CK Blog

I’ve had my spiffy current car for several years now and thus my car loan is coming due in February 2007. Because I was silly enough at the time to get talked into getting the extended warranty and not being too aggressive about paying extra towards the loan, I had a nice balloon hurding towards me.

Sure I could hope for a good tax refund and use to pay it off or refinance it..blah blah blah. Instead I decided to try to take the more reasonable approach and just try to put every extra nickel and dime towards it that I could and get it over with. Before I did anything, I stopped by my local credit union that has the loan and made sure I had all my facts correct such as I indeed had the balloon or would need to refinance it, etc. While I was there I made a decent size payment and noticed on my receipt, it said the next payment was due in January. In effect, it was skipping over the November and December payments because in theory I had paid ahead. I asked the teller to make sure that was correct and everything and they assured me it was.

I normally don’t keep the payment amount in this account because I use another bank as my primary account. I just get the money out of the one account and deposit into the other a few days beforehand. I had planned to go ahead do just that and deposit my normal payment anyway and just transfer it just to knock down the payment that much faster. But I got busy that week with just everyday life stuff and figured I could take care of it later.

Imagine my surpise when I got a little notice from my credit union a few days ago. It was an overdraft notice. They cleaned out my checking and savings accounts that had about 2/3rd’s of the payment amount and threw on a overdraft fee for good measure. I didn’t even think about my car payment when I got the notice. I haven’t used my checkcard nor written any checks on this account in ages so I thinking how could I have an overdraft? I’m pretty good (well usually) about this stuff and never had an overdraft before. Apparently even though my next payment was not due until January, their system automatically makes the transfer anyway.

I even got my statement that same day in the mail and it said the next payment was January. So I had a the original teller, the bank statement and a couple reciepts from where I had made loan payments that all said January. The teller was just sorta like thats just how things are and refunded my overdraft fee. I don’t really know what I had been wanting done, but I left feeling unsatisfied. I know there wasn’t much the teller could do besides refund the fee, but I guess its a prinicple at stake thing. If they would have said, you still need to pay November’s payment even with the extra payments, I would have been cool with that. I would have made 100% sure the money was in the account before the due date. Instead I trusted them saying January and got my first overdraft ever.

I deposited the amount for December while I was standing there with the teller to make sure it didn’t happen again. Of course though I happened to check my account tonight while setting up Yodlee and they automatically transferred out the remaining 1/3rd of the payment so I need to go back and deposit more anyway.

Since I have been on vacation this week, I had a bit more time to mess around with stuff I normally don’t get a chance to. One of the things I decided to try out was the paid to try offers sites such as Cashduck and Deal Barbie that I had read about a bit about on a few blogs. Although the various sites have similar offers I’ve mostly been exploring Cashduck because Kira from Penny Foolish runs it.

It has been said noone hires a stranger, which is why networking is so important in job hunting, but I had similar reasons in choosing Cashduck over the others. With Kira there is a real live person that you can read about and relate to, whereas the others are just websites. They are fine websites, but as dumb as this might sound, the connection isn’t quite the same. True I don’t know Kira any better than reading a few blog entries, but that was enough to make a difference in picking one set of offers over another.

One of the first items in about every article you read about saving money is to shop around your auto insurance for cheaper rates. While this is not a bad idea, I will be the first to admit I have not been aggressive about switching mine around even though I could probably save a few bucks a month by doing so.

The reason I have not is my agent whom I have had insurance with as long as I have been driving. He is the brother of a person who went to school with my dad and became my agent by default because he was my parent’s agent when I started driving. When I had my first accident that required claims and was freaking out after talking to other insurance people, who was there to calm me down and explain what to do. Well in that case it was his wife, but in some ways that is the point, he is not some guy on an 1-800 number looking at a policy number on a screen, but a guy who I can call and reach him or a member of his family and they recognize who I am by name. When my little brother wanted to know what and why he was paying the amount for insurance that he did, he was the one who sat patiently and went over line by line explaining all the factors and benefits received.

I know I could probably receive good service from some other company whether the person was across town or 1000 miles away via the phone, but I don’t feel the need to rush out and make a bunch of changes because of the loyalty factor. Does this mean I would not switch if I found out I could save a serious amount of money? No of course not, but the threshold is probably a bit higher than otherwise.

I know that this all comes in large part from my parents. They are the type that tends to stick with those they know. I get my glasses from a local optical store that my dad once wrote a story about and got to know the owner. The owner liked the story and gave my family a discount that continues to this day even though a new generation has taken over the store.

Of course, the loyalty can vary over time, which can lead you to reconsider the basic question, at what price, loyalty? In the case of the optical store, as new people take over, the same connection as with the original owner does not exist. Maybe they are not as aggressive about the discount or would prefer to get rid of it, but then again they do not have quite the same connection with me or the parents that existed with the original person. (As a disclaimer, in this case, I was speaking in part hypothetically; they have always honored the discount without saying one word of question as far as I know.) It is a two-way street though; I do not have the same connection to them either as my dad has. Although I have always gone to them for my glasses, my level of loyalty is not the same as my dad’s. Similarly if my auto agent were to retire and his son or someone else take over the agency, the level would not quite be the same because the connection with the new person has not been established to the same extent. Sure the relationship could built over time, but maybe along the way, cheap glasses at the Wal-Mart optical department or great rates from another company capture my attention in the meantime.

