Travel Agent or Internet

My friends insist travel agents save them money on vacation planning; however, I have always planned my trips using intratnet sites (Travelocity/Orbitz/Others). Given the complexity of the trip, I am considering giving an agent the business. Your experiences?

Recession with no Unemployment?

Talking with other people, I don't see much evidence of the unemployment problems most people associate with a recession. Basically, this recession seems focused on the rapid devaluation of homes and the mortgages on those homes. While the recent rate cut by the fed (2% in just a few months) will help, we won't have stability in the economy until the number of homebuyers in the market meets the supply of homes hitting the market.

Simple Tax Law Advice

I am not a tax attorney; however, I want to give everyone some great advice. The Income Tax is real and legal. Despite the rantings of anti-tax hucksters, you must pay income taxes if you are a US citizen.

Following the advice of tax protesters is a recipe for disaster.
1. You may go to jail;
2. You will end up paying taxes, interest, and fines;
3. You will spend a lot of money on lawyers . . . even if you win.

If you don't believe me, look at Wesley Snipes. Even if he avoids going to jail, did he really win??

Home Buyers - Taking advantage?

Given the current housing market, buyers have the upper hand. One of my friends is looking to buy a home. While discussing his negotiations with the current owner, we had a discussion about how much leverage he can ethically assert.

When does hard negotiation become taking advantage?

60 Minutes - Subprime Story

Wow. They actually placed some of the blame on the borrowers. In particular, I was facinated by the couple that was planning to walk away from their home. Although they could make the payments after the resets, they made a cold blooded decision to walk away from the loan. In their mind, it is the bank’s obligation to make the loan a good deal for them.

Basically, there are no innocents in this mess.

BTW - the agent who invented the RepoBus is brilliant. As the mess sorts itself out, people who are buying properties at a discounts are going to make a killing.

Complaint Letter - Getting a Refund

While it probably won’t work well in the manufacturing industry, the complaint letter to the CEO is an outstanding method of receiving discounts/refunds from the service industry. Basically, the service industry makes money from word of mouth and repeat business. If you are unhappy with your experience for a legitimate reason, they are likely to try to make it up to you.

Last week, my fiancé and I decided to get out of town for a day. Using my hotel points, a free night in nice (think Hilton, Marriott, Sheraton) level hotel combined with a nice dinner seemed like a good winter treat. Unfortunately, things did not go well on the service front. At checkin, the hotel recommended their “very nice” steakhouse. Since there was bad weather, it seemed like a good plan until we discovered it was closed. The incident was one of six, documented cases of poor service. When we got home, I sent a letter to the CEO of the hotel chain and to the GM of the hotel.

Four days letter, the GM called me to apologize. He researched my complaints and verified the mistakes. To make me happier, he refunded my hotel points times two. While I would have preferred better service over the extra points, his response to my complaint was definitely appreciated.

Paperless Record Keeping

With most of my financial providers now provide records online in .pdf format, I bought a scanner in hopes of going totally paperless. In addition to saving storage space, I hope my new system will be more secure and allow me to find important documents like receipts when I need them.

No more shoeboxes.

ING Direct Referrals

Follow the links on my site and we both get a nice bonus for opening a new accounts.

Worst Employee EVER - $7.16B Lost through Fraud

Overnight, French bank Societe Generali announced it was taking a $7.16 billion loss caused by fraudulent trades made by one of its traders. According to the WSJ, the bank said a single trader who had concealed enormous losses through a scheme of "elaborate fictitious transactions."

Because of his actions, it appears the bank won't offer any employees a bonus for 2007. I am sure they are happy with the thief and with management for allowing it to happen.



http://online.wsj.com/article/SB120115814649013033.html?mod=hps_us_whats_news

15.93% Trading Profit – Citibank

After the market opens up at 10pm, I am planning on closing out most of a position I took on Citibank.

Why did I take the position?
1. The stock had taken a horrible dive due to subprime markdowns;
2. I did NOT take a huge position. I took a calculated risk.
3. It was not intended as a short term trade. At the reduced valuation, I was willing to wait 2-3 years to profit from their inherent franchise value.

Why am I taking profits?
1. Bulls make money, bears make money, pigs get slaughtered.
2. By reducing my position by 1/3, I bank enough profit to dramatically reduce the risk of my long term investment.

Other strategy: If the stock goes back down below 22 again, I will probably reinvest the position I just closed out.

Tax Rebate amount and New Televisions?

Why is the proposed tax rebate $1,600 per couple? How did they come up with that number. If you look at the Best Buy advertisements, the rebate appears to be the perfect amount to purchase a new HDTV.

Coincidence? I think not.

Fed Move v. Tax Rebate -> Money in Your Pocket?

In the PF blog world, much has been written about the $800 per person tax "rebate" proposed as part of an economic stimulus package. While it may not be the best tax policy, it has one great virtue - simplicity. Get a check = have more money to spend, save, or pay down debt.

