Archive for April, 2011

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MR Cache 2011 April 10: Taxes, Tigers and Ligers Oh My

April 10th, 2011

Weekly Thoughts:

Augh!  Taxes was horrible this year, or at least stressful.  The most stressful part was accounting for stock ticker “EVEP”!  It’s an energy, limited partnership kind of stock, and it was very confusing to fill out the tax information (1099 K-1).  Turbo Tax helped out tremendously, but it was still a stressful exercise!

This spring break week, We went to an indoor amusement park, and there we watch a “Big Cat” performance.  It was the first time that we ever saw a young Liger!  It was an awesome looking cat with a lot of pep!  I have since read up on the animal, and it states that this crossbreed takes the best from both the male Lion and female tiger parents.  It also become bigger than both parents in size.  Fascinating creature!

Top Pick of the Week:

  • Little House in the Valley:  Claiming a Canceled Debt as Income- This is one of those “Never been there, haven’t done it” scenarios!  I’ve known that tax law says that you need to count “Forgiven Debt” as income for tax purposes, but I didn’t realize that the rule didn’t apply to short sellers of their homes.  Check this great eye-opening article out!

 

My Favorite Reads of the Week:

  • Budgeting in the Fun Stuff: Our House and Mortgage BIFS and her husband is doing exactly what my wife and I did with our finances 11 years ago, except perhaps a little better!  Nice job Crystal!!!
  • Frugal Confessions:  Suze Orman Gives Dave Ramsey the Financial Smackdown: Whose Side are You On?- I like Suze, but I think she’s really picking on the wrong guy in this scenario!  Dave Ramsey has helped tons of people and should finger wiggled at on his technique for getting out of debt!  Shame on you Suze for a picking a fight with such a heavyweight!  Fight decision IMHO goes to Dave Ramsey!
  • Consumer Commentary:  The Saver’s Dilemma- Interesting take on saving behavior people take when interests rates are high vs low.
  • Money Smart Life:  Renters Insurance 101- While in college, I know about this but never followed through!  Now that I’m wiser, if I were renting today, I would buy renter’s insurance and here is why!
  • PF Firewall: Life As A Landlord – Lessons Learned- A must read personal experience story on life as a landlord!
  • Financial Samurai:  Gas Prices Are Out Of Control And People Love It! – Gas prices are going out of Control!  In Europe, gas prices are very high, but I have a feeling most of the people over there live very close to where they work (just a hunch) so gas prices might not be that big of an issue.  In the US though, it’s hitting us middle of the country folks pretty hard though, whether we realize it or not!
  • Retire By 40:  Book Review: Generational Wealth – I normally don’t include book reviews, but this sounds like such a great book that I wanted to link to it as a reminder!  Thanks RB40 for a great review!
  • The Financial Blogger:  March Monthly Income Report – One word:  Amazing!

Posts From MoneyReasons this Week:

  • Save Money With GFI Replacement Tips – The journals how I saved money by replacing my GFI Outlet myself.  If you look into this, definitely make sure the power is off to the outlet!!!
  • Top 10 Tax Audit Red Flags & Understand How To Avoid an IRS Audit- This was a guest post from Manny Davis, and he did a great job!  I learned about few things about how IRS chooses who to audit.
  • Citicard Diamond Preferred Card Update- Tips about how to get the best value for your citi thankyou reward points.  I was also sad to see my cool looking black “diamond preferred” citi card replaced by a blue “preferred” citi card.  It looks like they are removing the diamond part from the name.  This bites as I like the look of the old card.  The benefits are the same though.
  • The Mercedes Driving Coupon Clipper- This was a shocker for me, and also a revelation!  I always read about how the rich can be value sensitive too (like Buffett using coupons at McDonalds), but I’ve never see it before until this instance!  Fascinating and very cool!
  • Is Buy And Hold Investing Dead?- I like to state information based on my experiment and personal experienced whenever possible.  In this case, I include my 401k performance for the past 8+ years.  I think it proves that “buy and hold” isn’t completely dead.
  • On Ground Whaler Flip and Host File Check For Identity Theft- Saturdays have become my fun post days.  This week I include a video to a man doing something I’ve never seen before!  An on the ground front “Whaler”!  I’ve only seen diver do “Whalers” before, so this blew my mind away!  I also describe how to check your host file if you use windows.

 

Carnivals and Mentions:

Closing Thoughts:

I was surprised that Turbo Tax had so many updates that I had to download this late in the Tax game!  I can now understand why they charge so much money for their tax software.

Overall, it was a great experience!  I especially like how I was able to import both my employer’s 1099 information and all my stock transactions from my brokerage account!

Accounting for my blogging earnings was easier than I thought.  Of course, it helped that I didn’t make that much last year too, at least from a tax perspective.

-MR

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On Ground Whaler Flip and Host File Check For Identity Theft

April 9th, 2011

I’ve seem some pretty cool gymnastic tricks since my daughter started taking gymnastic lessons, especially since the older girls practice in the same gym.