I am not trying to make the point that loyalty is good or bad, but instead to consider the impact that it has on our day-to-day decision making when it comes to our finances. It is a never ending aspect of the consumer experience, businesses are always trying to find new ways of increasing consumer loyalty, and consumers always have a choice where to make their next purchase from. So what is the price of your loyalty?

Awhile back, I wrote about my lack of ability to conslidate my student loans with a company besides Sallie Mae due to the single lender rule. Congress finally repealed the single lender rule as of June 2006, which should make for a more competative loan market for students. At the time I conslidated my loans, there were some nice offers that I had considered before discovering I couldn’t easily take advantage of any of them. I can only imagine how the market might change and the deals that could be down the pike if people are freely able to change their lenders.

     My conslidation did go through without a hitch and my bill gets paid to Sallie Mae every month without any problems so far. I’m locked in at 2.875%, which isn’t much to complain about espically compared to the 7% and 8% that I’ve seen other people have. Of course I have many many years of repayment to look forward to, but I got two degrees at least right?

     But seriously for anyone in college or about to go into college, take a moment to consider some random free off the top of my head advice.

• First, find and apply for lots of scholarships even if you think you may not qualify for anything, it doesn’t cost you anything but some time and the worst they can say is no. But you may get lucky and get a decent amount of college covered through this manner.
• Second, don’t just take out student loans for whatever maximum you can. Take a moment to consider what you really need and what you can cover through other sources like a job.
• Third, once you have that job, live within what you make. You’ll tell yourself its okay to spend money now because after you graduate you’ll make lots to make up for it. But make things easy on your future self, work a few extra hours and save a few bucks up.

     On our way back from a 12 hour drive from Charleston, my sister-in-law and I got on the topic of the past. In particular, if you could go back in time somehow, would you try to change things about your life? Although our context was more on a general nature such as relationships, I thought it could just as easily apply to one’s financial life.

     Think about it for a moment, if you could go back and tap that 18-year-old self on the shoulder, would you tell them to avoid credit card debt or racking up student loans? Maybe you would tell them to be more frugal or work a few more hours to save up some cash. Would they have really listened? Looking back upon my own life I can think of plenty of decisions I have made about my finances that I know now were not always the best ideas. However, to be honest, I am not sure I would change a thing. Would it be nice if I had less (or none) credit card or student loan debt right now? Sure! Ultimately, I had to go through all that stuff to learn my lesson to get me to the point that I am in my life now.

     I have always had a good understanding of money and got the concept of debt is bad and saving is good, etc. Even when I was a lot younger, I could give people some solid advice and knowledge about money and personal finance, but did any of that stop me from doing many of the same things I could warn others about? Nope. I could rationalize why this is from so many different perspectives, have many good excuses and a few people that could share some of the blame but ultimately know its all on me. So did I make many mistakes along the way? Yes, but I also learned a lot from those mistakes and work at trying to avoid them again and maybe even help a few others avoid them. I still do some dumb things with money and I will have to pay for those as well, but I think I am doing better and will continue to do so.

     Check out some thoughts that Single Ma had along these lines.

     As a general thought about this topic, not just in the personal finance context, remember when you think about wanting to erase some crappy time in your life, think about what might have happened that turned out great for you. We never know how our decisions today will affect our lives later on. Maybe losing that job will open a door for you to get an even better one that you might have never tried for because you were comfortable (stuck in a rut?) in you old job? Maybe going through a bad relationship will cause a path for you to meet a great person for you later on that might have never crossed your path. I will admit that it works both ways and maybe your decisions could be altered so something even better or worse could have occurred, but playing what-ifs really just messes stuff up, so quit it already! =)

A long while back, I heard about DRIP programs as an investment method. The basic idea is that if you own at least one share of a stock in a certificate form, you can buy more stock directly from the company while avoiding paying the normal broker commision. A few companies even will give you a discount on the stock program. The main problem is getting that first share in certificate form since it is virtually always held by the broker. Why? Because its cheaper for the broker to keep the certificate themselves and hold onto it for you, than having mailed to you. Plus you have to worry about possibly losing it or mailing it when you want to sell or a merger occurs…etc. Also to get a stock certificate in your name ussually requires a nice fee to your broker in the neighborhood of $35 – $50 a pop. So while I was researching about it, I came across Oneshare.com that specializes in selling one share of stock in certificate form. While it can be used for the purposes of a DRIP program, there are other cheaper alternatives to use since Oneshare is more along the idea of giving the share of stock as a gift.

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Today I cancelled my Netflix account. Overall, I can’t say I have any real complaints about the service and would recommend it to others. My main reason for canceling was purely a usage vs. cost consideration. Before I got Netflix, I only rented movies every so often from a local video store and the whole hassle of dealing with making an extra trip to return them and late fees.

