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Action Plan to Improve Credit Score
I have recently realized that my credit score is lower than I anticipated as a result of taking advantage of the 0% balance transfer offers. I am under the impression that as long as I keep my score at or above the 710-720 range then I should be in good shape. Anything above this doesn't get you much so I felt I was using my credit score flexibility to take advantage of the 0% balance transfer offers to earn extra cash. Since my score was estimated at 687, I realized I need to take some steps to shore up my score to get it back in my target range. The 1st thing I did was google for suggestions on improving my credit score: - five ways to improve credit score - this article gave me a better idea of the composition of the credit score (never had to worry about it till now) - tips for boosting credit score - this article confirmed my impression that 710-720 was a good target range and highlights the impact if I wanted to purchase another home in the near future. I also liked the credit score simulator - it was right on the money for me. So based on this I know I can improve a couple things to get me that extra 20 points or so that will put be back into my minimum target range. The easy thing to do would be to just pay off the 0% balance transfers, but then I am losing out on all that free money - I am too much of a tight wad to do that. I'm looking for the minimum damage to the free money while getting my credit score back where it should be. So the obvious things are: -pay off my outstanding balances on the 0% balance transfer offers -bump up my credit limit on the cards to reduce the % of limit borrowed -pay down balances to reduce the % of limit borrowed -close new credit cards to raise my average age of credit -stop applying for anything that results in a credit inquiry I have decided that the best things would be to: -pay off 2/4 balance transfers that are expiring soon anyway -request credit limit increases on remaining 2 balance transfers (as long as no credit inquiry is involved) -pay down the remaining 2 balance transfer to < 75% of limit borrowed Based on this I have devised a specific action plan: -request credit limit increase from BofA card -consolidate my 2 Citi cards -pay of GM card balance transfer -immediate pay down the HSBC credit card to below 75% limit -pay off HSBC credit card in the next 2 weeks Then it looks like the next steps would be to reduce the percent borrowed to below 75% on both the Citi and BofA cards - I would not prefer to do this as I will lose out on some of the free money I was banking on, but I think its critical to get my credit score back up to the 710-720 range.
My $2 Million Net Worth Goal Part 2: Forecasting My Net Worth
In Part 1 of this series I covered my starting points and assumptions in developing my net worth goal. In this post I am going to discuss how I used these to forecast what my net worth could reasonably be in 20 years. I started by creating an excel spreadsheet that took my annual income, subtracted my estimated cost of living and taxes to determine the amount of savings for each year. I then used my assumption of a 10% annual ROR to determine what the value of my previous year's net worth would be in the current year. I then totaled my savings and the value of my previous savings to determine my target for net worth each year. | Yr | Income | Cost of Living | Taxes | Yr Savings | VoPNW* | Net Worth | | 1 | $55,000 | $23,000 | $11,000.00 | $21,000 | $0.0 | $21,000 | | 2 | $58,300.00 | $24,380.00 | $11,660.00 | $22,260 | $23,100.0 | $45,360 | | 3 | $61,798.00 | $25,842.80 | $12,359.60 | $23,596 | $49,896.0 | $73,492 | | 4 | $65,505.88 | $27,393.37 | $13,101.18 | $25,011 | $80,840.8 | $105,852 | | 5 | $69,436.23 | $29,036.97 | $13,887.25 | $26,512 | $116,437.3 | $142,949 | | 6 | $73,602.41 | $30,779.19 | $14,720.48 | $28,103 | $157,244.3 | $185,347 | | 7 | $78,018.55 | $32,625.94 | $15,603.71 | $29,789 | $203,881.7 | $233,671 | | 8 | $82,699.66 | $34,583.50 | $16,539.93 | $31,576 | $257,037.7 | $288,614 | | 9 | $87,661.64 | $36,658.51 | $17,532.33 | $33,471 | $317,475.3 | $350,946 | | 10 | $92,921.34 | $38,858.02 | $18,584.27 | $35,479 | $386,040.7 | $421,520 | | 11 | $98,496.62 | $41,189.50 | $19,699.32 | $37,608 | $463,671.7 | $501,280 | | 12 | $104,406.42 | $43,660.87 | $20,881.28 | $39,864 | $551,407.5 | $591,272 | | 13 | $110,670.81 | $46,280.52 | $22,134.16 | $42,256 | $650,398.9 | $692,655 | | 14 | $117,311.05 | $49,057.35 | $23,462.21 | $44,791 | $761,920.6 | $806,712 | | 15 | $124,349.72 | $52,000.79 | $24,869.94 | $47,479 | $887,383.3 | $934,862 | | 16 | $131,810.70 | $55,120.84 | $26,362.14 | $50,328 | $1,028,348.5 | $1,078,676 | | 17 | $139,719.34 | $58,428.09 | $27,943.87 | $53,347 | $1,186,543.8 | $1,239,891 | | 18 | $148,102.50 | $61,933.77 | $29,620.50 | $56,548 | $1,363,880.3 | $1,420,429 | | 19 | $156,988.65 | $65,649.80 | $31,397.73 | $59,941 | $1,562,471.4 | $1,622,413 | | 20 | $166,407.97 | $69,588.79 | $33,281.59 | $63,538 | $1,784,653.8 | $1,848,191 | | | | | | Net Worth in 2021: | $1,848,191 | *VoPNW - Current value of my previous year's net worth (including 10% Avg Rate of Return)
As a result of forecasting my yearly net worth ($1,848,191.00 in 2021), I decided an aggressive but reasonable goal would be a net worth of $2 million. It would me a nice round number that would be easy to remember and was slightly ahead of my already optimistic forecast of what my net worth could be. My next post in this series will highlight my yearly progress since then and cover some of my additional observations since I came up with my $2 million net worth goal.
