Author: Mike Holman

Categories
Personal Finance

Are Canadian Cell Phone Wireless Costs Too High?

high1

It is a common perception that Canada has one of the highest wireless fees in the world. As a result, wireless penetration rate in Canada is only 62%, which is one of lowest in developed countries. Contrary to this common perception, Canadians enjoy one of the lowest wireless fees in the world through wireless retention plans from the Big Three (Bell, Rogers and Telus). I am going to discuss this using an OECD report on developed countries’ cell phone fees.

Methodology for OECP Report

OECD divides cell phone users into three groups: low, medium, and high usage. Voice minutes, text messages (SMS), and multimedia messages (MMS) are considered. The number of services is arbitrarily defined on annual usage. Important usage information is listed in Table 1 and is taken from here.

[table id=12 /]

Low Usage Comparison

Prepaid is fairly expensive in Canada. I will use SpeakOut Wireless in my analysis, since I determined it offers one of the best prepaid cell phone services in Canada.

Costs of SpeakOut Wireless using OECD low usage definitions:

  • Local Voice Minutes: 529 * $.20 = $105.80
  • National Voice Minutes (7% of calls are assumed national): 527 * .07 * $.16 = $5.90
  • SMS (SpeakOut Wireless charges $.04 for incoming and outgoing messages. To simplify things, I assume that for every outgoing text message, there is one incoming text message): 396 * ($.04 + $.04) = $31.68
  • MMS: Not available on SpeakOut Wireless to the best of my knowledge.
  • Fixed Charges (911 fee of $.79 a month): 12 * $.79 = $9.48
  • Total Cost: ($105.80 + $5.90 + $31.68 + $9.48)* 1.13 = 172.73 (5% GST, 8% PST)

OECD is estimation for low usage in Canada is $195.68 and Canada ranks 20th in terms of lowest cost in the 30 countries low usage comparison. My own calculation by using SpeakOut Wireless suggests that OECD’s calculation is representative for Canada. If my calculation is used instead OECD’s calculation, Canada would rank 19th in the low usage comparison. I conclude that Canada needs to have better prepaid options for people with low usage.

Medium Usage and High Usage

Here is where I would disagree with OECD methodology of calculating Canadian wireless fees. OECD used retail wireless plans in Canada, but in reality, most Canadians are able to get wireless retention plans from the Big 3 after a year of contract with any one of them or through retail promotions that occur once or twice a year.

[table id=13 /]

As seen from Table 2, a standard retention plan covers OECD medium usage and high usage definition. Annual total cost of this standard retention plan is $372.22.

Medium Usage Analysis

According to OECD’s medium usage analysis, Canada ranks 27th out of 29 countries in this section. If my calculation is used, Canada would rank 21th out of 29 countries. There is a big difference depending on the methodology used and it could be argued that there need to be better medium usage plans.

High Usage Analysis

According to OECD’s high usage analysis, Canada ranks 19th out of 30 countries in this section. If my calculation is used, Canada would rank 10th out of 30 countries. I believe this is the evidence that Canadian wireless fees are one of lowest in developed countries rather than the highest. Canadian retention plans have more features and are cheaper than US retail and retention plans. I believe that the high usage analysis is the most important and this is the category that most Canadian wireless users fall into.

Conclusions

If OECD introduces an ultra high usage comparison, I assume Canadian wireless cost based on retention plans would be among the top 5 in developed countries.

Canadian long distance can be very expensive, but retention plans usually come with either 100 or 1000 Canadian long distance minutes. In fact, there are Canadian long distance and North American long distance unlimited calling packages from retention departments. Canadian long distance should not be an issue on retentions, but Canadian long distance can be a real issue on regular retail plans.

Retention plans are really great and I use about 1000 to 2000 minutes and 100 text messages a month without any overages. It is possible to use even more minutes and text messages, but it needs to be used within the provisions of the retention plan like 6pm unlimited early evenings, unlimited network calling, unlimited incoming, or unlimited calling to 5 numbers. If you do not have a retention plan right now, do call in and ask for the retention department. It is very likely that you will be given a retention plan by just asking nicely.

Photo Credit: nutmeg15

Categories
Real Estate

Refinancing Your Home Mortgage. Is It Worth It?

Expensive house

Because of dropping interest rates – mortgage brokers have been falling over themselves this year to try to get clients to refinance their home mortgage and get a lower rate.  Brokers of course, make money from refinancing, so this is a good deal for them.  The idea of having a lower interest rate and being able to lock it in for a while, can be quite appealing for the home owner.

We were contacted a while ago by our mortgage broker about refinancing our mortgage.  I was skeptical that there would be any benefit, but of course I wanted to look at the numbers.

Refinancing fees

This is the greater of three months interest or the interest rate differential (IRD), which is the interest differential payable on the two different rates.  Ie if your current mortgage rate means you will pay $10,000 in interest over the next 2 years and you get a new rate which only involves $6,000 in interest, the breakage fee will include that $4,000 of lost interest which the mortgage company won’t be collecting.  This breakage fee may seem like a lot if you have a several years left on your mortgage, but it makes sense.  Why would a company forgo $X of interest (and profit) by letting you lower your interest rate without charging a fee to cover it?

