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Monthly Archives: April 2007

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Investing Our Tax Return in ERH

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Yesterday afternoon I was pleasantly surprised to see that our tax return had been deposited into my checking account. This puts us in the pleasant position of deciding what do with the money. After some thought, I’ve decided to take a position in the Evergreen Utilities and High Income Fund (ERH).

ERH is an exchange traded fund that invests primarily in the common stock and securities of utility companies, high yielding bonds, as well as number of more exotic strategies such as corporate loans and options. The fund additionally makes liberal use of leverage and foreign currency transactions. The objective of ERH is to provide high current income and moderate capital appreciation.

ERH’s redeeming factor is that they’re delivering shareholder value. Over the past couple of years, the share price has increased from 20 to 29 dollars. Not only that, the ERH pays modest monthly dividends and over the past two years has given out substantial annual dividend payments. Given that both myself and my wife are in graduate school, we need current income, so ERH would meet our needs in that regard.

However, in the interest of full disclosure, ERH has some serious drawbacks. First, the fund’s parent company, Evergreen Investments has been accused by the NASD of engaging in improper payments to generate referral business from brokers. What happened was Evergreen put together a posh resort weekend and invited a number of brokers to solicit their referral business. NASD alleged that Evergreen had allocated 27 million for kickbacks to those aforementioned brokers.

Also, ERH has a fair amount of portfolio churning. In 2004, 2005 and 2006 the fund’s turnover exceeded 100%. Also, the fund is relatively new and has a low float. This suggests that management is unproven and if there is a problem it might be hard to sell quickly to get out.

On the whole, I’ve decided to a limited position in ERH. There are some significant downsides, but the funds cumulative return over the past year has been over 40%, so it’s hard to argue with results. We’ll keep you posted on how the fund works out.

Best,

James

Utilitarian Tourist

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Along with travel comes the inevitable tourist traps. The cultural events focused only for tourists in mind or the ‘special prices’ in the market are bad enough, but the tchotchkes can often be the demise of any travel budget. You know, the knick knacks needs for friends, family, co-workers and neighbors.


When I first started traveling I definitely had a lot to learn in the art of travel shopping. I recall being excited at 16 in the t-shirt shop in Paris with cheap shirts for friends and family. Looking back I now know that not everyone wants a t-shirt of a place they’ve never been. At times I’ve been very generous with thoughtfully picking out items for a variety of time. Over time I’ve had to set limits in this regard. When I travel for work I often have very little time to buy anything, but they are other practical reasons as well.

If you travel as much as I do you need to come up with some strategies for making mementos for self and family to be both meaningful and useful. Before you spend half your travel budget for your friends at home, here are some of the rules that I apply when shopping for items to bring back from my adventures:

  • Only buy something for someone if it makes you think of them and you think it would be useful or meaningful to them. In my opinion the worst souvenir is one that is bought just to check something off your list. This often means that I might find something for my sister one time and my mom the next, but never do I travel with a list of people I’m required to buy for. It is much more meaningful to give a gift and say that it made you think of them and you thought they would really enjoy it. Sometimes this means I buy nothing at all.
  • Buy utilitarian items whenever possible. This can mean buying things that you use and enjoy on a regular basis, such as the beautiful mugs and fruit bowl that I bought on a recent trip to Macedonia or the winter jacket I bought the last time I was in Ukraine. This method makes it so you will use and treasure the items, but they won’t go onto the knick knack shelf.
  • Buy consumables if all else fails. I find that the best items to bring back are those that people will enjoy and experience a piece of your travels without having a tchotchke from a place they have never been. For instance on this trip I have bought fabulous Ukrainian tea, chocolate from the city I’m currently in (L’viv), and of course some vodka for good measure. On my trip to Macedonia I brought back a bunch of wine that is both cheap and fabulous.
  • When in doubt, don’t buy it. Your visa bill will thank you.
  • When you love it, buy it for yourself not someone else. You will likely appreciate it more than they will.

Of course James always wins out because at least he gets the souvenir of foreign money from my travels! Keep these tips in mind for your next adventures.

Happy Travels!

Miel

The DINKs Friday Round Up

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Hi All,

Its time for the Friday round up here at Dual Income No Kids. This week our wanderings through the internet have turned up two noteworthy postings.

The Consumerist managed to dig up some fee schedules from the major banks. Apparently the big lenders are hiding this information on their websites. They don’t want their customers reading this info, lest people get a clue that they’re being fleeced.

On a totally unrelated note, Get Rich Slowly has a great piece on reasons couples might NOT want to integrate their finances. Since my wife and I discuss this a great deal, I’m recommending that you check it out here.

Enjoy the weekend!

-James

Our Networth Goal for 2007

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Yesterday evening, I took some time to review the growth in our networth over the past 24 months. As you can see from the graph, since May of 05, our wealth has increased from $247,300 to $329,400. This is an approximate boost of 33% in the past two years. While its healthy level of growth, its given us some cause to consider where we would like our networth to go in the next few months.

Right now, our goal is to grow our networth to $340,000 by the end of this year. This should be relatively easy to attain. Over the past two years, our networth has accrued by $3,415 per month. Since we only have about $11,000 more to achieve this year, we should reach our 2007 goal by the early fall.

A Million Ways to Save the World

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In my travels I found this tidbit from Mellody Hobson, Good Morning America’s financial commentator and president of Ariel Capital Management (go figure that I have to leave the country to come across this!)

