Pragmatic Finance

A couple of weeks ago I received an interesting telephone call the day before I was going to return from vacation.  I don’t recall the exact words said but the gist of it was that the apartment above mine flooded.  Of course this had to leak until it collapsed my ceiling, soaking my entire room.

I had my laptop with me so luckily that wasn’t damaged.  However, my mattress on my bed and a few other items were destroyed.  Most of the things damaged were clutter I really didn’t need but hadn’t thrown away.  Think that cd you never listen to or those books you had put up to read but never did.  I did have a few pictures that were messed up and probably some other items I will sooner or later look for and realize are gone.

I tend to avoid insurance unless it’s something I know I can’t afford.  I was really glad that my roommate has renter’s insurance for the entire place.  However, had my roommate not already had it when I moved in I doubt I would have purchased it on my own.  It would have been hard to justify due to me being a college student without many things of high monetary value.

Now that it’s been a few weeks I am able begin to digest the situation.  I have decided the best way to look at it is to take solace in the fact that I won’t have to spend a few days going through my stuff to throw it away.  I always hate doing that because you tend to find some reason to keep things when you know deep down you’re not going to use them.  Well, at least that’s the best spin I can put on it.

A while back I decided that I should look into finding cheaper car insurance. I wasn’t necessarily unhappy with the service I had been receiving from State Farm but had wanted to make sure I wasn’t getting ripped off. After looking into the different coverages, I decided to go with minimal liability coverage with a high deductible. My car is very old so comprehensive or collision would not be worth it.

I started out by using some online quote websites. They take your information and desired coverage and give you a quick check of several companies to compare, most of which are lesser known or ones I hadn’t heard of. I also took some quotes from Allstate, Progressive, Geico, AIG, and Liberty Mutual, among others.

Overall, I was a little disappointed. Most of the popular names gave me quotes that were much higher than I currently pay. I believe AIG wouldn’t let me select the limited coverage I wanted. Although Geico has very entertaining ads, I wasn’t as enamored by the quotes they gave me.

However, USAA totally blew everyone out of the park. Their coverage ended up being almost half of what I currently pay so I jumped at the opportunity. USAA membership, and consequently its auto insurance, is only available to military members or the spouse or children of a member. If you are eligible I definitely recommend obtaining membership even if you don’t immediately get any accounts with them. I once heard someone joke that she wanted to marry a military man so she could get USAA insurance. I don’t know if its that good but it is the best I’ve seen.

I have been wanting to learn more about the different health care options out there for awhile now. It has been on my list of things to do before I graduate and no longer covered by my parents. So when I was offered a free copy of Health Care on Less Than You Think to review I took up the offer.

It is written by Fred Brock and covers the health care system in America. It dicusses the different types of coverages and goes over ways to save money and maximize your coverage. It also talks a little about the problems of our current system and gives a few suggestions of wholesale changes for the future.

One of the most useful parts of the entire book is a section in the second chapter that lists some of the common terms and gives definitions for them. I finally know what HMO, PPO, and EOB mean and the difference between a copayment and coinsurance.

There are a lot of useful tips. Some are very practical such as getting higher dosage pills and splitting them since some prescriptions are the same cost no matter what size of dosage. Other tips are useful to know about but probably more limited in who they apply to. A good example of this was moving to a different state based on their coverage laws and costs.

I also thought the discussions on practical matters were good. He discusses the importance of checking your hospital bills because of the abundance of errors. Also, how to prepare yourself and fight when the insurance company denies your claim. Many claims are unnecessarily denied probably because the insurance companies know most people will simply accept it and pay the bill themselves.

It looks like a health care savings account, HSA, is probably the best bet for me once I finish college and start a new job. I am very healthy and should be able to take advantage of the tax benefits. It also goes good with my view of insurance as a protection against catastrophe, not something to cover all expenses. However, I think most families would probably benefit from an HMO plan if their employer offers a good one and they tend to use medical care a lot.

Overall, I think Health Care on Less than you Think offers a great overview of the health care system and how to utilize it. It is obvious after the first chapter of the author’s political point of view but I don’t think that detracts from the book too much. Its a great primer to get a broad picture of the health care system and how to save some money.

