Do You Need 60X Annual Expenses to Retire Early?

Three years ago, I published a post titled The Millionaire's Rule of Thumb which presented an often quoted formula for expected net worth based on age and income. Many readers have expressed their dissatisfaction with the formula which is attributed to the book, The Millionaire Next Door by Thomas Stanley and William Danko. I predicted that someday a reader would develop a new and improved formula.

Three years to the day after I first posted that article, a reader who goes by the name of "dunkelblau" has indeed come up with a new and improved formula! Below is summary of dunkelblau's comments taken from this post, and from my very popular Net Worth Update post. (Note: Comments have been edited.)

I agree that wealth should be measured in units of time rather than dollars -- as in how long you can holdout without any wage income. But the correct denominator is annual expenses, not annual income. You're ready to retire when your networth divided by your annual expenses reaches 100 minus your age in years.

I don't blame you if you didn't catch that.  What the reader is saying is that if you take your net worth and divide that by annual expenses, that should equal 100 minus your age. The reader refers to net worth as the "numerator" and annual expenses as the "denominator". Reading on, dunkelblau continues by saying:

Investing well increases the numerator, but even investing badly still shrinks the denominator (assuming you don't borrow to invest). I think a conservative target number [for this quotient] is 100 minus your age in years. This way there's little chance of outliving your money.

So, as further clarification, another way to say this is that your net worth should equal your annual expenses times (100 minus your age):

Net Worth = Annual Expenses * (100 - age)

Lets take the example of a 40 year old who has saved $1 million for retirement. If this person can reduce expenditures to $40,000 per year, a common rule of thumb is that one can live off of the $1 million saved by assuming a conservative 4% safe withdrawal rate. See Resources for Early Retirement.

However, the "new and improved" wealth formula dictates that one needs (100 - age) times annual expenses to retire. In the case of a 40 year old, that would be 60X annual expenses, or a whopping $2.4 million for this individual to retire! Conversely, this person could further reduce their spending to less than $17,000 per year in order to live off of the $1 million. No wonder people assume that early retirement is impossible! The other curious thing about this new "formula" is that as one ages, the expected net worth actually goes down if annual expenses are kept constant. The one thing that I agree with dunkelblau about is that if you follow this formula, there is little chance of outliving your savings.

Anyway, my common sense tells me to take dunkelblau's formula with a grain of salt. In my opinion, this is definitely a new formula, but where is the improvement? What do the readers think?

DC

Update on Merck

Back in November, I wrote a post about buying Merck. I made this decision based on a stock analysis service called MarketClub. This is part of a website called INO.com (pronounced "I know") where I can research stocks, futures, or forex products. I recently used their Trade Triangle analysis to help me decide on buying Merck & Co (NYSE: MRK).

At the time of my post, Merck & Co (NYSE: MRK) was trading around $34, but it has increased significantly since my previous post. I had actually bought the stock about a month earlier than my post. Although I usually don't disclose the full details of my stock transaction on my blog, I thought that it would be instructive to share the details of this trade. For my own reference, this post will serve as a record of a trade that I got right.

Here is the summary of my trade: On 10/12/09, I bought 300 shares of MRK at 32.99. On 12/24/09, I sold 300 shares of MRK at 36.76. As I mentioned, the opening transaction was based on technical analysis done using Trade Triangles from MarketClub portion of the INO.com website. The closing transaction is due to a stop order that I placed after the stock started to move up. The idea behind a stop order is to protect gains from a potential decline in the stock price. However, volatility will sometimes cause one to be "stopped out" prematurely. That is one danger of placing a stop order.

On a percentage basis, this trade was not as successful as my investment in Bare Escentuals (NASDAQ: BARE ). Nevertheless, it still represents an 11.4% gain over the period. I don't usually compare my trades with the S&P 500 index, but I know that a lot of investors consider that to be an important measure of success. For the record, the S&P rose 4.6% over same period. The difference between my return and the S&P is 6.8%, and is referred to by some analysis as "alpha". There are entire websites that exist for the sole purpose of seeking positive alpha.

From a personal standpoint, I am always happy to rack up a good gain regardless of whether it generates a positive alpha. I also can't argue with success, and while I was at first very skeptical of technical analysis tools like Trade Triangles, I have had good success with INO.com, so I intend to continue using this technique in my investing.

DC

H&R Block At Home (formerly TaxCut)

Last week, I received a copy of H&R Block At Home (that is the new name for TaxCut) tax preparation software in the mail. I have noticed that if you register your copy of either TaxCut or TurboTax with the manufacturer, they will automatically send you a CD-ROM with their software for the following year. H&R Block did this again. If you get one of these package in the mail, don't be fooled into thinking that you are getting something for nothing. Usually, you aren't aware of the cost of the software until you insert the CD-ROM into your computer and read through the fine print. This time, H&R Block was a little more transparent about the pricing. It printed "Only $34.95" on the front of the DVD case that it came in. But, for most people the $34.95 version of the software will not be adequate for their needs. Expect to spend at least $45 if you plan on filing a state tax return.

The H&R Block At Home (formerly TaxCut) CD-ROM that I received in the mail did have a $10 rebate coupon for purchases from certain stores (specifically Amazon.com, Best Buy, Target, Office Depot, Microcenter, Staples, and Fry's Electronics). So, it usually ends up being cheaper for me to buy this tax software through a retail store rather than installing the version I received in the mail. In the past, I've noticed that some retailers offer a free movie DVD with purchase of Taxcut, so I will usually hold out until I see a similar deal.

As a side note, H&R Block used to offer a rebate for certain financial software (e.g., Microsoft Money) with the purchase of TaxCut. But, MS Money has been discontinued by Microsoft. The 2008 version (Microsoft Money Plus) was the last planned version of this financial software. (I might consider converting everything over to Intuit's Quicken in the future.)

As far as tax software is concerned, I have always used the Premium "desktop" version of the tax software, which includes the state version of the tax preparation software. This year it looks like H&R Block At Home has adopted the TurboTax naming calling their product "Deluxe" rather than Premium. An online version is available for both TurboTax and TaxCut, which I have not used. I also haven't tried using e-file yet, but I might consider it this year.

One last thing that I wanted to bring up is that TurboTax is offering to answer tax questions for free. Here is a link to the Intuit offer from TurboTax. My main criticism that I have about this offer is that it is only good until the end of January 2010. I would guess that the average person doesn't even get started with their taxes until February or March. By that time, they will be too late to take advantage of this free advice.

So, what tax software do you use?

Note to Commenters: If you represent a company such as Intuit, H&R Block, Microsoft, etc., please leave your contact information or send me an Email (my Email address is listed in the sidebar) to let me know that you left a comment. If I cannot determine that your comment is authentic, it will be deleted.

DC

Tax Questions Answered

It is that time of year again when you should start thinking about your 2009 taxes. I have been using computer tax software to prepare my taxes since 1996, and I plan to do so again this year. Once again, the two main contenders are TurboTax and H&R Block At Home (formerly known as TaxCut). I have not yet decided which of these software products I will use, although I have been using the H&R Block product for the last several years.

Anyway, the point of this post is to mention that TurboTax is once again offering to answer personal tax questions for free. They have IRS-Enrolled Agents and tax preparers available to help you with your tax question. To get started, you need to submit your question through their website: www.freetaxquestion.com. A tax advisor will research your question and give you a phone call to discuss your tax issue. Questions about this offer should be directed to TurboTax; contact Alexandra Cuccias (Alexandra@outcastpr.com) with any questions.

There are a couple of catches to the offer. First, it appears you that can only submit a question between the hours of 8am and 5pm PST, Monday to Friday. Second, this free offer is only valid through January 31, 2010. So, you need to be organized enough to know what tax question you want to ask before then. My criticism here is that the average person doesn't even get started with their taxes until February or March. By that time, it will be too late to take advantage of this free service. After January 31, TurboTax will charge $23.95 for this advice. In the past, H&R Block had a similar free offer, but I have not heard if they will be offering that service again this tax year

Getting back to tax preparation software, I have usually chosen TaxCut because it is generally cheaper than TurboTax. Also, I have usually been able to get a free copy of Microsoft Money Deluxe with the purchase of TaxCut. However, MS Money has been discontinued by Microsoft, and H&R Block is no longer offering any free financial software with the purchase of their tax software. Some retailers are offering a free copy of Quicken Starter Edition 2010 with the purchase of TurboTax, but that version of Quicken would be too underpowered for my circumstances.