Nevertheless, the Fed's loosening policy may put more money in your pocket. In the past 52 weeks, the policy has caused the Libor to drop from 5.82% to 3.90%. Because many variable rate loans (credit cards, student loans, and HELOCs) are tied to the Libor, a person with a combined $50,000 will save in the neighborhood of $1,000 per year.

Bottom Line: The Fed's move favors debtors.

My Easy Bill Payment System - 1 2 3 4

1. All bills are paid online using my ING Account. Although other accounts (especially credit cards) have good systems, centralizing the process with ING makes it easy to logon and see what is in the works.

2. Schedule Payments: If it is always the same payment, automate the payment so it is impossible to miss it. In my case, this means my mortgage payment, student loan payment, and car loan.

3. Other Payments: Pay them all - 1 day a week. Each week, I pay my bills on Saturday morning. Since ING pays interest on the amount in the account, I schedule the payment to go out five business days before they are due.

Extra Credit - Round Up: Instead of sending the electric company $89.13, I send them $90.00. It makes balancing the checking account easier.

Peace

I want my W2's!!

Because I changed jobs during they and had some issues with long-term comp, I do not have a good handle on taxable income for 2007. Complicating matters, my former employer "outsourced" most of their HR functions to a TPA. Given my experiece dealing with the TPA, I am expecting mistakes.

Since I expect a large refund, I don't want any extra delays.

As I understand it, it should be postmarked by 1/31/07. We shall see.

Stimulus Package: What it would mean for me!

According to news reports, President Bush is proposing an economic stimulus package in hopes of preventing us from slipping into recession. Without getting to wisdom of the plan, I decided to analyze what a $500-800 per person would mean to my family.

For future Mrs. FinanceGuy and I, $1,000 to 1,600 would not be life changing, however, it would be a nice chunk of change in a wedding year.

Possible Uses:

1. Savings Accounts: At 5% per year, the $1,600 would grow to $5,400 by retirement.
   
2. Student Loans:     For the highest interest rate loan, we would save about $750 over the next five years.
   
3. Needed Spending Spree: When I bought the house, I was moving from an apartment with one living space to a house with two. Two years later, the living room is completely empty. Using the cash to get furniture would free up savings for other purposes.
   
4. Frivolous Spending Spree: Not our style.
   

Key Understanding: A tax rebate in hand is worth a billion promises from politicians. Until we get the checks in hand, they don't exist and we will not change or plans in "anticipation" of getting something back.

Free TurboTax for State Farm Policyholders

If you have insurance with State Farm, they offer free TurboTax Online through their website for State Farm customers. Having tested the system, I have to say I am impressed with the program. Simple login and you are good to go.

The downside: your data ends up on their system.

website: www.statefarm.com.
You will need your policy number to register to use the website.

Starpoints Coversion Rate Rocks

For only 3,000 points, I am getting a luxury room this weekend. Working from the rates I found online for the room, the Starpoints are converting at a fantastic 13-14 cents per mile.

To date, I haven't found a better conversion rate with any card.

Evaluating Mutual Fund Performance in a Down Market

In this down market, don’t make the mistake of dumping a mutual fund just because it is down. Unless your stock fund made a big bet against sub-prime lending, your stock fund probably is down significantly over the past six months. In this type of environment, two common mistakes are:
1. My fund went down. It must be bad. I’ll sell the fund and buy something that went up.
2. My fund went down. It must be bad. I’ll sell the fund and buy another fund in the same sector.

In a down market, look at how a fund did relative to its peer group. You want the best, risk adjusted, fund in each asset class. If your fund was in the top 10-25% of its asset class in a down market, transaction costs make moving funds a questionable decision.

Tax Form Season - In the Mail

Before you pitch the lastest piece of junk mail, make sure you aren't throwing out a tax form. Today, I got my form from Vanguard. You should have all your forms befor February 15th.

Securities Fraud – A Win for Corporations

Earlier today, the United States Supreme Court decided by a 5-3 vote to limit securities fraud lawsuits. For a detailed analysis of the case and links to the opinion, I recommend visiting www.scotusblog.com.

Basically, a set of vendors agreed to some “wash” transactions with its customer. Although the vendors accounted for the transactions properly, the customer used the sham transactions to commit securities fraud. Years later, the shareholders of the customer wanted to sue the vendors for aiding and abetting the customer in committing the fraud. The Supreme Court decided not to create a private cause of action.

In terms of the facts of this case, the bad behavior by the defendants was truly atrocious. Hopefully, the government will take appropriate action against the companies and their employees.

Nevertheless, I am OK with the result. Had the plaintiffs prevailed, the shareholders of the vendors would end up compensating the shareholders of the customer for the fraud committed by the customer. Furthermore, innocent vendors could spend millions defending themselves from weak/frivolous lawsuits.