I just found out that Eloan offers a free credit score (similar to FICO credit score). I just signed up for an account and had to enter a credit card number that was listed on my credit report (just to verify it was me). Here is what the Eloan web site reported: Personalized Credit Score Analysis for [2million]
As of October 27, 2005
Your Score
Based on your credit report data, your CreditXpert Credit Score is 687
Your credit rating ranks higher than
40% of U.S. consumers.
Although this CreditXpert Credit Score is similar to the FICO score used to underwrite your loan application, it may differ for a variety of reasons.
Ouch - apparently between recently moving and the several 0% balance transfer offers I took advantage of I may have severely hurt my credit score. Here is the list of current 0% balance transfer offers I am using: -Bank of America Balance:$13,030/Limit $13,200; -Citi Balance $16,980/Limit $17,500; -HSBC Credit Card Balance $5810/Limit $7500; -GM Card Balance $200/Limit $2,300. (Keep in mind all this money is sitting in my EmigrantDirect Savings Account earning 4% APY). The last FICO credit score I got was around ~780 about 3 years ago. I have never missed a payment for as long as I can remember and always pay off my balances every month (with exception to the 0% BT offers). I have some actions I am planning on in the next week or two that should help this score a bit. Update: Just to follow up I DID know my credit score would be negatively affected, however I didn't realize THIS much - I had expected it might have fallen from 780 to say ~730. 687 is a bit of a shock to me.
My $2 Million Net Worth Goal Part 1: Assumptions
The purpose of this web log is to document my journey to financial freedom. I have defined financial freedom as a net worth of at least $2 million. It may be a moving target, but I guess we will see over time. Regardless, I wanted to share how I came up with this goal. When I started working after grad school in 2001, I decided I need to set a goal for retirement. I am a very goal oriented person and like to have a "stick in the ground" to focus on. I decided to figure out some starting points, identify some assumptions, and use these to help me determine what was a reasonable net worth goal. Starting PointsIn 2001 I turned 25, my starting salary straight out of grad school was $65,000, and I was basically starting out with nothing. AssumptionsI then needed to come up with some assumptions about the next 20 years: -I assumed I would pay 20% of my income in taxes. This is probably way low but I figured I would work hard at legally reducing my taxes (when financially beneficial) through real estate investments, running businesses (at the time I was overseeing a small family business), buying a home, etc -To make my estimates conservative I started with a annual income of $55,000 ($10k less then my income at the time) and estimated that my annual income would increase 6%/yr thereafter -I assumed everything I didn't allocate to taxes and cost of living would go to savings -A big assumption I made was that I would be able to make a 10% annual ROR on my savings -I conservatively assumed I had no savings in 2001 (net worth was $0), but in reality I was probably worth $5-10k. -I assumed my cost of living (everything other than taxes and savings) in 2001 would be $23,000 based on my chart of estimated expenses listed below and increase 6%/yr thereafter | Estimated Living Expenses | | Living Expenses | Monthly | Yearly | | Credit Card | $600.00 | $7,200.00 | | Car | $300.00 | $3,600.00 | | Car Insurance | $50.00 | $600.00 | | Mortgage | $850.00 | $10,200.00 | | Health Care | $40.00 | $480.00 | | Utilities | $100.00 | $1,200.00 | | | | | | | Total: | $23,280.00 | Now that we covered my starting points and assumptions, my next post will detail how these helped me develop my net worth goal.
My 1st credit card application rejection notice
Wow! I would have never thought this could happen. I got a letter declining my application from the RBS credit card I applied for to take advantage of their 0% Balance Transfer offer. First I was shocked, then I felt a little insulted, by this morning I am over it. Here is the letter: Dear [2million],
We appreciate your recent application for a credit card account and regret that we are unable to approve your application at this time. Your application was processed by a scoring system that assigns a numerical value to the various items of information we consider in evaluationing an application. These numerical values are based upon the results of analyses or repayment histories of a large number of customers. The information you provided us in you application did not score a sufficient number of points for approval of your application. The reason why you did not score well compared to other application were:
Percentage of balances to credit limits on revolving accounts
Number of revolving bank credit account exceeding 75% of credit limit
Time since most recent inquiry
......You may also obtain your report or dispute the information that it contains by contacting the consumer reporting agency at the following address and toll-free telephone number:
Experian
701 Experian Pkwy Bx 2104
Allen TX 7501
(888) 397-3742
Sincerely,
RBS
Well there it is. I like how the letter gives you at least a little insight as to what the problem is. This letter highlighted 3 things: 1) Percentage of balances to credit limits on revolving accounts - Well I currently have 4 credit cards I am using for 0% BT offers: -Bank of America Balance:$13,030/Limit $13,200; -Citi Balance $16,980/Limit $17,500; -HSBC Credit Card Balance $5810/Limit $7500; -GM Card Balance $200/Limit $2,300. I only use a small portion of the limit on the other credit cards for monthly purchases and pay off balance every month. 2) Number of revolving bank credit account exceeding 75% of credit limit - Ok this is enlightening to me because it turns out I have 3 cards that are exceeding the 75% limit (Bank of America-98%, Citi - 97%, HSBC - 77%). I now know the 75% limit is important and need to make sure my other balance transfers are down to below 75% before I apply for a new card/0% BT offer. Apparently the secret number here is less than 3..... 3) Time since most recent inquiry - This one concerns me as well because I thought I purposely waited at least 4 months since I applied to my last credit card (the Citi card) so maybe that isn't long enough either, or someone else made a credit inquiry recently..... Also although not mentioned, I recently moved and changed my mailing address - I am not sure how but I bet this somehow effects your credit score..... I plan on following up with Experian to review my credit report - I'll post any results from this effort. I guess the good news is I now know what I need to watch for before I try this again. I actually have to pay off the HSBC and GM cards in the next month since the 0% BTs will be ending (that is one of the reasons I decided to try this offer). My new plan will be to just move this money out of savings and pay off these 0% BTs then in a couple months I can try this again.