But one that I’ve never seen is anyone doing the diving move called a “whaler” on the ground.  But the guy in the following video can!  It’s an amazing video, the whaler portion (although small) blew me away!

As a small child, I really liked the songs of ELO.  Here is a video of a song that I thought sounded great but never really went far…

Okay, enough videos for the day!

I was recently reading ConsumerBoomer.com and she mentioned phishing and other forms of identity theft.  So I mentioned for users to check their host file on their computer to make sure some ip address trickery isn’t going on.  To check the file do the following:

  1. Using explorer browse to the following location:
    C:\WINDOWS\system32\drivers\etc
  2. Next check if there is a file called hosts.
  3. If there is, open it up and see if there are any lines that look like popular sites that you know of.  If there is, the ip address that is defined for it is probably bogus, and it’s probably a trick!
  4. Delete the lines that are bogus and save the file again.
  5. And there you have it!

You see if a bad guy puts their IP address in and put a url site (ex www.ebay.com), they can create a site that looks like the real site (like ebay), and then they will prompt you for your account and password.  Once they have this they will rip you off!

-MR

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Is Buy And Hold Investing Dead?

April 8th, 2011
401k History

401k Performance History

 

On TV and other channels of financial communications, I keep hearing that the “Buy and Hold” strategy is dead or no longer works, but I beg to differ!

The chart above is my 401k balance over the past 8+ years, and as you can tell, my overall balance has almost doubled (97.6 %)!  Now granted my 401k investments are in mutual fund which is bit different from buying “blue chip” stocks, but I think most investors do buy and hold mutual funds instead of individual stocks, so hearing such messages adds to the confusion.

Note in the chart above, that the reason I have only 8+ years of data is because that is as far back as I can go with the 401k company that provides information about my 401k balance.  If the data went back to 2000, my return would even be higher.

Buy and Hold

Buy and Hold taken as a mindlessly buying and holding stocks without thinking, is not the best approach.  But with mutual funds, it’s different!  When you buy a mutual fund, there’s (in theory at least) a smart fund managers running the fund for you or an index that weeds out the poorer company performers.  So you are paying them to do the thinking/indexing for you.

Buy and Hold Deviations

At my 401k’s core investment philosophy is the “Buy and Hold” strategy!  But I have taken some liberties with my 401k account.  For instance, during the downturn of “The Great Recession“, my first deviation was that I bumped my 401k contributions to the maximum that was possible.  So I was able to buy some shares in the mutual funds in my account at a deep discount (good deal!).  This is a stealthy way of buying low (aka timing the market)!

A second deviation from the “Buy and Hold” strategy is that I like to play one of the mutual funds that’s in my account occasionally.  By play, I mean trying to buy low and sell high (again timing the market).  While this isn’t advisable for most, I know this one particular mutual fund very well!  In fact, I know it so well that I’m able fairly accurately guess what direction it takes the majority of the time.  This is the wild part of my 401k investment (still very conservative though) and just a very small part of my portfolio that I use to provide a bit of extra interest for myself so that my 401k is more fun for me.  This approach probably has raised the overall cumulative value of my entire portfolio by a mere 1 or 2% at the most over these past 8+ years.

Not Following the Herd

During the downturn in 2008, even some of the financial gurus lost faith and were telling people to move to cash.  Such a move is very anti-”Buy and Hold” strategy.  Perhaps this is why the same group of “financial gurus” say that the “Buy and Hold” strategy is dead?!

I’m not going to mention names, but there were a few highly influential financial gurus that were telling their audience to sell their stocks and other financial investments practically at the market bottom!  It was one of the few times in life where I was yelling at the TV (very, very rare),  directing my anger at one of the “gurus”, yelling that this was the worst time to move to cash!  While the TV guru didn’t heed my advice, I felt better!

Champion investor Warren Buffett believes that the “Buy and Hold” investment strategy still has legs!  Perhaps that’s why he is making money instead of providing financial advice…  How can the financial community go against the best evidence of a “Buy and Hold” strategy via Buffett when the world’s greatest investor says that it work?  Isn’t that kind of telling former boxing champ Mike Tyson that he can’t hit hard and that it’s impossible for him to knock someone out?

Do you think Buy and Hold is dead?  What’s your take?

 

-MR

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The Mercedes Driving Coupon Clipper

April 7th, 2011

Last weekend, I took my family to “Steak & Shake” Restaurant.   We had a coupon from one of those ever popular entertainment books.  I was proud of myself for remembering to use it, at least until I noticed the “Mercedes Driving Coupon Clipper“!  Over the past few years, we decided to keep our entertainment books in the car, that way if we forget to take the coupon out of the book, or forget about the coupon entirely, it’s just a matter of having someone run to the car to bring the book in.

Back to my story…  So we finished our meals and I went up to pay bill with a $2 dollars off a second meal when 1 meal of $5.00 or greater was purchased.  Since there was four of us, the coupon was nice but not earth shattering as my bill still came to over 21 dollars.  Of course I used my trusty Citi Diamond Preferred rewards card as usual, so the amount off the bill was a little more than the $2 but again nothing to write home about.

