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Monthly Archives: September 2007

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Credit Cards Abroad

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The credit card debate continues….

While I agree with parts of James’ last post on Jane Quinn’s book, I don’t exactly live by it. Don’t get me wrong, I’m all about spending less and paying down debt. Yet, living in the 21st century I’m not quite certain why she is still taking about checks. I’d also love to see the smirk from the car rental agent when you try to pay by check!

I’ve found yet another great advantage for getting a credit card. In the doctor’s office today I picked up a Money magazine and there was an article on how to get more bang for your USD when putting it up against the Euro (or anything else these days).

First I learned that the you’ll always get the best exchange rate paying at point of service rather than getting cash out at an ATM. I’ll admit that as much as I travel this was news to me. I often have to get cash out, before departure or in-country, since places don’t always take plastic.

At the bottom of the article they mentioned that Capitol One credit cards charge no fees on overseas transactions. Now this might not mean much for many of you, but as I’m headed to live abroad in a couple of weeks this is like money in the bank.

In fact, it is a 3% saving above other cards. Both my ING debit card and my United mileage card both charge 3% on transaction fees while abroad. Thus, until now I had been resigning myself to the fact that I’d be paying an extra 3% on all purchases made for the next couple of years.

Needless to say, I’ve already gone online to apply for the card. The Capitol One No Hassle Miles card earns you 1.25 miles per dollar you spend, has no annual fee, can be used on any airline with no blackout days, no limit to the amount of points earned, and no expiration on points. I don’t know if you can beat that, especially for those who travel abroad often.

Happy savings!

Miel

The Big Money Philanthropy Controversy

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Hi All,

If you get a chance you might consider browsing today’s New York Times. There is an interesting article on the ins and outs of big money philanthropy. The article is interesting not because of the gargantuan amounts of cash involved, but because it talks a bit about the role of private giving versus government largess.

Click here for article.

Best,

James

Jane Bryant Quinn on Credit Cards

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Do you remember when credit cards were “prestigious”? – Well according to Jane Bryant Quinn‘s book, Making the Most of Your Money, the cool thing to do nowadays is pay off your cards. To do this, Quinn says, it all boils down to one principle:

Don’t borrow any more.

This is pretty simple. But according to Quinn, this is easier said than done. First off, you should probably stop using your credit cards – leave them at home and use cash or checks. The main idea here is that you’ll make it harder for yourself to sneak in new debts. Some people say that you need credit cards to buy things like airline tickets and rental cars. But, Quinn feels you should be able to find a way around most of these cases. For example, if you need a rental car, you can reserve the car with your credit card, but then pay with a paper check.

According to Quinn, once you stop using credit cards, three things will happen:

1. You will buy less. Whatever you buy will probably be less expensive. If you pay with cash, you find you become more stingy. The reason is that cash is “real” money, so how you think about spending changes. The result is you buy less and buy cheaper.

2. Your debt will shrink. The main idea here is since you’re not racking up new bills, your available cash will increase. This allows you to pay down your debt more quickly.

3. You’ll become smug and self confident. – Well, she doesn’t really mean this, but living debt free certainly doesn’t hurt your self esteem.

For my part, I like and endorse Quinn’s advice. The major problem with Quinn’s views on credit cards is the economy is increasing moving towards electronic transactions, so Joe average needs to have some form of electronic payment. For many Americans, this means credit cards.

So, if you have to pay electronically, feel free to talk to your bank and see if they’ll give you a debit card. Most new accounts come with debit cards, so they should give you one pretty easily. Debit cards have many of the advantages of credit cards, but don’t allow you the opportunity to rack up big debts.

For more on credit cards click:

here
here
and here.

Best,

James

Google Before You Buy!

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Hello All,

Just wanted to let you know that if you’re buying something on line through a major retailer, you might consider doing a quick internet search to look for coupons or discounts. For example, I just dropped $121.28 on textbooks on Amazon.com. But I was able to save 7 bucks by finding a promotional code. While seven dollars isn’t much, its still better than paying the full price. So, don’t forget to google before you buy! There are tons of great sites to search for deals on.

