Get Rich Slick

Suckers!  I traded in some secured debt (i.e. my car loan secured by my car) and did a balance transfer over to my new best friend credit union credit card!  As a result the loan is considered “paid off” and the lien holder sent me the clear and free title to my new car.   So now I just need to pay the outstanding balance on my credit card whenever I feel like it and in a worst case apocalypse bankruptcy it’s unsecured debt!

I actually have the cash to pay off the balance but why do that when it’s at a very low interest rate and there’s no rush?     Next move up trading student loans for mortgage debt

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I’m getting the sense that the market is going to start sliding back down.  By happenstance, my employer is eliminating a bunch of mutual funds from their portfolio and required all employees to move to the funds that would be remaining and out of the ones that would be gone.    I did this a week or two ago but forgot to write about it and with the markets sliding down I’m glad I did.   Ironically, I opted to push all my money into cash but the cash fund is also disappearing so I will have to make a move sometime over the next few weeks again.

I have a few months to make a decision but things are shaping up just right.

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Regular readers know that I have a great disdain for 401k plans and the mutual funds companies that offer them so whenever an opportunity arises to cash out my 401k from one of these horrible companies I usually jump at the chance.  Unfortunately, I was unable to do so when I left my last employer because the timing was horrible.   Because of extenuating circumstances, I was not able to stay 100% cash while investing like I normally would.  This was a result of poor choices, high fees and market volatility and opportunity that forced me into certain positions.

When I left my employer in January, I was down a significant amount in my portfolio.   To illustrate, I’ve got two diagrams showing the situation:

(click for larger image)

So while I didn’t recover 100%, it was close enough to Dow 10k to cash out.   In order for me to recover 100%, the Dow would need to climb up another 15% here and I just don’t see it happening.  As it stands, I’ve actually only lost my employer match which was free to begin with so I consider myself broken even and in 100% cash at this point for this account/money.

While many people have visions of Dow 14,000 now, I am highly skeptical that it will happen.   At some point over the next few weeks, a major correction is more likely than another 1k climb but anything can happen and I’m still seeing a great deal of volatility in the options market.

Gold is out of control, the US Dollar is on the brink, unemployment is high, and the S&P has a whopping P/E of 135+ and it’s like the dot com boom/crash all over again.

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Well it was a great experiment and it lasted for a short while but I’m pretty much down brown baggin’ it for lunch.   Up until now, I have been making my lunch at home and putting it in a lunch pack and eating it at work during lunch but I can’t do it anymore for a variety of reasons.

First, the savings isn’t all that great when you factor a few things in such as:

1. In order to save money, you have to buy groceries in bulk.  Once you do this you have effectively committed your lunch menu for the whole week.  For example, if I buy a pound of roast beef for sandwiches then I’m having roast beef sandwiches all week long.   If I buy turkey then I’m eating turkey.  These foods are perishable and if I don’t eat them by the end of the week they go in the trash.  I know someone will point out that I can freeze food but that leads me to problem number two.

2. The whole purpose of eating is nutrition, deliciousness, variety and freshness but eating frozen food bought in bulk defeats the purpose of many of these ideals and its counter-productive.

3. The food at my company’s cafeteria isn’t all that expensive thanks to the price deflation of just about everything these days.  Lunch is a reasonable $4 to $6 depending on what I buy and it is cooked fresh daily and it keeps the cooks and clerks employed as well as the dish washer people.

So instead of taking sandwiches to work, I’ll stop by the cafeteria and get a fresh one made and buy some hot fresh soup to go with my sandwich.  I may opt to take my own soft drink since the vending machines sell drinks for $1 and those don’t tend to spoil for a long while anyway.

This brings me back almost full circle to this post challenging Trent over at The Simple Dollar about the effectiveness of cooking meals at home in the infamous $0.99 Double Cheeseburger math.   Ironically, I was concerned about inflation back then before the big crash and I’m starting to get concerned about inflation again now that the Fed has pumped trillions into the system.

If anyone out there has any ideas I’m open to hear them but I hope they’re not “buy 10 cases of Ramen noodles” at $0.99 then heat them at office.

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I logged on to Chase today and was surprised to see a splash screen for “Blueprint” so I clicked to find out more as I was a bit intrigued and discovered that Chase is finally doing something right but I’m not sure how right it is at this point.    The “Blueprint” are essentially some tools to help consumers manage expenses a bit better.

What I did like was the fact that Chase will now offer the ability to track expenses much like Quicken does on a desktop level.  Seriously, I think I know why Microsoft dumped MS Money and why Quicken bought Mint because as more and more banks offer online tools to track and manage money there really isn’t any point to buying or using Quicken.

What I don’t like or can’t determine yet is whether the other “options” in Blueprint are of any value or if its just another way of scamming people.   There is an option to split up purchases and pay some expenses in full each month while letting other expenses accrue interest.   The example used on the site shows how you can pay for food and gas on your Chase card and pay that portion off in full at the end of the billing cycle but if you purchased an LCD for $1000 then you can pay only interest on that purchase.   On the surface, it sounds like a good deal because interest isn’t accruing on all purchases, just certain items but I’m not sure about the details or caveats.  What happens if you’re late on a payment?  Can gas & fuel purchases still be paid in full interest free?

Ultimately, I won’t use much of  “Blueprint” because I pay off ALL of my expenses every month so I have no need to split my bill.  I also prefer to use my Amex card anyway since they’ve been itemizing and categorizing my expenses for years now. Of course, the real issue is the interest rate on the card and not the ability to split bills.   I would have been happier if Chase were to offer low interest on large purchases vs. having the ability to split the bill.

