Scott On Money

For a number of years I have bought many Christmas gifts online. This year I noticed a difference. Online shopping is widely accepted. I say this because of the following observations:
- A large number of my friends and family have adopted online shopping in varying degrees to do their Christmas shopping.
- More of my non-gift and non-book shopping has moved online.
- A greater percentage of my gift buying is online.

In statistical terms the volume of online purchases was up 26% from last year.

Amazon.com is the flagship online retailer. When I first got out of school you had to go get extra software to access the web and almost everyone was using dialup. I used Amazon quite a bit back in then when it was book focused because in my field education demands are very high and I’m an avid recreational reader. This year more than 60% of my gift purchases were through Amazon.

More and more of our shopping is going to be online and there are many great benefits to this that I welcome. I have to deal with fewer crowds. A mall around Christmas time is a very undesirable place to be. I save time and I save money because I can comparison shop more effectively. With Amazon Prime and quick fulfillment I don’t have to worry much about time delays in online ordering.

Online shopping is not perfect and there are many times you need to go to a physical store to try or touch or feel something you are buying. But online shopping has real benefits. If you haven’t used it much I suggest you take another look.

Posted by Scott at 07:32 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

I’m back from a trip to visit my brother in Germany and so bloging will return to normal levels. I hope you enjoyed Christmas and were able to spend time with family and friends as it is truly a blessing.

I also owe thanks to those that edited carnivals even as I was winging my way around the world. The information in the carnivals is still valuable almost two weeks later.

A Penny Saved hosts the Carnival of Personal Finance.

Lazy Man and Money hosts the Carnival of Investing.

Posted by Scott at 02:59 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

I’ve read and written many articles on techniques for eliminating credit card debt. But there is a simple first step that you must take to be successful. Forget about it and all the other techniques combined will not help much.

You have to stop build credit card debt. If your credit card debt is out of control you have to regain control. It may sound really hard, but it is something you must do.

Start by laying out a budget. List all income you receive. Now try listing out you major expenses. Just start with anything that is 10% or more of your total income. Look for a way to make your income more than your expenses without using credit.

My Christmas wish for you this year is that you can find a way to take this important first step. If you do you’ve taken a huge leap towards being debt free.

Good Luck!

Posted by Scott at 07:52 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

This week’s carnivals are up.

Please check out the great entries in:

The Carnival of Personal Finance
The Carnival of Investing
The Festival of Frugality

Thanks to this weeks editors.

Posted by Scott at 11:44 AM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

I decided to cancel my Blockbuster movie rental subscription recently for two reasons. I have a very busy life and hardly have time to watch movies anymore. I also haven’t felt very compelled to see anything that has come out recently.

Yeah there are a few movies that look interesting but certainly not enough to see several movies a month. A while back my girlfriend (hi) went in with my free monthly coupons. We couldn’t find a single movie both of us wanted to see.

I went to there site to cancel my subscription and was a surprised to see a cancel button. Clicking it asked me for a reason why. I picked “I’m not using it enough”. The next screen offered me three cheaper deals and a button to cancel. That was it.

While I didn’t like the extra step it was no where as annoying as many other cancellations I’ve been through.

This makes me that much more likely to rejoin Blockbuster when my (and Hollywood’s) circumstances change.

Posted by Scott at 11:39 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

Okay, for the 80% of you that haven’t finished your Christmas shopping yet: Use your coupons.

I know, I usually throw away all the circulars and other junk mail. This time of year, if you are like me, you spend a good deal more money than the rest of the year. This time of year also sees a good deal of promotions from retailers. Use these offers to your advantage.

Here is just a sampling of offers I’ve received in the past two weeks:
- Best Buy 10% off and 12% off coupons.
- Target $10 off purchases of $100 or more.
- CVS $5 of purchases of $20 or more.
- Linens and Things $10 of a purchase of $50 or more.

I have to say that I’ve blown more than one offer by being overly stressed about shopping this year.

Steps
1) Read junk mail
2) Remove valuable coupons
3) Buy things you need that you have coupons for
4) Use coupon

I’ve missed step 4 a few times and while I had the coupon in the car not remembering it until I left didn’t save me any money.

Better luck with your coupons!

Posted by Scott at 09:29 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

I dipped my toes into the stock market many years ago. I took the amount of money I set aside and dumped one fifth of it into each of the five stocks I picked. It was a lot of money for me. The next day the stocks were all down. Way down.

This bugged me. A lot.

Over the year as commissions have become smaller I’ve found a method for investing (and selling) that is much more satisfying to me psychologically.

Say I pick a stock that I think I want to have about $2000 dollars worth of in my portfolio. Instead of hitting the buy button and typing in $2000. I might only buy $500-$700 at first. If it tanks the next day and my belief remains the same I call it a super-duper sale and add on some more. If it goes up dramatically over the next 3 months maybe I end up selling for a profit instead of buying more.

This is not a continuous investment strategy as I don’t aim to buy into a stock over a long period of time, but instead be more comfortable that random events will have a little less impact on me.

A few things to take note of:
- Don’t overdo this. Commissions can eat you alive. I target commissions totaling less than 1% of my investment, although I make exceptions up to 2%.
- Some argue that because the market mostly goes up this is approach leaves gains on the table. I have to say I don’t see a clear cut way to prove or disprove this point. I will say that this technique is about making me a happier investor, and for me it works.

Good luck! -Scott

Posted by Scott at 08:19 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

For many people car insurance is a large expense, sometimes running into the thousands of dollars a year. Finding ways to get a better car insurance rate is a great way to set aside a bit more each year.

