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

Did I Buy a Defective DVD Recorder?

With the coming transition to digital television (DTV) on February 17, 2009, all regular television stations in the United States will stop broadcasting in analog and switch exclusively to digital broadcasting. Several PF blogs such as My Wealth Builder and Realm of Prosperity have written about buying DTV converter boxes which allow standard analog TVs receive digital broadcasts. The federal government has offered a coupon of $40 for each coupon-eligible converter box (CECB) purchased, limit two per household. I, too, purchased a DTV converter box, and was also impressed with the picture quality even on a standard definition TV (i.e., a tube TV).

However, I now had a VCR, DVD player, and a converter box connected to a single TV set. And I needed FOUR remote controls to operate this conglomeration of techno-gadgets. Using this setup, performing a task like the timer recording of TV programs on the VCR is problematic. Essentially, one has to setup the VCR to record from the converter box, and leave the box on and tuned to the channel you want to record. Many converter boxes will automatically turn off after a set amount of time, so you also have to override that feature.

I lived with this setup for a couple of months before I decided that there must be a better way. I purchased an LG RC897T DVD Recorder/VCR Combo with a built-in digital tuner on eBay. The main features of this unit are a VCR, a DVD recorder which can record from TV or video, and a digital tuner. Theoretically, this one machine replaces my VCR, DVD player, and the DTV tuner box. I have confirmed that each of these functions are properly supported, and I am down to only two remote controls -- one for the TV, and on for the DVD/VCR combo. In addition, the built-in NTSC/ATSC tuner is capable of receiving analog TV, analog cable, digital broadcast TV and digital clear QAM (which is used for digital cable broadcasts). The machine also has a USB port that allows the user to show pictures or play music (MP3's) that is stored on a flash memory drive.

The DVD recorder supports a variety of different DVD media: DVD-R, DVD+R, DVD-RW, DVD+RW, and DVD-RAM. Each format has its own little quirks, and knowing the differences between them is confusing at best. Like many users manuals these days, the RC897T instructions are not very clear. In any case, neither the DVD recorder nor the VCR will allow the user to record copy protected material, such as commercially produced DVDs or VHS tapes (e.g., the movies that you would rent at a video store). I guess that it makes sense that they would prohibit you from copying these movies.

Now the main point of this post is to ask whether or not you think that I purchased a defective DVD recorder. The main symptoms go something like this: I setup the DVD recorder to record a program from the TV. Most of the time, this happens without a problem. But occasionally, the DVD recorder will stop recording in the middle of a program for no apparent reason. I have read a few product reviews citing the same issue. Many people who bought an LG RC897T do indeed believe that the machine is defective, and they are not alone. Some reviews have stated that the LG RC897T is an unreliable, useless piece of junk, and that it just shuts off during DVD recording of TV programs. Doing a search on eBay, I have found a company that appears to handle returns for Best Buy. They literally have hundreds of these "defective" RC897T DVD recorders in stock, and are auctioning them off for considerably less than the $280 retail price at Best Buy. I assume that these are all product returns.

However, my investigation leads me to believe that my DVD recorder is not actually defective. Rather, the seemingly random failure of the DVD recorder is actually a "feature" called CPRM. Buried in the instruction manual is a short description of CPRM which stands for Content Protection for Recordable Media. Basically, TV broadcasters seem to broadcast CPRM flags (which instruct DVD recorders like the LG RC897T to stop recording) at completely random times. Presumably that is to prevent people from recording copy protected material. However, I (and other reviewers) have found that sometimes the DVD recorder will stop recording at the most unusual times, for example, in the middle of a commercial. Others speculate that broadcasters and advertisers insert these CPRM flags as a way to force you to actually watch TV in real time, and not skip the commercials. I know for a fact that my DVD recorder stopped recording toward the end of an "Amazing Race" episode, just before you found out who got eliminated.

For people who have a DVD recorder, and experience this problem, the instruction manual does describe a workaround to this CPRM recording issue. You have to use DVDs that are formatted in VR mode, and the DVD media has to be either a DVD-RW or a DVD-RAM. My experience is that this always records CPRM material. But, I found that these formats do not always play back in other DVD players. Sometimes, the playback will work up to a point, only to have the player stop when it encounters a CPRM flag. Some DVD players let you know this fact, while others will stop playing without explanation, making you wonder if you have a defective DVD. Also, you can record CPRM protected programs to the VCR portion of the LG RC897T without any issue, but then the recording will be analog instead of digital.