Note to Commenters: If you represent a company such as Intuit, H&R Block, Microsoft, etc., please leave your contact information or send me an Email (my Email address is listed in the sidebar) to let me know that you left a comment. If I cannot determine that your comment is authentic, it will be deleted.

DC

Money Market Rates 12/09

Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

1.95% Shorebank Direct Online Savings
1.59% Ally Bank Online Savings
1.35% HSBCDirect Online Savings
1.30% ING Direct Orange Savings
1.15% Citibank Ultimate Money
1.15% Citibank Ultimate Savings
1.10% Umbrellabank Pot O' Gold Money Market
0.55% Western FCU Money Market
0.53% Chase Online Savings
0.50% E*TRADE Complete Savings
0.06% PayPal Money Market*

NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 12/3/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

So, there is the latest list. Please let me know if you know of any higher interest rates.

DC

Trade Triangle: Merck (MRK)

A couple months ago, I wrote about making money by using a stock analysis service called MarketClub. This is part of a website called INO.com (pronounced "I know") where I can research stocks, futures, or forex products. I recently used their Trade Triangle analysis to help me decide on buying Merck & Co (NYSE: MRK).

Over the past several months, I have been looking for individual stocks that I can get back into. I used MarketClub to get an instant analysis of Merck, and the results are shown below.

This analysis shows that Merck is now in a strong uptrend, and that this is an ideal time to buy the stock. MarketClub's Smart Scan analysis calls this situation a "Trade Triangle" with a +100 being the highest possible score. This kind of technical analysis is great for trend traders who like the "red-light, green-light" simplicity of investing. So, I bought some shares of MRK based on this information.

With a very strong gain yesterday, I have already made more money on Merck than what a MarketClub subscription costs for one year. Note that Trade Triangles are strictly a technical analysis tool. I don't use the MarketClub analysis to tell me what to buy. I rely more on fundamental characteristics like Earnings Per Share (EPS) and PE ratios to decide on which stock to buy. But, I use MarketClub to tell me when to buy. I now have a stop order in place to help protect my gains.

Another comment that I have is that MarketClub does not require you to download and install any software. This is good because you can access your subscription from pretty much any computer. The downside is that your access speed will be limited by your Internet connection. In other words, MarketClub is not the fastest analysis tool that I've ever seen. But, it is pretty good considering that the software runs on their servers and not your computer.

You can subscribe to MarketClub for $150 per quarter or $449 for a year. You will have complete access to many of the investment tools available on INO.com. There is a 30-day risk-free trial period in which you can try them out. They will ask for a credit card when you sign up, but you have the right to cancel within the first 30 days and get all of your money back. So, what do you have to lose?



Another free tool that I utilize to help me keep on top of my portfolio is called Trend Analysis. Trend Analysis is a daily email analysis tool that gives me insight into exactly what my portfolio is doing. For investors who are following many stock symbols, MarketClub sends a daily Email for every symbol in your portfolio.

The links above takes you to a screen where you can get your first stock (future or option) symbol analyzed at no cost to you. After you sign up, you can easily add more symbols to get a daily update, which I find very helpful.

DC

Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.

Countrywide SavingsLink Revisited

I first wrote about the Countrywide Bank SavingsLink account in 2007. This account offered interest rates as high as 5.5% at one point. It featured free online transfers between linked external bank accounts. Countrywide was acquired by Bank of America early last year, but the final merging of accounts was not completed until September 2009.

The SavingsLink account is no longer offered by Bank of America, and has been replaced by the "Growth Money Market Savings SL" account. According to my last statement, I am getting an APY of 1.23% in my account, but I think that the rate varies based on account balance. I was not able to find a rate sheet for this particular account on Bank of America's website.

Bank of America's Money Market Savings SL account does not have the same transfer features that the SavingsLink account did. The accounts that I had previously linked to my SavingsLink account were no longer available. When I try to transfer funds to or from Bank of America, it asks me to sign up for SafePass which applies an extra level of security (and complexity) to online transfers. SafePass requires a cell phone, and it will send a 6-digit, one-time passcode as a text message (regular text message fees will apply) to your mobile phone. If you don't have a cell phone, they can set you up with a standalone SafePass card for a one time fee of $19.99.

According to their service agreement, BofA charges a fee of $3 for each outbound transfer. There is no charge for inbound transfers. But there are transfer limits of $3,000 per day or $6,000 per month. I remember transferring as much as $25,000 at one time into my SavingsLink account.  I called Bank of America to ask a customer service representative about the reason for these limits, but I only got a vague explanation to the effect that certain customers may have higher limits depending depending on their relationship with the bank.

One other major change is that unlike Countrywide Bank, Bank of America has branches everywhere. Whereas physical deposits to Countrywide Bank had to be mailed to processing facility in Texas, you can make deposit to Bank of America at nearly any branch. At this point, I figure that if I need to transfer money in or out, it might be easier to just go to the branch.

I am no longer tracking the SavingsLink account in my regular money market rates posts because it is no longer available to new depositors.

DC

Annoying Phone Calls

I didn't sleep well last night. We received a couple of annoying phone calls that woke me up at around 3:30 am, and again at 5:30 am. My caller ID tells me that the caller's phone number is 408-651-8179, and it is identified as either "TOWER SOFT", "OUT OF AREA" OR "UNAVAILABLE". Searching the web, it seems like I am not the only person whose sleep was disturbed last night. See Caller Complaints, 800 Notes, and Who Calls Me? I found dozens of complaints from last night alone on these websites.

Like me, many of the recipients of these phone calls are on the Do-Not-Call Registry. In most cases the phone rings two or three times, but there is nobody on the other end when they answer. A phone call like that would be frustrating during the daytime, but it is highly abusive when they call and wake you up. What can you do about these types of annoying phone calls?

DC

Can An Established CD Interest Rate Be Reduced?

Can a bank reduce the interest rate of an established certificate of deposit (CD) account? I learned the hard way that the answer is YES. Let me be clear that I am not talking about a bank changing the interest rate at the CD maturity date, but actually lowering the rate during the original term of the CD. This happened to me, and it turns out to be all perfectly legal and approved by the FDIC.

Readers of my blog may remember that I wrote about receiving a free HDTV for opening a CD account at Irwin Union Bank. I deposited $20,000 into an 11-month CD with an interest rate of 1.96% in July. Then on September 18th, Irwin Union Bank was closed by the FDIC with its accounts and assets transferred to First Financial Bank. Subsequent to the Irwin Union Bank closing, the acquiring bank (First Financial) sent me a letter saying that my interest rate had been reduced to 1.5% for the remainder of my CD's term.

Does that seem right to you? On the FDIC webpage about the failed bank (Irwin Union Bank), there is a long-winded document called a Purchase and Assumption Agreement. Reading through the FDIC gobbledygook, I came upon this paragraph explaining how the assuming bank (First Financial) may change the interest rate on its CD acquired from Irwin Union Bank:

2.2 Interest on Deposit Liabilities. The Assuming Bank agrees that, from and after Bank Closing, it will accrue and pay interest on Deposit liabilities assumed pursuant to Section 2.1 at a rate(s) it shall determine; provided, that for non-transaction Deposit liabilities such rate(s) shall not be less than the lowest rate offered by the Assuming Bank to its depositors for non-transaction deposit accounts. The Assuming Bank shall permit each depositor to withdraw, without penalty for early withdrawal, all or any portion of such depositor's Deposit, whether or not the Assuming Bank elects to pay interest in accordance with any deposit agreement formerly existing between the Failed Bank and such depositor; and further provided, that if such Deposit has been pledged to secure an obligation of the depositor or other party, any withdrawal thereof shall be subject to the terms of the agreement governing such pledge. The Assuming Bank shall give notice to such depositors as provided in Section 5.3 of the rate(s) of interest which it has determined to pay and of such withdrawal rights.

I was following along up until the phrase "and further provided"... In any case, the net result of all this is that although I have not lost any principal or interest accrued before the failure of Irwin Union, the future interest rate has been reduced. The FDIC has also provided that a depositor could withdraw their funds without a penalty for early withdrawal. From my previous post, I mentioned that for the free TV offer, "The penalty for early withdrawal is substantial -- $500 plus 91 days of interest. That works out to about $600 if you need get your money out early."

