Financial Reality Show

In the last few months, to be precise since the downfall of Lehman Brothers, the whole financial market is in doldrums. Looking at the 401(k) it looks like i will never get to retire, so i have not touched my allocations, they are still the same when Dow was over 14000 and i will let it ride the down swing till Dow reaches the magical 5 figures.
I have been reading a lot on financial jitters in forbes and businessweek, which don't paint any rosy pictures for at least few more months to come, the recession is hitting each individual hard and the best thing to do is to call the credit card companies to lower the apr and banks to lower the fees. Lets see what happens when the Feds meet on december 16th, what plan they come up with to boost the spending power of consumers and investors.

JPMorgan buys WaMu

WaMu that was for sale since last week has found a buyer in form of JPMorgan Chase. That was a quick sale i must say, and for the customers of WaMu nothing changes. This has made me wondering if my money in the brick and mortar institution (bank) safe?

Can using GPS save greens on gas?

Yesterday i bought a Magellan 4250 GPS from Circuit City. I had been avoiding incurring this expense thinking i will use Google maps or MapQuest to reach the destination, but in spite of this paper copies i have gone in circles and missed the destination on number of occasion. Okay, I'm not directionally challenged, but due to detours as summer is the favorite time to repair the roads, i have wasted gas and time.
I plan to recover the cost of the unit ( i bought a open box item so it was cheap far less then $300.00) within 2 yrs time by avoiding getting lost and saving gas.

What do you guys think has the time come to categorize a GPS as a "Need" and not a "Want" and can it save some money?

JP Morgan Chase to acquire Bears Stearns

JPMorgan Chase announced today that it will acquire the investment bank Bears Stearns in an transaction for stock to stock exchange. On the basis of the closing stock price of March 15th, 2008 the value per share comes to merge $2.00 . Based on a report from BBC business site, Bears Stearns had a sub-prime loss of US$3.2 bn and lately JP Morgan Chase with the backing from Federal Bank of New York was to provide some emergency funds.

Another article on BBC says that Bears Stearns is(was?) the Wall Street's fifth largest investment bank and there where speculations that it was finding hard to come up with funds for its daily operations. The shares dropped 46% on Friday (March 14th, 2008) on the news that the banks is driven to insolvency by the hedge funds clients.

Looking back to my post i wrote on February 28th,2008 about the grim banking forecast, it looks like the reality of banks facing the sub-prime mess is hitting close to home.

Time to think Miles per Dollar (miles/$)

I guess with the barrel of oil flirting with $103.00 , i better start amending my driving styles and engage IT(Information Technology) to max out the miles per dollar. I have stopped thinking about miles per gallons few months back when the barrel was going against Newton's third law and i myself started following Newton's second law(Every action has equal and opposite reaction). It seams like just few years back we had the liberty to drive the car with lower prices and be more social then now a days. So for me the higher gas price is taking a toll on my social circle. A change that i made in my driving pattern was to walk to the stores, if they are within one mile radius, no need to burn the gas. This way i have three fold benefits (will keep fit, take care of the environment and keep my wallet happy).

Since 2007 January i have started keeping track(formed a habit) of all my fuel, service and car insurance expenses in Microsoft SQL Server 2005 Express Edition. To get a feel of how much i'm spending per car per month and annually. When Microsoft came out with Visual Studio 2008 Express Edition i created a web based application to streamline the tracking of services, fuel receipts and generating the analysis reports before i get shocked by the credit card statement. Its a good idea at least for me to see my monthly fuel expense as soon as i start the application and when the next service is and what needs to be done in that service. I have attached the screen shots of the application.

If you want to give the application a spin and start tracking the expenses i will be glad to provide you the application and database structure just email me your request.

Grim Banking Forecast

Today i saw a very interesting article by Ken the Bank Deals Guy where he is referring to a recent article on CNN about FDIC bracing for large number(100-200) of bank failures in the upcoming months(12-24). That is a big scary numbers. What happens to the contents stored for safeguarding at the safe deposit box when the bank goes under? Next time i visit my bank i will ask them this question and see what the reply is. This article further mentions how an individual can safe guard his deposits, i would recommend this article to all my viewers and readers. I bookmarked that article so that i can read it often.

I hope FDIC increases the $100,000.00 deposit insurance to cater for the inflation.