So, can anybody else weigh in on this issue? By the way, the LG RC897T DVD/VCR combo is very similar to the JVC DR-MV100B DVD/VCR combo, which has many of the same features.

DC

Microsoft Money 2009

Around this time of year, I start looking for the new version of Microsoft Money. Last year, I bought Microsoft Money Plus (2008) at the same time that bought my tax preparation software. But to tell the truth, I still have not installed MS Money Plus yet because some reviews I've read indicated that there were only minor changes from Money 2007. Anyway after searching a few stores, I came to the following conclusion: There is no Microsoft Money 2009.

How can that be? Doesn't Microsoft release a new version of their Money software each year? After some digging around, I found my answer in one of the Microsoft community discussion groups:

Microsoft Money Plus continues to be a valuable tool for our customers; however the feedback we are hearing is that the incremental updates to the software don't merit a new product every year. Given this, we have decided against releasing a 2009 version of Money Plus.

We are moving off of an annual release cycle for Microsoft Money Plus (no Money 2009 version in the fall), with future release dates TBD. Money Plus continues to be a valuable tool for our customers, however the feedback we are hearing loud and clear is that, after 17 years in the market, the incremental updates to the software don't merit a new product release every year. Given this, we have decided against releasing a 2009 version of Money Plus.

I guess that what I said was true: there are only minor changes in the yearly updates to MS Money. So Microsoft made the decision to not update MS Money for 2009. There is a new version of Quicken 2009, though. I might consider getting that.

See also: Microsoft Money to be Discontinued

DC

Extraordinarily low ratings for TurboTax

Around this time of year, I usually start looking around for new tax software (for the 2008 tax year). I like to get a head start on my income taxes before the end of the year. What a racket tax software publishers have! Each year, they update their existing software programs to match the latest tax laws. Sometimes they will add a few minor enhancements, but the end product largely the same as the previous year's version. Most readers know that each year, I choose to use either TaxCut or TurboTax to do my taxes.

Anyway, I was looking at TurboTax (Deluxe Federal + State + eFile 2008 version) at Amazon, and noticed that this product has already received over 300 reviews. It is unusual for a new product (which has been out for about a month) to have so many reviews, especially something as mundane as a tax preparation software. After all, it is not like people are reviewing a new Apple iPod, or the latest Blu-ray disc player. It is just tax software...

But what I noticed was that the vast majority of the ratings for the latest Turbo Tax were "1 out of 5", which is the lowest rating possible. Something definitely seemed wrong to me! Upon further investigation I found that reviewers were actually mounting a protest of two things:

1) TurboTax significantly increased the price of their software for tax year 2008.
2) TurboTax is now charging people an extra $10 for each additional tax return, if they file more than one.

It sounds like deja vu all over again as this situation reminds me of the year that TurboTax (Intuit) introduced its short-lived product activation scheme. To make a long story short, one was not allowed to install TurboTax on more than one computer, and this caused a lot of discontent among TurboTax users who prepare their taxes using more than one PC. This event became known as the "activation debacle" which Intuit experienced several years ago.

This year, I was thinking of switching from TaxCut (who also significantly increased the price of their software) to TurboTax. But after reading all of these negative reviews, I probably won't.

DC

Promotional USB Flash Drives

Two years ago, I wrote about attending the Hard Assets Conference in San Francisco. This is a yearly investment conference that focuses on precious metals, mining, oil, and gas. This year, I again attended the conference at the downtown San Francisco Marriott Hotel. The carnival atmosphere was notably toned down compared to past years. With the world stock markets in decline and the general economy heading into a recession, there was little to celebrate among the exhibitors.

But actually, the conference itself is not the topic of this post. I previously mentioned that I discovered a new trend in freebies. A few companies were offering free promotional USB flash drives. For those who are not familiar with the technology, a USB (Universal Serial Bus) flash drive is a portable computer memory that plugs into a computer USB port and can be used like a miniature hard disk. USB Flash drives are also known as thumb drives, and often cost less than $10 for a 2GB unit at places like Micro Center.