Inside Wire Maintenance Service Plan
What a rip off. I spotted this on my girlfriends latest phone bill from Bellsouth. She had a line item Inside Wire Maintenance Service Plan for $5.95/mo. I laughed when I saw this. While I guess this could make sense for someone, it certainly seems like a rip off to me. First of all, this plan is designed to cover problems with the telephone wiring inside the home. I don't know for sure, but I believe this wiring is rated for 50yrs or something. My girlfriend's home was built in 2004 which means I would not expect problems with the wiring for a long long time. Second, how much does wiring possibly cost? If you are handy or know someone who is you could probably rewire the whole house for less than $50. Third, if you are renting your place, your landlord is responsible for the inside wiring, so why pay for protection you don't need? This Inside Wire Maintenance Service Plan ends up costing my girlfriend $71.40/yr. Needless to say we emailed Bellsouth and had this cancelled. Maybe my girlfriend will take me out to dinner with all the money she saved ;-).
Highlights of Benefits Enrollment Package from work
What a wonderful time of the year; football, cool brisk mornings, state fair, and of course benefits enrollment. I actually don't think I am going to spend much time this year analyzing my choices. I spend a lot of time last year going through my choices and the plans didn't change significantly this year. The only differences I can detect are on the cost side: -monthly cost is going up $4 for healthcare insurance -prescription copay is going up $5/prescription -flexible healthcare spending account is now extended an extra 2.5 mos to 3/15 the following year (this is great news for me, I won't need to be as conservative with my estimates) Highlight of Benefits:Health Plans (High Level) -No Health Plan -(IBM gives you $30/mo) -PPO - Free -PPO Plus - $44/mo -High Deductible PPO w/ Health Savings Account (IBM contributes $500/yr) - Free -EPO (similar to a HMO) - $52/mo Some other benefits IBM plans offer:-Vision Plan -Dental Plan -Healthcare Spending Account/ Dependent Care Spending Account -New employees are offered $150 rebate to sign up as a non-smoker, or enroll in a smoking cessation plan. -All employees are eligible for a $150 rebate if they complete a fitness diary for a period of 12 weeks showing that they exercised 4 days a week for 10 out of the 12 weeks. -All employees are eligible for $150 rebate if they participate in a prevention program that involves filling out an online questionnaire and taking actions recommend actions (not sure of all the details yet). -IBM also allows employees to enroll in a 401k disability protection plan that will continue to make 401k contributions if employee goes on disability. -IBM also employees to buy up disability from 1/2 to 2/3 salary replacement. So here are my elections:-EPO Insurance Plan (similar to HMO) -Basic Dental -I am passing on vision plans -Enrolled in rebates for fitness & prevention -Enrolled in 2/3 disability insurance -Passed on 401k disability protection *Note: Some info listed was what was listed in my package, I don't know if these some/all of these prices/benefits where tailored or standard.
Bummed about my Pfizer investment....
Pfizer (PFE) released earnings this morning and it is getting pounded today in market trading. As I write this the last trade price at Yahoo!Finance I saw for Pfizer (PFE) was $22.11. I this Pfizer is a great company, I think it has a great management team, I also think long term pharmaceutical companies are a great investment with the baby boomers getting older. However, I have been adding to my position from ~$42/share back in 2001. I have been riding this stock down the past 4 years and I am still taking a beating. Besides IBM, PFE is the largest stock investment I have. My average share price for PFE is now around ~$31/share. Just when I think the latest fall in the stock price is a good buying opportunity the stock continues to go lower. Its depressing to realize I have a significant loss in this stock investment. I have been buying PFE as a long term investment, I always said its ok if it takes 10 years, but I believe PFE will continue to grow and become more profitable. However, stock declines are tough for me - its easier to swallow if a stock price stays flat because at least I can say I haven't lost any money ;-). With that said, I am going to continue to add to my PFE investment. PFE may be a drag on my investment returns for the next couple years, but I continue to believe it will pay off in the long run. Update: I also saw that the forward P/E ratio for Pfizer (PFE) as reported on Yahoo!Finance is now ~10.27! Wow - that seems so low to me for such a great company. But what do I know?