In our case, we have a five year mortgage.  First off –  please don’t tell me about how shorter term mortgages are theoretically cheaper over the long time.  I’m well aware of that – however in our case it made sense to lock in because at the time we couldn’t handle a large interest rate increase.  There are three years left in the mortgage at 5.19%.  According to our mortgage company FirstLine – the breakage fee is $4834 + $100 or $300.  The $100 fee applies if we stay with FirstLine and the $300 fee is if we don’t.  Since we would probably stay with FirstLine, our fee would be $4934.

One interesting strategy is you are planning to break your mortgage is to maximize any amount you can prepay without penalty by borrowing the money and then paying it back with the new mortgage.  You can read more about how to save money when breaking a mortgage.

Do we save on interest?

One scenario I looked at was:

  1. Keep our existing mortgage for 3 years at 5.19% or
  2. Break the mortgage and get a 3 year fixed mortgage at 3.59% (taken from ING site).  The idea is to directly compare the benefit over 3 years with known rates.  I calculated that the interest savings would be $4675.  In other words the breakage fee will exceed the interest saved by $259.  As previously mentioned – this makes sense since the mortgage company is not going to voluntarily give up profit that is already under contract and if they can make some extra money they will do it.  I didn’t get a quote from FirstLine or anywhere else for a better rate so it’s quite possible that the interest saved might be slightly more than my example.

Conclusion – Not worth doing in this situation.  The breakage penalty is roughly equal to the interest saved.

[edit]  I forgot to include the amount of the breakage fee which gets added to the mortgage.  This amount will accrue interest and will lower the profitability of refinancing.

Refinancing can lower your interest rate risk

Another scenario is:

  1. Keep existing mortgage for 3 years at 5.19% and then getting a 2 year mortgage at ?% or
  2. Break the mortage and get a 5 year fixed at 4.15% (from ING).

One other benefit of breaking your mortgage is to lock in a great rate for a longer time period.  This made a lot of sense a few months ago because the long term rates were so low.  If we did that strategy then we would break even or lose a bit in the first 3 years.  However if interest rates were to go up over the next few years then we would make a profit because the last 2 years would be locked in at 4.15%.  Had we kept our original 5 year deal in that case the interest rate paid on renewal would be much higher than 4.15%.

The problem is that to do this calculation you would need to know what the 2 year fixed mortage rate is, 3 years from now.  Is it lower, the same, higher, a lot higher???  You can create all the spreadsheets in the world, but it’s still a guess which is why I didn’t do an actual calculation for this scenario.

We are aggressively paying down our mortgage and will hopefully be done with it in about five years.  What this means is that in three years, our outstanding balance won’t be all that large, so the risk at that time from higher interest rates is not that meaningful since our payments would still be quite manageable, even if rates were 10% or higher.

Jump to shorter terms and lower rates

Another strategy for refinancing is to go from a fixed long term mortage to a shorter term or even variable term mortgages which have lower rates at the moment.  This is another strategy where you are basically trying to predict the direction and timing of interest rates.  If you are successful, you might save a lot of money – if not…well that’s too bad.

Historically low rates

What if you don’t have a lot of time remaining on your existing (large) mortgage and would like to lock in for several years?  Given the low rates available it might make a lot of sense to break the existing mortgage and lock  in the low rates.  Locking in for 5 years, gives you time to pay down the mortage without worrying about a big interest rate reset during that time.

Don’t get sucked in by lower monthly payments

One tempting aspect to getting a lower interest rate on your mortgage is the possibility of lower monthly payments.  This could occur for two reasons:

  1. Interest rate is lower, less interest = smaller payments.
  2. You can reamortize the mortgage and start your amortization period from zero again.  Ie if you are 5 years into a 25 year mortgage and you refinance, you can restart your 25 years amortization which will result in lower monthly payments.

The problem with #1 is that you end up paying the extra interest anyway in the form of the termination fee, so you don’t really save anything.  #2 is just bad – you are just turning your original 25 years mortgage into a 30 year (or longer) mortgage.

I think it would be easy for someone to renegotiate their mortgage, pay the termination fee, end up with lower monthly payments and be congratulating themselves several months later (having forgotten about the termination fee) on their clever financial engineering (“Hey neighbour, I refinanced and saved $200 per month”).

If you get pitched by a bank or mortgage to refinance in order to lower your monthly payments, run the other way.  They might also be suggesting switching to a shorter term to get a lower interest rate.  Yes, you will save in interest, but a 1 year term or variable mortgage won’t stay cheap forever and if rates go up, your payments will rise accordingly.

Conclusion

From what I can tell, there are no direct savings from breaking a mortgage and it might even cost you a bit.  The mortgage company will charge a fee to make sure that for the time remaining on your original mortage – their profit will stay the same, which means you don’t save anything.  The only way you can benefit from breaking your mortgage is to make an accurate call on future interest rates. One such situation is if you are getting near the end of your fixed mortgage and there are historically low rates available.  It would be hard to go wrong in that situation to refinance your mortgage assuming you want to stay locked in.

You should also consider negotiating to get a better breakage fee.  I don’t know if mortgage companies will bend on this, but you never know.