Conference exhibitors load up these USB flash drives with information about their companies: annual reports, company press releases, PowerPoint slides, etc. The casing of each USB flash memory is printed with the company logo, and it is unmistakably a freebie. In general, a flash drive can be reused for storing pictures, MP3s, documents, etc. You only need to delete the existing data, or just re-format the drive to make room for your own files.

I came across a new type of flash drive at the conference. This one is a 1GB drive with two partitions on it meaning that it shows up as two different drives when you plug it into a computer. I didn't even know it was possible to partition a flash drive! The first partition is identified by the computer as a CD ROM drive, and it contains an Autorun script that loads up a web browser and automatically sends you to the advertiser's website. The second partition looks and behaves like a regular USB flash drive.

My expectation was that after viewing the information on the USB flash drive, the memory could be formatted and re-used for whatever purpose I wanted. The problem is that after I tried to reformat the flash drive, the CD ROM partition with its Autorun file remained intact. In other words, it always loads up the company's website, even after deleting all the data or reformatting.

I searched the Internet for some information on this type of USB flash memory, but I have not found a way to delete or permanently disable the Autorun feature on this USB flash drive. I also speculate that information from my computer could be automatically transmitted to that company's website. That is both an annoying and disturbing though.

Has anybody seen this new kind of flash drive? Do you have more information or thoughts about it?

Special offer: If your company offers promotional flash drives, you may qualify for a free advertisement on PFStock. Please Email me (my Email address is in the sidebar) for details.

DC

Plan for the Worst

I started PFStock in August 2006 with the hope that younger readers and bloggers would look to me for advice. In one of my first posts on PFStock, I mentioned that I was subjected to downsizing twice in the past decade. I feel as if I've dodged a bullet, as my company had a significant layoff earlier this year, but I was somehow spared.

However, I am pessimistic about the current financial climate. The events of the past few months leading up to now have convinced me that an economic recovery will not happen soon. While many people talk about hope in future, hope alone is not enough to change the current economic malaise.

Over the years, I've learned not to get too overconfident. This year, confidence in the financial markets has certainly been shaken. Market volatility usually doesn't worry me because I have a diversified portfolio. But this time, I am worried! I wrote about irrational exuberance earlier this year. And while I predicted that the economy would be headed into a recession, I underestimated the severity of the downturn.

A down market usually presents a new set of opportunities for investors. But now, I am having trouble seeing where the opportunities lie. Indeed it is the time to plan for the worst.

I advise readers to carefully consider and to reconsider their investments. As I've said before, don't keep all of your money in once place. And it is not the time to buy into risky or exotic investments. While I believe that things will eventually turn around, any significant improvement may be far off. It is very possible that the economy may remain lethargic for an extended time. In other words, we may be in this for the long haul.

DC

AdSense Irrelevance

What do pasta, hair coloring, movies, milk, ringtones, horoscopes, web hosting services, meal replacements, and waterless toilets have in common? Two things, actually: (1) Each of these products or services has at one time or another been advertised on PFStock through Google AdSense ads, AND (2) I have never written about any of these topics here on PFStock.

In its promotional material, AdSense promises to put relevant ads on your website, by matching ads to your site's content. They claim that you can earn an undisclosed sum of money through their service. However, there are restrictions to this potentially unlimited stream of revenue for bloggers. For example, I can't ask my readers to "click the ads" or "support us" as that would be a violation of Google's AdSense Program Policies.

However, if anyone is guilty of violating AdSense Program Policies, it is Google itself. How could anybody legitimately claim that any of the above ads are relevant to a personal finance blog?

So, who is making money on AdSense. From my anecdotal conversations with other PF bloggers, it is not the bloggers who are making any money on this. By contrast, I have encountered many web pages that used snippets of text that were literally stolen from this and other PF blogs for what is called a "Made for AdSense" advertising site. Such sites use multiple AdSense ads for the sole purpose of achieving a high rank in the search engine listings. The sites generally make little sense, but include many advertising keywords in the text, with snippets of text stolen from legitimate bloggers. The site owners hope that visitors will click the ads since they get paid per click. In one case an entire blog entry was stolen from my blog, verbatim. I contacted Google AdSense directly about this issue. This was their response:

Thank you for your note. Upon recent review of the website mentioned in
your complaint, we were unable to locate the allegedly infringing
content on the page in question. If this matter is still a concern, please
reply to this email with detailed information to enable us to locate
the allegedly infringing content.

