Groupon: A Broken IPO

The Internet deal website Groupon (Nasdaq: GRPN) priced its initial public offering (IPO) at $20 per share on November 3, 2011. When the shares began trading the next day, GRPN opened at $28 per share -- a 40% jump. The hype surrounding a new IPO is usually the main driving force behind a rapid run up (or "pop") such as this one.

However last week, the share price of Groupon dropped below the $20 IPO price. Stock traders call an IPO that has dropped below its initial offering price a "broken IPO". So, Groupon is now considered a broken IPO. Could it be that the market for online coupon and deal sites is saturated? Groupon certainly has a lot of competitors, as was mentioned in this post about websites similar to Groupon.

I have written about buying IPOs before on PFStock. While getting into an IPO can be a way to make money quickly, I have warned that not all IPOs go up in price. A point that I will again underscore is that buying an IPO can involve significant risk! This appears to be the case with Groupon.

Disclosure: I do not own any interest in Groupon.

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PFS

Get $150 Cashback from Discover Card

Discover Card just sent me an Email offering a $150 cash back bonus for opening a new credit card account. Like every other credit card offer out there, they have certain conditions that you must satisfy to receive your money. For this one, you basically have to charge $1000 to your card within the first 90 days.

Update: The original offer has expired.

It is worth noting that new card members will receive a 0% introductory APR for the first 6 months. This is helpful if you run a balance, but that doesn't matter much if you usually pay off your card every month.

Additionally, I will note that Discover Card offers a 5% cashback bonus on a "seasonally rotating" list of spending categories. For the remainder of 2011, these bonus categories are as follows:

Q4 2011: Restaurants, Department Stores, Clothing Stores




PFS

Get a $1,750 Gift Certificate

Great news! I just received an Email from TD Ameritrade with a remarkable offer. Apparently, I am one of their pre-selected clients who is eligible to receive a $1,750 gift certificate for Ritz-Carlton or Marriott Hotels. All that I need to do is deposit or transfer $1 million dollars into an Ameritrade or Amerivest account. Even if I don't qualify, I could get a $400 gift card for a deposit of only $250,000. What a deal!

I know that most of my readers won't be able to benefit from this, but here is the link to this offer anyway. But seriously, I am not sure what they are thinking over at TD Ameritrade. I was going to make some additional comments, but I think the message from Ameritrade already speaks volumes.

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PFS

Flex Spending Accounts for 2012

It is that time of year again when companies hold their annual open enrollment. This is when employees have the opportunity to change medical or dental plans, and to opt into making contributions to a flexible spending account (FSA). In general, a flexible spending account allows one to deposit pre-tax dollars into the account to pay for medical expenses, or to pay for dependent care. (Note that these are two different types of accounts.) The ability to use pre-tax money to pay for expenses is a good benefit that can save you money.

Starting in 2011, there was an important change to FSA plans. Specifically, the rules have changed for the purchase of over-the-counter (OTC) medicines and drugs (such as OTC allergy medicines, pain relievers, antacids, cough medicine, etc.). This change is due to the federal health care reform law, the Patient Protection and Affordable Care Act of 2010 (PPACA). (This was a part of President Obama's health care reform plan.)

Previously, all of these OTC purchases were covered by flex spending accounts. However, starting in 2011 these OTC drugs and medicines cannot be reimbursed through an FSA unless they are prescribed by a medical practitioner to treat a specific medical condition. So, the bottom line is if you plan to purchase these OTC items through a flexible spending plan, you'd better have a prescription first.

One other thing to keep in mind when contributing to an FSA is that most flex spending accounts operate on a "use it or lose it" basis. This means that any balance you have in the account at the end of the calendar year is forfeited to your employer. This is something that I would rather not do, since I never want to leave any money on the table.

Warning:
In the current economy, I also want to warn my readers of one more potential hazard with FSAs. Having been downsized twice in the last decade, I can tell you that the "use it or lose it" provision also applies if you are terminated without cause (i.e., laid off). Any money that you have left in your FSA plan when you are terminated will be kept by your former employer. This may seem totally unfair, but that has been my real life experience.

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PFS

Citi Dividend Card Q4 2011 Categories

I had written before that I have a Citibank Dividend MasterCard. One of the benefits of this card is that it offers 5% cash back on rotating categories of merchants. The main problem I have with this arrangement is that I always forget which categories are currently offering 5% cash back when I am at the store. As a result, I often miss out on the bonus dividend dollars. In order to help me remember, I have decided to post the categories which change every three months here.

For Q3 2011, the categories are Airlines, Hotels, and Car Rentals.
For Q4 2011, the categories are Department stores, clothing stores, electronics stores, and toy stores.

Note that "Q4 2011" means from October 1, 2011 through December 31, 2011. Also note that even if you have a Citi Dividend Card, the enrollment is not automatic. You have to login and sign up for this offer at the Citibank website.

PFS

How Much Does a Bad Credit Score Really Cost You?