Best,

James

Our September Net Worth

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Hello All,

I just wanted to report briefly on the progress we made building wealth in August. To make a long story short, last month our wealth was $363,000. This is a bit of decline from July’s total of 367 thousand.

Why did we loose money? The primary reason we are down by 4 grand is the stock market. As you probably know, the subprime meltdown is having a wider impact. Both the Dow Jones Industrial Average and S&P 500 are off their 6 month highs. Because of this, our holdings in Exxon Mobil, Southern Copper and The Advantage Energy Fund, are worth less than last month.

On the other hand, we saw improvement in the values of our retirement accounts due to the DINKs better half – Miel’s strong salary growth. We also continued to pay down the mortgage on our apartment. Finally, last month we received some of my deceased grandmother’s jewelry. While I’m not planning on selling these items, they do count towards our total wealth.

Our stretch goal for this year is to reach a net worth of $400,000 by the end of 2007. Given our loss last month, the chances that we’ll meet this goal are looking more doubtful. We anticipate that we’ll be able to pay off a chunk of our second mortgage to contribute to this goal, but meeting the $400,000 will depend a lot on what the stock market does.

The details of our wealth are below:

DINK’s Budget

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Keeping an updated budget is an important part of fiscal management. Without keeping track of how much is coming in and going out, your ability to save is compromised.

As we all know, the best thing to do with a raise in your paycheck is to pretend like you never got it, and save it before it ever shows up in your paycheck. Despite seven raises in the past three years I’ve managed to remain with the exact same take home pay.

When getting a new job it can take a bit to rework your budget, not knowing exactly what your first paycheck will look like. In our case, I’ll both be getting by far the largest paycheck I’ve ever received, plus there are no taxes on the first $80k when living abroad.

All of this is great, but it makes budgeting a bit of a challenge. We figured that we might as well take a stab at it and readjust once my first paychecks start rolling in this October. For the time being we’ve just presumed the standard 30% in taxes, even though this is likely to be considerably less.

Note that our normal mortgage payment is around $2k, so the extra funds here will be to pay down the more expensive note on our place. There are also obviously many unknowns about what my expenses will be while in Afghanistan. For now I’ve kept spent levels the same, and we’ll readjust once I have a better picture of what my month to month expenses are.

Lastly, we’ve included a very high estimate for our R&Rs (rest and relaxation or romance and reconnection). We figured that we’d rather keep the estimates on the higher side and then pocket any savings that might occur. Something tells me that we won’t want to be back packing for our time together (four times a year for seven weeks total). I guess we should also consider that since this is a chunk of time it will also affect other aspects of our regular budgeting (i.e. groceries, etc.).

I’ll also be receiving per diem while I’m on travel (50% of the time) that haven’t been included in these projections. I’m hoping to pocket what I can and use this towards R&R expenses.

We’ll keep you post once we have a better sense of what our final budget works out to be. I imagine we should have some good numbers to work with by the end of the year.

Cheers,

Miel

Getting Ready for Afghanistan

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Hello All,

Happy Labor Day! Since neither of us have work or classes, we’ve decided to stay home and get ready for Miel’s impending trip to Afghanistan. While we anticipate that the separation will be hard while Miel is in Asia and James remains in DC, we’re doing a few things to be sure that our financial lives remain integrated.

1) We’ve recommitted to joint goals through early 2008. Basically, we plan to pay off our second mortgage. At 8.898% this is our most expensive debt. Since we owe approximately $20,000, this should take some months to pay off. That said, given the current economic uncertainty, any debt pay down would give us an immediate return of 8.898%. This looks like it’d be better than what the stock market is currently giving us.

2) We’ve updated our budget and expenses. With the move to Afghanistan, Miel and I have both updated how much we expect to have coming in and how much we have going out. This is important because we might have to shift whose paying for what during Miel’s absence.

4) We’ve updated our account information. Most of our banking is done on-line. So it’s important to keep are record of where everything is located. In the event that either of has to check accounts or make payments, (or either of us forget passwords – this happens a lot) we’ll have a central file where everything is kept. We had done this a couple of years ago but it was very out of date.

The thing about these points is that they’re good for couples to do even if you aren’t facing an extended absence. Otherwise, we’ll keep you updated regarding our other preparations for Miel’s departure abroad.

Best,

James&Miel

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