Skip to main content

Author Archives: Team Dinks

Older posts
Newer posts

Investment Gifts for the Holidays – Part I

Posted on by

The holiday shopping season is official upon us. Consumerism is one reason why Americans aren’t as rich as we really should be – people spend all their time upgrading their stuff and not enough time getting financially secure.

So, instead of getting stuff for the holidays, consider gifting real financial assets for your friends and relatives:

Here are some low cost options for doing this:

1) Savings bonds: Cost $25 to $50. The beauty of doing savings bonds is their low minimums. The minimum price for US bonds is $25 for series EE and $50 for Series I. Buying bonds is super easy, you just need to go into any bank and ask for a form. You’ll need the recipients social security number and address. Bonds usually take about six weeks to process, depending on the bank.

2) Single shares of stock: Cost $50 to $150. There are several companies online that will sell you one share of stock. The standard package is you buy a single share in paper form, as well as a frame and shipping and handling. Usually they charge you the base price of the stock, plus $30 to $40 dollars for the frame and $15 or so for miscellaneous. Check out oneshare.com or giveashare.com. For this you’ll need, the recipients social security number and the address.

3) Silver or gold: Cost $22 to $75. If you wanted to pick up a bit of precious metal as a gift, you could consider an ounce of silver or a gram of gold. There are two primary ways to buy these, from a coin dealer or via the internet. In either case a quick google search should tell you where to go. Before going shopping be sure to check ebay to get a sense of market for this type of asset. At current prices you’re looking at $20 bucks for an ounce of silver or $50 to $70 for a gram of gold. Both make nice gifts for younger brothers or cousins.

Readers: If you’ve got other tips to share, please feel free to leave us a comment.

Happy Holidays,

James

Negotiations Tips

Posted on by

I did all of my holiday shopping in Zimbabwe at local artisan stores and markets, so I thought I’d bring you a few reminders on tips for such negotiations. These can also come in handy stateside at craft fairs and so forth.

  • Better in Bulk – You are much more likely to get a discount if you look around and then choose a vendor to buy a majority of what you are looking for. This was particularly the case when I was shopping carpets in Afghanistan, where I got a much better deal sticking with a single vendor.
  • Add it up in your head – I do a mental calculation of what everything should be, then I take about a third to a half off to come to what I think will be the eventual final price.
  • Ask them for their “best, best price” – tell them not to bother starting with some other price, but since you are buying so much, that they should give you their best price. This will often eliminate several rounds of back and forth. In fact, most times when I ask as such, they come up with a figure close to what I’ve calculated as a reasonable deal.
  • Ask for a bit lower – Vendors are always willing to go a bit lower. If they aren’t, they will often tell you so. They will tell you, actually I’m only making three dollars if I sell it to you for that price, so it isn’t worth it to negotiate any further.
  • Be prepared to walk away – If you walk away, and they let you, then what you’ve asked for is too low. They are often willing to start negotiations again if you really are interested.
  • Keep in mind the “dash” – Remember when you are picking out a bunch of stuff to hold off a bit so you can ask for more as a bonus. This is common in many parts of the world, and you can often get something extra that is great.
  • Be nice – This is key throughout negotiations. Part of it is just a game and an experience. If the person really likes you then they will sell to you for even less. Sometimes once you’ve established a relationship like this, you can even buy more for very good prices with less negotiation.
  • Be serious – I don’t get into actual negotiations unless I want something. Otherwise it can be insulting to the vendor and culturally inappropriate.
  • Timing is everything – shopping in the morning (where some cultures have beliefs about first sales), or late in the afternoon when vendors are looking for a final sale, or shopping on a rainy day when others are not there, all of these can be good times for deals.
  • Get a feel for it – Whenever I have time, I do a round of looking before I ever get to shopping. This means that I have an idea of what I want, and I can ask for prices without getting into negotiations. Then I have a place to start from when I am serious about buying.


Here is a picture of a vendor who I befriended in Zimbabwe. I’ll even be sending her the picture by email this morning. It had been a rainy day at the market and she was eager to get me to buy. I think I in the end I got a wooden bowl for my sister, the batik in her hands, and a couple of small geckos for kids.

Happy Holiday Shopping!

Miel

Is The Coveted Visa Black Card That Great?

Posted on by

In honor of “black Friday”, my wife recently received an “invitation” to apply for a VISA Black Card.

Up until this point my knowledge of Black Cards was limited to rap songs and movie references, but I do associate the Black Card with a certain amount of wealth and status. Which made it even more amusing when we got the pre-approved application.