You could have a perfect credit score today and a terrible credit score in just a few months. All it takes is a few months of missed credit card payments to completely trash your credit score. Lot of things can hurt your credit score, but serious delinquencies hurt the worse because the credit scoring calculations place the most emphasis on payment history. But even late payments are mild compared to the damage that’s done from serious delinquencies like charge-off, collection, or worse, a bankruptcy or foreclosure.

Even people who are diligent with paying their bills on time can end up with bad credit after divorce, death of a spouse, job loss, or serious medically bills. All are situations that don’t directly affect your credit score but do impact your ability to pay on time.



Living with a bad credit score is tougher than you may realize. Lots of businesses depend on credit scores to decide who to give accounts to and how much to charge for those accounts. Businesses penalize people with bad credit by charging higher prices, additional fees, and higher interest rates.

Some companies charge an upfront security deposit to people who have bad credit. The deposit can range from $50 to $300 (possibly even more depending on what you’re applying for) and is held as a security for your account in the event that you cancel your service with a balance. Landlords, electricity companies, cable companies, and cell phone and internet service providers commonly charge security deposits. While you do get the security deposit refunded to you when you turn off your service or move out of the rental (as long as you don’t have a balance), it can be tough to come up with the extra money to establish these accounts.

It often surprises people to find out that you could pay a higher insurance premium when you have bad credit. Insurance companies are another business that charges higher rates to people with bad credit. Their reasoning is that people who have bad credit tend to file more claims than those with better credit scores. As a result of the increased risk of filing a claim, you’ll have to pay a higher insurance premium.

Not only does bad credit make you pay more money, it could also cost you the prospect of making more money. Your past credit mistakes may keep you from getting the job of your dreams. While employers don’t check your credit score, they do check your credit report, but only with your permission. If you have significant credit mistakes, like bankruptcy, lots of debt, or unpaid debt collections, you could be turned down for the job. Credit checks are common with jobs in the financial industry and higher-level management positions. Your current employer might check your credit, too, if you’re up for a promotion or a raise.

Bad credit makes it tough to get approved for new credit cards and loans. If you get approved, you can expect to have a higher interest rate, which means higher finance charges. On an installment loan, like a mortgage or auto loan, which has a fixed repayment period, the higher interest rate results in higher monthly payments. Credit cards don’t have a fixed repayment schedule, but you still pay a higher cost if it takes you longer to pay your balance in full.

Living with a bad credit score is costly, but it doesn't last forever. Most negative information falls off your credit report after seven years and you can proactively repair your credit even before the bad things disappear. The sooner you get a better credit score, the sooner you can stop paying extra money for services.

About the Guest Author
This guest post was written by James Quinn, a personal finance writer specializing in topics related to obtaining credit, debt relief, credit repair and more. Pass through the debt settlement blog for more tips and advice.

Yodlee MoneyCenter Alerts

Over the weekend, I received 11 Yodlee MoneyCenter Alerts by Email. I've written about these Yodlee alerts before. The alerts will, for example, inform me if an account balance drops below a certain amount, or a large transaction is processed. These alerts are meant to help in the early detection of fraud.

However, I received 11 of these alerts all at once, and they are for transactions going back as far as April. In most cases, the alert was to let me know that my paycheck was auto deposited into my savings account. But, the real question is why did I get 11 alerts all at once?  And, is it even helpful to know that I received my pay check nearly 4 months after the fact?

While I don't think that I could live without Yodlee to help keep track of my finances, situations like this add to my list of reasons why I have a sort of a love/hate relationship with Yodlee. Did anybody else get a bunch of Yodlee Money Center alerts all at once?

PFS

5 Money Lessons You Definitely Should NOT Teach Your Kids

Want to give your kids one of the best gifts you could ever give them? Teach them how to handle their money. And do NOT teach them the following lessons:

1) Pick a career you love, with no consideration of earning power.
Many parents tell their kids "do something you love and the money will take care of itself." That sounds nice. Everyone deserves to be happy. But can you be happy if you don't find a job? Or get into a career that doesn't give you the life you want? There's no easy answers to those questions, as many people live happy lives doing social service work, missions, or even volunteer work. And this is not to say you should discourage your kids to use their talents as actors, artists, or the like. But you should teach them some kind of balance. And if they decide to go to college, make sure to discuss the benefits of a degree, and who will be paying back the student loans, if there are any. Encourage your kids to do volunteer work, job shadowing, internships, or get a part-time job in the field they want to build their career BEFORE they make any significant investment, so they can see what the working life is really like.

2) Money comes easy, so don't worry about how you'll get it.
When it comes to teaching kids about money, giving an allowance is a debatable topic. Should you give your kids an allowance, either for doing some basic chores or just out of the goodness of your heart, so they have some money they can learn how to manage? Or not? Tough question! Here's one way to think about it - is it better to just give your kids money, or to teach them how to earn it? Just doing the same chores every week for the same amount of money doesn't really do it. Instead, think about giving them the choice - do the work and get paid, or don't do the work and don't get paid. Have them do jobs around the house - real jobs that require some work, like painting or window washing or fixing something that is broken. And teach them that to GET money they have to GIVE some sort of service and effort.

