From the monthly archives:

October 2006

Some Candies For Bloggers, Frugal Bloggers, and Payday Lenders

by golbguru on October 31, 2006

Here are some wishful candies I want to give tonight.
To all the bloggers who toil hard to put some sensible stuff on their blogs, I give you this:

candy1.0 musings

To all the personal finance bloggers, frugal bloggers, and all other bloggers who visit my blog regularly and leave comments, I give you this:

candy3.0 musings

For all the payday lenders who charge 1303.57% APR, I am pleased to present this to you (it’s a pity I wasn’t able to find/post anything offensive-er):

candy2 musings

Accept my candies and wishes for a happy and safe Halloween everyone!
Image sources: www.candyblast.com; www.junkfoodblog.com; www.cookiepots.com

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How Much Time Do You Spend At Work To Make $1000?

by golbguru on October 31, 2006

So exactly how much time do you need at work to make $1000? Here is a list of some people that TIME magazine published in it’s last issue and the time it requires for them to make $1000 (..yeah this table thing is working finally!). My numbers lie between the last two people in the list…that’s how fast I make $1000 !

Howard Stern Howard Stern: 24 seconds !!
Dr. Phil Dr. Phil: 2 minutes 42 seconds
Brad Pitt Brad Pitt: 4 minutes 48 seconds
Kobe Bryant Kobe Bryant: 5 minutes 30 seconds
Maria Sharapova Maria Sharapova: 6 minutes
Wolfgang Puck Wolfgang Puck: 7 minutes 30 seconds
Average CEO 2 hours 55 minutes
Average Doctor 13 hours 5 minutes
Average Police Officer 43 hours
Average High School Teacher 43 hours
Average Farmer 57 hours
Golbguru Somewhere here - never mind
Average Janitor 103 hours

Obviously, the richest people are not included in the list to avoid giving others in the list an inferiority complex :). Also, the list is a good example of how your salary does not have anything to say about your utility to the world.
Care to let me know where you stand in the list?

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Office Depot $30 Off Coupon Link and Code

by golbguru on October 30, 2006

I got this through email and wanted to share with y’all. The link below takes you to a Office Depot page that gives you a $30 off on your purchase of $150 or more (basically 20% discount).

$30 off on a purchase of $150 or more link

The link will work, but in case it doesn’t, use this coupon code during check out: 29045118

Before you go on a shopping spree at Office Depot, like all good personal finance enthusiasts, let’s read the fine print:

“Excludes technology purchases including (but not limited to) configure-to-order computers, desktop computers, notebook/laptop computers, fax machines, monitors, LCD projectors, printers, all-in-one machines, copiers, scanners, networking products, memory, PDAs, and digital cameras.” …”Free delivery in local delivery areas only for orders over $50.”

The link worked when I checked it last at 12:20 pm today. Here is what you should expect to see at some point of time during your checkout:

odepot


The email I received said it expires on 10/31, but from the image above it is clear that you can use the coupon code till 11/06.
Wish you happy and wise shopping at Office Depot.

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Interesting Posts Of The Week And Fooling With Tables In Blogger

by golbguru on October 29, 2006

Here are some blog posts that caught my attention this week. This is the first time I am compiling a list like this and my first trial using tables in blogger..and also the cause of the delay in this blog roundup. Let me know if this table stuff comes out right on your computer/browser.

What are DRIPs? 2million talks about dividend reinvestment plans. Links to more information on DRIPs.
3 Quick Tips For Dealing With Customer Service Reps Do check out the gethuman.com link here :)
500,000 Unique Hits Contest and Giving Away 5 Books Check out some “laffy-taffy” jokes on this post :), sing Jim’s praise and try your luck at the give-away.
Wow, blogging is harder than it looks! We must have all gone through this phase that Frugal Frugalson is going through. Share your ideas with him on how you keep up with your blogging.
Begin with goals in mind Dimes to Dollars writes about the importance of having goals for financial planning.

I will also take this chance to mention a few other blogs of interest:

Young and Rich Jon Postal blogs about his experiences with money.
Highest Echelon A personal finance blog by Wilks.

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Leonardo Da Vinci On Money, Gold, And Poverty

by golbguru on October 28, 2006

leovinci musingsI was reading this interesting book “The Notebooks of Leonardo da Vinci” and came across some interesting “prophecies”; something to ponder on over the weekend if you have nothing else to do.

Of money and gold:
“That shall come forth from hollow caves which shall cause all the nations of the world to toil and sweat with great agitation, anxiety and labour, in order to gain its aid.”

Of the precious metals:
“There shall come forth out of dark and gloomy caves that which shall cause the whole human race to undergo great afflictions, perils, and death. To many of those who follow it, after much tribulation it will yield delight; but whosoever pays it no homeage will die in want and misery. It shall bring to pass an endless number of crimes; it shall prompt and incite wretched men to assassinate, to steal, and to enslave; it shall hold its own followers in suspicion; it shall deprive free cities of their rank; it shall take away life itself from many; it shall make men torment each other with many kids of subterfuge, deceits, and treacheries.