Hobson advocates that “In our cashless society of maxed-out credit cards and corporate excess, positive financial role models are few and far between. This is why I am on a mission to make the stock market a topic of dinner conversation in every home and financial literacy a mainstay in education. If we added an “I” – investing – to the three Rs of reading, writing, and arithmetic, and included it in the curriculum of every school worldwide, our children would learn the basics of wealth creation and gain the skills to transform their lives, their financial futures, and ultimately the course of their families and communities. That would save the world.”

All I can add after long day, is rock on! My next question that I consider, in my half asleep way, is what us DINKs can do to further this initiative. Saving the world goes much further that education about finance, but it is an interesting place to start…

Goodnight!

Miel

Suck My NASDAQ

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Okay, first off, we’d like our readers to forgive the title of this posting. We aren’t actually implying that you should to anything of the sort. I repeat, do not try this at home. That said, we wanted to introduce to the latest You Tube sensation. Suck my NASDAQ is a You Tube channel run by a day trader named Jefferson. His daily posting contain rants and raves about the money he’s lost and made (mostly lost), as well as liberal comments about drugs and attractive women.

His postings are definitely NOT safe for Work and we don’t agree with his views on drug use. But his You Tube updates are entertaining and we both enjoy watching them. So, if you have a spare moment you should check out Jefferson’s webpage and his You Tube channel.

And remember folks, you heard it here first!

Best,

James&Miel

P.S. If you are at the office, go home!

Book Review: The Complete Idiots Guide To Managing Your Money

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Last week I picked up a copy of the the Complete Idiots Guide to Managing Your Money. Since my subway commute up the University isn’t exactly scenic, I wanted something that I could easily peruse. The book turned out to be a surprisingly a pleasant and informative read. So, after some thought, I recommending it to our readers.

This version of the idiots guide has something for everyone. If you don’t know much about money the book offers a good introduction to topics like credit cards, debt management, and retirement planning. For those with more financial experience, the authors have updated discussions of investment fees and retirement account changes. The book is also witty and avoids jargon, which makes an enjoyable read even if you don’t know much about finance.

Some of the tips it offers are:

* Time is money, so get started now
* Trim the fat in expenses by budgeting
* Keep an eye on interest rates
* Avoid incurring expensive credit card debt
* Buy aggressive investments for your retirement

At first, I was a bit skeptical because some of the idiots guide books have been hit or miss. However the quality of the advice and the accessible writing make The Complete Idiots Guide to Managing Your Money a good value for its price. You can pick up a paperback copy on Amazon for about 12 bucks. Check it out!

Best,

James

Where to get free and legal online movies

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If you’re like us DINKs, you probably enjoy good movies. Since you’re reading our personal finance blog, you’re probably also like to cut costs in an ethical way. This means you probably would like to know more about free, legal online movies.

There are two sites where you can watch free and legal movies on-line. These sites are emol.org and archive.org. Of course, you won’t be able to get the latest blockbusters but there are plently of old classic thrillers like Captain Kidd and Sherlock Holmes. Also there are a number of government films and some offbeat documentaries that might interest you. The best part about this that the movies are in the public domain or their copyrights have long expired, so you can enjoy them legally for free!

Happy surfing and enjoy the movies!

Best,

James

Battle of the Personal Finance Gurus

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In my wanderings through the internet, I came across this neat clip on google video. Its a 9 minute segment from the David Latko show. In the segment, David Latko invites David Bach on his program and then starts to criticise him for offering bad financial advice.

In case you don’t know who these people are. David Latko is the author of Everybody Wants Your Money. Latko advocates that people should rent and spend their excess cash on investing. David Back is the author of The Automatic Millionaire. Bach differs from Latko in that he says you should buy a house and not rent. Check out the video. Its nice and quick. The two Davids go after each other a bit, so its about as dramatic as personal finance can get.

For what it’s worth, I think that Bach is correct. According to the statistics I’ve read, people who own their own home tend to be wealthier and better off at retirement.

Best,

James

Tips for credit card shopping

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If you’re like most financially savvy people, you’re probably interested in managing the amount of credit card debt you have. For some, part of this process might be shopping for new credit cards. This posting should provide you some useful tips and resources for when obtaining new credit.

1. Get Educated.

Before starting to apply for new credit, you might consider investing a couple of hours in learning about credit cards. This is to your advantage. Getting a working knowledge of the terminology associated with credit cards could help you make a more informed decision about your borrowing.

The federal reserve and the FTC have good pro-consumer websites you might consider checking out. Both of these sites will introduce you to some key issues like the different type of Annual Percentage Rates (APRs), fee structures and terminology used by credit lenders.

2. Know Where to Shop.

Knowing where to shop for can also help. If you have a credit union, you might consider researching their options. Typically credit union offer better terms than traditional banks.

If you don’t feel like walking all over town, there are a few websites that you might think about. One of these is creditcardclients.com. Other sites you might investigate are lowcards.com and creditcards.com. These sites work on commission. That is, if you sign up for a card offer through their site, then they’ll be compensated by the card company. The last stop on your shopping trip should definitely be bankrate.com. Bankrate.com lets your compare all sorts of financial products, credit cards included.

As a final thought, some people think that shopping around may not matter at all! The main reason they say you shouldn’t shop around is because of confusing contract language. Some card critics think the confusion is supposed to hide the fact that the card companies can charge you anything they want. So, like in all things, caveat emptor and be sure to read the fine print.

Happy Shopping!

– James

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