I called my new bank, First Financial, to quiz them on this issue. They confirmed that my CD interest rate has been reduced, and that there would be no further reduction of the interest rate for the remainder of the term. And, I could withdraw my money anytime before maturity with no penalty. When I asked about the HDTV set, they said that there would be no penalty to keep that either.

So, what should I do? I could withdraw my money and keep the HDTV without penalty. That would work out to a pretty good equivalent interest rate. Or, I could keep my money in the CD account since 1.5% is still better than most money market or rates for a similar term CD nowadays.

What would you do in this situation?

DC

Money Market Rates 10/09

Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

2.15% Shorebank Direct Online High-Yield Savings
1.35% HSBCDirect Online Savings
1.35% Umbrellabank Pot O' Gold Money Market
1.30% ING Direct Orange Savings
1.25% Citibank Ultimate Money
1.25% Citibank Ultimate Savings
0.75% Chase (formerly WaMu) Online Savings
0.65% Western FCU Money Market
0.60% E*TRADE Complete Savings
0.05% PayPal Money Market*

NOTES: *The PayPal Money Market fund is NOT FDIC insured.
Rates are believed to be accurate as of 10/1/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

The SavingsLink account is no longer offered by Bank of America, and has been replaced by the Growth Money Market Saving account. Guaranty Bank has been closed by the FDIC, and was taken over by BBVA Compass. I will no longer be tracking these accounts here.

In my last update, I mentioned Irwin Union Bank which was offering a free 22" HD LCD TV or a Flip MinoHD Mini Camcorder to open a new bank account. Unfortunately, Irwin Union Bank has also been closed, and taken over by First Financial Bank.

So, there is the latest list. I intend to write a couple of follow up posts about the recent bank closing, and how changes may affect your accounts.

DC

Sponsored Post: CashNetUSA

While some consumers believe that payday lenders are evil, they fill an important niche that is not served by traditional banks. In an ideal society, everybody would be on top of their finances, and there wouldn't be a need for payday lenders. But reality is not consistent with this utopia, as the majority of us have gotten a little bit behind on bills at some point.

CashNetUSA offers cash advance loans that basically use your next paycheck as collateral. A payday loan is an option to consider if you find yourself in a short-term bind and in need of money. If, for example, your car breaks down or you encounter an unexpected expense, a payday loan could definitely assist you. Obtaining a payday loan is relatively easy. The online application takes only a few minutes to complete. According to CashNetUSA, most loans are generally approved within one day.

CashNetUSA's FAQ does a lot to explain the process of applying for a loan. A checking account and a steady job are the main prerequisites to apply. One must also be a US citizen or permanent resident that is at least 18 years old. To explain how the loan works, suppose you were to borrow $250 from the payday lender. The lender then transfers this money to your checking account, and expects to be repaid this amount plus a loan fee ($44.13 on a $250 loan) when you receive your next paycheck.

I would advise borrowers to read all of the disclosures on CashNetUSA's website before applying for a loan. Understand that, in some cases, the effective annual percentage rate (APR) on the loan can be the equivalent of several hundred percent. Payday loans are designed to help you through a short-term credit need and are not meant for long-term borrowing. If used correctly a payday loan can help tide you over to the next payday.

Celebrate Arts Month and Win Prizes

My readers know that my blog originates from Silicon Valley, California. However, I have not focused on posting about local events. Nevertheless, one of my local readers has asked me to mention an event celebrating the arts that will take place in Mountain View, California during the month of October that encourages people to participate in the arts. More information about this event is available at: Mountain View Celebrates the Arts in October.

What caught my eye is that there will be a free drawing for prizes with a total value of over $800, which will be awarded in November. In order to enter the contest, you need to fill out an "Arts Challenge" entry form (which will be available for download at the website), and return it by November 1. Mail-in entries are accepted.

Most of the prizes are provided by local, Silicon Valley organizations. The prizes that will be given away include:

• Three $75 gift certificates for classes or camps at the Community School of Music and Arts in the spring, summer or fall 2010
• Four vouchers for performances at the Mountain View Center for the Performing Arts (value of up to $50 each)
• Two tickets to QUADRE's Horns for the Holidays concert on Dec. 8, 2009 (value of $18 each)
• Four tickets to Talk Cinema in Palo Alto (value of $20 each)
• One voucher for a birthday party at Art-n-Fun in Los Altos (value of $156); will expire on December 15, 2010
• Five vouchers for an introductory clay/art class at Art-n-Fun in Los Altos (value of $26 each); will expire on December 15, 2010
• Tickets to a performance at Pear Avenue Theatre (value of up to $30 each)

In addition, the reader also mentioned that they may also be giving away free gift cards from Starbucks, which should be usable anywhere. In any case, it is worth downloading the entry form and entering for the price of a stamp. If you would like to publicize a local, Silicon Valley event or know of other special deals that readers might be interested in, please send me an Email message (my Email is in the sidebar) with the details.

DC

MarketClub Pays for Itself

A couple months ago, I mentioned that I signed up for a stock analysis service called MarketClub. This is part of a website called INO.com (pronounced "I know") where I can research stocks, futures, or forex products. I recently used their Trade Triangle analysis to help me decide on buying a stock.

The stock that I was interested in buying was Bare Escentuals (Nasdaq: BARE). Readers of this blog may remember that I first purchased shares of this stock during the Bare Escentuals IPO. I sold that stock a while ago. But with the stock market recovering, I have been looking for individual stocks that I can get back into. I used MarketClub to get an instant analysis, and the results are shown below.


This analysis shows that Bare Escentuals is now in a strong uptrend, and that this is an ideal time to buy the stock. This type of analysis is great for trend traders who like the "red-light, green-light" simplicity of investing. So, I bought some shares of BARE at $9.25 per share at the beginning of August. It recently closed above $11 a share.

Based on the number of shares that I purchased, I have already made more money that what the MarketClub subscription costs for one year. Note that Trade Triangles are strictly a technical analysis tool. I don't use the MarketClub analysis to tell me what to buy. I rely more on fundamental characteristics like Earnings Per Share (EPS) and PE ratios to decide on which stock to buy. But, I use MarketClub to tell me when to buy. I now have a stop order in place to help protect my gains.

Another comment that I have is that MarketClub does not require you to download and install any software. This is good because you can access your subscription from pretty much any computer. The downside is that your access speed will be limited by your Internet connection. In other words, MarketClub is not the fastest analysis tool that I've ever seen. But, it is pretty good considering that the software runs on their servers and not your computer.

You can subscribe to MarketClub for $150 per quarter or $449 for a year. You will have complete access to many of the investment tools available on INO.com. There is a 30-day risk-free trial period in which you can try them out. They will ask for a credit card when you sign up, but you have the right to cancel within the first 30 days and get all of your money back. So, what do you have to lose?



Another free tool that I utilize to help me keep on top of my portfolio is called Trend Analysis. Trend Analysis is a daily email analysis tool that gives me insight into exactly what my portfolio is doing. For investors who are following many stock symbols, MarketClub sends a daily Email for every symbol in your portfolio.

The links above takes you to a screen where you can get your first stock (future or option) symbol analyzed at no cost to you. After you sign up, you can easily add more symbols to get a daily update, which I find very helpful.

PF Stock

Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.

Whoops!

That is a word that you never want to hear your doctor say... Well, I had a "whoops" moment last month when I accidentally overpaid my telephone bill -- to the tune of nearly $700. I pay most of my bills through my checking account online, and I must have somehow confused a credit card bill with the phone bill. It was a few days after the payment went through to the phone company that I realized my error.

This turned into a panic when I also realized that my credit card payment hadn't been made, and it was too late schedule another bill payment since the due date had passed. After a frantic call to the credit card company, I explained the situation to them. They agreed that I wouldn't be charged any late fee if I could make an over-the-phone payment that same day, which I did.

To make a long story short, the issue with the credit card was resolved without any problem. However, I still have over $600 in credit on my phone bill. I guess that I could request that they send a refund check for the overpaid amount, but I haven't decided what to do yet.

I guess that old age is catching up with me. Has anything like this ever happened to you?