Photo Credit nutmeg15

Categories
Announcements

Labour Day Beaches and Air Show – LinkStuff – Sept 6

AwesomeHappy Labour Day everyone – we’ve had a fantastic weekend in Toronto – in fact the weather has been perfect for the past week.  Saturday we went up to a beach near Wasaga and it was quite impressive.  I was expecting a fairly small beach but it was huge.  Sunday we braved the crowds to head out to Centre Island to enjoy the beach there and watch the air show.  We didn’t have a great view of the show but were able to see quite a bit.  One time we were watching and a plane went right over us from behind.  It sounded like it was about 10 feet over our heads.  🙂

AwesomeDayAtChelseaBeach

These pictures were taken with our new Canon 200sx.  Some of the pictures and videos ended up being pretty good but those planes are hard to take pictures of.  They are either too far away or moving too fast when close.  The other problem is that the view finder on the Canon is not as good as the actual camera – there were a number of times where I couldn’t see the planes on the view finder but the picture showed them clearly.

AwesomeDayAtChelseaBeach1

The links

Good Financial Cents had a pretty cool story about a friend who just returned from service in Afghanistan.  Nothing to do with personal finance but a good read.

Finance Freelance Life had a very useful post on How to save and store critical financial information for your family.  If you get hit by a bus one day you don’t want your family to have to scramble to figure out the finances (not that you’ll really care at that point).  🙂

Million Dollar Journey had another great post from Kathryn called Money and dating – finding someone with similar financial goals.

Canadian Capitalist tells us his top five investment deals.

Preet talks about a hedge fund that returned 80% last year.  And it wasn’t run by Bernie Madoff.

Financial Blogger asks Is my pension dead?  6 Killer questions to ask your HR about your pension plan.

The Dividend Guy explains why ETF marketing is hurting investors.

The Oblivious Investor has some thoughts about paying down debt vs investing.

Cash Money Life gives us a guide for estimated taxes. These are American rules.

Moolanomy also wrote about how to calculate IRS estimated tax payments.

Personal Finance by the Book thinks that a rising national debt makes the Roth IRA a good choice.  The Roth IRA is the American equivalent to the Canadian TFSA so he’s basically predicting that taxes will go up so paying your taxes now might be a better choice.

The Intelligent Speculator says it’s time to dump eBay.

ABCs of Investing explains what REITs are – real estate investment trusts.

Carnivals

Festival of Frugality

Carnival of Money Hacks

Carnival of Financial Planning

Carnival of Everything About Personal Finance

Categories
Money

Contribute Unused Vacation And Sick Leave Pay To My 401(k) Or Other Retirement Accounts

Employers already have the ability to let workers contribute the value of their unused vacation time to their 401(k) plans but it is pretty rare for en employer to do so.  A recent proposal by President Obama will make it easier for employers to convert unused vacation and sick leave pay into a retirement account such as a 401(k) plan.  The purpose of the plan is to try to encourage Americans to save more – while the American saving rate has increased from the dismal 0% rate in the last year or so – the low amount of savings that middle-aged Americans have is going to be a big problem when they try to retire.

What kind of retirement accounts will it apply for?

This program will apply to any qualified retirement plan.  401(k) plans, Roth IRA, tradition Roth etc.  It hasn’t been announced if you will have the option of splitting up your unused vacation time into different accounts or have to designate one account to be the receiver of any contributions resulting from unused sick days or vacation time.

Will these contributions be on top of existing contribution limits?

No, the contribution limits won’t be changing for any retirement accounts.  If you have already reached the contribution limit for your Roth IRA for example then you won’t be able to use that account for this purpose.

What if my current vacation/sick leave is “use it or lose it”?  Can I still contribute?

Probably not.  These changes are voluntary for employers and employees and there are no actual rules changes.  If you lose your unused holiday at the end of the year then it would be up to the employer to “volunteer” to allow these unused days to be contributed to a retirement account.  I wouldn’t hold your breath waiting for this to happen.

Will these changes encourage workers to save more?

I doubt it – workers who can already “bank” their vacation days and unused sick leave pay will just continue to do so.  Workers who don’t have the ability to carry over these days are very unlikely to have an employer who suddenly decides to allow employees to keep their vacation days.

Where there any other changes announced?

Yes.

Ability to buy US government savings bonds with your IRS tax refund.

Starting in 2010 you will be able to select “buy savings bonds” selection when filing your taxes.  Your tax refund will be used to buy US government bonds which will be mailed to you.  I’m not sure how useful this is since these bonds don’t pay very much interest and are probably a more appropriate investment in a tax-sheltered account such as the Roth IRA.

Auto-enrollment for retirement plans

Another feature of the latest proposals is to make it easier for small and medium sized employers to automatically enroll employers into their company retirement plans.  Currently there is a fair bit of bureaucratic paperwork to set this up and this process will be streamlined.

More Information

Roth IRA Contribution Limits For 2010

Categories
Personal Finance

Sony A350 DLSR Camera Review – Why A DLSR Camera?

Sony-DLSR-Camera-A350

As I discussed previously on a post about our Canon 200sx camera, our only camera up until about a year ago was an aging Canon PowerShot – a great camera in the day but now it was very slow and took very average shots unless the lighting was really good.  Three years ago, our first child was born which meant a huge increase in camera use.  At first the camera worked fine for us because he wasn’t mobile, but as my son started to crawl, walk and eventually run – the camera became somewhat useless because my son would not stay in one place for the several required seconds for indoor shots.  Outdoors (no flash) the camera performed better but it was still too slow.