Another Fed Rate Cut

Jeez, this year has started with a turmoil in the stock market, what a way to start the year? I wonder, where this drop will lead to. Looks like history repeat itself and now the stock market globally is showing how globalization pull each other down. To steadfast the drop on this Tuesday morning of 01/22/2008 Fed called an impromptu meeting and cut the lending rates by 0.75% to make it to 3.50% from the whooping 4.25%. This provided a cushion to the stock market crash as this move kinda off opened the parachute on the stock market and the wall street glided itself down instead of crashing down at a high speed. There is again a possibility that Fed will again cut the rates when they meet on Jan 30,2008 for the scheduled meeting. Fed also lowered the rates for the banks to borrow directly from the central bank to 4.00% .

The million dollar question that arises is What does this mean to you and me? My two cents on this is now it is a good time to call the credit card companies and ask them to lower the APR This move will also effect car buyers as the auto loans and home equity lines will be reduced. Had the gas price been lower we would have seen some good times for FORD and GM, but lets hope new first time car buyers will get the bargain.

The interest rate drop will prompt few home buyers who have fixed rate mortgage to refinance the house as this drop will surely save a big chuck of interest over the mortgage loan's life. Hopefully, this will easy up the sub prime mess for the lenders.

Down side is the savings accounts will look less attractive as the interest rate drops faster then the big apple coming down on midnight in NYC. This can be a good time to invest in CD's and lock in the prevailing rates. I did run a query on the bankrate.com for higher yield rates for 1 year and found the best rates been provided by Flagstar Bank (4.83%),Intervest National Bank(4.64%) and Advanta Bank Corp (4.59%). You can check the full list of the high yield CD's for 1 year here.

If any of you have information of higher yield CD's please do mention it in the comments.

Save more money (smm)

The general rule of thumb that I have started using is budget the saving approach, use the e-billpays to pay the bills, use Google apps to document expenses, yodlee the credit card accounts, so all the transactions snap shot is right in front of my eyes and I don’t have to hop from among various different credit cards sites to check my balances.

Budget the saving: I started making budgets to save money (at least 25%) from my paycheck and then paid myself to take care of the bills. I would normally budget my expenses prior to the saving and to my horror I use to rarely save a dime, as I would be paying myself more to indulge in all the lavishes, buy new gadgets add would celebrate with friends often even on wining in racquetball tournament.

I opened different funds in different banks earning higher yields (Flagstar) stay away from CITI (I wasted days trying to get my account activated), always have an account with credit union. I have a credit union account and I’m happy with the service they have provided me, not so much with the yield that my money earns. Hence, I maintain the bare minimum balances that I would require on monthly basis and transfer rest to the higher yielding accounts.

e-BillPay: I use the bill pay options to pay the bills and this way save few quarters every month in postage. Moreover bill-pay provides me the facility to pay the bill on time and never get in the bad books for missing deadlines and take a credit hit.

Google Apps: Normally as soon as I get a bill I will open it to see the due date and balance amount and write it on the top of the envelope and collect the bills from Monday till Saturday. Every Saturday I'll schedule the payments using e-billpay facility provided by my bank. Then I update the spreadsheet in Google documents where i enter the balances to update my Net Worth and Expenses. I use to manage my finances using Quicken (> 2 years) then moved to Microsoft Money(2 yrs), but then after 2 years the Microsoft Money asked me to pay for an upgrade in order to receive electronic updates of my credit card transaction and recently few credit card providers have made it even hard to download the transactions namely(Discover), so I decided that I will not allow myself to be held at petty ransom or at the mercy of the software companies and pay them my hard earned greens just to download my other expenses (That’s double whammy). Here in enters Google with its online suite of apps, where by I can access my expense log anywhere I can get connection to internet. So once a week I update my spreadsheet of expenses and maintain a local copy in my pc just in case if the Google server or the internet connection is lost. I will say that keeping a track on my expenses has helped me to reduce my debt and expenses and be more careful with my green backs.

Yodlee: It’s FREE software that keeps track of the transactions of the accounts you specify. It provides a snapshot of the accounts balances and there by saves time as I don’t have to hop from one account to another. I tired mint and wasabe, mint uses yodlee as its back end aggregator so i stayed with yodlee rather then moving to mint. wasabe shows too much details on every transaction, put my two cents in it why should i care who paid for the same item in new york or california.

People tend to save money and think about ways to save the money, but seriously how many of us have thought to ways to increase the income and the mantra to be "spend less then you earn" ?

I would like to hear your comments and view and any new ideas you readers would have.