Regards,
The Google AdSense Team

Apparently the infringing material was removed from their website just before Google had a chance to look at it. But, I suspect that Google is really looking the other way whenever they encounter a site like this. And why shouldn't they? After all, Google makes money from these sites that steal copyrighted material from others. Since the financial rewards of my Google AdSense ads have been disappointing, I may consider other alternatives to AdSense. Does anybody have any suggestions?

Lastly, so that I don't rouse attention from the Google legal department, I feel that I had better post the following disclaimer: This post is not intended to reflect poorly upon Google (AdSense) or otherwise disparage or devalue Google’s reputation or goodwill. Any interpretation thereof is not intentional and exists solely in the mind of the reader.

DC

Yodlee Account Errors

I mentioned before that I use Yodlee to keep tabs on many of my bank and brokerage accounts. Usually, Yodlee works reasonably well, and I haven't had many technical issues. However, in the last month, I have received more than a dozen Email messages with the following subject: "Your Yodlee MoneyCenter Alert: Account Error".

It seems that the main culprits are Countrywide Bank, Smith Barney, and Citibank. Yodlee tells me that either my login credentials (user name and/or password) are invalid, my account type is not found, or there is some other technical issue with the financial institution's website. This is the case, even though I didn't change my login information.

However, I do not encounter any technical problems if I log into the financial institution's website manually. All of my accounts are all accessible. Sometimes (but not always), if I manually update my accounts in Yodlee, the errors go away. These are intermittent solutions since the problem usually comes back in a day or two. In other words, Yodlee has become unreliable. Has anybody experienced similar technical problems with Yodlee lately?

DC

Net Worth IQ Increasing

In a previous post, I mentioned how readers are innately curious about comparing their net worth to others in a similar income range or age group. I talked about three tools that help people figure out where they stand in relation to others. One of PFStock's readers wondered if personal finance (PF) bloggers had higher than average net worth. Another reader stated that such networth figures are not representative because people with a high net worth would be over-represented due to self-selection.

These are good insights, and in this post I want to talk more about the NetworthIQ website. As I mentioned, this site has compiled a set of Net Worth Statistics based on what its members have reported. To review, for the case of a 40 year olds, the median net worth was $462,658. And for for those making $100,000 a year, the median net worth was $260,828. I mentioned that these data were current as of 1/26/2008.

The latest data that Networth IQ has compiled are current as of 6/3/2008. For 40 year old the median net worth is now $491,100. For those making $100,000 a year, the median net worth is now $267,042. While these number are greater than the previous data point (from January), they do not include the effects of the latest downturn. It would be interesting to know if NetworthIQ's median net worth is still increasing after that.

In addition to age and income, NetworthIQ allows you can compare net worth based on education, occupation, and state of residence. In short, it is a treasure trove for those who are intent on comparing their net worth to others.

See also: Net Worth Update

DC

FDIC Update

When I wrote my recent post about FDIC Insurance, I cautioned readers that information they read about the FDIC may go out of date. For a period of nearly ten years, few people would have noticed an erroneous article about FDIC insurance. After several bank failures in the last few months, there is much greater scrutiny of the accuracy of FDIC information published by news sources.

Some of the information in my post has already gone out of date. Specifically, last month the FDIC temporarily raised the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. The temporary increase in deposit insurance coverage is in effect until December 31, 2009. After this date, the deposit insurance limit is scheduled to return to $100,000.

Many other information sources have updated their information as well. Bankrate.com updated the article that I mentioned in my previous post, after I contacted their editor about their erroneous information. However, Bankrate did not acknowledge PFStock in their updated article. And they did not respond to an Email message that I sent them, pointing out their error. That's gratitude for you!

DC

Update on Money Market Rates

Interest rates are constantly changing these days, and it is hard to keep track of the rates that I've been getting in my various money market accounts. I've decided to compile 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.

4.00% Washington Mutual (WaMu) Online Savings
3.40% Countrywide SavingsLink
3.40% Umbrellabank Pot O'Gold Money Market
3.30% E*TRADE Complete Savings
3.25% HSBCDirect Online Savings
3.00% ING Direct Orange Savings
3.00% Citibank Ultimate Money
2.50% Guaranty Bank Gold Rewards Money Market
2.43% Western FCU Money Market
2.29% PayPal Money Market
1.63% TD Ameritrade Money Market

Rates are believed to be accurate as of 10/1/08. 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.