You'll need no more than 92.35% of your income when you are financially free
Well sort of. I am talking about the Social Security and Medicare taxes on your paycheck. If you can live off the same income (passive income) after quitting your job that you do before (as wages), you'll only need 92.35% of the income since you get to avoid the FICA and Medicare tax. Really that is just the tip of the iceberg since often capital gains and dividends (common types of passive income) will have smaller tax rates as ordinary income. If you assume a 10% tax savings (15% instead of 25% tax rates) your ahead another 10% - therefore you might only need to replace 82.35% of your income. Ok so I'll need no more than 82.35% of my income in today's dollars. Thats < $75,000 in today's dollars. If we can find a way to knock off another $50,000 I'll be retiring in no time. Although theres the problem of living off the same amount of money - I'm still single and someday I hope to have a family - I suspect that may knock my cost of living up ;-(
Have you heard of the Dogs of the Dow? I first heard of this investment strategy in the 1990s and it seemed to fall out of favor during the dot com bubble. However I think it is again gaining attention as large-cap stocks have continued to under perform the broader market. The Dogs of the Dow is a simple investment strategy. The strategy is simply investing an equal amount in the 10 highest yielding Dow stocks on Jan 1st of each year. Easy to define, easy to do, easy to benchmark. Infact the Dogs of the Dow supposedly have had an annual return rate of 17.7% since 1973. The 2005 Dogs of the Dow Ticker | Company | Price | Yield | SBC | SBC | $ 25.77 | 5.01% | GM | General Motors | $ 40.06 | 4.99% | MO | Altria | $ 61.10 | 4.78% | MRK | Merck | $ 32.14 | 4.73% | VZ | Verizon | $ 40.51 | 3.80% | JPM | JP Morgan Chase | $ 39.01 | 3.49% | C | Citigroup | $ 48.18 | 3.32% | DD | DuPont | $ 49.05 | 2.85% | PFE | Pfizer | $ 26.89 | 2.83% | GE | General Electric | $ 36.50 | 2.41% |
(Prices as of Jan 1)I currently have holdings in a couple Dogs of the Dow - Pfizer (PFE), Merck (MRK), General Electric(GE). I also have some Bellsouth which is almost a sister company to Verizon and SBC. I think the Dogs of the Dow investment strategy fit in nicely with all my discussions on DRIPs as DRIPs could be a good vehicle to use for investment purchases. I plan to do some historical work on the Dogs of the Dow and work it into some of my future investment decisions, however I don't plan to strictly follow this investment strategy - its a little too mechanical for me.
CF Results for Week 6, Picks for Week 7
Background on my bad habit. Recap of Week 6 Previous Balance $407.41 | Trans Date | Wager | To Win | Result | Description | | 10/5/05 | $40 | $34.78 | Lost | OSU(-3) over PSU |
Current Balance: $367.41 Net Deposit: $250, Current Profit: $117.41 (ROI 47%) My second losing week in a row. I almost didn't post because I was so pissed off at the result ;-). Picks for Week 7: I am picking just 1 game again this week. I think FSU will win. My confidence is a bit shaken from the past couple of weeks, so I am hoping to regain it this week. | Trans Date | Wager | To Win | Result | Description | | 10/14/05 | $39.06 | $33.98 | TBD | FSU(-7) over UVA |
Interested in playing? Sign up for Bodog Sportsbook and use my referral number P78BAC Full Disclosure: I may receive a commission for people who join Bodog.
The Almost Definitive Guide to using Company-Sponsored DRIPs or ShareBuilder Accounts
How to make sure you are picking the right plan for your long term stock investment Ok so you have done your homework and you are ready to make a long term investment. Now that you have spent all this time picking the perfect stock the work is done right? Well if you are considering holding a dividend paying stock long term, you are probably considering the company sponsored DRIP as a plan to make your investment in. But there is also ShareBuilder who now has a pretty compelling alternative. You should carefully consider each plan, because the fee structure of the plan can have a significant impact on the total return for a long term investment (see the section about fees in this article to understand why). I have put together some material to help make sure you find the plan that saves you the most money. (Note: A primer on DRIPs if you need it)Here is a checklist of items to go through to help understand if a company sponsored DRIP or a ShareBuilder account is the best plan for your needs. If you are considering starting an investment through a DRIP or ShareBuilder - this may be helpful. 1) What will your investment frequency be? Will you follow a strict dollar cost averaging approach such a fixed monthly investment amount in the stock or a more loose interpretation with a couple investments per year? The strict dollar cost averaging of just one or two stocks favors using the company sponsored DRIPs, however if there are several different investments involved, depending on the total DRIP fees, a ShareBuilder account (such as the "standard" plan may be less costly) 2) Will you be reinvesting your dividends? If so, ShareBuilder account have free dividend reinvestment, but not all company sponsored DRIPs do. 3) What's the time horizon? The longer the time horizon, the more importance should be placed on dividend reinvestment fees as they may make up a more significant portion of your transactions. If this is the case, in general the more favorable the company sponsored DRIP plans become without dividend reinvestment fees. 4) What will be the magnitude of your total investment amount? The larger your investment/investments will be, the less a factor the plan fees will be vs benefits such as market timing transactions by the account. Other things to consider: -The plans fee structures, both ShareBuilder and company sponsored DRIPS can change at any time. -If a company sponsored DRIP becomes a less favorable option in most cases you can have your stock issued to you in certificate form free of charge, unlike ShareBuilder and other brokerages. This will allow you to move it to another account somewhere without hefty fees. -If you are investing in several stocks, ShareBuilder has "bundled" plans such as the "Standard" plan that reduce your monthly investment costs making them an even more attractive option in some cases. Plan Comparison TableI have also put together a table that breaks down whether it makes more sense to use a particular company sponsored DRIP or a ShareBuilder account. I make no warranties about the accuracy of this information, but I hope it will be of use to many of you. If you would like to a DRIP added to this matrix, add a comment and I'll see if I can continue to expand it. To use this table, first determine the investment strategy (column) that most applies to you, then find the applicable stock (row) and you will see for that investment scenario whether the company sponsored DRIP or a ShareBuilder basic account would have the lesser fee structure for your investment strategy. Scenario #1
Strict dollar cost averaging strategy with automatic recurring contributions, reinvesting dividends.
