Saturday, May 31, 2008

Using Starpoint – Value Analysis

After booking our honeymoon at a non-Starwoods property, I had to decide what to do with some of the points I have been hoarding for years.

Option 1: Transfer to American Airlines. At Christmas, we were planning to visit Dallas for the holidays. If I understand the program correctly, it will take 50,000 miles to save $800 on a flight for a savings of about $.02 per point.

Option 2: Get a gift card. Starwoods offers $50 gift cards to various merchants for 5,000 points. At $.01 per point, a very bad deal.

Option 3: Using 16,000 points, I was able to reserve a room at a Manhattan Sheraton during the holiday season. At $679 room rate for a Saturday, I am getting $.03 per point.


Option 1: 1. We really need to go home at least once per year and the cost cannot really be avoided. At Christmas time, two tickets are a tough nut to swallow. Hopefully, I will be able to get better fares on other carriers if I don't go this route. Although the savings per point is 50% of the savings of options 2, option 2 is a luxury and can be avoided.

Option 2: When we typically visit the city, we get up early and drive home at night. Because the cost of the hotel room can be avoided for free (don't stay overnight), is this really a savings? Yes. The trip will be part of our holiday/birthday celebrations and we really enjoy ourselves. Although there are cheaper hotels available, we like the amenities and the location.

Thursday, May 29, 2008

Travel Agent – The Case For Using One

In the age of internet reservations, I saved significant money using a travel agent for my honeymoon. Because of problems in the economy, our trip to Hawaii is a definite luxury. Today, she called to let me know she cancelled my original trip and rebooked it at a significantly lower cost. While I might have been able to pull it off myself, I really doubt it. Including booking the airline reservations at the right time (and avoiding the idiotic checked luggage fee), I figure she saved us $1,000-1,200 on the trip.

Tuesday, May 27, 2008

Our Response to Gas Prices

With my fiancé and I able to carpool approximately 2.5 x per week, I expect to save $400-500 in commuting costs during the remainder of 2008 at current gas prices. While many people are upset about the price of gasoline, I am worried about enormous heating bills come winter. While we have a wood stove (for when we are home and awake), I am expecting a massive increase in my heating bill come winter.

Listening to reports on the news, they are touting the fact US demand for oil is down. Unfortunately, these reports do not tell the entire story. As anyone who has studied basic economics understands, higher prices (caused by a shift in the supply curve to the left) will cause quantity to go down – even if the demand curve remains unchanged. I want to see is a shift in the demand curve to the left, it would lead to dramatically lower prices. Hopefully, it will happen.

My $0.78 Prescription

In an age of $4 per gallon gas, it was nice to get a price break on something. By getting my prescription filled at Target, my prescription was filled for $0.78 which represents a 20% co-pay on a $4.00 cost. When the cashier showed me the price, I thought it was a mistake. If you use common generics, the $4.00 prescriptions may be the best deal in America on anything.

Sunday, May 25, 2008

Comcast – Opaque Pricing Stinks

After reviewing our TV watching habits, we realized we don't really watch Shotime (unless Dexter is on) and decided to drop it. When I called to cancelled, the imbecile who answered the phone initiated a conversation that went something like this:

Comcast: You have the preferred Digital Plan with Shotime. Did you want to cancel the other channels as well?

Me: What are the other channels?

Comcast: Some of the one's over 100?

Me: Could you be more specific?

Comcast: Not really.

Me: Look, I just want to get rid of Shotime and save a few bucks?

Comcast: OK. I will cancel Shotime and the preferred plan.

Me: Did I stutter? I said cancel Shotime.

Comcast: OK. I will cancel Shotime only.

$5 says he F's up the order.

Bottom line: All I want are all the HD channels, ESPN, the Golf Channel, vs, and Spike. Every year, my cable bill goes up as I get "more channels" I don't want or need. If this continues, I am going to drop it completely and go with DirectTV.

Saturday, May 24, 2008

HSA – Mistake – Mid-Year Marriage

Oops. I learned the hard way that HSA plans can be tricky. When I get married later this year, I planned on joining my fiancé's health plan. It offers comprehensive benefits and my employer will pay me a bribe to reject health insurance under our plan. When I spoke with HR about making the switch from my current plan (HSA), I learned there are possible "tax consequences" for moving from an HAS in the middle of the year. Definitely not in the plan. Rather than switch in September like I planned, I am going to wait until January, 2009. While the penalties may not be severe (I think they are 10% of my contribution), I don't feel like making my return any more complicated than it already is.

