Washington Mutual's fall was quick and painful. The bank's stock was down like 95% with a market cap of $2 billion and a couple hundred billion in outstanding loans so there's no surprise they failed. What does surprise me is how quick they went down. I opened a checking account at BofA last week just in case so I'll have to decide what to do with that. I was getting 4% in my savings account with WaMu, so if JPMorgan nerfs that rate I'll jump ship. Too bad I didn't know about BofA's referral program before opening my account, could have gotten me and the Blarg $25 each. If anyone wants to move from WaMu to BofA let me know and I'll send you a referral.
Tagged with: banking
Posted under: Money Stuff
My old employer offered an IRA through Fidelity and I just passed the 2 year maturity date on that account. With Simple IRAs you have to wait 2 years before the funds are available to rollover. I'm sure regular investment accounts at Fidelity are fine, but this IRA was an "Advisor" account and I didn't really have much control over it and the investment options were limited. Some of the fees are a little steep considering how much I have in the account. I think I just have a money market fund in it that hasn't done much, but I did double my investment from the employer match.
The Fidelity IRA will be rolled over to a Traditional IRA at Vanguard and I'm contemplating putting the money into the Total International Stock Index Fund. I've got the Target Retirement 2045 in my Roth which is heavy in domestic large caps and only has 18% of its holdings in international stocks. I'd be willing to go a little higher than that, maybe 30-35% international. My rollover just barely meets the minimum $3000 in the international fund and maxing out my Roth IRA for 2008 would put my portfolio at 39% international. Next year I'll buy more of the 2045 fund and bring that percent down.
If anybody is interested I put together a little spreadsheet to help calculate asset allocation based on a fund's holdings. With funds of funds, this can be tough to figure out, especially if you have overlap in different funds. Since I'm in broad market index funds I don't have to worry about being too heavy in a certain sector or single company.
Yeah yeah I know, index fund blah blah blah, asset allocation blah blah blah.
Tagged with: asset allocation, investment, ira, vanguard
Posted under: Money Stuff
Shared from Google Reader:
Detaching From Material Possessions a Sign of Emotional and Financial Maturity
Makes you think about all the "stuff" we have and do we really need it. If I start riding my bike to work I'm going to have a truck I'll drive occasionally on the weekend, but still pay a good chunk of change every month for it to sit there all week. Only 2 years left on the loan, but if I was starting a bike commute a year ago I'd probably be more serious about downgrading.
The Blarg is clearing out his DVD collection which makes me think I could do some house cleaning myself.
Posted under: Money Stuff
How Much Could You Have if Social Security Was YOUR Money?
AllFinancialMatters has an interesting post up about what kind of money you could accumulate if you were able to take the money coming out of your paycheck and invest it yourself. He's using an optimistic 10%, but he also forgot to include the employer's portion of the tax so the numbers are actually understated.
Tagged with: investing, retirement, social security
Posted under: Money Stuff
With gas prices at their current levels people are hurting at the pump and even my 2.5 mile commute adds up. I usually go home for lunch so I'm driving 10 miles a day. Compared to the 50 miles I was doing one year ago I should be grateful my gas bill is as low as it is. The savings I've seen with a shorter commute aren't quite as large as you'd think. The increased price of gas and lower mileage from city driving has doubled my cost per mile.
Gas prices have gone up considerably; here's my data I'm collected over the past 2.5 years:
Higher prices mean it costs more to drive a mile, no question there. Here's my mileage over that same time period for my 2005 Toyota Tacoma 4 cylinder automatic:
When I started at the County last August two things happened: a tank of gas started lasting longer and my mileage plummeted. The short trip to and from work means my engine is operating at a less efficient temperature for a larger proportion of my commute. Coupled with stopping and idling at traffic lights I saw a 7-8 mpg decrease, that's a very significant ~30% drop in mileage. My historic cost per mile looks like this:
The double whammy of increased prices and lower mileage hurts. With my current cost per mile it costs me $2.20 to drive to work everyday. Doesn't seem like much, but that adds up to about $550 per year. That's just to get to work, that doesn't include driving anywhere fun.
I'm going to go through a series of post analyzing my energy costs and figuring out ways to reduce them. What's your daily commute cost you? Simple formula to calculate it:
Commute cost = (price of gas / MPG) * miles
Tagged with: commute, driving, energy costs, gasoline prices, mileage, mpg, toyota tacoma
Posted under: Money Stuff
How Much Could You Have if Social Security Was YOUR Money?
AllFinancialMatters has an interesting post up about what kind of money you could accumulate if you were able to take the money coming out of your paycheck and invest it yourself. He's using an optimistic 10%, but he also forgot to include the employer's portion of the tax so the numbers are actually understated if the employer helped out with retirement.
I could go off on a rant about Social Security, but I'll save that for another day.
Tagged with: investing, retirement, social security, taxes
Posted under: Money Stuff
I despise PayPal because monopolies are bad for the consumer. PayPal has become the defacto method of sending money across the Internet and paying for eBay auctions. I just sold an extra CPU on eBay for $60 and PayPal took their $2 cut (don't get me started on the $5.41 eBay got). Google Checkout was suppose to be a big PayPal competitor for retail sales, but peer to peer transactions are stuck using PayPal. There might be a viable contender in town now.