3) Keep all your money in the same place.
When you're a kid having all your money in one account is no big deal. You make a few bucks, put it in your savings account, and take it out when you need it. But as your kids get older, and as they become adults, this becomes a bad strategy. Because in 2011 if you put all your money in your bank checking or savings account, you're earning very little interest. It may be safe, but it isn't doing much for you. Or if you invest it all aggressively into a single stock or type of investment, you risk losing a LOT when the market changes. Even as a kid, if you put your money in your drawer or in a box, you risk big brother or sister taking your money, or your parents "borrowing" from your stash of cash. And none of these are things you want to have happen. So teach your kids to diversify their money early on. Need money quickly? Keep some in your bank savings account. Want to save long term? Put money in U.S. savings bonds, mutual funds, stocks...you get the idea. The more kids know about the different types of investments the better.

4) Hope is a good thing...
Hope you win the lottery. Hope you get a good job. Hope social security will be around when it's your time. Hope that mom and dad will bail you out when things get bad. And if none of these come true, don't worry, something good will happen. Obviously, this is a bad strategy when it comes to managing money, and a bad lesson to teach your kids. Instead, teach them how to set themselves up well financially long-term. Teach them how to save on a regular basis. Teach them how to start their own business or get a job when they need money. Teach them how to protect their money and not to spend all their money just because they have it right now. Then, if you want to buy a lottery ticket for fun, good luck!

5) If you want it, buy it now, worry about paying for it later.
When you're young, ask mom and dad to buy it for you. When you're older, use plastic. Same concept - buy now, pay later. Bad lesson, very bad lesson. Kids need to realize that money is a thing, not an idea. Meaning that you need it to spend it. Credit cards are a way of life for many adults, but for most people they are little more than an illusion. An illusion that you have money that you might not have. OK, if you use credit cards responsibly, or if you use them for the rewards and then pay them off every month, that's not so bad. But if you buy something on a credit card because you don't have enough cash, then what happens next? First, you get a bill for the entire balance. Then, next month there's some interest added on. Before you know it, the monthly payment keeps getting bigger and bigger...do your kids a big favor, and teach them that if you want something then you should wait until you have enough cash to buy it. Otherwise, keep saving until you do.

The best time to teach your kids about money is when they are young enough to want to start spending it. That means they understand that money is a means to getting what they want. Of course, you don't need to force them to read Forbes or the Wall Street Journal when they are 3. But it's never to early to learn the balance between spending, saving, and earning!

About the Guest Author
Kris Bickell started www.Debt-Tips.com to share the lessons he learned about getting out of debt, fixing credit problems, and saving money. Learn how to get the type of debt help you need and get your finances back on the right track.

Guest Post: Reverse Mortgage and Credit Card Debt

Retirement used to be a time for people to enjoy life without a mortgage or high credit card bills, a time when heavy debts were mostly a thing of the past. Increasingly, that's no longer true. Some seniors are taking on debt in retirement to fund a trip they've always wanted to take. But a growing number are in debt because they have no choice, according to debt counselors and a growing body of research.[i]

Reverse Mortgages can solve a lot of problems for people facing financial hardship due to the rising costs of medical bills on a fixed income. A qualified consumer can enter into a reverse mortgage which has two major benefits. The first, you no longer pay a monthly mortgage payment. This allows you to free up cash flow to pay your medical expenses and credit card debt more comfortably. The second is a source of income you can receive in monthly disbursements or a lump sum of cash. The extra income can help you become more comfortable during your retirement years and alleviate the stress of bills you are facing and the burden you may feel you are placing on your immediate family to care for you.

What many people don’t realize is that a certified debt specialist may be able to work with your reverse mortgage specialist to involve you in a plan to not only alleviate your financial troubles and burden but help to eliminate your credit card debt for less than the full amount owed. This can further assist you in preserving your precious resources for medical bills and cost of living increases you face on a fixed income.

The need for these two services is at an all time high as every single day more than 10,000 Baby Boomers will reach the age of 65. That is going to keep happening every single day for the next 19 years.[ii] Baby boomers are retiring under the umbrella of $790.1 billion of U.S. Consumer Debt.[iii] A large portion of which are adjustable rate credits cards while the largest population in US history is on or going on a fixed income. A recipe for disaster coupled with an underfunded social security program.

Because a reverse mortgage is not driven by credit it does not matter if you are falling past due on your credit card accounts, have late payments in the past, or cannot show enough income. You are facing a financial hardship on fixed income so a certified debt specialist may be able to put a plan in place for you in conjunction with your reverse mortgage to assist you in paying off your debts all at once or over time.

These two specialists working together can help turn your retirement years around by preserving more of the precious resources you need to last the rest of your life. You can move beyond the monthly cycle of medical bills and unhealthy stress of credit card debt. Working with a reverse mortgage specialist and Certified Debt Specialist can help.