Friday, May 23, 2008

Tahoe/Expedition SUV - RIP

While ta
lking about high gas prices at work, we got into a discussion about commuting costs. A few years ago, all of us fit the profile of the large SUV buyer (young, professionals with growing families). Although some of us have SUVs and don't plan on selling them, we wouldn't consider buying something like a Tahoe or Expedition in a million years.

All of us are taking steps to reduce gasoline consumption. In my case, I figure I can carpool 2-3 times per week with my fiance.

Wednesday, May 21, 2008

American’s New Travel Fees – Retroactive?

According to news reports, American Airlines has decided to add a $15 charge for carry on luggage. This is in addition to a new $25 charge for a 2nd piece of checked luggage. Months ago, my fiancé and I purchased tickets on American to Maui for our honeymoon. Who wants to bet they won't try to charge us an extra $220 for my flights ((2 carry ons ($30) + 2 checked luggage ($50)X 2 ways)?

As I understand Department of Transportation rules, retroactive fees are illegal; however, I anticipate an argument coming on.

Tuesday, May 20, 2008

LL Bean Card – RIP BOA ends program

Yesterday, I received a letter from BOA indicating it had severed its relationship with LL Bean. Because I like their jeans, golf shirts, and chinos, I was able to order my clothes online and get free shipping. Although BOA offered a replacement card (with different benefits), it wasn't worth keeping the line of credit open and I cancelled the card.

Saturday, May 17, 2008

Mileage and Shopping

In the days of $1 gas, a short trip to save a few bucks was worth the effort. Now that gas is $4 per gallon, I find myself calculating mileage into the price of merchandise. Basically, every 20 miles costs about $6 with wear and tear.

Wednesday, May 14, 2008

Mass Transit - Good Idea at $4 per gallon?

A few months ago, I posted an analysis on the cost of commuting by car or commuting by bus.   Because the bus only cut 9 miles each way off my commute, the car was the clear winner.   Now that gas is at $4.00 per gallon and I get 18mpg, they are a wash.  Nevertheless, the bus is a clear winner when one figures in wear and tear.    While I won't take the bus every day, I will take it every week. 

Sunday, May 11, 2008

I blew it – AIG

During the Hank Greenberg era, AIG was the ultimate money making machine in the P&C world. Thinking I could get some "value" by picking up $1,000 a few months ago, I blew it. Last week, it announced it was raising $12.5 billion in additional capital after posting a $7.8 billion loss during the quarter. Needless to say, the stock didn't move up.

From what I can tell, the new CEO is not up to running the a company like AIG. While I won't sell my stake, I am not going to add to it.

Monday, May 5, 2008

Blogging my may to Christmas

Good news, my blog revenue has reached a whopping $20. My goal is to make enough money by Christmas to pay for airfare to see my folks. If you like my blog, please support my advertisers.

BTW – ING Direct really is a good deal.

Buy on Bad News


Today, the Tropicana Casino's parent filed for Chapter 11 bankruptcy protection. While this is probably not the correct time to invest in casino stocks, it does signal a key investment strategy: Buy on Bad News.

Frankly, it amazes me how many people want to buy into the hot markets when profits are gushing and P/E ratios are outrageous.

My philosophy for individual stocks or other targeted investments, buy on things that have been beaten down and have the potential to bounce back.

Good Example: The Gaming industry is probably to take a beating in the short run. Now is the time to start shopping for that "good buy" at a "good price" at the right time.

Bad Example: Landline phone companies. Every US phone company will tell you they are losing landline customers by the boatload. They are all investing in their wireless and internet platforms and disinvesting in landline businesses. Do not invest in the modern version of the buggy whip company. While landlines will be around for another 50 years or more, they are unlikely to ever "bounce back."

Sunday, May 4, 2008

$39.4m Pay Package

Looking to beef up its results, Merrill has agreed to pay former Goldman Sachs trading guru Thomas Montag a staggering $39.4 guaranteed. Keep in mind, this is the minimum he will be paid.

All I can say, it is good to be wanted.

Saturday, May 3, 2008

Subprime Mess – Have we hit bottom?

If you read the WSJ and other financial press, there are many stories about bottom of the subprime mess. While I don't think we are there yet, I figure it we are within 6-9 months of the bottom.

My strategy: strategic buyer of equities. I am buying on days when the market is down as I move my portfolio back into the market.

Sample story: