Category Archive

I recently left HSBC Direct due to interest rates that were nothing special and an ugly interface. My new choice, a money market fund at Vanguard, really isn’t all that different in terms of the rates I’m getting, but I like having my money there.

It seems what is hot this month in the pf blog world is Series I Savings Bonds. Xin Lu at Wisebread posted a great article about them yesterday . E.C. and Ms. MiniDucky recently talked about purchasing them, and the always informative Jonathan at MyMoneyBlog spelled out the details of them as well.

If I buy before the end of April (on the 30th, if possible), my one year yield will be roughly 4.04%. There is a mentions of 4.44% yield for those in high tax states (that’s me!) but it seems the exact rate depends on whether or not you itemize your state taxes (I don’t).

The only downside I see is I’d lose all liquidity. This means I won’t put my entire efund (almost 10k now!) in these bonds (which is the limit: 5k online and 5k paper), but it seems like a reasonable investment for a solid chunk of it. Is it too scary to lock away half of my cash reserves?

I tried to open a Treasury Direct account, just in case. They need me to mail in some sort of form to prove my identity, so perhaps I’ll go the old school route and just get them from my bank. I’m going to think about it for a few days, and if I decide it is a go, I’ll buy on April 30th.

What do you think? Is it even worth it? The difference in interest is currently only about 2% (so, on $5000, about $200 a year) and I lock away my money for a whole year.

I was pretty excited because my economic stimulus check was to be direct deposited very early in the schedule. In fact, not to brag, but I was scheduled to be one of the first people in the country to get my share! I filed early and got my refund direct deposited, and managed to procure a SSN with the last 2 digits lower than most other people. I rule, I thought.

Then I came across this little tidbit of information on the (surprisingly helpful) IRS website:

I used Direct Deposit to split my refund betweeen several accounts when I filed my tax return. What will happen to my Stimulus Payment? Will it go to just one of the accounts?
A. If you elected to split your refund between several accounts, you will not receive your Stimulus Payment by Direct Deposit. Instead, you will receive a paper check.

Yes, it is true. I split my payment into two accounts to save myself having to transfer the appropriate portion to checking and savings. I am surprised that the government wouldn’t just put it in either account, but I suppose there is some logic to it. They aren’t sure where I want it, so they will send me a check and I can decide. Now I’m sad, I’ll have to wait an additional two weeks, and a few more days to get it into the appropriate accounts. I might as well have a SSN of 999-99-9999. I guess I don’t rule after all. (Also the three e’s in betweeen are copied from the website.)

In other financial news, my scarcely used Wells Fargo credit card (and by scarcely, I mean I might have used it once last year) tried to charge me $24 to be enrolled in their rewards program. I got the charge removed, but they warned me “all current rewards are forfeited”. I wasn’t too upset about that.

I have been using two online savings accounts for about a year, ING and HSBC. Both have been dropping rates like crazy, and neither are very competitive anymore. There simply are better options out there. I’m not going to stand for this anymore!

I did a little research, and decided to switch to the Vanguard Prime Money Market Fund to house the majority of my savings. It currently has a yield of 4.22%. While are HYSAs and CDs out there with better rates, they aren’t consistently higher. I’m not going to rate chase. This is a solid account that has continually been competitive to HYSA. I first did the analysis last summer, and the tax free money market account actually came out ahead of any savings account. Try out this awesome calculator to compare. These days, the taxable account is a better deal for me. I was wavering between EmigrantDirect (solid reviews, solid rates) and Vanguard, and honestly the final decision was sort of impulsive. I figure I’ll eventually roll over my 401k into an IRA there, and move my Roth from Fidelity… So it will simplify my finances in the long run.

I funded it with $4000 to start, about half of my HSBC balance. I already have a lot of stuff linked up with my HSBC account, so I’m waiting to completely pull the plug on it… But it will happen. I already set up my Vanguard account for direct deposit and will be sending my tax refund there as well.

What about ING? Well I’m not too impressed with them either, but they will be staying around. I’ll be using them for some shorter term savings (car insurance, travel fund) and for now, for my student loan payback account and new car fund. Why? I like the subaccounts. Yeah, I can do it in excel. Whatever, I don’t want to. For such small balances I’m not as concerned about getting the best rate.

Why else? The $10 referral bonuses and the sweepstakes I am entered in for using direct deposit. So it’s lame to trade interest rates for sweepstakes… but whatever, you’ll be jealous when I win $30,000!

I took $1000 out of my high yeild savings account and directed it into my Roth IRA for 2008. Really, for true dollar cost averaging, I only contributed $585 above what I would normally contribute for a month. My Roth is fully invested in a 2050 target date retirement fund for now.

I could have funded the whole year with savings, but I don’t feel that I have the approrpriate cushion in my savings, especially with a cross country move coming up. Besides that, with markets being so shaky, I’m not sure I want to throw dollar cost averaging out the window this year. I wouldn’t be surprised if the market recovers nicely, but I also wouldn’t be surprised if it declines as well. I’m not an expert.

Since I’m leaving this job, I’m going to have the option of rolling my 401k (about 16k) into a regular IRA. Since my MAGI is less than $100k, I will also have the opportunity to convert it to a Roth IRA. I’ll have to look at whether or not I can take the tax hit in 2008, and the pro’s and cons of doing this.