In 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

Coinstar: The Big Lie

I am sure that most readers have seen Coinstar machines at their supermarket. The way it works is pretty simple, you deposit your change and the machine counts up your coins. It then spits out a voucher which you can redeem at the cashier. Typically, Coinstar charges you about 8.9% for the coins counted. You can also choose a gift card and avoid a counting fee.

Coinstar has a slogan "Turn your coins into cash," which I consider to be a big lie. The phrase "coins to cash" always rubbed me the wrong way. I've never been a fan of Coinstar, and I refuse to pay them 8.9% to count up my coins. However, their marketing is very effective because they've somehow gotten people into thinking that coins are no longer acceptable legal tender.

Let's back up a moment and think about the language here. Aren't "coins" considered to be "cash" by definition? Since when are coins not acceptable as legal tender, for all debts public and private? I've had half a mind to bring in a big jar of coins to pay for my groceries just to protest the Coinstar machine. If they refuse my money, I could claim discrimination...

Gift cards are not cash either. On eBay, gift cards often sell for 10% less than face value. In any case, when you compare this "counting fee" versus the amount of interest that you can get at the bank, that is nearly 3 years worth of interest that you are losing out on.

If Coinstar wishes to be truthful, they ought to change their slogan to "turn your cash into a voucher or gift card that is worth less than you put in".

DC

Caution: FDIC Misinformation is Rampant

With the recent string of bank failures, there has been a renewed interest in people seeking information about FDIC (Federal Deposit Insurance Corporation) insurance limits. Unfortunately, I have found that there is rampant misinformation about FDIC insurance, even among usually reputable sources. Following this misinformation can and has cost depositors dearly -- some losing a significant portion of their savings when their bank failed.

Everyone knows that an individual bank account is insured to $100,000. However, probably the biggest misconception is that you can increase this limit by opening different accounts at the same financial institution -- for example, opening a savings, CD, and checking account at the same bank. This assertion is simply not correct. If the new accounts are in the same ownership category (i.e. individual accounts), the insurance FDIC limit is still $100,000 regardless of the number of accounts you have.

The $100,000 FDIC limit can, however, be bypassed by opening a joint account. Individual and joint accounts are considered different "ownership categories" by the FDIC, and are insured separately. In our personal situation, my wife has an individual account at a bank, and we have a joint account at the same institution (which I won't name here). To confirm my understanding, I called the bank's customer service number, and then Emailed them to ask what the FDIC limits are in our case. Surprisingly, I received two different, incorrect answers to my question. I then went to the branch office and talked to a teller whose response was something to the effect of "Duh, I don't know. Let me ask a supervisor."

Finally, I sat down down with a senior bank representative at the branch who gave me the correct answers: My wife's account is insured to $100,000 and our joint account is insured to $200,000 for a total of $300,000. I have confirmed this finding with the FDIC website as being correct.

Imagine my surprise when on the morning of July 27, I opened a copy of my local newspaper, the San Jose Mercury News (usually a reputable source), and read an article written by noted financial columnist Kathy Kristof depicting a nearly identical situation where she claimed that a portion of the wife's deposits would be uninsured. I leaped out of my seat and exclaimed, "That article is wrong!" I was about to write message to the author pointing out her error, but I did some research and found that the same article was published in the Los Angeles Times a week earlier. The Times subsequently published this correction to their article:

"The Personal Finance column in Business on Sunday erred in how it described insurance of individual and joint accounts. It said that each person's interest in individual and joint accounts is added together to determine that individual's insurance coverage. In fact, individual and joint accounts are insured separately. Therefore, you could have an individual account worth $100,000 and a joint interest in a $100,000 joint account and all of your deposits would be fully insured."

However, a version of the same article on the S.J. Mercury News website remains with the erroneous information. This is true, even though the L.A. Times published the correction several days before the Mercury reprinted this story.