Scenario assumes 5 years period with initial investment $1000; invest $50 every month; reinvest all dividends.
Scenario #2
Buy and hold in lump sums, make contributions, but not necessarily on a regular basis. Scenario assumes 5 year period with initial investment of $1000; make $100 investments 3 times per yr; reinvest all dividends.
Scenario #3
Buy and hold in lump sums, make contributions, but not necessarily on a regular basis, but don't reinvest dividends.
Scenario assumes 5 year period with initial investment of $1000; make $100 investments 3 times per yr; no dividends are reinvested.
Company | Ticker | Scenario#1 | Scenario #2 | Scenario #3 | IBM | IBM | DRIP | ShareBuilder | ShareBuilder | Proctor & Gamble | PG | DRIP | ShareBuilder | ShareBuilder | Merck | MRK | DRIP | ShareBuilder | Sharebuiler | Pfizer | PFE | DRIP | DRIP | DRIP | Duke Energy | DUK | DRIP | DRIP | DRIP | CMS Energy | CMS | DRIP | DRIP | DRIP | Microsoft | MSFT | DRIP | DRIP | DRIP | Edison Int | EIX | DRIP | DRIP | DRIP | Medtronic | MDT | DRIP | ShareBuilder | ShareBuilder | ChevronTexaco | CVX | DRIP | ShareBuilder | ShareBuilder | Walmart | WMT | DRIP | ShareBuilder | ShareBuilder | Bellsouth | BLS | DRIP | DRIP | DRIP | Bank of America | BAC | DRIP | DRIP | DRIP | Verizon | VZ | DRIP | ShareBuilder | DRIP | Lowes | LOW | DRIP | DRIP | DRIP | Eastman Kodak | EK | DRIP | ShareBuilder | ShareBuilder | Home Depot | HD | DRIP | ShareBuilder | ShareBuilder | GE | GE | DRIP | DRIP | DRIP | Exxon | XOM | DRIP | DRIP | DRIP |
List of company-sponsored DRIP fees and web sites used in comparisonI think this table is a great way to quickly get an idea which plan would be better for a given stock. I have quickly learned that several of the stocks (PG, MDT, and CVX) I have holdings in company-sponsored DRIPs in would save me money if I had them in a ShareBuilder basic account. If you decide to open a ShareBuilder account, make sure you check out this opportunity for bonus money when you open an account. 
Just Earned a $5 Amazon Gift Certificate for taking a 5 min Financial Quiz at Citi
This morning I found a link on slickdeals to Citi Cards which is currently offering a credit education module with a 5 minute quiz at the end to test your credit knowledge. Score a 70 or better and earn $5 Amazon gift certificate. Easy money - finished in under 5 minutes. Just go to the Citi web site, select "Get Credit-ED Certified Online", then "Take the Credit-ED Certification Quiz". Enter CITCHE1 in the promo box.