I hope everyone has a Happy Thanksgiving.  I’ll spare you the customary list of things I am thankful for.  I hope to get back into the swing of posting several times a week.  Lately I have been really busy and just haven’t had much time nor motivation to post much.  Anyway, enjoy the day and eat a lot.

Welcome to the 45th edition of the Festival of Frugality. I will tell you an interesting experience I had recently.

Last weekend I was organizing my room after hearing Upstate Frugal tell me how it could improve my finances. I was going to throw away some junk mail invitations to seminars that Wenchypoo told me are a waste of money when I heard the telephone ring. It was FreeMoneyFinance. He had come across a flyer advertising some carnival in town. He said it also had some tips to save money during the holidays. That seemed strange for a carnival and I contemplated whether it would be fun. After hearing Ask Uncle Bill tell me to get off the dime many times I decided to finally go to the Festival.

I got dressed, putting on my new gray socks that I bought after learning from Frugal Living that white socks don’t last as long. After talking with the Weight of Money I decided to make a special purchase plan for the kids.

Before I left the house Enough Wealth told me how credit cards can save you money if used correctly so I brought them with me. I left and got into my rental car that got a corporate discount on using My Wealth Builder’s advice.

Once there I had to wait in line unfortunately. While standing there a girl named VicPicks explained how she got loads of student discounts on her purchases using a discount card. I might have to get one of those after I leave here. I asked someone named FireFinance who was standing in front of me about his hair style and he explained how he saves money by getting hair cuts at home.

After I got in I was very hungry so I started looking for something to eat. While I attempted to buy something Jengod explained to me some great tips on cooking at home so I could do that next time. If I do that I should probably listen to Stop the Ride and visit bulk food stores.

I decided to get a hamburger and a soda at sat down with a group of friendly looking people. Queercents made sure to point out that I could save the plastic bags it was in for other uses. Phil for Humanity also told me that I should have recycled rain water at home instead of buying the drink. During the conversation Penny Nickel recalled a story of visiting snack stores as a child to explain how to shop for less at discount stores.

I then went to try out some of the games there. At first they seemed pretty strange. One booth had a girl named Tricia who showed me how to play the paper bag game. Next I went to someone named Highest Echelon whose game involved matching your phone usage with service. He advised using Virgin Mobile. A booth with the words How do People Get Rich attracted my attention. But when I got there they were explaining how to get a much better return on your money using online savings accounts. I began to wonder, what kind of festival is this?

I began to leave and as I was walking out I heard someone complaining. His nametag said DebtFree4Ever and he was telling some people about this year’s nominees for creditcard.org’s lemon aware. A guy next to him named Debt Free told me three mistakes when selling your home.

When I was almost home my car broke down. Maybe I will have to look into that interesting car sharing service that the Good Human told me about. During the walk my knees felt some pain. I thought to myself that I should listen to fivecentnickel’s advice on saving on medical care when I have this checked out.

When I finally arrived I had some more bad news. I noticed a letter from the bank. Apparently, a free house can be too expensive if you can’t afford the bills. Maybe if I had listened to First Time Homeowner and got a tax credit for insulating the attic I could have saved some more money and been more energy efficient.

After the long exhausting day I laid down wondering why it had been so bad. Maybe I would have some better Karma if I did like Tired but Happy and gave tax deductible gifts to friends and family instead of buying them things they don’t really need.

You’ve probably been told or heard countless times of the importance of a college education, especially in regards to the increased earnings. However, saving for the college expenses of your children is a daunting task. I am reviewing a chapter from the The Boglehead’s Guide To Investing that is titled Savvy Ways to Invest for College as part of the BogleHead Project. It covers some of the strengths, requirements, and tax implications of some of the popular methods.
The plans they cover are:

• Personal Savings
• Custodial Accounts
• U.S. Savings Bonds
• Coverdell Educational Savings Accounts
• 529 Qualified Tuition Plans
• IRA Withdrawals
• Other funding options

Read the rest of this entry »

After preparing for my app o rama for over a month I finally got down to business. My goal was to get sign up bonuses and as much 0% balance transfer money as possible.

Whew. A few notes…the advanta is a business card that has 5% cash back on gas, office supplies, utilities, computer equipment, cell phones, and internet services with the usual 1% back on all else. Sounds awesome. The only catch is that the cash back is capped at $25 max per month and $300 per year.