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I recently lost my cell phone. Don’t know what happened to it, it just disappeared off the face of the earth. While researching new models, weighing the costs of a dreaded new 2 year contract, and trying to figure out what I would do, it occurred to me that perhaps I didn’t even need a cell phone!

I recently signed up for Google Voice and discovered that I could get free SMS texting and free caller id, free voicemail and a few other features free.   One of the great features of Google Voice is that I can reroute calls from my google voice number to any phone number.    So I started thinking…..

From 8 to 5 I’m usually in the office Monday thru Friday, why can’t I give out people my google voice phone number and simply re-route it to the office phone during this time?   After hours, I’m usually home so why not re-route my google voice number to my home from 6 pm to 9 pm and on weekends as well?

During other times I am either engaged in some activity and don’t want to be interrupted (e.g. at the movies or gym or park or driving).  Do I really need a cell phone for only a few hours out of the day?    Big Telecomms should be very afraid of Google, I know Apple is terrified of Google and that’s why they dumped Google Voice App from the  iTunes store but I think its much more ominous  for Big Telco than anyone thinks because they can’t compete with FREE!

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Bloomberg is reporting that credit contraction for July was $21.9 billion instead of the economists predicted contraction of just $4 billion and I can tell you the unintended consequences of banks stupidity and greed.

I am now, almost weekly, getting credit card balance transfer offers for either 0% or 0.99% APR on balance transfers but with some huge caveats.  First, the balance transfer fee is 4% almost across the board so if I did a 25k balance transfer I’d be hit with a $900 fee JUST for transferring.   That’s bad enough but the bank can also renig on the deal whenever they want so who’s going to pay a $900 fee on the premise that the APR for the balance transfer might now skyrocket the very next day?  The new credit card rules prevent changes to fixed interest rate cards not variable so it’s a no-brainer not to go down this road.

Secondly, I know many people that have stopped using credit cards altogether because of the high interest rates.  Many people have been rate jacked, including 700+ FICO consumers of which I recently posted and received a few comments on here.

Third, I think banks have lost a great deal of the “trust” factor and it’s not coming back anytime soon.  I have little intention of ever borrowing arbitrage money again from credit cards.  Like any sensible person, I’ve moved on to student loans locked in at 5% APR with a max cap of 9% and that’s really the new safe arbitrage and way to borrow money.

And the revolt has begun….

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During my unemployment, I made some cut backs on my normal spending and since I’ve started work again I’ve partially returned to my old ways.  The biggest change is going to shop at Costco again for a variety of reasons: they have the best snacks and drinks that I take to work.

The biggest question is whether I should return to a healthier lifestyle.  One of the most dramatic changes I made was cutting back from ultra lean ground beef (the 94/6 kind) to a higher fat 73/27 kind.   I have to admit, the fattier meat tastes so much tastier and less expensive but so much cheaper.   I think the price difference is $3.99/lb for ultra lean to $1.72/lb for fattier beef.

I saw a news report on a woman talking about not being able to justify $0.88 for bell peppers because a double cheeseburger at Wendy’s was $0.99.  “Which would you buy?” she asked the interviewer, a double cheeseburger for your family or two bell peppers?   With over 300k of income, I never wondered about that until I was unemployed and uncertain about the future.   Despite currently working, I’m still uncertain about the future and on the one hand, if I don’t support the lean meat producer they may go under yet on the other hand if I do support them I may find myself unprepared for the next round of layoffs.   What to do?

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Bank of America is sending me balance transfer checks in the mail almost weekly and I’m guessing they’re desperate to reel in some fish that actually pays their bill so they can jack up the rate and make some money. Sorry, Bank of America, but I was only interested in your free zero/low rate loans for arbitrage but your new ridiculous balance transfer fees, interest rate jacking gimmicks, and overall mismanagement of bank deposits during the subprime crisis leads me to believe that I don’t want to do business with you.

Did I mention that BoA cut my credit line by 50% not too long ago? Hmmm….I wonder if they’ll be cut again should I dare take them up on their balance transfer offer? If they did, I guess I would be over my credit limit and have my rates jacked up? Wait, there’s that new legislation that would restrict these kinds of draconian activities right? Well, perhaps not because the law is full of loopholes.

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If you were just laid off would you carry Cobra health insurance? That’s the discussion with a friend I had recently and he’s been paying $1000/month for Cobra health insurance. I told him I thought he was throwing money down the toilet with Cobra and I gave him my rationale:

If a catastrophic event occurred which required major medical, he would be unable to pay for the medical expenses anyway. Say he needs major surgery which costs $60,000 and insurance will cover 80% which means he’ll be on the hook for $12,000. If he doesn’t have the 12k cash he’ll have to file for bankruptcy or work out some horrendous payment plan.

The question isn’t whether you’re better off owing 12k or 60k, the question is what is better use of that $1000/month cobra payment?  I’d rather save that money to pay my mortgage or groceries or even my car than for health insurance.   My buddy has been paying $1000/month for nearly 8 months which means he’s flushed 8k down the toilet in health insurance premiums and he STILL hasn’t found a job so at some point he’ll run out of unemployment and be unable to pay the Cobra anyway so what was the point?  He’s out 8k and possibly 10k when it’s all said and done and hasn’t had anything “bad” happen to him or his family where he needs to use the health insurance.

My buddy asked what I would do and I’ve had this discussion with my wife.  If we were both unemployed we wouldn’t sign on to Cobra as it’s a colossal waste of money.  Of course, if you’re taking $1000 worth of meds or have pre-existing conditions you may not have a choice but if you’re healthy, don’t waste your money!

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