DC

Update On My Free HDTV

Last month, I wrote a post about a bank offering a free HDTV or a mini Camcorder for opening a new CD account. Specifically, the offer was made by Irwin Union Bank to customers who open an 11-month CD with a minimum deposit of $20,000. After funding their account, a depositor would receive a Sharp or LG 22 inch HD LCD TV or a Flip MinoHD Mini Camcorder within 30 days. I took Irwin Union Bank up on their offer, and opened a new CD account. It has been about a month since I opened my account, and I just received my HDTV.

About a week ago, the bank sent me an Email that saying that the manufacturer had run out of 22" TV sets, and that I would receive a Toshiba model 22AV600U instead. The TV itself is the first HDTV that I've owned, and the picture is quite sharp compared to our old tube TVs. The new TV includes a built-in NTSC/ATSC/clear QAM tuner that can tune into both broadcast TV and cable. (It is an unadvertised fact that cable subscribers who have a clear QAM tuner can often receive unencrypted HD cable TV, without adding "digital" cable to their service.)

A new 22 inch TV set retails for about $250-300, so it is a generous gift considering how stingy banks are with interest rates these days. This offer was scheduled to end on August 31, but it seems that Irwin decided to end the promotion early, as I can no longer find the offer on their website. Readers who are still interested in the TV or Flip Mino might try calling the bank directly. It can't hurt to ask.

The bank informed me that they will report the value of the free gift ($280) to the IRS (on a 1099 form), so the "free" TV will probably end up costing around $100 in taxes. I thought that the days of banks offering a TV set to new customers was a thing of the past. Has anybody else taken Irwin Union Bank up on this offer? If so, could you share your experiences here?

DC

Net Worth Update

Readers keep coming back to PFStock to read my Net Worth Comparison post. Curiosity definitely gets the best of people -- wanting to assess how one is doing compared to others. Basically, people want answers to the question of "How am I doing versus other people my age with a similar income?"


In March 2008, PFStock asked the question: Are You Wealthy? This post examines a formula from the book The Millionaire Next Door For your reference, the formula is repeated here:

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

In addition to the Millionaire formula, I mentioned a couple of websites for readers to look at. CNN Money has a Net Worth Comparison Tool that asks you to enter your age and annual income. These numbers have changed since my original post. Since people are most interested in the "numbers", I've decided to reproduce the results here (with appropriate credit given to the information source: Nielsen Claritas).

Net Worth by Age (from CNN Money)

Age	Median Net Worth
younger than 25	$1,475
25-34	$8,525
35-44	$51,575
45-54	$98,350
55-64	$180,125
65 and older	$232,000

Net Worth by Income (from CNN Money)

Annual Income	Median Net Worth
less than $25k	$1,250
$25k-$49k	$34,375
$50k-$74k	$168,500
$75k-$124k	$301,475
$125k-$149k	$644,100
$150k and higher	$1,122,900

From these statistics, you can compare net worth for an average 30 year old, 40 year old, 50 year old, or whatever your age. The income ranges are fairly broad, but should also give you an idea of where you stand.

Note: Please also participate in the annual income / net worth polls in the sidebar of my blog. See also: How Much Do You Make? And leave an anonymous comment. Comments to this post are also welcome.

The other website that I mention as a data source is NetworthIQ. This site has compiled a set of Net Worth Statistics based on what its members have reported. This data was current as of 4/22/2009. In addition to age and yearly income, Networth IQ lets you compare net worth based on education, occupation, and state of residence. The age groups and income ranges are broken out in finer increments than the CNN Money data.

Net Worth by Age (from NetworthIQ)

Age	Median Net Worth
under 25	$9,660
25-29	$37,229
30-34	$136,629
35-39	$298,500
40-44	$491,100
45-49	$690,090
50-54	$702,552
55-59	$1,123,000
60-64	$507,000
65-69	$2,294,492
70 and over	$2,734,001

Net Worth by Income (from NetworthIQ)

Annual Income	Median Net Worth
$0 - $9,999	$1,830
$10,000 - $19,999	$839
$20,000 - $29,999	$1,808
$30,000 - $39,999	$3,582
$40,000 - $49,999	$22,211
$50,000 - $59,999	$32,461
$60,000 - $69,999	$50,177
$70,000 - $79,999	$96,520
$80,000 - $89,999	$113,100
$90,000 - $99,999	$176,548
$100,000 - $149,999	$267,042
$150,000 - $199,999	$513,000
$200,000 - $249,999	$549,446
$250,000 +	$1,035,000

There are a couple of peculiarities in the NetworthIQ data. Specifically, it appears that net worth goes down in the 60 to 64-year old age group. Also, net worth also seems to drop in the $10,000 to $29,999 income range. This non-monotonicity is probably due to the way that these data are reported.

Some would argue that the NetworthIQ data is not a good representation of the population as a whole. This is because the net worth people report is not audited, and you can see only what people choose to disclose. Arguably, there are those who may have overestimated the value of their home, cars, and personal property in order to inflate their net worth. But taken with a grain of salt, one can still find some usefulness in the numbers.

Even the detailed data from the last two information sources leave some questions in my mind. I have made the assumption that these data are meant to measure the net worth of American citizens. However, NetworthIQ also includes a significant number of profiles for residents of other countries, such as Australia, Canada, New Zealand, and the United Kingdom. It is also unclear if the reported networth is based on individual or household net worth? Obviously, per capita net worth would be lower than household net worth. Does anybody want to weigh in on these issues?

So there you have it: three ways that you can compare your net worth to others. So, how do you stand?

DC

Money Markets and a Free HDTV

In last month's update, I mentioned a "new" bank called Ally Bank, which offered the highest money market rate of 2.05% APY. Ally has dropped out of the lead, and now ShoreBank Direct is on top. Like I said, there is no telling how long a particular rate will last. Anyway, it is worthwhile to consider moving your money into banks at the top of the list, especially if you are willing to open a new account.

Without further ado, here are the latest interest rates. Note that the rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

2.05% Shorebank Direct Online High-Yield Savings
1.85% Ally Bank Online Savings
1.55% HSBCDirect Online Savings
1.40% Bank of America SavingsLink**
1.40% ING Direct Orange Savings
1.35% Umbrellabank Pot O' Gold Money Market
1.30% Citibank Ultimate Money
1.30% Citibank Ultimate Savings
1.00% Guaranty Bank Gold Rewards Money Market
0.95% E*TRADE Complete Savings
0.75% Chase (formerly WaMu) Online Savings
0.65% Western FCU Money Market
0.08% PayPal Money Market*

*Note that the PayPal Money Market fund is NOT FDIC insured.
**SavingsLink account is no longer offered to new customers.
Rates are believed to be accurate as of 7/23/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

I was surprised to come across a bank offering a free 22" HD LCD TV or a Flip MinoHD Mini Camcorder to open a new bank account. This offer is from Irwin Union Bank to customers who open an 11-month CD with a minimum deposit of $20,000. The offer is also available to depositors who open certain business checking and business money market accounts. For reference, a 22" HDTV retails for about $250-300, and the Flip MinoHD sells for a bit less than that, so it is quite a generous gift considering how stingy banks are with interest rates these days.

The CD rate is dependent on your particular area, but where I am it is a respectable 1.72% (APY) interest. Indeed, that is better than what most banks offer on CD terms of less than one year. There appear to be a couple of downsides to the offer. The penalty for early withdrawal is substantial -- $500 plus 91 days of interest. That works out to about $600 if you need get your money out early. The other negative is that the bank states that it will report the value of the free gift to the IRS (on a 1099 form), so the free TV or camcorder could end up costing around $100 depending on your tax bracket.

I thought that the days banks offering a TV set to new customers was definitely a thing of the past. I don't know much about Irwin Union Bank except that they are FDIC insured, and based in Indiana. If anybody has any dealings with Irwin Bank, could you share your experiences here?

DC

Free Stock Market Analysis

A while back I signed up for a useful stock analysis service called MarketClub. It is part of a website called INO.com, where you can research stocks, futures, or forex products.

I recently asked for an instant analysis of INTC (Intel Corporation), and got this graph from MarketClub:


Their analysis is called a Trade Triangle. It shows that Intel is now in a strong uptrend, and it is an ideal time to buy. This analysis is great for traders who like the "red-light, green-light" simplicity of investing.