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[i] http://www.usatoday.com/money/perfi/retirement/2007-01-22-senior-debt-usat_x.htm
[ii] http://endoftheamericandream.com/archives/in-2011-the-baby-boomers-start-to-turn-65-16-statistics-about-the-coming-retirement-crisis-that-will-drop-your-jaw
[iii] http://www.federalreserve.gov/releases/g19/Current/

The 2011 San Francisco Money Show

Each year, The Money Show is held at the San Francisco Marriott Marquis Hotel in the city's downtown. This a literal carnival of investing. Every year The Money Show brings in a large collection of speakers, most of whom have some sort of investing product or service to sell, who pitch their advice in 30-45 minute speaker sessions. Over the years, though, I have seen some notable speakers. The ones that I remember most vividly are Bambi Francisco (formerly of Marketwatch), James Jubak (of MSN Money), and William J. O'Neil (founder of Investor's Business Daily).

The seminar sessions are broken out into many of the hotel's subterranean meeting rooms. The SF Marriott Marquis is a huge hotel with dozens of meeting rooms that can be re-sized for practically any group of speakers. It is well suited for conventions such as The Money Show. At any given time, several speakers will be talking about different topics. Many of the speakers do have something to say about important topics. I think that the speakers representing larger firms are often trying to share their knowledge with people. But having said that, there are a lot of speakers who are just giving a sales pitch and fishing for new business.

The exhibitors at The Money Show range from large mutual fund companies and brokerage houses to individual newsletter writers and penny stock promoters. All and all, one has to pick and choose which booths are worth stopping by for more than quick glance. If you linger too long at any one booth, you might find yourself in the middle of an unwanted sales pitch. There is no shortage of reading materials for the numerous offerings that the exhibitors have. This brings me to another reason I like going to The Money Show: freebies.

I can usually cart off a couple of bags worth of sample newsletters, magazines, pens, notepads, key chains, refrigerator magnets, mouse pads, and candies. In a few cases, I have been able to come away with a USB flash drive or two. One time, I was lucky enough to get a copy of William J. O'Neil's book, 24 Essential Lessons for Investment Success. And occasionally, exhibitors will invite you for lunch or cocktails, but that usually involves listening to a sales presentation for the duration.

Oh, and did I mention that admission to The Money Show is free as well? I generally make a trek into the city for The Money Show event. Unfortunately, I am not going the year because the organizers have decided to hold the 2011 San Francisco Money Show on weekdays (Wednesday through Friday) from August 10-12, 2011. I still have a regular job to hold down, so I will have to miss it. Maybe next year.

PFS

PerkStreet Financial

I want to take a couple minutes here to talk about a unique checking account offered by PerkStreet Financial: the PerkStreet Financial Deposit Account. Coupled with a PerkStreet debit card, they offer one of the most rewarding cash back programs in America by offering up to 2% cash back on all non-PIN debit card purchases.

You typically earn at least 1% cash back on non-PIN purchases with a PerkStreet card debit. But whenever your account balance is over $5,000 for a day, they double that to 2% cash back on all non-PIN purchases. Additionally for the first 90-days after opening a new account, they are offering 2% cash back on every non-PIN purchase regardless of your account balance.

The average family earns $600 cash back every year with PerkStreet – substantial rewards that can be redeemed for gift cards at places like Starbucks, Amazon, Target or Best Buy. But PerkStreet Financial isn't just about offering a checking account with cash back, it can be a great tool to improve your financial life. Use your cash back to pay down debt, save for the future or even reward yourself. To start earning cash back with PerkStreet, sign up today!

Pandora: A Broken IPO

Shares of Internet music service Pandora Media (NYSE: P) began trading Wednesday, June 15 after the stock's initial public offering (IPO) at $16 per share. Pandora's shares rose on their first day of trading, and peaked as high as $26 on Wednesday. The hype surrounding a new IPO is usually the main driving force behind a rapid run up such as this one.

However in the first day of trading day after its IPO, Pandora closed significantly lower than after the initial pop at $17.42. Yesterday, June 17th, Pandora dropped to close at $13.40 after dropping below its initial $16 offering price on Thursday. Traders call an IPO that has dropped below its initial offering price a "broken IPO". So, Pandora is now considered a broken IPO.

The recent LinkedIn Corporation (NYSE: LNKD) IPO has brought a new focus on IPOs. LinkedIn's IPO price was $45, and started trading on 5/19/2011. LNKD skyrocketed upward going as high as $122 at one point.  However, it closed this past Friday at $65.53. While this is still greater than it's IPO price, LinkedIn's stock price is still much less than its peak.

On this blog, I have written about buying IPOs before. While getting into an IPO can be a way to make money quickly, I have warned that not all IPOs go up in price. A point that I will again underscore is that buying an IPO can involve significant risk! This is certainly appears to be the case with Pandora.

Disclosure: I do not own any interest in Pandora Media or LinkedIn.

PFS

Free Walmart Gift Card?

Has anybody heard of a company called Buyers Advantage? They recently sent me an offer to receive a $40 Walmart gift card, and the offer was made through a bank that I used to do business with. Apparently, if I sign up for Buyers Advantage, they will send me a free gift card, and I can cancel within 30 days. Otherwise, my bank account will automatically be debited a $14.99 monthly fee for the service.

But, they left the biggest question unanswered: What exactly is Buyers Advantage? Is it a type of purchase insurance, or a discount program? This point was not clearly spelled out in the offer materials. But in the very fine print on one of the inserts, separate from the reply form that you have to sign, is a brief mention that the service is a price protection guarantee program. It says that they'll refund "the difference between the original purchase price and sale price when items go on sale within 90 days of purchase in the same retail store". The program is offered through a company called Trilegiant Corporation (TLG).

So, the funny part of this marketing campaign is that they are not even trying to sell you the product, but instead are promoting the free Wal-Mart gift card offer. Also in the fine print is that they don't actually send you the Walmart gift card when you enroll. Instead you have to return another form that in included in the membership materials they send, and allow four to five (more) weeks for delivery.

After I saw how many hoops there are to jump through to get a $40 gift card, I decided not to enroll in this program. But, I'm curious if any of my readers have signed up for Buyers Advantage, and what experiences they had. I am wondering if there are complaints about this company, or if this is a scam? Did you get charged for something you didn't really want?

PFS

Motorola Spinoff

At the beginning of 2011, Motorola Incorporated was split into two companies: Motorola Solutions and Motorola Mobility. I have been a long time holder of Motorola stock. When I checked my stock portfolio on TD Ameritrade, I noticed two new stock symbols: Motorola Solutions, Inc. is NYSE: MSI, and Motorola Mobility, Inc. is NYSE: MMI. The old stock symbol MOT has been retired.

This spin off was a little bit more complicated than the usual spinoff. First, holders of the old Motorola Stock (MOT) were given 1 share of Motorola Mobility (MMI) for every 8 shares of MOT that they owned. Then, the remaining MOT shares underwent a 1-for-7 reverse split and the remaining entity was renamed Motorola Solutions (MSI). If this sound confusing, I will work through an example of what happened.

I usually don't get too excited about spin offs because they require me to re-calculate the tax basis of the stock shares that I own. In this case, I need to find the cost basis for both the MSI and MMI shares that I now own. Also when I finally sell the stock, I will be charged two sets of commissions -- one for Motorola Solutions (MSI) and another one for Motorola Mobility (MMI). The purpose of this post is to work through an example and help readers understand the tax basis calculations.

To start the process, one needs to know the opening prices of MSI and MMI on January 4, 2011 immediately following the spinoff. For MSI, the stock opened at $37.30 on January 4. For MMI, the stock opened at $31.17 on January 4. To further complicate matters, we need to adjust the stock prices to account for the split ratio from the original Motorola (MOT) stock. To do this, we need to divide the prices of MSI and MMI by 7 and 8 (the split ratio), respectively. For MSI this is ($37.30/7) = $5.33, and for MMI this is ($31.17/8) = $3.90.

Knowing this information, we can calculate the percentage of the original Motorola (MOT) cost basis to allocate to each of the two new stocks. For MSI, this is $5.33/($3.90+$5.33) = 57.75%. And for MMI, this is $3.90/($3.90+$5.33) = 42.25%. Note that the denominator in each case ($3.90 + $5.33) = $9.23 represents the value of a single share of the original Motorola (MOT) at the opening on 1/4/2011. MOT closed on 1/3/2011 at $9.11, so in essence Motorola stock gained 12 cents in value at the time of the spinoff.

Okay, so we've made it this far. Now, let's work through an example. Suppose that you owned 1000 shares of MOT that you bought at $8 per share ($8000 total cost basis). Following the distribution, you would end up with (1000/7) = 142.857 shares of MSI, and (1000/8) = 125 shares of MMI. Using the ratios that were calculated above, the allocated tax basis for MSI is (57.75% * $8000) = $4620. And the allocated tax basis for MMI is (42.25% * $8000) = $3380.

I've seen that people often do web searches using terms like "Motorola spinoff cost basis." Unfortunately, you won't be able to find your cost basis in this way as everybody's situation is different. Your own cost basis has to be calculated for your personal situation.

I will note that most cases, you will end up with fractional shares of either MSI or MMI after the spinoff. (The only exception is if the number of original MOT shares you owned was a multiple of 56 shares.) In this case, there is also a small portion of the cost basis that may be paid out as "cash in lieu" (CIL) of fractional shares. For cash-in-lieu, you would subtract that amount from the portion that is allocated to each stock.