However, I was patting myself on the back with my coupon ninja skills, when I noticed that the family in front of me was taking a really long time!

 

Mercedes Driving Coupon Clipper

As I stood there in line, I noticed that the mom, dad and teenage son were an very handsome family.  I supposed that the son played sports since he was a few inches taller than I was.  The mom was attractive in a classy kind of way with cloths that looked expensive, but one never knows these days…

But the dad (the one paying the bill) caught my attention the most.  While he wasn’t dress poorly, he wasn’t dressed as nicely as the mom and son.   He was soft spoken and patiently waited for the cashier to get her manager because of the complex grouping of coupons that he had.  Once the manager came over, the man proceeded to explain how the coupons worked and the discounts that each entitles.  I was impressed that he know with such exact detail what each coupon was worth and the expiration date on each.

While I don’t remember the exact amount that he paid, I do remember it was close to but less than 10 dollars (9 something), and that I was impressed.  As the family left, I was subconsciously confused, but I didn’t know exactly why.

 

The Parking Lot

It didn’t hit me until I got to the parking lot, at that point I realize that the family were probably very well off!  Of course it helped that as we got to our car, I noticed that man and his family driving off in a high end Mercedes Benz!

My wife asked my what I was chuckling about as I got in the car.  That’s when I told her that this was the first time that I’ve even seen a Mercedes Driving Coupon Clipper!

Later after getting home and letting what I saw spin passively in my head somewhere deep in my subconscious, my thought came to my active thoughts!  The man was both rich and frugal because it was a game for him!

I should have noticed that he was enjoying the game that he was playing as he explained each coupon to the manager as if he were trading a valuable baseball card with another collector!

After a seemingly long 5 minute transaction with the manager, how the entire family seemed happy as they left the restaurant instead of being flustered as the typical customer (including myself) would have been!

I don’t know if I would have figured it out had I not seen the Mercedes that they drove off in.

Perhaps this is a more common occurrence than I realized.  It would also explain why Warren Buffett isn’t to proud to use coupons.  Even though it’s obvious that he doesn’t need to…

Readers have you ever seen or heard of a story like I experienced?  This should make us all realize that money is money, and if we can get something for less we shouldn’t be shy about saving a buck to two extra off of a purchase!  After all, if the very wealthy are looking for good deals, why should we do the same?

Needless to say, I was very impressed with the Mercedes driving coupon clipper…

 

-MR

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Citicard Diamond Preferred Card Update

April 6th, 2011

 

During “The Great Recession“, one of my favorite credit card the “Citi Diamond Preferred” card seemed to have discontinue the Best Buy $100 gift card for 10,000 points option.  In fact, they seemed to discontinue most of the $100 gift cards for 10,000 points options!  Instead they seemed to be offering a $25 gift card for 3,5000 points and other less beneficial deals.  So as you can imagine, I was very disappointed!

Well, I’m happy to say that they have included the $100 gift certificates for most (if not all) of the companies in the program again, but you have to be on your toes!

If you just go to the thankyou.com site that Citicard uses, you have to dig a little to get to the $100 for 10,000 point option!  If you just glance at the gift cards offered, there only seems to be the “$25 for 3,500 points” option!  The trick is that you have to go to “View Details“, the click on the denominations pulldown box to select the $100 for 10,000 option!

 

Citi Diamond Preferred reward points

Tricky Thankyou Rewards Site

 

 

So what did I decided to do with the now my now once again valuable points?

Well, now that I can get a decent value for my points, I decided to cash out 70,000 points for $700 so we can finally buy a 50 inch HDTV (note, I still have $500 leftover from the previous “thankyou rewards” order for Best Buy cards).

In addition, if things go as planned and the credit card companies don’t discontinue their rewards program, I should have enough points to buy a new computer system by the end of the year.

The best thing is that these purchases are effectively free!  The money I spend with my Citi Diamond Preferred card was on things that I would have purchased anyway!  By using my credit card, I receive a discount in the form of reward points with each purchase!

Now some may say, that they would rather have cash, and I’m definitely cool with cash!  But, at the same time, by using this rewards programs, I have to spend the points instead of saving the money like I typically would.  Now as long time readers may know…  I have an unusual problem with not spending money.  But by using the thankyou rewards program, I have to spend the points that I saved on fun stuff, or at least on something!  So for me, this is a win-win, because it’s spending without the money coming out of my checking account!

UPDATE:  I should mention that if you have this card or if you decide to go with this card, you should only use it to order gift certificates, and in denominations that are $100 for 10,000 points!  Any other options is subpar in my opinion!

Today (4/8/2011) I got replacement cards for my City Diamond Preferred card a year earlier than expected, and surprise, the card is now called “Citi Preferred”.  Apparently, the lost the diamond…

The new cards are blue instead of black.  So much for the cool looking black card.

I hope others that have a citi credit card that use the Thankyou rewards site find value in my little tip!  Do you have any additional tips on any credit card?

-MR

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