O vile monster! How much better were it for men that thou shouldst go back to hell! For this the vast forests shall be stripped of their trees; for this an infinite number of creatures shall lose their lives.”

Of the fear of poverty:
“The malevolent and terrifying thing shall of itself strike such terror into men that almost like madmen, while thinking to escape from it, they will rush in swift course upon its boundless forces.”

For convenience: subterfuge = trickery; tribulation = pain

Reference: “The Notebooks of Leonardo da Vinci”, Vol. II, edited by Edward MacCurdy, George Braziller, Inc (1958), New York, pages 1098 and 1110.

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Jump Off The Medium Income, High Debt Treadmill

by golbguru on October 27, 2006

Here is a link to another excellent article on Bankrate.com about managing credit card debt. treadmillThe article addresses a question from someone called “Elaine”. The question is reproduced verbatim below. Read carefully, it is not about “I cannot pay my credit card debt”, it is more about “I am confused”.

“I am in a lot of debt. I make $40,000 a year and have $16,000 in unsecured debt. I am slowly trying to pay off credit cards and then close them. I tend to find myself making large payments on the credit cards, but then needing to use them because I don’t have enough cash on hand. I know I need to pay them off, but using them again because I need them is defeating my purpose. What should I do?”

I want to give a numerical perspective to Elaine in addition what Bankrate’s Steve Bucci has to say on the question:

-If you are in such a situation where you owe an amount almost half of your annual income, the first thing you should realize is that depending on how aggressively you pay off your debt, it will take you between 3 to 45 years to wipe it off ! So be prepared for tough times and don’t despair early and read the information below carefully.
-A debt of $16,000 for an annual income of $40,000 is a very manageable scenario (though the debt is high) and I would give you a lot of hope for a financial recovery.
-Assuming a 15% APR debt, if you keep making minimum payments for each billing cycle, it will take you 45 years (!!) to be debt free. In that time, you will pay something to the tune of $26,000 just in interest. BUT, this is not realistic, so don’t worry too much if you hear such numbers.
-Why are these numbers (45 years and $26,000) not realistic? I look at it this way; your first monthly payment will be around $320 (2% of your balance). Now, if you can make the first monthly payment, which by the way is not too much considering a $40,000 annual income, you can certainly keep paying $320 for the rest of the billing cycles. This way, the amount of time it will require for you to become debt free will be around 12.5 years and you will pay about $9200 in interest alone.
-If you get a little more aggressive and keep at least $500 each month for your debt payments, you can get rid of that debt in 3.5 years after paying about $4500 in interest….now that is more like it.
-So my advice is simple: stop using your cards right now and do whatever you can to keep $500 each month for your debt payments. “whatever you can” includes renting a cheaper apartment, carrying your self-made lunch, cutting vacations and any other stuff you think you can do. You will realize very quickly that it is not difficult to keep aside about $500 a month just by making smarter choices in your everyday expenses.
-With $40,000 annual income, on a conservative side, I would estimate that your net income would be something like $2500 per month. After taking out $500 for your card payments you still have $2000 each month to spend on yourself ! That is a lot money if you use it wisely :)
-Read this article “Pack away your debts with the payment push” and decide how you want to distribute the $500 payments each month.
-And yeah…don’t cancel those credit cards after paying them off…doing that is going to hurt your credit score.

Resources: The following calculators at Bankrate.com will be helpful in planning your campaign against debt:

  1. The true cost of paying the minimum
  2. What will it take to pay off my credit card

[Image courtesy: http://www.lowback-pain.com/]

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How And How Much You Would Earn From A 0% APR Offer: Part 2

by golbguru on October 26, 2006

In part 1 of this series, I wrote about how much money you would potentially save by making use of a 0% APR balance transfer (BT). At the time, I was expecting to write part 2 about how to make use of a balance transfer when you don’t have any credit card debt. However, I will now cover that in part 3 and address the issue of balance transfer fees in the current part. This part will attempt to answer questions like: Is a balance transfer worthwhile if the credit card charges a fee of 3%? How much would I earn in this case? At what point do the fees become greater than the gains?

We will consider the same scenario again: you have a 0% APR offer for 12 months on your new card and you want to save money by transferring your balance from a card that is charging you a 10% APR to this 0% card. But, unlike the last time, your new card is charging you a 3% BT fee. Usually there is an upper limit on the fees (usually $75, sometimes $100). Let us see what happens in this case.