Our solution was to buy a Sony A350 dlsr camera.  One of the big benefits of a dlsr camera over the regular point and shoot is the speed.  The dlsr is much, much faster.  If you aren’t using a flash then the difference isn’t huge since the point and shoot will probably operate with a reasonable speed but the dlsr is still noticeably faster.  Indoor shots however is a different story – our old camera would take forever and a day to take the shot whereas the dlsr still works at lightning speed.
As we found out after buying a new point and shoot – a good portion of the speed difference was because of the age of the old camera rather than the fact that it wasn’t dlsr.  However the dlsr is still significantly faster than our point and shoot (Canon 200sx).

While speed may have been our main motivator – another great feature of the dlsr is the ability to interchange lenses.  My wife has a pretty good Minolta lense from an old film camera that works great on our new DLSR.

Photography as a hobby

The dlsr we bought can be set to “automatic” which is how I like it.  It can also be set manually – my wife is a bit of a shutterbug and would like to learn more about photography so having a more advanced camera is a good tool for that.  This camera has room for expansion since you can buy different lenses and flashes for different purposes.

Picture quality

When comparing shots from our Canon and the Sony – for a lot of situations, the DLSR is definitely superior.  Inside shots in particular are almost always better with the DLSR.  The point and shoot gives a good challenge with outside shots with good lighting but the Soney (dlsr) still wins out.  The image stabilization feature is quite excellent.

Which DLSR camera to choose?

Since I’m not a camera expert, I can’t really comment on this other than to say that I really like our Sony A350.  It’s easy to use and takes great pictures.  For some better discussion on the differences between various DLSR cameras you should check out Consumer Reports.

Summary

We’re quite happy with our Sony A350 dlsr camera.  I will say however that for most situations we tend to use our smaller Canon 200sx.  We would like to use it more but with two young kids it’s hard to justify another piece of luggage when we go out somewhere.
If you have an older point and shoot and you want to upgrade but keep the same portability, I would strongly suggest just buying a new point and shoot rather than going to the DLSR since the DLSR is much bigger and a lot more expensive.  You will probably be very happy with the newer point and shoot.
If you want to really upgrade and take the best photos you can and are willing to cart around a much larger camera then the DLSR is a good choice.
If speed is a consideration then although the newer point and shoots are fast – the DLSR will be significantly faster.

Categories
Announcements

Monday, August 31 LinkStuff – End of Summer?

First up – Rob Carrick wrote a post in the Globe and Mail where he talks about 7 good deals in investing and lo and behold – Questrade discount brokerage is one of them.  I couldn’t agree more – cheap trades are cheap trades.  If you are paying any more for trades then you are throwing money away…. As I mentioned recently if you are a former Questrade customer and want to return without paying transfer fees then check out my post – Heading home to Questrade to find out the details.  Check out the article for yourself to find out what else Rob recommends (I agree with all of them) along the best recommendations of Canadian Capitalist, Million Dollar Journey and Larry MacDonald.

On with the top links

Million Dollar Journey had a post called “flipping houses for profit“.  I would have thought the proper title would be “flipping houses for FUN and profit”. 🙂   Flipping houses is tough if you aren’t in a rising real estate market.  In fact I think it’s pretty close to impossible to make a decent return on your money by doing this.

Preet is giving away a pretty good book.   Check out the contest page to find out the details.

Moolanomy had a pretty good post on how to sell your house fast.  Some great advice here.

Canadian Capitalist wrote about the Fraser Institute and the “average family”.  I’ve often wondered about Fraser Institute – they don’t seem to be very unbiased.

The rest of the links

ABCs of Investing wrote about investment real return.

BMM just bought a HUGE tv and has some advice about saving money when buy electronics or other high priced items.

The Financial Blogger reveals 10 professions that are still in demand.

Personal Finance by the Book compares traditional IRA or Roth IRA – which is better?

Cash Money Life tells all in Cash For Clunkers Appliances – rebates for appliances.

Good Financial Cents explains how to become a certified financial planner.

Carnivals

Festival of Frugality

Carnival of Road to Financial Independence

Money Hacks Carnival

Carnival of Pecuniary Delights

Carnival of Financial Planning

Festival of Stocks

Carnival of 20 Something Finances

Economy and your Finances Carnival

Categories
Money

Cash For Appliances Program – Upgrade Your Clunker of a Fridge, Washing Machine, Dishwasher

Fresh off the huge success of the Cash for Clunker old car trade-in program, the government is now planning a similar rebate plan for your old appliances.  Simply put – there will be cash rebates ($50 to $200) available which can be applied if you buy new appliances with an Energy Star seal.  The main difference with this program is that unlike the Cash for Clunker program you don’t have to trade in your old appliance to get the rebate.  So if you want to move your grandfather’s old 1950’s fridge out to the garage then this program won’t interfere with those plans.