I signed up with Netflix after seeing an offer from AAA that gave you $12 for joining and keeping it a month. My movie viewing did increase and I got caught up with several movies I had wanted to see. The post office that the movies are shipped back to is right near my work. So that meant if I timed my returns correctly, I had a 3-day turn-around. For instance, if I dropped it in the mail on Tuesday, they would receive it and mail my next movie on Wednesday, and I would receive it on Thursday. Of course, if you return it on Friday or the weekend, you are not getting it until Tuesday at the earliest. Every once in awhile, there would be a hiccup in returns. I would return two at once and one would be processed the next day and the other a day or few later. I cannot say for sure though if that is a Netflix issue or a USPS issue. I know someone who works at the post office that mentioned the Netflix envelopes are trouble for their machines so sometimes they get piled up until someone can manually work them.
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     Have you ever come across a really great offer? Let’s even say it is an opportunity for you that makes a few bucks with time being your main investment. What do you do that information? Do you share it with scores of others on the Internet? Clue in a few close friends or relatives? Keep things quiet to yourself?

     I have been pondering this whole thought for a little while now after I came across such an opportunity. I found out about it in a off-hand mention buried in a long theard on a message board. So right off the bat, I would have been out of luck if this person had not shared about it in their message. Granted in this case, the information is not secret per-say, but wasn’t hugely publicized either at that point. I did make a nice little amount of money when it was really active, not enough to get rid of my credit card debt or anything but still worth my time while it lasted.

     In the end, this particular deal followed the normal pattern and the gravy train ended as more people found out about it and the rewards got smaller and smaller till they mostly went away. For some dedicated souls, there is still money to be made, but the old happy days are probably gone for good.

     Back to my original question though, what do you do with your deals, potentially if they are of a more fragile nature? I tend to find that most times, even with the best of deals most people won’t take advantage of the opportunity anyway. I remember back when ING Direct had a really nice referral offer where a new customer only had to put like a dollar in your account and both you and the new depositor got a little bonus. I mentioned it to a few friends, not only because I would have liked to recieve the bonus, but because it was a good deal just from the interest rate alone compared to what they were recieving. Did any of them jump at the chance? Nope. I was just dumbfounded that people would walk away from free money that barely required any work and no risk. Compared to other deals that have come across my way that required a lot more risk and potential capital, this one was a piece of pie.

     Then again, I shake my head in disblief when I hear my coworkers talk about how they don’t take advantage of the company’s 401k and thus walking away from free money ever paycheck in the form of the company match. Then there is those who do participate in the 401k, but keep their money in super conservative investments that no where match their age or retirement needs. I won’t even go into the coworker who constantly keeps two 401k loans out and keeps their 401k mostly in money market funds.

     I’ll grant you that paying off debt could be a mathmatically reason for not taking advantage of a 401k, but of course most people aren’t exactly using that approach either.

     In the end, I am no closer to having an answer to this ponderable for myself, and probably will continue to try to spread the knowledge among my peeps when it seems appropriate, but know it’ll probably a losing battle.

My younger brother really likes to download music. But now days with the legal entanglements of the practice, a search was on for a good source of music that was also reasonable in price. A friend of mine uses the ITunes music shop and really likes it. Every so often, he will connect his IPod and pick out a few new songs to download. Sometimes it will only be a song or two, other times the session will mean twenty songs. Overall, given the $0.99 price, that is not a bad deal since its only a bit more than you would spend if you had a retail CD every week or two habit.

Given his economic status currently, my brother was hoping to find a lower price alternative. What is the first name that comes to mind when you think about music online (besides ITunes)? Napster of course. In particular, I have seen plenty of ads where they proclaim how you can download lots of music that would cost you $10,000 to fill up your IPOD with ITunes for only $15 a month with Napster.

Sounds good right? So we get online and download the software. As far as I can recall, there were no real problems to install it. Once it was setup, the first thing I noticed was it had real ITunes type of interface feel to it. Anyway, we registered and selected the 7-day trial they offer to see what it was like. He downloaded a couple of songs and planned to try later to really search and try it out. In the mean time, I decided to do some more research about it.
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The grace period on my student loans is ending, so Sallie Mae has processed my consolidation loan and sent me the terms of my repayment. I know there were potentially better deals for consolidating the loans that I have read about on Fatwallet’s Finance forums, but I was out of luck due to the single lender rule. The gist of that rule apparently is that if you only have one lender (ie: your school uses Sallie Mae to process your loans), you have to consolidate with them. Although you can also run into problems due to the selling of loans, even though you may have probably from Bank A, when it comes time to consolidate, there is no guarantee that they have not sold your loan along the way. It is common for banks to take the loans they have made, bundle them up together and sell them to others as an investment so the bank has more money available to make loans.

FinAid has some advice for getting around this rule. Of course, when I was in school getting loans, I had no idea about this rule or the potential benefits to me when it came to consolidating time, otherwise I might have tried to do something about it. That is not to say I would not have consolidated with Sallie Mae, who knows…but I would have had more options without as much hassle and work if I wanted to try to bypass the rule.

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