Motorola investor relations has a webpage with additional information about the spinoff. It is located here: http://investors.motorolasolutions.com/separation.cfm

In the case of my brokerages, both TD Ameritrade and Morgan Stanley Smith Barney calculated the cost basis for me. In both cases, there was a slight difference between what my the basis would be if I calculated using the method above. My suggestion is that if your broker already calculated the the basis for you, you should go with that number unless you believe that they made a mistake in the process.

One last note is the question of whether the cash-in-lieu (CIL) distribution is taxable. In general, CIL received for fractional shares of stock is a taxable event. However last year, after Verizon spun off Frontier, I received 6 cents in CIL that was not reported. However, I got this message from my broker: "A cash-in-lieu payment is reported on Form 1099-B if the payment exceeds $20. If your payment was less than $20, it is not reportable."

So, is this explanation as clear as mud?

Update 1: On August 15, 2011, Google Inc. announced that it plans to acquire Motorola Mobility (MMI) for $40 per share in cash. They expect this transaction to close by the end of 2011 or early 2012. The acquisition will, of course, require regulatory approvals in the US, the European Union and other jurisdictions, as well as the approval of Motorola Mobility shareholders.  But if everything goes through, this will provide a closing transaction for MMI shareholders.  It will also require the selling stockholders to calculate their tax basis as this type of cash acquisition generally triggers a taxable event.

Update 2: For information about reporting the Motorola spin off on your taxes, see this post: Do I Need to Report the Motorola Spinoff on My Taxes?

Disclaimer: The example provided here is for illustrative purposes only. I am not providing tax advice, and I encourages readers to consult with a tax adviser if they have specific questions about cost basis calculation.

PFS

Ways to Save Money on Credit Repair

Credit repair can get expensive. You’ll need access to your credit reports and credit scores during the credit repair process, first so you’ll know what you need to repair and then so you can tell if your efforts are paying off. Single credit reports are about $10 — add your credit score with your report and you’ll pay upwards of $20. If you want all three credit reports and credit scores, expect to pay up to $40 each time you order your reports and scores. Order all three credit reports and credit scores four times in a year, and you’ve spent $160.

Credit monitoring isn’t any cheaper. Monitoring for all three credit reports and scores costs as much as $30 per month. That’s $360 for an entire year of credit monitoring services.

There are ways to save money on credit repair by getting your credit reports and credit scores for free. Be careful with which method you use, some free (and cheap) methods end up costing you if you don’t take specific steps to avoid the cost.

Free Credit Report
Thanks to a law passed in 2003, you have a right to order a free credit report from each of the credit bureaus (Equifax, Experian, and TransUnion) each year. Though all the bureaus offer some type of free credit report, these aren’t the reports guaranteed by Federal law. Instead, to order this annual free credit report, you must go to AnnualCreditReport.com. Only your credit report is available free through this website.

Free Credit Score
CreditKarma.com is a site where you can get access to your credit score for free at any time and as often as you’d like. Credit Karma is sponsored by advertisements so you never have to pay for your credit score. You don’t even have to enter a credit card number! The credit score you get at Credit Karma is the TransUnion risk score and it’s based on the information in your TransUnion credit report.

Free Credit Report and Score
Quizzle.com gives you free access to your Experian credit report and credit score year round, but the report and score are only updated twice a year. So, if you order your credit report and score in January, you can view it until June, but it won’t reflect any changes made during those other months. Like Credit Karma, Quizzle doesn’t ask for a credit card number and won’t charge you to see your free credit report and credit score.

Using Free Credit Score Offers
After the Federal government introduced a law requiring free credit report websites to send consumers to AnnualCreditReport.com, these sites all started offering free credit scores instead. There are several free credit score websites around, so you can get plenty of free credit scores, but there’s a catch. All the free credit score sites only give you a free credit score if you sign up for a trial to their subscription credit monitoring service. You must give them your credit card number and cancel the subscription within the specified time period to avoid being charged. If you don’t cancel your subscription, your credit card will be charged for the service until you cancel it.

Expect to be hassled a little when you call to cancel the service – the customer service representative will try to talk you into keeping the service or get you to sign up for something else. Just keep repeating no and eventually they’ll cancel the service for you.

If you use a combination of these free credit report and score methods, you can monitor your credit history for free during your entire credit repair process.

About the Guest Author
Ed O’Brien is a seasoned writer in personal finance, specializing in Credit Repair. You can find more of his articles located at CreditRepair.org.

Do You Want a Black Credit Card?

There are a couple of black colored credit cards that some people refer to as "high roller" cards. These are the most elite of credit cards and stand in a class of their own. The best known of these is probably the American Express Centurion Card. This is the original "black card."

Technically, the Centurion Card is not a credit card. It is actually a "charge card" and users are expected to pay off the balance each month. There is a one-time activation fee of $5,000 and an annual fee of $2,500. There are no spending limits and many exclusive benefits come with the Centurion card.

The application for the Centurion card is by invitation only. If you want to hold a Centurion Card, you must first have an American Express Platinum card, and have spent at least $250,000 on the card in the past twelve months. The Centurion card is so exclusive, that even the website is designed to be cryptic and vague for outsiders.

