User dan - ourluckydime

What's your favorite "money" cartoon?

2009-10-10T07:15:28Z

Here is one of my favorites:

Why do stock prices go down when the jobless rate goes up?

2009-10-02T16:26:07Z

With the recent news about joblessness (is that a word?), it seems like markets sank a bit.

Why do stock prices go down when the jobless rate goes up?

Visiting Disneyland on the cheap

2009-10-02T21:28:27Z

My family has been talking about going to Disneyland for the past 2 years now, and my wife and I are going to finally save up and do it.

We'll be there a week.
We don't live in California - and we'd like to stay in a hotel.
We'd like to fly, if possible (but we're about 8 hours away by car and we think this might be reasonable).
We're not afraid to cook our own meals, but we'd like to eat out as much as possible (it is a vacation, after all)

What are some ways we can minimize expenses during this trip and maximize our fun?

Answer by Dan for How do you beat the urge to buy on impulse?

2009-10-19T18:06:19Z

A few simple (but not easy) tips:

Have a written budget that includes a 'blow money' category.
Spend every dollar on paper on purpuse.
Withdraw that 'blow money' category money in cash

Use cash for those impulse purchases. This will do 2 things:

Psychologically, the 'pain receptors' are activated in the brain when you use cash. This will discourage you from frivolous spending. It will literally 'hurt' a little
You can't spend more than you have if you have cash. But you'll be more inclined to bargain or find a deal (and this is good).

Answer by Dan for What is a derivitive?

2009-10-15T23:22:27Z

From the Wikipedia article here:

A derivative is a financial instrument that is derived from some other asset, index, event, value or condition (known as the underlying asset). Rather than trade or exchange the underlying asset itself, derivative traders enter into an agreement to exchange cash or assets over time based on the underlying asset. A simple example is a futures contract: an agreement to exchange the underlying asset at a future date.

Derivatives are often leveraged, such that a small movement in the underlying value can cause a large difference in the value of the derivative.

Derivatives are usually broadly categorized by:

The relationship between the underlying and the derivative (e.g.
forward, option, swap)

The type of underlying (e.g. Equity derivatives, foreign exchange
derivatives, credit derivatives)

The market in which they trade (e.g., exchange traded or over-the-counter)

Answer by Dan for Saving for larger purchases

2009-10-15T15:38:25Z

I think you're on the right track. Strict budget = good. That extra money you're sweeping to a savings account is a great idea (it's what my family does).

We then just keep track of what we have saved for our individual items using a 'breakdown of savings' spreadsheet. You can use the worksheet here or come up with your own spreadsheet like we did.

Answer by Dan for Which Online Broker should I use

2009-10-15T15:32:22Z

What do I use?

E*Trade.

Simple, fantastic support both on and off the site, good research sections, and an iPhone app that works very nicely.

Oh, and SmartMoney (the magazine) rated them the #1 Online Broker.

Answer by Dan for When is it ok to allow foreclosure on a house

2009-10-11T12:23:56Z

Well, to be honest, I think you answered your own question when you said:

I am not technically in hardship. I am only $100 or so in the red each month

Really, you need to sell this house. I know that you think you won't get all your money back -- but you'll have to either a.) get a short sale offer and take it to your bank to see if they'll accept it or b.) get a regular bank loan for the difference.

I'd be willing to say that option 'b' is going to be the best for you if you can swing it: yes, you'll be in debt a bit longer, but you'll be done with that higher mortgage payment and you won't take a hit on your credit.

Also, when you ask:

Besides any moral issues, what feedback do you have?

Are you stating that you don't want any feedback on the moral issues here?

How does the Olympics benefit the host city's economy?

2009-10-02T16:22:46Z

I've heard a lot of hype lately, with the International Olympic committee deciding on their next city soon. How does the Olympics benefit the host city's economy?

Answer by Dan for What sorts of bonds (if any) should I start investing in now?

2009-10-10T06:59:51Z

Don't buy bonds. You get a crummy return.