Another ownership category recognized by the FDIC is called a revocable trust account. In general, these accounts are titled with the account owner's name, and either POD (payable-on-death) or ITF (in trust for) a qualifying named beneficiary. The FDIC has very specific rules on who can qualify as a beneficiary. For example, a grandchild, parent, or sibling can qualify. However, nieces, nephews, in-laws, or domestic partners would not qualify. I advise that readers should check with the FDIC for the specifics on who can be named as a beneficiary.

Revocable trust accounts (also called testamentary accounts) are insured separately from individual, or joint accounts. Each owner of a POD account is insured up to $100,000 for each qualifying beneficiary. For example, a couple with one child can establish a POD account for their child and it would be insured separately from the other ownership categories up to $200,000.

A fellow blogger referred me to an article published at the usually reputable site Bankrate.com which also talks about these types of accounts. In this article, Bankrate stated that "Couples can set up an in-trust or testamentary trust account for their children for a maximum of $600,000 in insurance coverage." Unfortunately this is an oversimplification, and after puzzling for a while, I figured out how Bankrate got it wrong. The FDIC publication Your Insured Deposits gives several examples of how a couple with three children can setup a POD account. In this case, the maximum insured amount is indeed $600,000. However, this is not the general case as it ONLY applies to two-parent families with three children. Depending the number of account owners and qualifying dependents, this limit may be higher or lower. For example, a couple with four children could setup an account with $800,000 in FDIC protection; a couple with two kids would be limited to $400,000 in a similar testamentary account.

Similarly, a household headed by a single parent, or by same-sex partners would have a different maximum FDIC limit. It is irresponsible for Bankrate to make such broad generalizations because everybody's personal situation is different. Clearly, Bankrate's information here is outdated (it was published in 1999), and I intend to contact them about their oversight.

So what is a high net worth depositor supposed to do about the FDIC limits? First of all, don't assume that any information you receive (even from your banker) is correct. I've read several anecdotal accounts of people who were burned in the recent IndyMac Bank failure. They claim that the bank said their accounts were covered by FDIC, but it turns out that they were not. I am starting to believe that they folks were indeed given wrong information from their bank. For the record, an FDIC press release stated that IndyMac had "about $1 billion of potentially uninsured deposits held by approximately 10,000 depositors." Or, about $100,000 of uninsured deposits on average.

Secondly, understand that financial writers and bloggers may not have similar finances to yourself, and any generalizations made may not be applicable to your particular situation. Many financial sites have a disclaimer that says something to the effect that what they publish shouldn't be construed as actual financial advice. This is with good reason: sometimes they get the facts wrong.

In an effort to be completely honest, I tell my readers this: DON'T EVEN TAKE MY WORD ON IT! Although everything in this post is believed to be is currently accurate (in August 2008), it is very possible that you are reading this blog post years later. FDIC rules and regulations are subject to change, and there can be no guaranty that anything you read will still be true in the future.

Lastly, and most importantly, the most accurate source of information about FDIC insurance is the FDIC website itself. For any readers with significant assets in bank accounts, I encourage them to carefully study the FDIC rules, and run your specific scenario through the FDIC's Electronic Deposit Insurance Estimator.

http://www.fdic.gov/edie/

This tool will help to determine and confirm your actual deposit insurance limits. Good luck to you.

DC

Single Step Personal Finance Challenge

Andy from Saving to Invest, tagged me with the "Single Step Personal Finance Challenge" blog meme started by Mrs. Micah. The challenge is to "find one step you can take to make your financial system better or more organized."

Andy's single step was to open up a Roth IRA account. My only real commentary on this is that I typically contradict the common investment advice to contribute early to an IRA. I don't contribute to my Roth IRA until the end of the tax year so that I can know for sure that I qualify. A person's eligibility to contribute to a Roth is determined by their AGI in the contribution year. Since it is impossible to completely predict future income, there is always a possibility that one will exceed the Roth IRA income limit. If this happens, one must either withdraw the excess, or face an IRS penalty. In either case, this would involve some messy dealings with the IRA custodian.

Anyway, on to my single step... Readers who saw my post about Money Market Interest Rates are aware that I was considering closing one or more of my bank accounts that is paying me a lower interest rate. I've done just that. I closed my Guaranty Bank money market account, and moved the money to Washington Mutual. In one step, I am now earning 1% more interest on my money.

Although I agreed to humor Andy and Mrs. Micah with a response, I thought that this blog tag meme was a somewhat silly one, and have decided not to tag anybody else.

DC