A less costly alternative to the Centurion card is the Visa Black Card. It is designed to compete with the other black card. The Visa Black Card is a traditional credit card with an annual fee of $495. While the annual fee is much less than the Centurion card, it is still pretty steep for most people.

Visa Black Card users can choose to receive a 1 percent cash back return or airline points. The Visa Black card offers some exclusive benefits and perks such as access to over 600 airport lounges worldwide and luxury gifts for special occasions. The card provides a 24-hour concierge service that is ready assist with personal, business and travel needs and accommodations. They can help with finding the perfect gift, the perfect room, or even make dining reservations at exclusive restaurants.

The Black Card is issued by Barclay's Bank of Delaware, and limits the number of members that it accepts. Personally, I carry a U.S. Airways Dividend Miles MasterCard that is also issued by Barclay's Bank of Delaware. I can attest that their customer service is pretty good (for a credit card company, that is).

So there you have it. Are you willing to pay the annual fee for these exclusive extra bonuses?

Understanding the Stock Market

The daily results of trading on the Stock Market are everywhere. The numbers scroll across the bottom of the TV screen, fill the morning paper, and affect people’s mood. Because the results of trading on the stock market are so prevalent in the news, it is a good idea to form a fundamental understanding of the stock market. A familiarity with the market can allow you to better understand the role it plays in our complex society.

Shares
The stock market exists for the trading of shares, the fundamental elements of a company’s value. A share represents equity, or ownership, of a company. A company sells shares, or equity, to raise capital, usually to expand. A buyer, the investor, purchases shares or stock of a company to receive a share of the company’s profits and to share in its growth. Stock sales serve both parties admirably well, letting a corporation share its future profits with investors while raising interest free capital.

The Stock Market Itself
The stock market exists to facilitate and control sales of stock from publicly traded companies. A privately held corporation becomes publicly traded when it offers shares, representative of tiny pieces of equity, to the market in an Initial Public Offering or IPO. Once sold, these shares can then be traded at stock exchanges, such as the New York Stock Exchange or the NASDAQ. Publicly traded shares will change in value as investors buy and sell them, hoping to take advantage of gains in share value.

What Price?
The price of a stock on any given day is driven by price expectations in the near or distant future. Day traders and other short-term investors use the daily volatility of stock prices to profit, while long-term investors consider distant future share price projections based on company growth. These two types of investors, through supply and demand expressed in buying or selling, are the key factors in establishing a share’s value.

Daily Volume and Indexes
Trading on the stock market is vast. To help people better understand it, numbers are reported out each day in two forms: volume and value.

Volume, total number of shares traded, points to the overall vigor of business because it represents the interest level in trading. Strong activity means buyers consider profits likely. While this number indicates activity, it doesn’t reveal much about value.

Value is most often considered through indexes such as the Dow Jones Industrial Average and the S&P 500. These indexes consider the aggregate values of trades with losses offsetting gains to determine if shares trended up or down. Since the market is so large, indexes are based on selected inputs, most of which are carefully selected stocks representative of the industries traded in the market. Looking at this sample gives an idea of the change in value of the entire market. People are, of course, happiest when they hear the market value is up, but an index doesn’t necessarily mean a particular stock is up in value; an index is a reading of a particular cross section of the market.

Since most people don’t own stocks directly, market fluctuations aren’t critical daily data, but a basic understanding helps put all those numbers in perspective.

About the Guest Author
When he's not reading about the latest auto news, Miles Walker looks at auto insurance comparisons over at CarinsuranceComparison.Org. His latest article reviewed car insurance Texas.

Discover Card Cash Back at Supermarkets

Get cash back when using your Discover Card. I am not talking about the Discover Card Cashback bonus that you earn for making purchases on a Discover Card. Rather, I'm talking about using the Discover Card in a supermarket, and then choosing cash back as a option during checkout. Discover card refers to this checkout option as "cash over". Here in Silicon Valley, California, I usually get my cash back from Safeway. While Discover Card limits you to $120 in "cash over" per day, Safeway only allows you get up to $60 per transaction.

This cashover works out to be a nice interest free loan since I pay off the card every month. It also saves me a trip to the ATM. It used to be that you would also earn cashback on the cash over amount. But now, Discover Card separates out the "cash over" part from the "purchases" part of your transaction, and you no longer earn a cashback bonus on the cash over amount.

Warning: I do not recommend this strategy to people who run a balance on their credit card, and end up paying interest charges on the money.

If you don't have a Discover Card yet, I suggest that you apply for one to take advantage of this deal. A few of the offers that Discover currently has are $150 Restaurant.com Gift Certificate, a 0% promotional balance transfer interest rate, and a card that offers travel reward miles.







PFS

Are We Supposed to Feel Sorry for This Person?