We don’t live the extravagant lifestyle most people would probably associate with Black Card holders; we certainly don’t have the means to do so even if we wanted. I suppose the fact that she received an application has more to do with banks needing to bring in more money than it does with some exclusive club we’re somehow eligible for. But let’s look at some of the features of the card:

  • Membership limited to “only 1% of U.S. residents.” Don’t care. Next.
  • Exclusive rewards program. Our cards give us pretty good rewards, so that really isn’t enough to sway me.
  • 24-hour “world-class Concierge Service.” I can pretty much guarantee that I would never use this, but I could see how a certain segment of the population could find this useful.
  • Variable APR, currently set at 13.24%. The rate is determined by adding 9.99% to the Prime Rate. The credit card I own has an APR of just over 11%, which I think is pretty good but ultimately it doesn’t matter because we don’t carry credit card balances. Plus if I was going to get a new credit card I would definitely make sure that it was a fixed APR.
  • Annual Fee of $495, plus $195 for each Authorized User. This is absurd. I would never pay an annual fee for a credit card anyway, but to pay $690 a year for a credit card that doubles as a status symbol is ludicrous.

The extras don’t sway me at all, what it comes down to for me is the APR and the annual fee. If I was in the market for a new credit card (which I’m not; having one main card and an emergency one is fine) then I need a card whose APR is as close as possible to 10% with no annual fee. This card does not fit either criteria. Plus there’s just something absurd about the whole idea. If my wife and I can qualify, then clearly, it’s not that exclusive. Plus my credit union VISA pays for my groceries at Safeway just as well as a Black Card would.

-Michael

Negotiate Your Bills

Posted on by

If you think that all of your bills are non-negotiable, you are wrong.

I simply refuse to pay full price for our internet service and have negotiated this successfully for years. Basically as soon as the introductory rate runs out, I call up and negotiate again for another discounted rate.

This time around I was actually in Liberia when I called to negotiate. This meant that I was even quicker to the draw and simply said that my rate had just gone up, I wasn’t willing to pay that much, and what was the best rate that they could offer me. In less than five minutes I was hanging up with my rate have been reduced from $72.95 to $32.95.

That is a savings of $480 over the course of the year.

Since I’ve done this for the last seven years since getting comcast, this means that I’ve saved literally thousands of dollars by just calling up to negotiate. Check out former posts on past successes.

Other relatively easy areas to negotiate are cell phones, maybe even land lines, cable service, credit cards, and anywhere else that takes your money.

Consider where you might be able to save money and give them a call today! You’ll be extra Thankful tomorrow!

Happy Savings,

Miel

Selling Short

Posted on by
On September 19th, 2008 the Securities and Exchange Commission halted the short selling of financial stocks in order “to protect the integrity and quality of the securities market and strengthen investor confidence.” The U.K.’s Financial Services Authority took similar action the previous day, in an effort to stabilize what was at the time, a very volatile market. The action taken by the SEC froze the short selling of securities of 799 financial companies immediately.
If we associated the typical purchasing of a security as taking a bullish approach (i.e. holding a conviction that the value of that security will increase), then short selling would be the opposite, taking a bearish approach (i.e. holding the conviction that the value of the security will decline).

For example, if an investor is convinced that a certain company’s stock value is inflated, he can go to his broker, who is holding shares of that stock for another investor, and “borrow” however many shares he wants. He can then sell those shares, wait for the value of that stock to drop, and then buy then back and return them to their owner, netting himself a profit which is equal to the difference in value between what the shares were originally worth and what they are worth after the drop – minus brokerage fees and borrower’s fees of course.

The benefits and detriments of shorting a stock are essentially the inverse of the benefits and detriments of purchasing a security in the typical fashion. With shorting, you make money when the security’s value goes down, with “going long” you make money when the value increases. Purchasing a share of stock places no limit on how much money you can (theoretically) gain, while you can only lose as much as the original cost of purchasing the security. Conversely, shorting a stock will yield profits dependent on the original price of the security, while your potential losses are (theoretically) infinite.
Short selling is used in a lot of different scenarios – particularly in the commodities market – but the most common scenarios are speculation and hedging. Speculating with a short sell means that there is some indication that the value of a particular security will go down, and the stock is thus sold short in order to profit on the decline in value. Hedging works by distributing an investor’s risk, thus allowing them to protect themselves in the event that a large market movement hurts their original investment.