Revolution Money Exchange is part of Revolution, LLC, founded by AOL co-founder Steve Case. The board of directors is filled with former CEOs: David Pottruck from Charles Schwab; David Golden from JP Morgan; Franklin Raines from Fannie Mae; and Russell Hogg from MasterCard International. This definetely isn't some homegrown Web 2.0 project coming out of some guy's garage.
Here are some of the differences between Revolution Money Exchange and Paypal:
- No fees for receiving and sending funds
- Only checking accounts are used, cutting credit cards out of the picture is what reduces the costs so drastically
- No business services or eBay integration
- Simple interface, PayPal has become a nightmare to use
Sending money person to person is Money Exchange's focus and it shows in the account creation process which is very straightforward. They've got a $25 sign up bonus going on until May 15th so I thought I would try it out. If I don't end up using it then I got some free money. If you sign up for the $25 bonus through the link below I'll get a $10 and then you can refer people.
Give it a try; it would make transactions like going in on a gift together or selling things on Craigslist a lot easier. There is some real potential here and I hope it starts growing in popularity.
Tagged with: paypal, personal finance
Posted under: Money Stuff
The IRS is actually ahead of schedule and will be sending checks or direct depositing the stimulus money pretty soon.
Don't Mess With Taxes has the full
schedule available. It will be interesting to see what people actually do with the money. I don't expect it to do much even if a significant portion of people just spend it on consumer items. I doubt that will happen and good amount of the money will go to paying off debt and day to day expenses. Our check is probably going straight into savings where it will stay for the foreseeable future. Anybody have plans for their rebate check?
Tagged with: rebate, stimulus, taxes
Posted under: Money Stuff
I've been blabbing on about finances for a little bit now and up to this point I haven't been very aggressive about saving for retirement. Saving for retirement is good and dandy, but right now is the most important time for us to put away money (if you are wondering why see this
post on compound interest). Both of us have a little money in SIMPLE IRAs, I pay 5% into LACERA (county pension) and get 3% matched going into a 457(b). Not enough to meet our goals, but definitely better than 0%.
For over a year now I've been talking about starting a Roth IRA and never did. With April 15th just a few days away, I went ahead and started a Roth IRA at Vanguard. What's important about April 15th besides taxes being due? It's the last day to make IRA contributions for 2007. I maxed out my 2007 contributions which leaves me another year to work towards maxing out my 2008 contributions.
My entire investment strategy revolves around starting young and investing for the long term (30 years). I also wanted a strategy that would require very little effort on my part. I knew index funds were the way to go, but there are ton out there and needed to narrow it down. I was also taking asset allocation and fees into consideration.
After some research I found Vanguard's Target Retirement Funds. They are funds of funds and include indexes of US and international markets along with bonds. The 2045 Retirement Fund has an asset allocation of about 90% stocks and 10% bonds right now and will gradually reverse those numbers as 2045 grows closer. Since I'm starting young I'm comfortable with an aggressive allocation and the automatic reallocation will save me time down the road. The expense ratio is a low .25% which can really impact savings over the long term.
Opening the account was really easy and everything is done online. Funds were transferred straight out of my checking account and I avoided a $20 annual maintenance fee by opting for paperless statements. I also like the fact that Vanguard is client-owned and is there to serve the investor, not outside shareholders. You'll never see TV ads for Vanguard since that's money coming out of their investors pockets. With $1.3 trillion in holdings they must be doing something right.
My strategy will probably evolve as our income and tax situation change, but the essential idea is to put away a steady amount over the years in tax advantaged accounts and let compound interest do its job.
Tagged with: investment, ira, personal finance, retirement, vanguard
Posted under: Money Stuff
I've been getting increasingly annoyed about the mainstream media's coverage of housing and the economy. Someone coined the term "credit crunch" and it gets regurgitated in every single story that happens to mention the economy. The problem is the lack of credit isn't the
cause of our current economic woes, it is just merely a side effect of a larger issue at hand in our society. The real cause of this recession can be summed up in another cute, alliterative phrase:
debt deluge.
At no other point in history have we been in more debt. We just keep piling it on. Loose mortgage practices over the past couple years made it easier for people, who normally wouldn't qualify to take on more debt, to bury themselves up to their ears. Unsurprisingly, people can't handle the payments on the debt that they've acquired. Instead of blaming homeowners, borrowers, lenders, brokers, banks, realtors and everyone else involved in pumping up the housing bubble, the media points a finger to the lack of credit.
At this point everyone is being dishonest to try and deflect blame and responsibility for the situation our economy finds itself in. Homeowners should have known better about jumping head first into a steaming pile of debt. Lenders knew giving inflated, risky mortgages to people, who only a couple years ago would have been laughed out of the bank, was wrong. The government turned a blind eye to their regulatory role since taxes kept rolling in. Realtors had no qualms about selling houses at prices customers couldn't afford because they got their cut and washed their hands of the transaction. The media won't admit their "house flipping" shows helped contribute to the mess.
Debt is the root of our problem and it will take some serious purging to heal the damage that has been inflicted. Jobs in financial services and construction are going to be hit hard. People are going to lose their homes and ruin their credit history. Home prices will adjust to a point dictated by increased supply and lower demand. Government has to adjust spending or increase taxes. The next time you hear a reporter or politican read "credit crunch" off the teleprompter just replace it with
debt deluge. Tagged with: personal finance, spending, taxes
Posted under: Money Stuff
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