I went for the USAA American Express because I have heard USAA is generous with limits and it has a 1% foreign transaction fee. This gives me a card to use on trips overseas. It will also help me to keep my utilization lower since it’s going to be pretty stressed due to the balance transfers.

The Washington Mutual’s bt offer is only 6 months but the real reason I am getting it is for the free FICO score. I am sure that will eventually come in handy.

The American Express Gold Business has a lot of potential bonus points if you spend a lot on it. I doubt I will get to those levels but the immediate bonuses from amex and cardoffers make it well worth it.

Adding up the totals…if I am approved for all cards I will get…$710 in cash from signup bonuses, 12k discover miles, and 15k skymiles. I am hoping, with my current citi offers, to acquire 50k in balance transfer cash at about 35 to 45% utilization.

I got sidetracked and forgot to post about this monday. AllFinancialMatters has set up a project involving the new book, The Bogleheads’ Guide to Investing. Each day a blogger will post a review of one of the chapters. I will be reviewing Chapter 14: Savvy Ways to Invest for College. A list of each chapter and the blogger who will cover it is on his site. I have seen book reviews but don’t remember seeing a community wide book review like this before. It should be interesting.

To give you some background info…John Bogle founded Vanguard, the mutual fund company. Bogleheads refers to some of the strong supporters and followers of John Bogle’s approach to investing. The book is three of the strongest supporters who manage the Vanguard Diehard’s forum on morningstar.com. I have just started reading it and so far I am really enjoying it.

Check back on Wednesday, October 18th to see my review on investing methods to save for college.

Probably more important than the company you choose for your auto insurance is the actual coverage. It’s probably a good idea to go over the major types of coverage before going forward.

Liability
This covers an accident where you are at fault. This is normally the bare minimum that you can get by with. If you run into someone or over a telephone pole this is what will pay the bill. Many times it is split into bodily and physical damages and sometimes with a maximum per person and per accident. Read the rest of this entry »

I decided it was time to do an app o rama to make some more free money. Never heard of it? I discussed what an app o rama is not too long ago. It’s simply a process of opening up a bunch of new credit cards when your credit score is high in order to get sign up bonuses and 0% balance transfer offers. Read the rest of this entry »

This is a story that makes you shake your head. Matthew Shinnick tried to sell some bikes using Craigslist. His trip to Bank of America was not the usual trip I am accustomed to. It ended with him being handcuffed and arrested in the middle of the bank, taken to jail, and out 14k in legal fees. If you ever needed any more motivation to stop going inside and to just use the atm then this is it. Read the rest of this entry »

Tim at HelpYourMoney has a running series of interviews of personal finance bloggers. This past week he posted my interview. He is up to about 20 interviews now. They ask about 11 questions and all are interesting.

Citibank is still offering it’s Professional Card that includes a sign up bonus of 10k thank you points. This is the equivalent of $100 if you trade those points in for a gift card or student loan rebate. The card also gives back 3 thank you points (~3%) for auto rentals, restaurants, gas stations, and certain office supply stores. I am pretty sure I have gotten the extra thank you points from Office Depot so I know that one counts. It also gives 1 thank you point for all other purchases.

You simply need to make a purchase after receiving the card to get the bonus. Like most Citibank cards, there is a 0% interest balance transfer option available too. It lasts for 12 months from when you make the first transfer.

You don’t have to have a business or be a professional to apply. It has some business card features but it goes on your personal credit file and is listed in Citibank’s personal credit card section. It almost seems as if it is some hybrid of the two.

I wrote not too long ago about using fatwallet cashback when purchasing online to save money. There is also another site, ebates, that is very similar. They have discounts and different promotions if you click through their site to the site you are buying from. Sometimes it’s a percentage back while other times they have offers of a straight cash amount back.

When you sign up for ebates the also give you $5 free. It stays as pending until you make a purchase. If you sign up and put in the email address of the person who referred you they also get $5. But that isn’t necessary to get your bonus. If you would like to refer me you can use Jason at pragmaticfinance dot com.

I had checked the site out a long time ago but didn’t use it because fatwallet was giving much higher discounts on the stores I purchased from online. However, I am going to sign up for some Sharebuilder bonuses and remember reading about a $20 bonus if you apply through ebates. A simple search on their site for Sharebuilder brought it up.