Another thing I want to look at once I’m settled in Cali is moving a large chunk of my HYSA to a money market fund, specifically the tax exempt California one offered by Vanguard. My after tax return might be able to beat out my current high yeild savings accounts, especially since I’m not rate chasing. This article by The Finance Buff which suggests it may be so. It’ll make more of a difference if I itemize deductions (I usually take the standard), so I’ll have to do a little research on this. Or another option: TIPs? I have heard a lot about them, but my knowledge is limited. A high yield savings account is a great start, but I think I’m ready to see what else is out there and make sure I’m getting the best deal.

Typically, I track my daily spending in an excel sheet. I use Yodlee to view my net worth and to verify my excel tracking. I update my net worth monthly in NetworthIQ. So when I heard about the new personal finance tool, Mint, I wondered what it could do for me that my other tools weren’t.

I decided to find out. The first thing I noticed is that the website had a striking interface. It was quite aesthetically pleasing and very clean. I easily added all my accounts, but was surprised to realize that I couldn’t include my 401k or Roth. As I became more familiar with what the site was trying to do–help you analyze your spending–I can see why they don’t include it. But I’m still disappointed they don’t! After it loaded my data, I could see all of my transactions for the past 2 months.
I think some of the “shopping” was groceries (Target). The “No Category” stuff was ATM transactions, and in the future, I’d want to note exactly where that cash went. It is pretty neat, even though Yodlee has an uglier version of the same chart. Also, I could click on these categories, and they would be broken down into even more well defined categories. I wish it included a piece for savings, but it seems like it only tracks what you spend.

Honestly, I am not yet overly impressed with Mint so far. It is sort of like Yodlee, but with a cleaner interface and less features. I am going to continue using it, and perhaps as it matures, it will grow into something more useful to me. (It is still in beta, and they have promised to rol out more features over the next few months. )

I consolidated my student loans last June, and the process was pretty painful. It really shouldn’t have been, but there were some minor issues that turned into huge problems due to Wells Fargo constantly giving me wrong information about what forms I had to fill out to fix them.

Anyway, a few days ago I noticed that my loan had been taken off ‘in-school deferment” status and put into repayment, and a retroactive “hardship forbearance” had been processed without my knowledge. As part of this, $366 of interest was capitalized into the loan. I was upset because interest is tax deductible (if it is paid as interest, not if it is rolled into the principle!) so I contacted Wells Fargo to complain.

Their response, basically, was that it is too late and they can’t help me. They also explained that this was an unusual siltation, and in most cases, I would have been given the opportunity to pay the interest. So, that will cost me about $100 in a tax deduction, but I was surprised at the level of helpfulness and competence they showed in dealing with my situation.

Here are snippets from the most helpful correspondence I’ve had with their loan department to date:

According to our records, we originally disbursed your Federal Consolidation Loan (CA0001) on 01/05/2007 and since you were enrolled in school half-time, we processed a half-time study school deferment on loan CA0001.

After loan CA0001 was disbursed we received your request to add another loan to your Federal Consolidation Loan. We processed this request and disbursed your new Federal Consolidation Loan CA0101 on 06/07/2007. Loan CA0101 canceled out loan CA0001.

[My note: this loan was listed on the original application, and I have no idea how they forgot it. It also took them a million years and several phone calls to take care of this issue]

In October we received updated enrollment information from your school showing you dropped to less than half-time status as of 05/05/2007. Usually we would update the deferment end date and process an administrative forbearance on the account to keep it current. However, since you dropped to less than half-time status before loan CA0101 was disbursed on 06/07/2007, we had to remove the deferment from loan CA0101 and process a standard forbearance on your loan.

We regret that because we just received your updated enrollment information and made the adjustments to your account, there wasn’t sufficient time for us to notify you of the outstanding interest so that you could pay it before it was capitalized onto the principal balance of your loan. However, by processing the standard forbearance on your loan, we kept the loan from being reported as delinquent to the credit bureaus and from being assessed late fees. [My note: Gee thanks how kind.... especially since I was not getting billed and my account online clearly said "deferment" with nothing due!]

Well, it sounds a bit confusing, and I’m not sure that I buy the “there wasn’t sufficient time” line, but I do understand their motivation. They also reminded me that after THREE YEARS of on time payments, I would qualify for another 1% rate reduction. I’m certainly annoyed that I will not be getting any tax breaks on the interest I pay this year, but if I was more in tune with the rules, I could have notified them of my school status myself.

While checking my online banking, I noticed my student loan is suddenly back in repayment status I took 6 credits of graduate classes last semester and was granted a student loan deferment. I thought this was great news, because my loan is subsidized and I am not charged interest during a deferment.

It seems like my class this semester doesn’t qualify me for the same treatment, perhaps because I’m only doing 3 credits. Wells Fargo has taken it upon themselves to mark 6/07 until 10/19 as a period of hardship forbearance! More like a period of “Wells Fargo screwed up… again!” I’m going into the branch tomorrow to inquire about this. If it doesn’t affect my credit report, then I suppose I’ll let it slide. I have to go to the branch anyway because I can not, for the life of me, figure out how to set up auto-payments online in the appropriate way to get the rate discount offered. I can set up payments online, but it seems it isn’t the same thing as when I mail the forum in. They make it confusing!

More annoying, they not only charged me interest for the “forbearance” period (this is to be expected), but they capitalized it into the loan, raising the principle by $366. I’m going to fight that, even if I have to simply pay the interest outright. If I do that, I can deduct it from my taxes! In the loan documents, it says they can capitalize the interest into the loan if I choose not to pay the interest, but I do NOT choose that, they gave me no option! This all just seems wrong. They haven’t provided me any notification or got any consent from me.

What makes me most annoyed is that until I pay off my student loan, I’m stuck with Wells Fargo. If it were something more simple, I’d just take my money elsewhere.