How much would you save?
Let us assume that you were planning to pay off the balance on the 10% APR card uniformly over a period of one year. Last time we saw that if you have $5000 on your 10% card, you could save about $280 ($275.2 to be exact) over a 12 month period. However, with the fees (for $5000 it will be $75), your savings will be about $200. The savings are graphically shown below for all amounts from $500 to $5000.

int1

Lessons from the graph are:

  1. For small amounts the gains are very small even without any fees. With fees they can be extremely small (read: not worth the trouble). For example, for $1500 transferred with a 5% BT fee, you will save only $7.56 ! ….yeah fees are never good :). If I were to use such an offer, I would be interested only if my balances were above $2500.
  2. Since fees are capped at a maximum of $75, savings for both 3% BT fees and 5% BT fees are same for higher amounts.
  3. There is another catch with transferring smaller amounts. The savings shown in the graph above are after assuming that you will take the full 12 month advantage of the 0% APR offer. However, if you are looking to transfer smaller amounts, you might be better off by just paying them off on your old card in a couple of months. For example, look at the graph below.
  4. int3

    It shows you the savings per month when you transfer $500 from a 10% APR to a 0% APR card. There is a 3% BT fee ($15). It is clear that the savings are more than the fees ONLY if you cannot pay off the balance for more than about 6 months. So if you can make payments of about $84 a month, I would suggest paying the $500 off instead of using the balance transfer offer. I know it is getting a bit complicated here but make sure you understand the implication of BT fees; read this stuff three times if you want to :).

  5. If you are looking to transfer about $5000, then look at the graph below.

    int2

    Clearly, the savings become more than the fees after the first two months. Now, a balance transfer with fees will make sense this case because (normally) it is highly unlikely that you will pay off $5000 on your 10% APR card in two months.

I am summarizing a crude rule of thumb (Golbguru’s Balance Transfer Rule if you like :)) you can use:

-Don’t bother yourself with a 0% BT offer, that charges fees, unless you are looking at about $2000 to transfer. If your current card charges an exhorbitant APR (like 20% ~ 25%), again don’t bother unless you intend to transfer at least $1000.

There is another way of looking at balance transfers: you use one credit card company’s money to pay another credit card company, while you can keep your own money in a high-interest account. If you go through all of the above with this logic, you will reach the same conclusion.

Please feel free to share any experiences/cases where you feel this line of thought does not apply.

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Fed Leaves Interest Rate Unchanged At 5.25%

by golbguru on October 25, 2006

interestrates.1 bankingFed is holding the rate constant at 5.25% again after today’s meeting. This was expected after not-so-strong economic predictions and cooling housing markets. However, at least one panel member (Jeffrey Lacker) voted for a quarter point increase in the rate (probably due to inflation worries?).

There is some speculation that the Fed might start cutting rate sometime next near.
Read more about it here on MSN.

Is it time to lock up on those CDs?
[Image courtesy: http://msnbc.msn.com/]

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$180 Million Is Not Worth 24 Years In Jail ; The Story Of Jeffrey Skilling

by golbguru on October 24, 2006

What can a man do for money? How about selling his soul to the devil for $180 million?

That is exactly what Jeffrey Skilling did when he was at Enron…well sort of. Read more about what he was accused of here on MSN and here on BBC.

How can a Harvard Business School graduate be so stupid? Or did he think he was too smart? May be he didn’t figure out that 24 years from today he will be 76 years old and too senile to enjoy $180 million (however, I have a feeling he will get away with something like a Martha Stewart-style sentence).

I would like to think that he is one of a kind, but read this on MSN: “Skilling joins other prominent executives whose corner-office careers ended in prison cells. WorldCom founder Bernard Ebbers received a 25-year sentence, former Tyco chairman Dennis Kozlowski got 8 to 25 years, and John and Timothy Rigas of Adelphia received 15 and 20 year sentences, respectively.”

What is it with these top bosses? Don’t they have a lot of money already?

Seriously, we need some mandatory ethics training to go with top money making positions, to make sure that the next generation CEOs don’t steal lunch money from the rest of the population.

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Got Busted By Sharebuilder !! Free Money Days Are Over !!

by golbguru on October 24, 2006

Those happy days of free money from Sharebuilder promo codes are over for me. After opening three accounts in the last two months, my fourth account got busted by Sharebuilder. That also means no more Sharebuilder accounts for me in future.

Earlier, while opening the fourth account, Sharebuilder accepted the promo code and everything went smooth. I also set up an automatic investment plan and scheduled a trade for the following Tuesday. However, the trading Tuesday went by and a quick glance at my Sharebuilder summary in Yodlee told me that the trade was not placed. I logged in to check what was going on and saw this message:

sbuild2.0

Well that’s not the end of it. When I clicked on the “Click here” link in the above message, I was greeted by this:

sbuild1.0

Fortunately, all other accounts are in working order and I have already received a total of $150 for my three earlier accounts.

I have also confirmed that you cannot remove such a restriction from an account so that damn thing is going to stay there for ever…and remind me whenever I get tempted by another Sharebuilder code.

So to all the aspiring Sharebuilder bonus gatherers: beware ! Sharebuilder might be getting smarter :) If you already have more than one Sharebuilder account, I would suggest you wait a while before opening another account.

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