List of Dividend Reinvestment Plans (DRIPs)
I noticed that netstockdirect.com was purchased by ShareBuilder earlier this year and as a result there is no easy way to find a 3rd party list of DRIPs. I have started my own and will continue to update it - let me know if there are any companies in particular you would like me to add. This list will quickly give you the basic information about each DRIP such as purchase minimums, fees, and a link to more info about the plan. This table is in no particular order: Company | Min Open | Open Fee | Min Opt Invest | Opt Invest Fee | Auto Purch Fee | Reinvest Fees | Proctor & Gamble | $ 250 | $ 7.50 | $ 50 | $ 2.50 | $ 1.00 | 5% up to $1 | Merck | $ 350 | $ 5.00 | $ 50 | $ 5.00 | $ 2.00 | 4% up to $2 | Pfizer | $ 500 | $ - | $ 50 | $ - | $ - | 0 | Duke Energy | $ 250 | $ - | $ 50 | $ - | $ - | 0 | CMS Energy | $ 250 | $ - | $ 25 | $ - | $ - | 0 | IBM | $ 500 | $ 15.00 | $ 50 | $ 5.00 | $ 1.00 | 2% up to $3 | Microsoft | $ 1,000 | $ 10.00 | $ 50 |
|
| 5% up to $3 | Edison Int | $ 1,000 | $ 15.00 | $ 25 | $ - | $ - | 0 | Medtronic | $ 250 | $ 10.00 | $ 25 | $ 3.00 | $ 1.00 | 5% up to $5 | ChevronTexaco | $ 250 | $ 10.00 | $ 50 | $ 4.00 | $ 2.00 | 5% up to $3 | Walmart | $ 250 | $ 20.00 | $ 50 | $ 5.00 | $ 1.00 | 0 | Bellsouth | $ 500 | $ 10.00 | $ 50 | $ - | $ - | 0 | Bank of America | $ 1,000 | $ 10.00 | $ 50 | $ - | $ - | 0 | Verizon | $ 500 | $ 5.00 | $ 50 | $ 2.50 | $ 1.00 | 5% up to $2 | Lowes | $ 250 | $ 5.00 | $ 25 | 5% up to $2.50 | 5% up to $2.50 | 0 | Eastman Kodak | $ 150 | $ 10.00 | $ 50 | $ 5.00 | $ 2.00 | 5% up to $3 | Home Depot | $ 250 | $ 5.00 | $ 25 | $ 2.50 | $ 2.50 | 5% up to $2.50 | GE | $ 250 | $ 7.50 | $ 10 | $ 1.00 | $ 1.00 | 0 | Exxon | $ 250 | $ - | $ 50 | $ - | $ - | 0 |
Category Explanations:
Min Open - Minimum stock purchase amount required to open an account
Open Fee - Initial fee charged by DRIP to open account
Min Opt Invest - Minimum stock purchase amount required to make an optional cash purchase
Opt Invest Fee - Fee for an optional cash purchase
Auto Purch Fee - Fee for automatic monthly cash purchase
Div Reinvest Fee - Fee charged for dividend reinvestment
A co-worker of mine pointed me to this free I-Watch Investing Tool on the Lycos web site today. This tool provides insight into institutional buying and selling on individual stocks. Check out this chart of IBM from the last week of trading created by the I-Watch tool:  The chart shows institutional offers to "buy" and "sell" messages through the trading day (or whatever time period you select). Besides the "wow" factor of getting to see this info, what benefit might this have? From a buy and hold perspective, not much. This only really gives you insight into the short term price movements of stocks and their support levels. However from a market timing perspective, I think this could be a valuable tool. This tool could give you indications of support levels provided by institutions. For instance with this chart of IBM, at quick glance you can get an indication of recent institution buying support for the stock around $80.00-$80.75 and institution selling at levels just below $82.00. I think I will stick this link in my collection of research tools. If I plan to make an investment through my broker, I might refer to it so I can place a limit offer on the stock right near the recent support levels.
RBS Platinum Mastercard
Today I applied for an RBS Platinum Mastercard. This is the first new credit card I have applied for in about 4 months. I have 2 cards I am using for 0% BT offers that will expire next month, so I have decided to sign up for this card to take advantage of another 0% BT offer for another 12 months. Highlights of this card include: -0% APR for balance transfers and purchases until Oct 2006 -No balance transfer fees with offer -No annual fee Nothing really special about this card, but its another credit card company that is offering 0% Balance Transfers along with Citi Card, Chase/Bank One, HSBC, and Bank of America. I am still waiting for a good Capital One credit card offer. I am hoping my credit line will be at least $10,000. I plan to stick it in my Emigrant Direct Savings Account which has a current yield of 4.0%APY. This should net me at least $400 in interest.
Sent $250 to my Duke Energy DRIP
After doing some homework I thought it was time again to start investing in Duke Energy. Some highlights that led to this are: -I noticed the other day that Duke Energy was rated a 'Strong Buy' in the S&P stock report. -Dividend is still very attractive $1.24 (4.5% yield) -The Duke-Cinergy deal seems to be progressing ok - in my opinion major deal breakers would have surfaced by now -Check out what the company assets would look like after the merger Asset Map-I think with the increased costs of other energy sources, longer-term many electric utilities may benefit -I need to send a mailing to my Duke Energy DRIP anyway to change my mailing address ;-) I mailed a check for $250 today, and I am considering having an automatic monthly stock purchase started. I also have holdings in Pepco, Edison International, and CMS Energy. I also need to revisit these companies - especially CMS Energy, they might also be ripe for further investments.
Investing in Merck? Should you consider ShareBuilder?
I have recently been expanding my investment position for Merck. I have been participating in the Merck DRIP for a few years and it is one of my least favorite DRIPs because of the unfavorable fee structure. I have heard of ShareBuilder for a few years, but have never really considered them as an alternative to my current DRIPs. Lets take a look at how they stack up, because quite frankly I am sick of paying the Merck DRIP fees. The Essentials for the Merck DRIP: Account Setup Fee: $5.00 Optional Cash Investment Fee: $5.00 Automatic Purchase Fee: $2/mo Service Charge for reinvested dividends: 4% up to $2. Sales Fee: $5 + $.01/share The Essentials for a Basic Account with ShareBuilder: Account Setup Fee: None Optional Cash Investment Fee: $4 Automatic Purchase Fee: $4/mo (same as one-time purchase) Service Charge for reinvested dividends: none Sale Fee: $15.95/market order, $19.95/limit order Other Notes:
The Sharebuilder account allows you to purchase stock once a week and perform the entire transaction online which results in a quicker turn around on your investment transaction unlike the Merck DRIP which is requires you to mail a check unless you sign up for automatic monthly investment.One time investments are cheaper in the ShareBuilder account, selling transactions are cheaper in the DRIP depending on the amount of stock sold. Based on my buy and hold strategy with Merck stock, it looks like I will save more money by purchasing my Merck stock in a ShareBuilder account rather than continuing to purchase in my Merck DRIP account.