The program is part of Obamas economic stimulus package for 2009 which provided money for various parts of the economy and is now going to stimulate the appliance industry.  $300 million dollars has been allocated so far.  Considering how quickly the original Cash for Clunkers funding was increased from $1 billion dollars to $3 billion dollars after it’s quick success, I don’t think it’s much of a stretch to imagine that the Cash for Appliances program could get increased funding if demand is high enough.

[edit Sept 27 – Cash for Appliances – List of Eligible Appliances]

[edit Dec 9 – Cash for Remodeling]

When does the Cash for Appliances program start?

The program is very much still in the planning stages.  It will be run by each individual state so make sure whatever information you get is applicable to your state or the state where you are going to buy the appliances in.  The government’s Energy department has set a deadline of Oct. 15 for states to file formal applications.   These formal applications will outline the exact details of how much the rebates are, who will be eligible and how the plans will be administered.  The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November.  This is just a guess – it’s very possible that it could get used up much quicker or much slower than anticipated.  I would assume that the programs will start either on October 15 or by November 1 by the latest.

The amount budgeted for this program should cover approximately 2 million appliances.  This may sound like a lot but if you consider that the Cash for Clunker program applied to 750,000 cars and was done in 2 weeks, it’s very possible that the cash for appliances funding could easily be used up in a week.  Since the original amount ($300 million) is relatively small ( it’s less than a third of the original amount allocated to the Cash for Clunkers program ) so the Cash for Appliances program could get extended several times if necessary.

What kind of appliances are eligible for the Cash for Appliances rebates?

The Cash for Appliances rebates will be awarded for the purchase of appliances which have the Energy Star seal.

Here is a list of the eligible appliances:

  • Refrigerators
  • Air conditioners
  • Washing machines
  • Freezers
  • Central and window air conditioners
  • Dishwashers
  • Furnaces
  • Water heaters
  • Heat pumps

How much will the Cash for Appliances rebates be?

This information has not been determined yet.  So far the plan is that the rebates will be at least $50 and not more than $200 per appliance.  I would assume that the larger rebates will be given for appliances that are more efficient.  For example all the refrigerators that have an Energy Star seal will have different efficiencies – it’s likely that the fridges that are more efficient within that group will get the largest rebates.

Energy savings by the consumer is also a great reason to use this program.  If you can save $100 per year on a new fridge then that’s a good deal even without the rebates.

Old refrigerators and freezers are some of the biggest energy users in homes, and getting old ones out for energy-efficient models will save customers anywhere from $50 to $150 a year on electricity bills, says Steven Rosenstock, manager for energy solutions at the Edison Electric Institute, which represents 70% of the investor-owned utilities in the United States.

Will existing state rebates still apply?

Yes, any existing rebates for energy-efficient appliances will still apply so you can “piggy back” the different rebates to get a fairly cheap appliance.  It’s important to do your research on this topic since there are different existing rebates in various states and the Cash for Appliance program will unfortunately have different rules and rebates for each state.

Why is the government doing this?

The government is funding the program in the hope that the appliance industry will get some stimulus money.  The home appliance industry has been in a big slump with sales in 2009 down about 15% from last year.

“These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy,” Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.

What should I with my old refrigerator (or other appliance)?

If your old appliance is an old clunker that can’t be sold then try to find out if your local utility will pick it up for free.  Some utilities will not only pick up the old appliance but will also pay you some money for it.

Meanwhile, utilities in many states offer to pick up and recycle old refrigerators and freezers and give the customer a rebate ranging from $25 to $50. Such programs began on the West Coast in the last decade but more recently have been moving east.

In five years, NV Energy in Nevada has picked up 50,000 refrigerators, giving $30 to customers in Nevada and California who have turned in their working, but old appliances. The company hopes to boost the program to 20,000 appliances a year and help the utility reach its goal of producing a state-ordered 25% of its electricity through renewable or energy-efficiency sources by 2025, Hargrove says.

In Michigan, where 2008 energy legislation required utilities to cut electricity production by 5% a year, the program is exceeding expectations.

DTE Energy, parent company of Detroit Edison which serves 2.2 million electric customers in Detroit and its suburbs, collected more than 3,300 appliances since starting the recycling program at the end of June. It offers $50 per refrigerator or freezer and $20 for old window air-conditioner units.

More information on the Cash for Appliances program

Cash for Clunker Appliances coming soon

Cash for Appliances – Government will give money for old appliances

Categories
Personal Finance

Carnival of Financial Planning – Edition #104 – August 28, 2009

Welcome to the August 28, 2009 Edition #104 of the Carnival of Financial Planning.

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

This edition is arranged by subject heading, so that you can browse efficiently.

Budgeting

oneadvice presents Credit Crunch: Luxuries We Won’t Say No To… posted at One Advice, saying, “Credit Crunch = Doom & gloom for frivolous spending. But there are those little luxuries which we refuse to say no to, even when money is tight…”

Dorian Wales presents The Personal Financier: Personal Finance Management: Budget vs. Net Worth posted at The Personal Financier, saying, “While it may be recommended to manage both a budget and net-worth sometimes focus leads to better results.”

Wise_Bread presents Beyond Budgeting Pocketsmith Helps You Forecast posted at Wisebread.