Even if you don’t do that deal it’s still good for discounts and the signup bonus doesn’t hurt either.

I often feel as though I am being ripped off on auto insurance. Perhaps this is just due to my dislike of insurance. Unfortunately, it’s a necessity. My current plan is up for renewal very soon so this is a great opportunity to see if there is anything better out there.

Overall I have been pretty satisfied with State Farm. They have always been very helpful and had good service. I have had one accident that was my fault and it was taken care of with just a phone call. The only negative experience I have with them was several years ago. I called to see about canceling my life insurance policy I have with them. They told me that if I canceled it my auto insurance with them would go up. When I asked why they really didn’t explain it at all to me. It was quite annoying. Read the rest of this entry »

I love making money off credit card companies. I have been getting into a habit of opening up credit cards for sign up bonuses and 0% balance transfer offers haphazardly but there is one method to maximize your results. I have heard it referred to as an App-o-Rama or an application spree but the strategy is the same. Wait until you can maximize your credit score and then apply for all the cards you plan to….at the same time. Read the rest of this entry »

Bank of American has a new promotion for their extra bases credit card. You can get a free iPod and an offical Major League Baseball Jersey. If you read the fine print it appears you have to make purchases or cash advances of $75 to get the jersey. Then you can make purchases or balance transfers of $2000 to get the iPod Nano. The balance transfer offer is 12 months at 0% interest but it has a 3% fee with no cap.

It seems the best way if I decide to apply for this is to get the card and make a purchase for $75. Pay that off and then do a balance transfer. If you did the minimum of $2000 that would be $60. So you would be getting a jersey, iPod, and 12 months of 0% interest balance transfer for $60.

I read an interesting article on MSN Money today about some weird stuff that hurts your credit. It talks about several things that can hurt your credit that I imagine most people don’t know about. There were a few points that I thought were worth repeating.

Some credit cards don’t report their limits. They mention the problems of Capital One here that I have discussed in the past. To summarize, when your real limit isn’t reported it can make it look like your using a lot more of your available credit than you really are. No preset spending limit cards such as those from American Express also have this problem.

Their advice about fighting it is pretty pointless as Capital One won’t change their methods unless they are forced to. Interestingly, they did mention one guy who is suing them. Hopefully others will too.

The best way to get around this is to charge up close to your limit through purchases that you already planned on doing or cashing some of those purchase checks. You can then pay it off before you get charged interest and get your high balance to report. You can also change cards to ones that do report.

The other interesting thing is that FICO scores you a little differently depending on what group you are classified in. They gave an example of a lady whose score decreased significantly because when her new card aged enough she was put into a higher credit group. The debt she had made her score drop since she was no longer one of the best of a bad group but instead near the bottom of the good group. If that’s a little confusing the article described it better. I have to say, though, that doesn’t sound very effective if the scoring system does work that way.

They also warn about the tendency for unpaid traffic tickets and library fines to be put on your credit report. Hmm, I wonder if there is a statue of limitations on these as I think I still an unpaid library late fee from high school…

MBNA cards have one of the most unique features available: the ability to pay off a credit card using another credit card. I’m sure many of you have paid bills using bill pay from your bank or used a credit card site to pull funds from your bank but this feature is a little different.

If you have an MBNA card you have the option to pay the bill online. If the card is considered one of their own cards and not one of the cobranded ones then you also have the ability to pay other bills with it.  The kicker here is that you can select other credit cards as bills.  Interestingly, their system considers the Fidelity cards to not be cobranded. Read the rest of this entry »

Welcome to the 52nd edition of the Carnival of Debt Reduction. Some great posts this week, although some of the more interesting ones I left out didn’t really correspond to debt reduction. Anyway, on with the show. First I’ll go over some of the ones that caught my eye this week.

Favorites

Debt Free looks at a comparison of How is a Budget Like a Diet? A unique analogy I hadn’t seen before.

My Financial Awareness discusses two different Methods of Paying off Credit Card Debt. Good analysis of the different ways to pay off your debt. Both saving the most interest and paying it off in a way that gives keeps you motivated have their own benefits.

Craig of Recovering Broke Guy discusses the passing of his father and how it is A painful reminder of the importance of a Total Money Makeover. Although painful, a major event like this is an opportunity to do some introspection.

And now with the others… Read the rest of this entry »