Dave Ramsey (a man who explains things much clearer than I do) explains in this article on his website:

One dollar invested in bonds in 1801 would yield $13,975 today.

One dollar invested in stocks in 1801 would be worth $8.8 million today.

One dollar invested in gold in 1801 would be worth $14 today.

Warren Buffet (a man much smarter than I am) says "they're not a buy at current yields" ... which is just a nice way of saying you get a crummy return.

Answer by Dan for Is there a fund of green energy companies?

2009-10-10T06:53:05Z

There are several financial articles that discuss these types of funds at length. If you're in a hurry (and I don't recommend you invest in a hurry) here they are:

Answer by Dan for Whats the best low cost index fund available?

2009-10-10T06:41:57Z

Warren Buffet is a very bright man -- so I don't mean to come off as trying to pretend that I know more than him. But I don't think it's wise invest in anything you don't understand -- whether Warren Buffet says you should do it or not.

However, I do have a few points of advice:

Read up on what index funds are
If you're sold on index funds, then generally speaking I would suggest something like E*Trade's S&P 500 index. According to this article on fool.com, "The Vanguard S&P 500 fund has outperformed over 90% of all domestic equity mutual funds over the past three and five years (and a much higher number if you include bond and international equity funds)."

As a sidenote, I have always enjoyed reading Warren's 'Letters to shareholders'. They give a very interesting insight into his investing style and honesty.

Answer by Dan for On-line personal finance management tool

2009-10-05T04:59:12Z

There are a few others that I know about (that might be of interest to you):

Geezeo

Buxfer

Mvelopes

Answer by Dan for Which personal finance blogs do you follow

2009-10-05T04:53:20Z

The Consumerist

Answer by Dan for Tools for organizing your financial accounts

2009-10-02T21:22:05Z

My wife and I use 2 excel spreadsheets: One breaks down our income and budgeted expenses on a paycheck-by-paycheck basis. The 2nd spreadsheet breaks down our savings account into several infrequent expenses. (If you're interested, these 2 spreadsheets are based on Dave Ramsey's allocated spending plan and breakdown of savings worksheets).

To backup and share information, we use Dropbox. This allows me to see the the latest synced version of these spreadsheets on my iPod touch.

For secure access and storage of bank account information (like passwords or account numbers) we use Keepass.

To manage day-to-day expenses, we use an envelope system. My wife and I each have one of these.

And that's pretty much it. It's simple and effective.

Answer by Dan for Best credit card rewards program

2009-10-02T21:06:08Z

Bankrate has a great section detailing current rewards cards and what benefits they offer, so you can compare easily and in one place.

That being said, I don't use any credit cards. The best reward is the one you give to yourself (and don't involve jumping through hoops from another company).

What is a bond?

2009-09-30T17:48:27Z

What is a bond? Why might I want to purchase one?

Answer by Dan for David Ramsey's Financial University

2009-10-01T22:07:17Z

I have personal experience in the program and recently became debt free using Dave's debt snowball.

There are 7 'baby steps' as a part of the Dave Ramsey program (taken from the website):

If you're curious about this way of living, I encourage you to check out his free daily podcast. The podcast is the first hour of his syndicated radio program, and there is a new episode every weekday.

Generally speaking, his plan encourages you to get on a written budget, avoid risk by getting out of debt (and staying out of debt), building cash reserves for emergencies, and investing in things you understand with cash you already have. The one debt Dave "won't yell at you for" is a 15 year fixed rate mortgage where the mortgage payment is no more than a quarter of your monthly take-home pay.

I love that he shares his life experiences in addition to his financial good sense -- and he's not afraid to call people out on their stupid behavior.

In going through this program together, my wife and I have grown together. We each have an equal voice in our finances now -- we even involve the kids in some of our financial meetings now (and they have contributed some great ideas).