Susan Savering presents Personal Living Expenses posted at Family Financial Planners, saying, “When you don’t understand how much you spend and how much you save and invest, you do not have a financial plan. This dramatically increases your family’s long-term financial risk.”

KCLau presents Thoughtless Spending posted at KCLau’s Money Tips, saying, “I was surfing the web recently and an article in Yahoo finance caught my attention. The article emphasizes the need to curb spending on the miscellaneous things in daily life.”

Economics

Banker Saver presents TARP Bailout Funds: How Have Banks Used Taxpayers’ Money? posted at Banker Saver, saying, “On TARP funds and the bailout program for banks.”

Curt presents Bernanke is Crazy to Think That the Economy is on the Verge of Recovery posted at PennyJobs.com.

Super Saver presents Expecting Another Bubble posted at My Wealth Builder, saying, “Low interest rates are bound to create another bubble. Hopefully, by expecting one, I can protect our savings better that during the housing and financial crash.”

Roshawn Watson presents The Rich Get Poorer posted at Watson Inc, saying, “The implications of this recent recession have been far-reaching enough to put a big dent in American and world wealth. Both the magnitude of wealth and the number of millionaires decreased profoundly in 2008.”

Dorian Wales presents On Causality and Correlation in Economics posted at The Personal Financier, saying, “Causality is perhaps the most fundamental element of empirical evidence available to economists. However, it is also the source of many misconceptions due to its elusive nature.”

Estate Planning

Jeff Rose presents Taking Care of an Elderly Parent posted at Jeff Rose, saying, “Find of what you need to do when you have to become the parent of your parents.”

Financial Planning

Big Larry presents Is Your Attitude Impacting Your Finances? posted at Out of Debt Christian, saying, “Has the daily dose of bad economic news, political rancor and untimely celebrity deaths gotten you down? Be careful — your bad mood can translate to some poor financial decisions too.”

Dividend Tree presents Building Core Competency for Long Term Survival posted at Dividend Tree, saying, “whether it is running a business or individuals’ investment portfolio, it is important to build a core competency for long term sustainability. In my case, I focus on good quality companies that consistently pay or have potential to pay growing dividends over time.”

Patrick @ Cash Money Life presents Beyond The Latte Factor posted at Cash Money Life, saying, “5 small changes anyone can do that will have a large affect on their financial situation.”

The Smarter Wallet presents How To Build Good Credit and Clean Up Bad Credit posted at The Smarter Wallet, saying, “Here’s how to work on cleaning up your bad credit.”

Patrick @ Military Money presents Money Management Tips for the New Recruits and Recent Graduates posted at Military Finance Network, saying, “Basic money management tips for people going out into the “real world” for the first time. This article applies to new military recruits and recent college graduates.”

Bellar presents Start Your Step to Implement Personal Finances posted at Personal Finance Management & Financial Services — MyFinancialCorner.com.

The Smarter Wallet presents Credit Monitoring Services To Check Your Credit Report posted at The Smarter Wallet, saying, “What you need to know about monitoring your credit.”

Four Pillars presents Make Home Affordable Refinance Program Changes Eligibility Requirements For Easier Refinancing posted at Quest For Four Pillars, saying, “Making Home Affordable refinance program eases requirements.”

KCLau presents I achieved financial freedom at 38 posted at KCLau’s Money Tips, saying, “This post is contributed by WaiYin, a reader whom I admire very much because she achieved financial freedom at age 38! Here, she shares how she did it.”

Patrick @ Military Money presents How Much Life Insurance Do Military Members Need? posted at Military Finance Network, saying, “Military members may have different life insurance needs than civilians. Here is information regarding how much life insurance military members should buy, and some resources for finding the best life insurance deals.”

Susan Savering presents Personal Investment Strategy posted at Family Financial Planner, saying, “When pursuing optimal financial planning and investing strategies and controlling your costs and capital gains taxes, you also need to establish a time-efficient system to monitor, adjust, and adhere to your financial plan.”

Big Cajun Man presents Mid-Year Personal Finance Check Up posted at Canadian Personal Finance Blog, saying, “Mid year is a good time to go over your plan for the year to see how well you are doing, so do it now!”

Financing a Home

Doug Boude presents Buying a New Home is EASY! posted at Doug Boude (rhymes with ‘loud’), saying, “My wife and I will be completing the process of purchasing a new home tomorrow. I summarized our experience, with tips and ideas, to help encourage others to invest in their own home as well.”

Tallahassee Real Estate presents Consider Paying Home Mortgage Discount Points posted at Tallahassee Real Estate Blog, saying, “When it comes to comparing interest rates for a mortgage loan, home buyers often have the option of choosing a loan with a lower interest rate by paying discount points. Simply put, discount points are fees charged by the lender to reduce (discount) the interest rate charged to the borrower. Paying points may seem attractive, because a lower interest rate means smaller monthly payments. But is paying points always a good idea?”

Alex Fotopoulos presents When is it Smart to Refinance a Mortgage? posted at My Trader’s Journal, saying, “Some key points to consider when refinancing your home.”

Financing Education

Buck Weber presents Does a Financial Education Matter? posted at The Buck List, saying, “With so many opportunities to learn how to get it right, why do so many of us screw up our finances so badly?”