CF Results for Week 5, Picks for Week 6
Background on my bad habit. Recap of Week 5 Previous Balance $424.37 | Trans Date | Wager | To Win | Result | Description | | 9/28/05 | $10 | $8.33 | Won | VT(-10) over GT (VT 51, GT 7) | | 9/29/05 | $20 | $19.76 | Lost | Clemson(-7) over WFU (WFU 31, Clem 27) | | 10/1/05 | $5 | $4.76 | Won | Navy(-7) over Duke(Navy 28, Duke 21) | | 10/1/05 | $10.05 | $8.38 | Lost | UM(-20.5) over SF |
Current Balance: $407.41 Net Deposit: $250, Current Profit: $157.41 (ROI 62%) My 1st losing week of the year. Picks for Week 6: Things are getting bit tougher to pick. I am staying away from VT(-35) this week because the line is so high, but I think we will still cover. Right now the only pick I have is OSU(-3) over PSU. Notice I have a strong wager on this - all signs point to an OSU win. | Trans Date | Wager | To Win | Result | Description | | 10/5/05 | $40 | $34.78 | TBD | OSU(-3) over PSU |
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Finally finished paying off my car loan! Whats next?
Well I have finally done it. After 4 years and $8250, I have finally finished paying back my parents for my car. Back in 1999, I came home from grad school for Memorial Day weekend to find my parents ready to take me car shopping - they were going to take back the car they were letting me use so they could give it to my sister and they were going to help me buy a car that weekend. By the end of the weekend I ended up with a 1998 Nissan Sentra. I paid out $5000 in savings that I had, and my parents paid for the rest of the car as a "loan" to me that I would repay along with the insurance premiums once I started working. By the time I started working in 8/2001 the tab was $8250. | Car Loan Payments | | Date | Amount | | 11/26/2001 | $ 150.00 | | 1/23/2002 | $ 900.00 | | 10/29/2003 | $ 900.00 | | 1/20/2004 | $ 900.00 | | 5/7/2004 | $ 900.00 | | 9/24/2004 | $ 900.00 | | 12/6/2004 | $ 900.00 | | 5/19/2005 | $ 900.00 | | 8/2/2005 | $ 300.00 | | 9/2/2005 | $ 500.00 | | 9/16/2005 | $ 500.00 | | 10/3/2005 | $ 500.00 | | Grand Total | $8,250.00 | I am very grateful for the "free" loan from my parents as well as the flexibility they allowed me to pay it back. You'll notice a gap of over 1 year in my payments that allowed me to focus on saving for a down payment for the house I purchased in 8/2002. After some thought my current plan is to keep my car for 5 more years which I hope will allow me to save enough money to purchase my next car outright. I will begin to save $250/mo to put away for my next car. Over the next 5 years that should amount to $15000 plus interest for my next car. As I get closer to the time to buy my next car I plan to fine tune this savings target to ensure I have the amount I need to buy my next vehicle.
Money Saving Tip: Ask them to keep your valve stems when you get new tires
After discussing my recent tire purchase with some coworkers I was enlightened of another way I could reduce the expense of getting new tires in the future. Apparently the new tire valve stems aren't really needed! I just assumed they were since I have never been asked if I wanted new valve stems. My coworkers told me they may be needed if you think you have a slow leak or some problem with them, but if you are getting new tires just because they are worn out then there may not be a good reason to buy new valve stems (other than to make more money for those changing tires). Something to keep in mind on my next tire purchase. That tip would have saved me $5.61 (including tax) on this last purchase.
September 2005 Net Worth Update (+$8,739)
Here's my net worth update for September. The increase is on track and I am closing in on my EOY goal of $205,000. | | Aug-05 | Sep-05 | Change | % | | Cash & Equivalent | $ 5,317.73 | $ 6,605.26 | $ 1,287.53 | 24.21% | | Saving | $ 36,034.15 | $ 35,975.47 | $ (58.68) | -0.16% | | Brokerage | $ 39,242.72 | $ 39,776.90 | $ 534.18 | 1.36% | | Roth IRA | $ 19,182.86 | $ 19,582.31 | $ 399.45 | 2.08% | | 401(k) | $ 62,923.82 | $ 64,657.09 | $ 1,733.27 | 2.75% | | Stock Option | $ - | $ - | $ - | 0.00% | | ESPP | $ 25,853.03 | $ 25,497.05 | $ (355.98) | -1.38% | | Home Equity | $ 39,953.80 | $ 40,127.99 | $ 174.19 | 0.44% | | Other Assets | $ - | $ - | $ - | 0.00% | | Receivable (Payable) | $ - | $ - | $ - | 0.00% | | Reserve Funds | $ - | $ - | $ - | 0.00% | | Loans | $ (44,169.73) | $ (39,144.25) | $ 5,025.48 | -11.38% | | Tax Liability | $ - | $ - | $ - | 0.00% | | Total | $ 184,338.38 | $ 193,077.82 | $ 8,739.44 | 4.74% | Highlights -A portion of this month's net worth increase is from the reimbursement for my business trip in August (Note the large drop in the Loans line item). This is one of the downsides to cash based accounting compared to accrual based accounting. -I focused on cutting down my "dining out" expenses in September since I have spent ~$500/month for the past 2 months on "dining out". According to my MS Money report I spent ~$230 for the month of September. -I bought 3 new tires this month for my car at walmart for ~$170. -Investment wise I continued to add to positions in Pfizer.