One of the things that helped us the most (even though it was painful at first) was going 'full boar' with the envelope system. The envelope system, if you're not familiar with it, is a way of budgeting and paying for items with cash. We even decided to use this system for groceries -- which scared the hell out of me at first. I didn't know if we'd have enough money to last until the next refill of our envelopes. But a funny thing happens when you start to pay attention to money diligently in a budget -- it becomes a tool that you can wield. The more you use it, the more comfortable you get with it. For the first few weeks, I was worried that this system wouldn't work and we'd be up a creek. But after using this system a while now, I can assure you it works. I sleep like a baby now.

Oh, and there's no feeling in the world like being debt free.

Answer by Dan for PayPal Balance on iTunes

2009-09-30T17:30:19Z

Looking at the Paypal User Agreement on their site, it looks like there may not be a way to get around this (and it might actually be something that Paypal is doing to limit risk to themselves):

Payment Source Limitations. In order to manage risk, PayPal may limit the Payment Sources available for a transaction. In such a case, you may choose to continue with the transaction with the understanding that you may have fewer avenues available for dispute resolution should the transaction turn out to be unsatisfactory.

I think a good workaround might be to purchase an iTunes gift card using Paypal (or some other payment source), add the giftcard balance to your iTunes account, and use that balance for iTunes purchases.

Answer by Dan for Why do currency rates fluctuate?

2009-09-30T17:20:14Z

In general, the law of supply and demand takes effect.

From Wikipedia's article on Exchange Rates:

A market based exchange rate will change whenever the values of either of the two component currencies change. A currency will tend to become more valuable whenever demand for it is greater than the available supply. It will become less valuable whenever demand is less than available supply (this does not mean people no longer want money, it just means they prefer holding their wealth in some other form, possibly another currency).

Increased demand for a currency is due to either an increased transaction demand for money, or an increased speculative demand for money. The transaction demand for money is highly correlated to the country's level of business activity, gross domestic product (GDP), and employment levels. The more people there are unemployed, the less the public as a whole will spend on goods and services. Central banks typically have little difficulty adjusting the available money supply to accommodate changes in the demand for money due to business transactions.

There is more interesting information in the source article on Wikipedia, including what choices a country might have to make when deciding how to exchange or value its currency and how these choices eventually effect the currency valuation when exchanging with another currency.

What's a fair budget for a halloween costume?

2009-09-30T00:38:11Z

What's a fair budget for a halloween costume?

Answer by Dan for What's the best way to consolidate 401K

2009-09-30T00:34:20Z

Setup an IRA account at a place like E*Trade.

Call up each of the places that you have 401k's at, and let them know you'd like to do a direct rollover. (You'll need your information from the account you just setup). You can either have those companies transfer the money directly, cut a check and mail it directly to E*Trade, or cut a check to you, and then you mail it to ETrade. Consult with the company that will have your 'target' account to determine how the check must be made out.

E*Trade even has a handy guide for rolling over funds from other places.

Answer by Dan for Best place to research investments

2009-09-30T00:24:02Z

Morningstar has a great site for researching stocks and funds.

Answer by Dan for Simplifying your finances

2009-09-30T00:21:00Z

Paperless billing / online billpay through your credit union. Spreadsheets to manage income vs budgeted expenses. Cash (and an envelope system) to manage day-to-day expenses.

If it's taking you more than 20 mins every month, you're doing something wrong. (Oh, and I'm married -- so that 20 mins includes communicating with your spouse).

Comment by Dan

2009-10-15T15:43:33Z

I have a problem with your premise: Credit ain't a game.

Comment by Dan

2009-10-15T15:42:05Z

@Kyle: Good ratio? I would suggest having NO money on credit cards. "The best debt to have is no debt", I say. Why? It's simple: Risk. Your risk is very low when you pay for purchases with cash. Your risk is high if you're bankrolling your purchases on credit.

Comment by Dan

2009-10-02T16:16:12Z

For the last point (same percentage of your portfolio in bonds as your age) -- can you site your source? Or is that your opinion?

Comment by Dan

2009-09-30T17:45:13Z

It might help to understand why you're trying to 'use almost no cash so that all my spending shows up in my bank statement.'

Comment by Dan

2009-09-30T00:24:23Z

I would have added more links, but I'm considered a 'new user' and it won't let me.