For investors who are following a large number of stock symbols, MarketClub sends a daily Email for every symbol in your portfolio. But staying on top of the changes and momentum shifts often becomes overwhelming, especially if you’re watching a large number of symbols and open positions, like me.

Another free tool that I utilize to help me keep on top of my portfolio is called Trend Analysis. Trend Analysis is a daily email analysis tool that gives me insight into exactly what my portfolio is doing.

The link above takes you to a screen where you can get your first stock (future or option) symbol analyzed at no cost to you. After you sign up, you can easily add more symbols to get a daily update, which I find very helpful.

PF Stock

Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.

My Coke Rewards Code

I bought some 12-packs of Coca-Cola, and have collected the My Coke Rewards codes from these packages. Since I don't think that I will redeem the My Coke Rewards codes, I have decided to post the codes here as a service to my readers. Feel free to claim the codes (hidden in my blog posts). Please post a comment (or send me an Email) after you have claimed the code, so that I can post the next code.

If you have any unused codes that you want to donate, please feel free to post them in the comments.

Update: This didn't exactly work out the way that I had planned. It seems that whenever I post a new code, it is found almost immediately. However, the person who redeems the code usually does not Email me or post a comment here. Instead, I find out from other readers that the code is already RNBM (Redeemed Not By Me).

Instead of posting new My Coke Rewards codes here, I've decided that I will hide the codes in some of my old posts. The codes will be harder to find, but rules are the same: please Email me, or post a comment saying that you've redeemed the code. Then I will erase the old code, and hide a new code somewhere else on my blog.

NEW Hint: I've hidden some unredeemed codes on links outside of this blog. So, leave no LINK unclicked! Happy hunting!

DC

Microsoft Money to be Discontinued

Microsoft has recently announced that it will discontinue its Money Software. In late 2007 (at the same time that bought my tax preparation software), I bought a copy of Microsoft Money Plus (2008). And in January of this year, I wrote that Microsoft decided not to release a 2009 version of Money. It turns out that Money Plus will be the last version of MS Money to be produced. The following notice was posted on the Microsoft Money website:

Important notice: Microsoft Money Plus will not be available for purchase after June 30, 2009. All purchased Money Plus products must be activated prior to Jan. 31, 2011.

With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed. After suspending annual updates of Money Plus in 2008, Microsoft is announcing today that we will no longer offer Microsoft Money Plus for purchase after June 30, 2009.

We would like to thank the many dedicated users who have been enthusiastic supporters of Microsoft Money over the years, as well as our partner financial institutions who helped pioneer a digital vision of financial management.

Microsoft remains committed to helping customers chart a course to financial well-being. The MSN Money Web site will continue to provide personal finance information and advice plus comprehensive market news and quotes. We will continue to evolve and enhance the online MSN offering in the coming months.

Microsoft also posted an FAQ on the topic.

To tell the truth, I never installed installed MS Money Plus on my computer, and am still running Money 2007. The Money FAQ has some interesting recommendations to people in my situation. Here are a couple of questions and answers from the FAQ:

Q: I am Money 2007 user. Should I upgrade to Money Plus before sales end?
A: If you are still using Money 2007, it is not recommended that you upgrade to Money Plus at this time.

Q: I am a Money 2006 or earlier user. What should I do?
A: If you are still using Money 2006, it is not recommended that you upgrade to Money Plus at this time.

So, Microsoft is not even recommending that people upgrade to the last and final version of MS Money. I have an unused and unactivated copy of Microsoft Money Plus that Microsoft does not recommend I upgrade to. Maybe I ought to sell my copy of Money Plus on eBay.

What do I do now? There is a new version of Quicken 2009, and I might consider buying that or a 2010 version when it is available. Also, an anonymous commenter on my last post suggested that I ought to consider GnuCash. According to the reader, GnuCash is 100% free and very powerful. I have downloaded this software, and I won't dispute these claims. However, I will say that GnuCash is not as intuitive as either MS Money or Intuit's Quicken.

Interested readers can read more about GnuCash at: http://www.gnucash.org/
You will also find links to download a free copy of the software for Windows (63MB). The source code is also free and available if you want to compile it for Linux, UNIX, or Macintosh.

DC

New Bank Offers Highest Money Market Rate

Savings account interest rates have dropped again. However, there is some good news. Since my last update, I have added a couple of new banks to my list that are offering 2.05% APY on a money market account. These banks are Ally Bank and ShoreBank Direct. These were the highest money market yields that I could find. There is no telling how long these offers will last, but I think that it is worthwhile to consider these options if you are willing to open a new account.

It has been difficult to keep track of which financial institution has the best interest rates on deposits. So periodically, I will post a list of the annual percentage yields (APYs) for institutions that I have accounts at, or have otherwise mentioned in my blog. These rates are sorted by APY:

2.05% Ally Bank Online Savings
2.05% Shorebank Direct Online High-Yield Savings
1.80% Umbrellabank Pot O' Gold Money Market
1.55% HSBCDirect Online Savings
1.50% Citibank Ultimate Money
1.50% Bank of America SavingsLink**
1.50% ING Direct Orange Savings
1.40% Citibank Ultimate Savings
1.00% Guaranty Bank Gold Rewards Money Market
0.95% E*TRADE Complete Savings
0.75% Chase (formerly WaMu) Online Savings
0.75% Western FCU Money Market
0.14% PayPal Money Market*

*Note that the PayPal Money Market fund is NOT FDIC insured.
**SavingsLink account is no longer offered to new customers.
Rates are believed to be accurate as of 6/15/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

I think that the big news is that there are banks that still offer higher interest rates, but you really have to seek out these banks. A note about Ally Bank is that it not exactly a new bank, but it is actually the reincarnation of GMAC Bank (originally General Motors Acceptance Corporation). With the former parent company (GM) in bankruptcy, they have made an effort to shed any remaining association with the original GM. The SavingsLink account (originally from Countrywide Bank) has fallen considerably from the top of the list, and Bank of America no longer offers this account to new customers.

Historically, money market funds (offered through brokerages) have paid a higher interest rate than their counterparts at commercial banks. However, this situation has reversed itself, and the money market funds are now at the bottom of the list. Money market funds are NOT insured by the FDIC. However, money market accounts offered through banks are.

DC

Rescan Your DTV tuner

Did any of your local TV stations disappear last night? Officially, all regular television stations in the United States stopped broadcasting analog TV signals and switched exclusively to digital broadcasting as of yesterday, June 12th. Because some digital stations have moved to different channel numbers, everybody should re-scan their DTV tuners to ensure that you will receive all of the digital stations broadcasting in your area. This is usually a straightforward procedure.

My DTV converter box is an Insignia NS-DXA1-APT, but it is very similar to the Insignia NS-DXA1 as well as the Zenith DTT901 and DTT900 models. On these models, I push the Menu button on the remote control to get into the setup menu. From there I would select either Auto Tuning, or EZ Add, and follow the on-screen directions to scan for new channels. If you have any difficulty doing this on your DTV converter, then you should consult the manual that came with your DTV box.

For some background information, the switch to digital TV is not as simple as just turning off analog TV broadcasts. Until June 12, 2009, TV broadcasts were received on channels 2-69. After the digital transition is complete channels 52-69 will be reallocated for other uses. In Silicon Valley, where I live, the digital TV station KTEH is on channel 54-1. KTEH is really broadcast on digital channel 50, but shows up as 54-1 through a process known as virtual channel numbering. The analog channel 54 will disappear after the DTV transition.

In the San Francisco Bay Area, KGO broadcasts analog TV on channel 7, and digital TV on channel 24. After switching off the analog channel, they will return the digital broadcast to channel 7. More complex is the case of KTVU which broadcasts analog on Channel 2, and digital on channel 56. After the switch off, they will broadcast on channel 44. However until June 12th, Channel 44 was used by KBCW (the old KBHK). For obvious reasons KBCW needs to shutdown their analog transmitter before KTVU can take over this channel. Is this confusing enough for you?

In addition to my DTV converter box, I also bought a DVD/VCR recorder with a built-in digital tuner. If I use an antenna with this device, I will also have to rescan the channels to receive over-the-air (OTA) TV broadcasts.