Picked up 3 new tires for my car
I have always felt I get screwed when it comes to maintaining on my car. This is in large part to my own ignorance. So when I decided I couldn't put off getting new tires any longer I thought I was going to do some serious comparative shopping for my new tires. I checked out BJs, The Tire Rack , and Super Walmart and ultimately went to Walmart getting 3 new tires. The 4th tire was replaced not too long ago and look like it would be good for a long time - we will see if that was the right decision. Here is a line item breakdown of the Walmart fees: | (2) Goodyear tires @ $48.74 | $97.48 | | (1) X-trac tire @ $30.00 | $30.00 | | (3) Valve stems @ $1.75 | $5.25 | | (3) Mounting, installation, balance @ $8.01 | $24.03 | | (3) Tire Disposal fee @ $0.70 | $2.10 | | State Sales Tax (tires, valves) @ $132.73 | $9.29 | | 2% scrap fee on tires @ $127.48 | $2.55 | | TOTAL | $170.70 |
I don't know if I got a great deal, but I don't feel like I got screwed like I usually do. How do all these fees compare to my previous tire purchases? I dug out my previous tire work receipts and compared the fees. | Store | Valve Stem | Tire Disposal | Balance | | Walmart (9/05) | $1.75 | $0.70 | $8.01* | | Atlantic Tire (3/03) | $2.50 | $1.50 | $15.00 | | Goodyear (10/01) | $2.99 | $1.50 | $10.50 |
*Walmart mounting & install package also came with free rotation and road hazard (which I believe means if I put a nail in the tire they will plug it for free).Walmart end up with the cheapest fees compared to all my previous tire purchases.
End of a belt-tightening month and I feel great!
September is finally over - I can't wait to crunch the numbers and see how I made out. I made an effort to reduce dining out expenses this month since all summer there have been lots of things going on and my expenses (especially dining out) were out of sync. I was so excited that at the end of the month I splurged on 3 things I normally would skimp out on this past week: 1) took my girlfriend out to a spur of the moment dinner at a great local bistro (~$29) 2) went to lunch at Panera Bread with a coworker to network (~$9) 3) bought a 12 pack of Sam Adams Octoberfest Lager (~$13) I have 2 weekend trips planned for October, November and December are always expensive months due to the holidays so I expect that September is my last best opportunity to make some ground on my net worth goals for the year.
Would a townhome make a good investment?
I have been watching the real estate in the area that my house is located in. I am currently renting a room from a buddy of mine and I don't have any weekend home improvement projects to work on. I'm getting bored. If I can find a property that I think is attractively priced, has some remodel potential, and may make a potentially good rental property I might bite. A friend of mine lives in a townhome in this area and recently found out that one of these townhomes may be going on the market. So how would a townhome compare to the single family home I am looking for? Lets take a closer look at the potential for these properties. I am looking for a particular house - 3 bedroom, 1.5 BA, single family ranch (common in the area). Two of them which are now under contract, recently were listed at $188,500, and $194,500. This is the same type as my other house - I think they have great remodel potential and are very rentable in my opinion. The townhouses that may be sold are 2 bedroom, 2 story, 2.5 BA brick townhomes, with about the same square footage as the 3 bedroom house. They are definitely more spacious, but that isn't a big concern of mine - infact I think that may be a hindrance because I don't think the rent increase corresponds favorably to the extra square footage. The 1st things that jumps out is the price of the townhomes - here is the sales history for the community for the last 2 years: 2/2005 $148,500 12/2004 $158,000 11/2004 $168,500 7/2004 $155,500 7/2004 $146,500 9/2003 $153,000 7/2003 $150,000 5/2003 $144,500 3/2003 $155,000 I actually haven't examined each of these property yet but I believe they are all 2 bedroom, 2.5 BA but some have large sunroom areas on the side hence accounting for some of the variance in price. Regardless the range on these townhomes looks to be $145,000-$165,000. For purposes of my analysis I am going to assume a purchase price of $150,000 which appears be a reasonable price. I think I could rent one of these townhomes for $950-$1000/mo. They are about 20 yrs old so a little work on the inside will go along ways to making them look attractive. The house I mentioned above I am looking for would probably end up costing me about ~$200000 after remodel expenses. I think I could rent on of them for $1300/mo after I finished the remodel. So which is a better investment? Taxes, insurance, mortgage, etc all being equally proportioned to the purchase price the return would be nearly identical. The townhomes would need less work, which due to time limitations at work, and a chance of relocating for a temporary assignment in the near future, is a factor. I believe the single family homes edge out on the price appreciation. However, here is the standout - the area the homes are located in there is no homeowners association. The townhouses, since they have maintenance free exteriors, have a $150/mo fee. Wow - that kills it right there. It doesn't sound like a lot of money, but I think that fee turns these townhomes into a lousy investment. That is a net $54,000 in fees over 30yr (not including any investment returns). I could hire a lawn boy for $50/mo, replace the roof and buy vinyl siding and still come out ahead.
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