- Look into increasing your deductible. Often times raising your deductible can reduce you rate by several hundred dollars a year. Zero dollar deductibles are especially costly.

- Make sure your comprehensive coverage decreases with the value of your car. If you have $30,000 of insurance for $5,000 of property you may be wasting money.

- Shop around. Different companies have radically different views of the same set of circumstances.

- Make sure the miles on the policy match the miles that you drive. Your insurance is based in part on how much you drive the car. I’ve talked with people that have this number set way too high.

- If you are now or were in the past in the military or are related to some who is see what coverage from USAA will cost you. I’ve personally had very good rates from them.

- Consider were you live. If you are living in a neighborhood with a high crime rate it may cost you more on your car insurance company. Make sure that you factor this added cost in when you decide to live there.

- Ask your insurance company what discounts are offered. I’ve heard of offers for a big discount for getting your car windows etched with the VIN number. Some other discounts that might be available:
- Good driver discounts. No accidents or tickets for a certain amount of time.
- Anti-theft devices (alarms, Lojack, …).
- Keeping your car on the garage instead of on the street.
- Good student discount.
- Multi-car discount.
- Discount for other insurance from the same company (home, life, …)
- Auto-payment discount
- If you get a ticket and traffic school is an option to remove the ticket from your record (called “points” in some places) do it. The number of points you have can radically alter your insurance rates.

I hope these tips will save you some money!

Posted by Scott at 01:59 AM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

If you watch your mutual funds closely this time of year you might end up with a sinking feeling in your stomach. You might see your mutual funds share price drop precipitously. Last week I had one hit me with a 15% drop.

Why do mutual funds do this? The tax man makes them. The fund has to make distributions to account for the capital gains and dividend income it receives. As with most things governmental it is far from fair. If you buy a fund and it has a distribution the next day you get to pay the tax bill for the last year.

Before you buy a mutual fund check with the fund or your broker on when the distribution date is. If it is within the next month or two consider waiting until after the distribution to invest.

Of course if you do all of this in your tax deferred accounts it will not make a bit of difference.

Posted by Scott at 11:22 PM | Permalink | Comments (0) | TrackBacks (1) | Subscribe | Digg | del.icio.us | Technorati

REIT is an acronym for real estate investments trusts. A REIT is a lot like a mutual fund of real estate. They come in all varieties. Some invest in commercial property, some in residential property, others in malls or even timber lands.

But why would you do this rather than just go buy real estate yourself?

REIT Characteristics

REITs are liquid. If you buy a REIT today it is likely much easier to sell than a house or office building. In this respect they are very much like mutual funds.

REITS are divided into manageable chunks. REITs are sliced into small pieces just like companies and mutual funds allowing everyone to buy a little slice of property. This is great since not everyone can pop for the loan on a ten million dollar property.

REITs are internally diversified. A REIT typically owns more properties than most individual investors could manage.

A REIT does not require you to be a property manager.

REITs are generally big and can take advantage of economies of scale on administrative and maintenance expenses.

Direct Investing Characteristics

Typically more tax advantaged since you don’t have to takes gains every year as REITs force you to do.

Direct investing allows you to directly contribute to your investment and create value with your hard work or creativity.

Direct investing can leverage your personal vision or knowledge to make uncover a pearl of an opportunity. If you think a revitalization project will result in a big increase in property values in a neighborhood it is unlikely that a REIT will help you take advantage of that.

This just scratches the surface of the options available to you. If you want to know more go to your broker’s site or money.msn.com to read the prospectus from a REIT or two.

Posted by Scott at 11:27 PM | Permalink | Comments (0) | TrackBacks (1) | Subscribe | Digg | del.icio.us | Technorati

Check out the most recent Tax Carnival. You can read some great tips there. Taxes are important right now because you still have many options to reduce your taxes that you need to act on now.

Also check out:
Simple Ways to Save on Your Taxes
2006 401K Contribution Limits
2006 IRA Contribution Limits
2006 SEP IRA Contributions Limits
Make Your Donations Now

Posted by Scott at 11:12 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

The short story for you impatient readers is Citi is better. As you may have read I borrow money using 0% credit card offers and invest them. I pay them back before the offer expires.

Citibank made the process easy. Login and request that they cut you a check. Done.

I logged into Chase to do the same thing. You are not allowed to do this online. So I called them and asked about it. They told me that they don’t let 0% accounts do balance transfer checks online. They also will not cut you a check on the phone for the first three months. I went online to transfer the money over to my Citi card and it wouldn’t let me do that so I had to call to get the card to card balance transfer.

Of course then I had Citi cut me another check for the balance. Kudos to Citi for being easy to work with. Thumbs down to Chase for being hard to deal with and for making me deal with them so many times. They could have put a notice in their website about these restrictions, explained the error online or explained all the rules when I called the first time.

If you have a choice go with Citibank.

Posted by Scott at 10:36 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

The end of the year is almost here and it is time to make your donations to charity. As you can surmise from the news today the bad weather can drive a tremendous need for charities to step in and help those in need.

Take the time to make your donations to charities that match your philosophy and address issues you are concerned with.

It is important as you do this to remember to get documentation of your gifts to get the tax deduction that you are entitled to.

For cash donations make sure you get a receipt.

For other donations I get a receipt but I also take a picture of the items. This helps in valuing the items and my memory.

Take some time these holidays to think of others!

Posted by Scott at 09:33 AM | Permalink | Comments (0) | TrackBacks (1) | Subscribe | Digg | del.icio.us | Technorati