DC

New Government Acronyms

Super Saver over at My Wealth Builder has just published a very funny list of new acronyms used for government bailout programs. On his list are the "Special Creative Accounting Methods" (SCAM) and "President Obama's Oversight Program" (POOP).

To see the whole list, read the whole post. Let me know if you can think of any more creative acronyms that the government ought to be using.

DC

Diapers.com Coupon Code

Elias over at Finance Puzzle has recently had a baby. In one of his posts, he mentioned saving $10 when buying diapers from Diapers.com. He used a promotional discount coupon code.

The promo code that he used was good for $10 off of your first order from Diapers.com. In addition, they offer free shipping with a purchase of $49 or more. Although they are best known for diapers, Diapers.com also sells other baby products such as wipes, clothes, toys, books, car seats, strollers, etc.

Diapers.com’s claim to fame is fast shipping. Based on what other people have said, delivery usually takes about 1-2 days. In some cases orders are delivered in less than 24 hours.

Anyway, I thought that I would pass along this information to my blog readers in hopes that it can save you some money. If readers know of other helpful discount codes, please let me know.

DC

Latest Money Rates 5/09

Over the past month or so, savings account interest rates have remained about the same or have dropped only slightly. It has been difficult to keep track of which financial institution has the best interest rates on deposits. So periodically, I will post a list of the annual percentage yields (APYs) for institutions that I have accounts at, or have otherwise mentioned in my blog. These rates are sorted by APY:

2.05% Umbrellabank Pot O' Gold Money Market
1.65% Citibank Ultimate Savings
1.65% HSBCDirect Online Savings
1.65% Countrywide (now Bank of America) SavingsLink
1.50% ING Direct Orange Savings
1.20% E*TRADE Complete Savings
1.20% Guaranty Bank Gold Rewards Money Market
0.85% Washington Mutual (WaMu) Online Savings
0.75% Western FCU Money Market
0.21% PayPal Money Market*
0.05% TD Ameritrade Money Market*

*Note that the PayPal Money Market and the TD Ameritrade Money Market funds are NOT FDIC insured.
Rates are believed to be accurate as of 4/30/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

In my last post about money market rates, I mentioned that I did open an Umbrellabank Pot O' Gold Money Market account, which gives the highest interest rate in my list. Now, I'm in the process of moving more money into Umbrellabank. The 0.85% rate that I'm getting at Washington Mutual (WaMu) is particularly disappointing, and I have been moving money out of WaMu (soon to be Chase) over the last few months.

As I mentioned before, Smarty of Growing Money has published an interesting post listing a few institutions that are still offering good interest rates. Please see his post 10 High-Yield Savings Accounts. Note that his post is a couple of months old, and most of the interest rates have changed. Nevertheless, I would like get some feedback (good or bad) from anybody who has an account at any of the institutions that Smarty mentioned:

Broadway Federal Bank
ShoreBank
Alliant Credit Union
Danversbank
CNB Bank Direct
Chesapeake Bank
Provident Direct
GMAC Bank
Presidential Online Bank
FNBO Direct

Historically, money market funds (offered through brokerages) have paid a higher interest rate than their counterparts at commercial banks. However, this situation has reversed itself, and the money market funds are now at the bottom of the list. Money market funds are NOT insured by the FDIC. However, money market accounts offered through banks are.

After I published my last update, I found a website that copied my last six posts verbatim, without giving any credit to or even mentioning PFStock. There is one word for this: Plagiarism. I found the plagiarizer through trackbacks on Smarty's blog. After sending a cease and desist Email to the plagiarizer, I got him to remove the stolen material from his website.

DC

Searching for Market Direction

These days everybody is searching for clues about where the stock market is headed. I wrote a post a while back about predicting stock market direction. The stock market sure is volatile these days; one week the market is up, the next week it is down. Even on a day-to-day basis, the stock market sentiment can turn around 180 degrees. Although my original post is more than a year old, it remains as applicable today as it did when I wrote it.

I think that we would all like to have some insight into where the stock market is going, and I am not a psychic in this regard. But, there are ways to predict the direction of the stock market. These predictive insights come from the stock futures markets.

The CME Group (formerly called the Chicago Mercantile Exchange) trades stock market futures contracts. Specifically these futures contracts are for the S&P 500 and Nasdaq 100 and are known as equity index futures. By observing the behavior of these equity indices, you can often predict how the stock market will do in early trading. This prediction gets more and more accurate as it gets closer to the stock market opening.

The CME Group has a page that displays the most popular equity index futures in one place. Pay special attention to what is known as the "Globex Flash Quotes". Each week, the Globex trades nearly continuously from Sunday evening through Friday afternoon. This is by design so that US stock market futures can be traded by people around the world.

In the example, green numbers for the S&P and Nasdaq futures predict an up day in the stock market. Red numbers would predict a down day. However, I will warn you that these "predictions" are only reliable for early trading. I am sure that you've seen it happen many times where the stock market opens up in the beginning and ends significantly lower. Or the stock market drops in the early minutes of trading, only to recover significantly before the end of the day.

Another places to look for a predictions of stock market direction are in the International Market indices. These indices tell you how the overseas markets are doing. If the markets in Asia and in Europe have had a down day, it is likely that the US markets will follow suit.

DC

Plagiarizers

There are many pitfalls to writing a finance blog. Among them are deflecting comments from irate readers who (like most of us) have lost money in the financial markets recently, and are looking for somebody else to blame for their misfortune. But nothing irks me more than the wholesale plagiarizing of my blog. This is the one issue that makes me want to throw in the towel, and quit blogging for good.

Let me be clear on what plagiarism is not. If you copy a portion of a blog post (1-2 paragraphs), but attribute that the author (usually with a link to the original post), that is not plagiarism. In fact, this is generally encouraged among bloggers who appreciate incoming links. However, I have recently discovered a website that reproduced my last 6 posts on PFStock, verbatim. This website is a stock market blog written by somebody named "Allen". And, he has stolen credit not only from me but also from a several people that I recognize as stock market bloggers.

The way that I discovered this fraudulent website is mostly by chance. I recently wrote a post that I linked to a post on Smarty's blog, Growing Money. When I reread his post, I noticed that someone else had linked to his blog post with a topic that was very similar to mine. I wanted to see what the other poster said, and I clicked on the backlink to discover my own post reproduced on the plagiarizer's website. This blogger was even too lazy to edit the links.

Anyway, to deal with the issue, I found out the Email of the website owner by using the WHOIS Lookup for domain name servers at Network Solutions. I also also found an Email address for his web hosting company. Armed with this information, I drafted an Email that looked something like this:

Dear Sirs:

It has come to my attention that a website run by you has been deliberately plagiarizing material from my blog PFStock ( http://pfstock.blogspot.com ) without my permission.

I demand that you immediately cease and desist this activity, and that you remove from your website all of the stolen material. If you fail to do so, I will seek further action against you and your company.

Sincerely,
PF Stock

After sending this Email to the plagiarizer and his web hosting company, another exchange of Emails ensued. Finally, I got the plagiarizer to remove the stolen posts from his site. I also noted that if I ever catch him plagiarizing again, I would take legal action against him.

Like I said, plagiarism is probably the one issue that really makes me want to quit blogging. Hopefully, this will be the last time I have to take such measures against people copying my blog. But somehow, I doubt it.

DC

How Much Do You Make?

That is the question that everybody would like to know the answer to, but nobody wants to ask. I mentioned before how readers are innately curious other people's net worth. I think this is because of people's natural curiosity -- wanting to assess how one is doing compared to others. When you read new blog or meet somebody new, do you ever wonder how much they make?

So, how much do you make? Madame X, who writes My Open Wallet (one of the blogs on my blog list), has asked the question not once but twice. Do you think she got any responses? In fact, she received hundreds of comments on her posts. Here are a few that I picked out.

I'm 35, I have an AS in Culinary Arts and I am a restaurant manager in Tallahassee, Fl. My base is 32,500 plus up to 12,000 in bonus.

24, Female, Process Engineer in a Healthcare Environment. Work remotely (from home) in ATL. 66K - all benefits 10K in bonuses for 76K total.

Live in Nashville, TN. I am 31 and work in sales. Made 87k last year, worked an average of 41 hours per week, have 1 month paid vacation, and have a full time personal assistant. This year due to the economy I am on pace for 64k.