If you remember, the Fall of 2008 was quite a volatile time for the stock market. Investor confidence was very low, and that manifested itself through wild swings in the market. At the time, the Fed was worried about a total market destabilization, a scenario they believed was being facilitated by investors acting too bearishly, prompting the ban on short selling of those 799 securities.
The ban didn’t exactly go as planned, and its orchestrator, SEC Chief Christopher Cox even went so far as to question its effectiveness, stating in December 2008 that “knowing what we know now, I believe on balance the commission would not do it again.”

One of the unintended consequences of the ban was a sharp decrease in liquidity in the markets, and after the ban was lifted, the market resumed its steady decline, further harming investor confidence and increasing the call for more drastic measuring, including calls to shut down the markets entirely.

The ban was deemed a failure, at best having no effect on the economy and at worst harming it further than it would have been had the SEC left it alone.

-Michael

Wave of Debt Payments Facing U.S Government

Posted on by

This story is making the rounds on Digg. Its a sobering look at the national debt from the NY Times. In a nutshell its saying the debt is becoming increasing difficult to manage – total annual interest payments are approximately 500 billion. For my part, I’m thinking the Treasury is acting like a debt junky who is in denial about their spending.

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

Click here for the full story.

Best,

James

How To Improve Your Credit Score

Posted on by

Credit scores are one of those little things in life that while they can have a significant impact on people’s financial bottom lines and your ability to build wealth, many people don’t understand all of the ins and outs. Here are a few tips to improve or maintain a good credit rating. Keep in mind that a small improvement in a credit rating can impact the interest that you pay on mortgages and other loans. Here are a few handy reminders to help you improve your score

  1. Order a copy of your credit report. Review it carefully. Correct any significant errors. This can be done by sending in letters to all three of the credit bureaus.
  2. Pay your bills on time, every time.
  3. Don’t open a lot of new accounts over a short time period, especially if you have a short credit history.
  4. Shop for credit over a short period of time. FICO scores distinguish between searching for credit for a specific loan and searching for lots of different credit lines.
  5. Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix – it probably won’t raise your score.
  6. If you have a questionable credit history, open a few new credit accounts, use them responsibly, and pay them off on time. In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
  7. Don’t open credit accounts you don’t intend to use. Also, don’t open a number of new credit cards that you don’t need, just to increase your available credit.
    This approach could backfire and actually lower score. New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.
  8. A credit card or installment loan can raise your score as long as you don’t have too high a balance and you pay it off in a timely manner.
  9. Keep your balance low in relation to your available credit. If your credit limit is $10,000, keeping your balance below $2,500 (25%) will improve your score.
  10. Pay off credit card debt rather than move it around to lower rate cards. Moving balances to other credit cards and closing out the old account can hurt your score because it can change the ratio of your total credit card balances to your total available credit lines. The most effective way to improve your score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
  11. Don’t close unused credit cards as a short-term strategy to raise your score.

Keep in mind also that negative items affect your credit score much more quickly than positive items. Late payments can negatively affect your score in just a few months, whereas paying bills on time may take 6 to 12 months to generate a significant improvement in your score.

Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

Note that closing an account doesn’t make it go away.
A closed account will still show up on your credit report, and may be considered by the score.

The launch of AnnualCreditReport.com entitles every American consumer — about 200 million people — to a free copy of their credit report each year. Check yours to see how you stack up.

Best wishes in improving your FICO.

Miel

Where To Get Honest Credit Counseling

Posted on by

Folks,

I had an interesting talk with a neighbor yesterday at lunch. He had a friend in New Mexico who was so deeply in debt that she walked away from all of her obligations; credit cards, home mortgage, student loans…everything. Generally its not a good idea to renege on your debts – it will destroy your credit. So if you are in this situation and don’t know where to get good honest help, here is what you might consider:

Contact the National Foundation for Credit Counseling. The NFCC is a network of nonprofit agencies with trained counselors who will help you assess your situation and lay out the most logical and realistic steps for you to follow. They are not miracle workers; you will have to pay off your debt. But the NFCC has been around for a while and has a good reputation.

Go to nfcc.org or call 800-388-2227.

For more about this, check out Liz Pullman Weston’s piece on NFCC and credit counseling more generally.

Good luck,

James

California’s Budget Problems Continue

Posted on by

The California Board of Regents recently approved a staggering 32% increase in undergraduate tuition over the next two years. California’s budget problems have been well-documented, but this figure blew me away. Obviously, this didn’t sit well with students, whose protests gained the attention of the police. If I was attending UCLA and paying my own way, this increase would probably spur a transfer. Yikes.

Students Arrested After 32% Tuition Hike Sparks Protests — CNN.com

Michael

Older posts
Newer posts

Boost Your Brand – Advertise with Us!

Advertise With Us

You cannot copy content of this page