Praveen presents Students Beware! Colleges, Tuition, Loans, and Debt – Will Education Follow the Housing Bust? posted at My Simple Trading System, saying, “Tips for students to avoid excessive loans and debt”

Income

nissim ziv presents Finding a Job: How to find a job Online posted at Job Interview Guide, saying, “This article provides a beginner guide for finding a job and the basic information on how to find a job online using social media sites, online job search engines and other job portals.”

Tyler Tervooren presents Create Your Own Green Collar Career posted at Frugally Green, saying, “Sick of your daily grind? Looking to start something new? It doesn’t matter if you’re an entrepreneur or an employee. Take the skills you already have, mix in your passion for the environment, add a little creativity and you’ve got a leg up on your new pursuit.”

FMF presents Outsourcing Chores Could Be a Good Investment posted at Free Money Finance, saying, “Time equals money. Sometimes it’s a good deal to spend money to gain time.”

Praveen presents Easy Ways to Generate Cash posted at My Simple Trading System, saying, “Easy ways to generate extra cash”

Investing

Dividend Growth Investor presents 13 dividend stocks to enter on dips posted at Dividend Growth Investor.

Dan at Everydayfinance presents Option Hedge Strategy: 2 by 1 Put Spread is Cheap and Effective posted at Everyday Finance, saying, “This article provides a low-cost way to hedge the recent rapid runup in the stock market by using a ratio spread, which can return over 2000% with a nominal cash outlay.”

Praveen presents India Fund (IFN) Trade Example posted at My Simple Trading System, saying, “An example of how having a trading system gives you an edge, and let’s you take advantage of market moves outside of your control.”

Dividend Tree presents What is your preference – Aristocrats or Achievers? | Dividend Tree posted at Dividend Tree, saying, “The key question here is; are we willing to invest in companies that have still not completed 25 years of dividend growth? All dividend aristocrats were at that stage at some point in time.”

The Skilled Investor presents Personal Investing posted at Personal Investment Manager, saying, “Investors more easily understand investment costs that are directly measurable, such as fees deducted on investment statements. However, many investors ignore or are unaware of the opportunity costs of their sub-optimal investment behaviors. Opportunity costs are usually much more difficult to measure directly, but these investment costs can be even higher than more visible investment fees.”

Jae Jun presents Warren Buffett Stock Pick Portfolio | Old School Value posted at Old School Value, saying, “A look at the intrinsic value and stock holdings of Berkshire Hathaway run by Warren Buffett. Graphs and fair value estimates included.”

Silicon Valley Blogger presents Online Discount Brokers: SmartMoney Broker Survey posted at The Digerati Life, saying, “I list some great online discount brokers for your investment needs. The list is based on Smart Money’s broker survey.”

Investing Toolkit presents Why Should I Start Investing? posted at Investing Toolkit, saying, “Why we should start investing as soon as we can.”

20smoney presents Could You Retire Off Investing In China? posted at 20s Money, saying, “A look at why we should definitely consider investing in China as a long term investment.”

Jimmy Atkinson presents Talking ETFs, China, and Intellectual Property With Claymore’s Christian Magoon posted at ETF Database.

Zach Scheidt presents Lululemon Athletica – Alarming Trends posted at ZachStocks, saying, “Lululemon Athletica (LULU) has rebounded nicely from the March low. While the niche apparel company has a strong product line and has expanded the number of stores, its same store sales figures along with inventory levels raise concern.”

Aussie Investor presents Shares To Buy Now And For The Long Term posted at Australian Investing, saying, “With investors the world over having suffered through the global financial crisis, some are now wondering how best to restore the health of their share portfolios. This article discusses some of the factors I consider when looking for the best shares to invest in. By maintaining this disciplined approach investors should end up with a portfolio of good investments to see them through these troubled financial times.”

Retirement Savior presents The Best Long Term ETFs and Mutual Funds posted at Retirement Savior, saying, “The high-growth days of the US are over. Look overseas and to other continents for your investment gains.”

Dividends4Life presents Two Dividend Stocks Rewarding Patient Investors posted at Dividends Value, saying, “Life isn’t linear and neither is investing. There are always bumps in the road and before we reach the next level sometimes we must toil longer than we like at the current level. Case in point, 2 companies’ investors have waited six quarters for a dividend increase and this past week their patience was rewarded.”

Zach Scheidt presents FDIC Backs off Slightly – PE Firms to Buy Troubled Banks posted at ZachStocks, saying, “The FDIC approved guidelines for private equity firms to purchase failed banks. While the proposal was controversial when issued last month, the balance appears to be in place to offer PE firms an opportunity for profit, while still encouraging a more stable financial environment”

Frank Vertin presents Best Index Fund posted at Best Index Fund, saying, “Buying an S&P 500 index fund through an investment counselor can substantially increase your initial purchasing costs and and drive up your annual management expense fees. Unfortunately, the vast majority of individual investors buy mutual funds and ETFs through brokers and investment advisers. Rarely do financial advisors recommend that you buy index funds with low fees. This is because low cost, no load mutual funds do not pay them as well as loaded, high fee mutual funds.”

Investing School presents What the Heck is an Asset? posted at Investing School, saying, “We always use the term but what is it really? Here’s a brief explanation.”