35 yo single female in Denver with BS and MD degrees, making $350K/yr with $200K savings, work 60 hour weeks with weekends free to ski.

28 male living in north jersey. No college education - manager in retail (Never work Sundays) salary 78k + bonus and perks exceeding 10k. Don't let anyone fool you, there's is money to be made for hard workers with a lack of formal education.

Single male, mid 30s, in-house attorney for midsized corporation in Miami. Total income this year between 300K and 400K, depending on bonus.

So, now I'm asking: how much do you make?

Note: Anonymous comments are welcome. See also the annual income poll in the sidebar of my blog.

DC

Need fast cash? Instant payday loans from MyPaydayLoanCash can get you cash today!

Latest Money Market Rates

Overall, savings account interest rates are continuing to drop. It has been difficult to keep track of the rates that I've been getting in my various money market accounts. So, I've decided to periodically post a list of the annual percentage yields (APYs) for institutions that I have accounts at, or have otherwise mentioned in the blog. These rates are sorted by APY.

2.05% Umbrellabank Pot O' Gold Money Market
1.75% Citibank Ultimate Savings
1.65% HSBCDirect Online Savings
1.65% Countrywide SavingsLink
1.50% ING Direct Orange Savings
1.45% E*TRADE Complete Savings
1.20% Guaranty Bank Gold Rewards Money Market
0.85% Washington Mutual (WaMu) Online Savings
0.75% Western FCU Money Market
0.32% PayPal Money Market*
0.05% TD Ameritrade Money Market*

Rates are believed to be accurate as of 4/6/09. I did not include banks that had special, or introductory rates in the list because these are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

*Note that the PayPal Money Market and the TD Ameritrade Money Market funds are NOT FDIC insured.

After my last post on the topic, I did open an Umbrellabank Pot O' Gold Money Market account, which gives the highest interest rate in my list. The 0.85% rate that I'm getting at Washington Mutual (WaMu) is particularly disappointing, and I have been moving money out of WaMu (soon to be Chase) over the last few months.

My fellow blogger, Smarty has published a interesting post with a few institutions that are still offering good interest rates. Please see his post 10 High-Yield Savings Accounts. Note that his post is more than a month old, and the interest rates may have changed.

Historically, money market funds (offered through brokerages) have paid a higher interest rate than their counterparts at commercial banks. However, this situation has reversed itself, and the money market funds are now at the bottom of the list. Money market funds are NOT insured by the FDIC. However, money market accounts offered through banks are.

Due to the ridiculously low interest rates paid by TD Ameritrade and other ongoing issues that I've had with TD Ameritrade, I'm seriously considering moving my assets to another brokerage. Does anybody have some suggestions?

In these times of uncertainty, I will repeat two pieces of advice that I think few people would disagree with:
1) Never exceed the FDIC insurance limits.
2) Don't keep all of your money in one place.

DC

Determined Californians!

I have mentioned the Retire Early Home Page Discussion Board as being a resource for those interested in early retirement. Topics on this board range from starting to save for retirement to leisure activities after retirement. Some posts seek investment or retirement advice from other readers. One post in particular has stuck in my mind over the years. This post titled "Early Retirement Plan needs investment advice" was written on August 12, 2005:

We have a very serious plan to retire in 3 years (2008) and need advice on investing the lump sum Capital Gains from our properties.

Our plan is to have a total of 10 rentals by the end of this year. So far we have 5 and buying homes very aggressively to achieve this goal by the end of this year. We are breaking even after renting each home. I figure that by the end of 3 years, assuming they all appreciate at the current rate of 30% we will have $2.7M in equity.

After 2008 the Capital Gains tax reverts back to 28%. We want to sell all our properties in 2008 pay the taxes at the 15% capital gains rate and start our retirement. Our thought is that we live off the interest for a long period of time.

I will be 45 and my husband will be 38. This will be a huge accomplishment if this happens and we’re working very hard at it.

I have read many books, articles and logged on to many websites. I still have a long ways to go on educating myself in the investment arena.

What suggestions do you have for rookies like us in putting our money is a safe but of course high interest account to allow us to live off the interest?

We have a combined total of $35,000 in our 401K, both currently work making a combined income of $170,000/yr and have no other investments besides our rental properties. After our planned retirement, our expenses would be $70,000/year to live comfortably, after paying off our main residence.

Determined Californians

This post was written by shelnbud, and is the only post that this author ever posted on the Retire Early forum. Replies to this post from other members of the message board were critical of the lack of diversification in the author's "retirement plan". I don't think I need to add my own commentary since the post itself speaks volumes...

DC

Stores Offering Discover Cashover

You can use a Discover Card to get cash back at the grocery store. Discover calls this the "cash over" option, and you can choose it when you checkout at the supermarket. For me, this works out to be a nice interest free loan, since I pay off my card every month. It also saves me a trip to the ATM. Officially, Discover says that most supermarkets have a Cash Over limit of $50, but I've noticed that my local Safeway limits me to $40.

Since I first mentioned getting cash back at supermarkets when using a Discover Card, there have been questions about which supermarkets allow cash back on this credit card. According to discovercard.com, the following stores offer cashover:

Big Y, Hannaford, Safeway, bloom, Heinen's, SAM'S CLUB, Carrs, Meijer, ShopRite, Dominick's, Pak'n Save, Sweetbay, Food Lion, Pavilions, Tom Thumb, Genuardi's, Randalls, Vons, Giant Eagle, and Walmart.

It used to be that the cashback goes on your monthly statement as being a purchase. But Discover changed this so that they now classify the cash back as being a "cashover". They separate out the "cash over" part from the "purchase" part of the transaction. And, you don't earn the regular Discover Card cashback bonus on the cash over amount.

Warning: I do not recommend this strategy for people who run a balance on their credit card because you will end up paying interest charges on the cash over amount.

DC

More TD Ameritrade Spam

I haven't written about this in a while but, it is happening again. I am getting spam at my Ameritrade Email address. To protect my Email, I use a unique Email address for my Ameritrade account, which is accomplished through Yahoo's "AddressGuard" feature. Because I've only given this unique Email address to Ameritrade, they are supposed to be the only entity that knows this unique Email address.

However, I've recently gotten significant amounts of spam at the Email that only Ameritrade is supposed to know about. Whenever this happens, I will usually change my Email address to a new one, and delete the old Email address. This has happened four times already, and it seems that my Ameritrade Email address has been repeatedly compromised. I know that this problem has been an ongoing a security issue at Ameritrade.

Shortly after I posted my last article about TD Ameritrade Spam, TD Ameritrade announced that they discovered "unauthorized code that allowed an external source to retrieve certain client information" from their system. How can this "unauthorized code" magically appear in their software? Clearly this was an inside job, as it seems that TD Ameritrade has a more than a few disgruntled employees...

By contrast, the Email address that I use for E*TRADE, and several banks has never been compromised. There is also a reason why I cannot delete my existing Email address, and setup a new one with Ameritrade. It has to do with courtesy fill notifications. I have asked Ameritrade to change my Email address, but the courtesy fill notifications are on a different system that retains my old Email address. I spoke to Ameritrade's customer service people about this issue. But, the Ameritrade CSRs are so incompetent that they don't know how to change Email addresses for courtesy fill notifications. In fact, some Ameritrade employees aren't even aware that they offer a courtesy fill notification service.

DC

Early Retirement Revisited

I haven't written about early retirement in awhile. So, let me first reiterate what I think are the three common rules among those who have retired early:
1) Living below your means (LBYM).
2) Maintaining a diversified investment portfolio on which to draw from.
3) Using a conservative 4% rule of thumb as a baseline for withdrawing from your retirement savings.

In my previous posts on PFStock, I have mentioned Billy and Akaisha Kaderli. This couple retired in their late 30s, and claim to live off of $24,000 per year. In my communications with the Kaderlis I have determined that they live in what is commonly known as a mobile home. When I asked my readers if they thought that they could live off of $24k a year, or retire to a mobile home, I did not get an overwhelming response. So, one could say that early retirees are often willing to do what most people are not.

