing as well. I look forward to stealing from CVS and Walgreens.

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The Anatomy of My Credit Score

October 12, 2008

Two weeks ago Equifax was offering a free credit score for the first 10,000 applicants. Fortunately for me I was able to take advantage of this offer. It was very interesting to see my credit score as I was closing on my condo that same week. Equifax calculated my credit score to be 723 and put me into the “Good” score.

Equifax Scores and Classifications

Equifax scores range from 300 to 850. My score of 723 puts me above 50% of US consumers. Equifax has five categories to classify your credit: bad, not good, good, very good and great. Bad ranges from 300-559, not good ranges from 560-659, good ranges from 660-724, very good ranges from 725-759 and great ranges from 760-850. Looks like I just missed having a very good credit score by two points.

Factors Affecting my Score

There are four categories that Equifax looks at when determining a credit score. These four categories are amount of debt, amount of new credit, payment history and length of credit history. I was rated as good in the amount of debt category, very good in the amount of new credit category, great in the payment history category and not good in the length of credit history.

Factors Hurting my Score

The following factors are hurting my score with the first factor having the greatest negative impact.

  • Short Credit History – This factor measures both the age of the longest account and the average age of all accounts. The age of my longest account is 5 years and 11 months. The average age for the longest account of high credit scores is 19 years. The average age of my accounts is 3 years. The average age for high credit scores is between 6 and 12 years. The negative impact of my short credit history will only diminish if I continue to make payments on time.
  • Recently Been Looking for Credit – This factor measures how many hard credit pulls were performed on your behave over the past 12 months. Apparently, people who are actively seeking credit are riskier to lenders. I had 2 credit inquiries over the past 12 months. 72% of high credit scores did not have any credit inquiries in the past 12 months.
  • No Recent Activity on Revolving Accounts – This factor looks at the activity on revolving credit accounts such as credit cards. People who demonstrate the responsible use of revolving credit are less risky. I don’t really understand this ding on my credit score as I have two open credit cards that I use regularly. I have one closed credit card. I also have a car loan, which I have paid on time for over two years. Either something is wrong on my report or I don’t fully understand the definition of recent activity on revolving accounts.

Factors Helping my Score

The following factors are helping my score with the first factor having the greatest positive impact..

  • No Missed Payments on Credit Accounts – This factor is pretty self-explanatory. If you make your payments on time you are less risky. I have 0 missed payments on my account. 93% of high scorers have no missed payments at all. Those who do have missed payments missed the last payment nearly 4 years ago on average.
  • Low Balance on Revolving Accounts – This factor evaluates how much of your available credit you use. I have $226 on my revolving accounts, which is interesting because I just recently purchased a new lcd tv and it was definitely more than $226. The average balance for high scorers is $2,300, which seems like a lot.
  • Moderate Number of Credit Cards – This factor looks at the total number of open and closed credit cards. I have 3 total accounts on my credit history. The average number of accounts for high scorers is 4 to 5. I disagree that the total number of credit cards should be a factor in determining credit score. Does it really matter how many cards you have as long as you keep the total balance low and pay it off every month? Also, why does it matter how many closed accounts you have?

How Lenders View my Credit Score

According to Equifax, my credit score of 723 leaves me with a risk rate of 5%. The higher the credit score, the lower the risk rate. The risk rate is also defined as a delinquency rate. Equifax defines the delinquency rate is defined as the percentage of borrowers who reach 90 days past due or worse on any credit account over a two year period. The following chart shows how the delinquency rate varies with credit score.

Conclusion

I was very lucky to stumble on a free copy of my credit score. Overall, I am very happy with Equifax’s presentation and explanation of my credit score. I don’t necessarily agree that the activity of my revolving credit accounts has been low and if I hadn’t already received my loan I might question the accuracy of that factor. Also, I completely disagree that closed credit card accounts factor into a credit score. Similarly, if closed credit card accounts factor into a credit score, why don’t paid off loans? I have completely paid off a hefty school loan and it is not reflected in my credit score. In the end, I would recommend getting a copy of your credit score if you are taking out a loan for a large purchase in order to maximize your score.

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