Tomas Escent presents Quant Finance posted at Nerds on Wall Street, saying, “Think of this book as sort of a Hitchhiker’s Guide to Wired Markets. There are no robots parking cars for six million years, but there are robots trading millions of shares in six milliseconds, so maybe that’s close enough.”ABC presents Different Types of Stock Market Indexes posted at ABCs of Investing, saying, “How different types of stock market indexes work.”

Tushar Mathur presents Can’t Control the Markets? Try controlling the Costs posted at Everything Finance, saying, “As 2008 proved, the financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results that many mutual funds posted in 2008 and at the outset of 2009 may have left you feeling concerned over your financial future. You’re not alone.”ABC presents Investment Real Return posted at ABCs of Investing, saying, “A simple explanation of investment real return.”

Larry Russell presents Best No Load Mutual Fund posted at No Load Mutual Funds, saying, “Taken as a whole, the vast body of investment research studies show that there really are better approaches to buying and owning mutual funds and ETFs. You do not need to frantically chase fund performance. Performance chasing simply does not work.”

Managing Debt

Ray @ Financial Highway presents Dealing with Collection Agencies- Tips on Handling Collection Agencies posted at Financial Highway, saying, “Sometimes bad things happen to good people and find ourselves fighting with collection agencies. Here are some tips on how to deal with Collection Agencies.”

CreditCardAssist presents Credit Card Reform – How It Will Help You posted at Credit Card Assist, saying, “How the new reform legislation will benefit consumers and use of their credit cards after the new law takes effect.”

MoneyNing presents AnnualCreditReport.com For Free Credit Reports posted at Money Ning, saying, “AnnualCreditReport.com should be the only way to get a free credit report.”

Master Your Card presents Getting Your (Actually) Free Credit Report from SmartCredit.com posted at Master Your Card, saying, “A handy method for getting a free credit report once you’ve used up your three free reports from the government.”

The Dough Roller presents List of Low Interest Credit Cards posted at The Dough Roller, saying, “while credit card companies have a reputation of charging exorbitant interest rates, the truth is that many cards come with modest, single-digit APRs.”

Roshawn Watson presents Outrageous Law Transfers Parents’ Debt To YOU posted at Watson Inc, saying, “With few exceptions, such as a divorce decree, you are not legally liable for debts you have not personally signed for or agreed to pay. There is an inherent sense of fairness to this principle: your finances cannot be obligated to pay for something without your consent (except perhaps to the taxman or to your dependents). However, an archaic law in Pennsylvania is being enforced to make adult children to pay for their parents’ debts.”

Miscellaneous

MoneyNing presents How to Get Out of a Rut and Out of a Slump posted at Money Ning, saying, “Ever in a rut? Here’s how to get out.”

Four Pillars presents 2009 Cash For Clunkers Program – Trade In Your Old Junker For Money posted at Quest For Four Pillars, saying, “A comprehensive look at the new Cash for Clunkers trade-in program.”

No Load Bonds presents Bond Index Funds posted at Bond Index Fund, saying, “Simply put, if you pay higher bond mutual fund fees, then these bond management expenses tend just to be a deadweight loss to you. The best bond fund buying strategy is to pick only very low-cost no load bond funds.”

Retirement Planning

PT presents 403(b) Rollover to a Traditional IRA posted at Prime Time Money, saying, “My 403b Rollover”

Jeff Rose presents Can You Rollover Your 401k to a Roth IRA? posted at Jeff Rose.

Top Stock Index Funds presents Stock Index Funds posted at Top 10 Index Fund, saying, “Buy these top 10 very low cost no load S&P 500 index mutual funds directly. You do not have to pay the heavy added expenses of buying through a stock broker, financial adviser, investment adviser, or investment counselor.”

Barry presents Retirement Planning: Can You Make Do With Less? posted at Associate Money.

Lisa Moren Bromma presents Reinvent Your IRA posted at Wise Women Investor, saying, “Reinvent your IRA and learn to take control of your financial future by learning about the benefits of a self-directed retirement plan.”

Jeff Rose presents Using a Roth IRA to Maximize Your Wealth posted at Jeff Rose.

Super Saver presents A Gift of Retirement Funds posted at My Wealth Builder, saying, “A relatively small lump sum investment of $10,000 can lead to a significant sized nest egg at retirement.”

Risk Management and Insurance

Patrick @ Military Money presents COBRA Benefits Subsidy in the 2009 Economic Stimulus Recovery Act posted at Military Finance Network, saying, “The 2009 Economic Stimulus Plan includes additional COBRA and unemployment benefits.”

Savings

jim presents Wachovia Bank CD Rates posted at Blueprint for Financial Prosperity.

Tom Drake presents How Much Do You Need To Retire? The Rule Of 20 | MapleMoney posted at MapleMoney, saying, “While the 4% rule has become a standard quick calculation for retirement planning, there is a new rule that is similar, The Rule of 20.”

FMF presents Do You Shop Less to Save Money? posted at Free Money Finance, saying, “A simple way to potentially save a bundle.”

Taxes

Jeff Rose presents IRS is My Hero: The Heroes Earnings Assistance and Relief Tax Act (the HEART or Heroes Act) posted at Jeff Rose.

That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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