I recently came across a blog that purports to be be about early retirement. But, the author is not actually retired, and the blog really focuses on an extreme version of what is known as "voluntary simplicity". Some suggestions mentioned in this blog are turn down the heat to 55F, stop drinking milk, and reuse gift wrap. This got me thinking that practically anyone could claim "retirement" by reducing their consumption to a very small fraction of their net worth. The real question then is "would you be willing to reduce your consumption to this level?"

Along these same lines is the book Your Money or your Life (YMOYL) written by Joe Dominguez and Vicki Robin. I read YMOYL a while back. While there certainly is a lot of good information in this book, some of the suggestions may be equally unappealing to many people.

The authors of YMOYL encourage the reader to thoroughly evaluate the value of each item they have, and track every last penny that comes into or out of your life. This is an activity that I personally frown upon, as I don't think that people should obsess about the minute details of every financial transactions.

YMOYL also advises investing virtually all of your money in US government bonds. I think that a more diversified investment portfolio of both stocks and bonds is a far more prudent choice. A portfolio made up of purely bonds violates rule #2, above. Also, as a historical note, Joe Dominguez died of cancer at age 58. And, this always left me with an uneasy feeling that the lifestyle he advocated in YMOYL may have contributed to his early demise.

In any case, I don't think that early retirement should be solely about depriving oneself to reach these goals. I will not tell you to give up eating meat, drinking milk, or buying your favorite latte drinks at Starbucks. Regardless, I think that everybody can make small steps that will bring an early retirement closer to reality.

Today, I will leave you with a quote from Robert Frost:

Never ask of money spent
Where the spender thinks it went.
Nobody was ever meant
To remember or invent
What he did with every cent.

DC

Digital TV Delay

It looks like Congress has agreed to postpone the switch off date for analog TV from February 17th until June 12th, 2009. Unless you've been living in a cave, you would know that is the date when all regular television stations in the United States will stop broadcasting analog TV signals and switch exclusively to digital broadcasting. Presumably this nearly four month delay is meant to reduce confusion whenever the digital switchover occurs. But the truth is that there will be confusion regardless of when the switch is made.

Just look at the current wording on the FCC website about when exactly the transition to digital-only TV will be:

On Feb. 17, some full-power broadcast television stations in the United States may stop broadcasting on analog airwaves and begin broadcasting only in digital. The remaining stations may stop broadcasting analog sometime between March 14 and June 12.

That sounds pretty wishy-washy to me... If I interpret this correctly, even the folks over at the FCC don't have a clue when the transistion date is going to be.

The switch to digital TV is not as simple as just turning off analog TV broadcasts. Currently, TV broadcasts are received on channels 2-69. After the digital transition is complete channels 52-69 will be reallocated for other uses. In Silicon Valley, where I live, the digital TV station KTEH is on channel 54-1. KTEH is really broadcast on digital channel 50, but shows up as 54-1 through a process known as virtual channel numbering. The analog channel 54 will disappear after the DTV transition.

In the San Francisco Bay Area, KGO broadcasts analog on channel 7, and digital on channel 24. After switching off the analog channel, they will return the digital broadcast to channel 7. More complex is the case of KTVU which broadcasts analog on Channel 2, and digital on channel 56. After the switch off, they will broadcast on channel 44. Channel 44 is currently used by KBCW (the old KBHK). For obvious reasons KBCW needs to shutdown their analog transmitter before KTVU can take over this channel. So, is this confusing enough for you?

If you own a DTV tuner, what this means is that you may need to re-scan for channels after the switchover. I used to tell people that you could do that on February 18th, but now you'll have to wait until June 13th to be safe. I do own a DTV converter box, but I also bought a DVD/VCR recorder with a built-in digital tuner. I guess that I will have to rescan the channels sometime (as according to the FCC) possibly between March 14th and June 12th. But, it seems that the FCC who has the last word on these matters, aren't themselves sure of the exact date.

DC

Blog List - Link Exchange

I have replaced my blogroll with a new Blogger featured called a "Blog List". All of the blogs that were previously listed in the blogroll now show up in the Blog List on the sidebar. Under the "My Blog List" feature, blog names are shown with the title of its most recent post. Previously, the blogroll was sorted alphabetically. Now, blogs are sorted with the most recently updated blog at the top. I regularly read posts in my blog list, and I like that I can quickly tell which blogs have been recently updated.

I can also tell which bloggers haven't posted in a while. Just a warning, I reserve the right to remove blogs from my blog list, starting with the ones that haven't posted recently. It looks like Retiring Early is currently on the bottom of my list...

You can have your blog listed for FREE at PFStock. I am looking to add more blogs to my blog list. If you have a bona fide personal finance blog, please Email me (my contact information is listed in the sidebar) about exchanging links. Since I regularly read posts from blogs in my blog list, this would automatically increase your readership. Note that I do not currently link to commercial, real estate, or multi-level marketing blogs.

Only personal finance blogs that are written by individual bloggers on a not-for-profit basis qualify for a free listing in the blog list. Blogs and websites that do not qualify for a free listing may inquire about the advertising rates offered for PFStock sponsors.

DC

Money Market Rates Reach 0%. What's Next?

Last week, I mentioned that TD Ameritrade was paying 0.00% APY interest on funds in its Money Market Sweep account. (See Money Market Rates) TD Ameritrade is not alone. Here is a recent screen capture that I took from the E*TRADE website:


The table shows that E*TRADE's nominal interest rate for three of its money market funds is actually negative. With waivers, the interest rate is 0.00%. Note that these are the rates paid by E*TRADE Brokerage in their cash sweep accounts; it is not the same as the 3.01% rate that E*TRADE Bank offers for their FDIC insured bank accounts.

And here is a screen capture that I took from the TD Ameritrade website:



At this point, the next question that comes to mind is "Can interest rates on money market funds go negative?" I'm here to tell you "Yes, they can!" Indeed, you can actually lose money in a money market fund. I will note that each money market fund has a disclaimer that looks something like this:

An investment in any money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investments at $1.00 per share, it is possible to lose money by investing in the fund.

Essentially, the brokerages are saying that you are taking a potential risk by putting your uninvested cash in a money market fund vs. an FDIC insured bank account. And they are paying you nothing (and actually penalizing you) to take that risk. That said, I am in the process of moving my money to safer FDIC insured investments.

DC

Money Market Rates Dropping

Interest rates have dropped considerably over the past few months. My October post on the same topic will give you a historical point of reference. It has been difficult to keep track of the rates that I've been getting in my various money market accounts. So, I've decided to periodically post a list of the annual percentage yields (APYs) for institutions that I have accounts at, or have otherwise mentioned in the blog. These rates are sorted by APY.

3.01% E*TRADE Complete Savings
2.60% Umbrellabank Pot O'Gold Money Market
2.60% HSBCDirect Online Savings
2.50% Citibank Ultimate Savings
2.40% ING Direct Orange Savings
2.22% Western FCU Money Market
1.65% Countrywide SavingsLink
1.50% Guaranty Bank Gold Rewards Money Market
1.15% Washington Mutual (WaMu) Online Savings
0.77% PayPal Money Market*
0.00% TD Ameritrade Money Market* (not a typo!)

Rates are believed to be accurate as of 1/21/09. I did not include banks that had special, or introductory rates in the list because these are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

*Note that the PayPal Money Market and the TD Ameritrade Money Market funds are NOT FDIC insured.

Overall, I think that the results of my survey have been dismal. Though I do business with both E*TRADE and Umbrellabank, I don't have the specific types of accounts that I mentioned in this post. I guess it is time to move some money around.

Also, the 1.15% rate at Washington Mutual (WaMu) is particularly disappointing since WaMu was at the top of my list last time around with a 4.00% APY. Lastly, I want to mention the two money market funds that I mentioned. Historically, money market funds (offered through brokerages) pay a higher interest rate than their counterparts at commercial banks. However, this situation has reversed itself, and the money market funds are now at the bottom of the list. Money market funds are NOT insured by the FDIC. However, money market accounts offered through banks are.

The TD Ameritrade money market fund rate is not a typo! They are indeed paying 0.00% to hold onto your money. This situation has me very nervous. Coupled with other ongoing issues I've had with TD Ameritrade, I'm seriously beginning to consider moving my assets to another brokerage.

In these times of uncertainty, I can offer two pieces of advice that I think few people would disagree with:
1) Never exceed the FDIC insurance limits.
2) Don't keep all of your money in one place.

DC