I came across a post on a site called Patrick.net which discusses a recent article in the New York Times. The article describes the case of Susanna Wilson of Grass Valley, California. Susanna is 70 years old and has "not a penny" of retirement savings despite having at one point earned an income of $65,000 a year. While she currently receives about $1,400 in monthly income (mostly from Social Security), Susanna has accumulated $9,000 in credit card debt -- what she jokingly refers to as "MasterCard futures".

The article goes on to mention that Susanna is part owner of several tracts of some timberland in northern California. Her house is valued between $150,000 to $200,000, and a financial planner has suggested that she consider a reverse mortgage. Nevertheless for many readers, the concept of an Under Accumulator of Wealth (UAW from The Millionaire Next Door) comes to the mind.

Articles like this one ( and the one about Law Professor M. Todd Henderson: We are the Super Rich ) tend to draw a lot of comments, many of which are, umm, shall we say "unsupportive". Here is one such comment (edited):

Are we supposed to feel sorry for this person because she never saved any money? She lives in Grass Valley in a nice house and has $150K in equity? Can she take a reverse mortgage and get a monthly check from the bank? She also owns timberland in northern California that she won’t sell because it has dropped in value? She never invested any of her earnings over the years… Her choice. Give me a break! This woman is better off than 90% of the people on this planet. For real. Cry me a river. Am I missing something here?

You can see this post and its many comments here. And for reference, I am also linking to the original article in the New York Times: A Reverse Mortgage Can Help Those With No Retirement Savings.

Should we feel sorry for Susanna Wilson? What is your opinion?

PFS

Guest Post: Plastic Containers in Microwave

A dioxin chemical causes cancer, especially breast cancer. Dioxins are highly poisonous to the cells of our bodies. Don't freeze your plastic bottles with water in them as this releases dioxins from the plastic. Recently, Edward Fujimoto, Wellness Program Manager at Castle Hospital, was on a TV program to explain this health hazard. He talked about dioxins and how bad they are for us. He said that we should not be heating our food in the microwave using plastic containers.

This especially applies to foods that contain fat. He said that the combination of fat, high heat, and plastics releases dioxin into the food and ultimately into the cells of the body. Instead, he recommends using glass, such as Corning Ware, Pyrex, or ceramic containers for heating food. You get the same results, only without the dioxin.

So such things as TV dinners, instant ramen and soups, etc., should be removed from the container and heated in something else. He reminded us that a while ago some of the fast food restaurants moved away from the foam containers to paper. The dioxin problem is one of the reasons.

Also, he pointed out that the plastic wrap, such as Saran, is just as dangerous when placed over foods to be cooked in the microwave. As the food is nuked, the high heat causes poisonous toxins to actually melt out of the plastic wrap and drip into the food. Cover food with a paper towel instead. This article should be mentioned to anyone important in your life.

HAFD

Short-term vs. Long-term Capital Gains

For any investor, one of the most important distinctions is the one that lies between short-term capital gains and long-term capital gains. The taxes you pay on your investment earnings depend on the holding period of your investment. You will be able to better plan your investment buying and schedule, and use it to better reach your financial goals, when you plan according to your investment holding period.

Short-term or Long-term?
First of all, you need to understand the difference between short-term and long-term investments. It’s a fairly basic rule of thumb:

• Short-term investments are those held for one year or less.
  
• Long-term investments are those held for more than one year.

If you bought a stock on April 1, 2010, you need to keep it until April 2, 2011 if you want it considered long-term. This is because an investment held for exactly one year is considered a short-term investment.

There is often confusion regarding investors who make use of dollar cost averaging. After all, with this technique, you don’t just buy a few shares and let them sit. You are constantly investing more. If you decide to sell some of your shares after dollar cost averaging, you will need to figure out whether the shares you sold are long-term or short-term.

In these cases, it is generally assumed that your sale will follow the first in, first out rule. This means that the shares you sell will automatically be the first ones you bought. The IRS assumes this rule (as do brokers and fund managers), unless you specify otherwise. If the first you shares you bought are more than a year old, chances are that they will be long-term investments. (This may not be the case if you sell more shares than you originally bought more than a year ago.)

There is also a method of cost averaging, which can be used if you don’t use the first in, first out rule. Cost basis is figured by adding up your shares and dividing by prices paid for them. You might want to contact your fund manager, or a tax professional, to find out more about this. Know, though, that if you decide to go with cost averaging rather than first in, first out on a fund, you will have to follow that method of determining cost basis on each sale.

Paying Capital Gains Taxes
When it comes to paying capital gains taxes, how much you owe depends on whether the investment is a short-term gain or a long-term gain. Short-term gains are taxed at your regular income tax rate. This means that if you are in the 25% tax bracket, your gains will be taxed at the marginal rate.

Long-term gains, on the other hand, are taxed at a different rate. As of this writing, if you are in the 10% and 15% brackets, there aren’t taxes on long-term capital gains. The story changes, though, when you reach the 25% tax bracket. At that point, capital gains are taxed at 15%. If you are in a higher tax bracket, that can mean real tax savings. These levels are set to last through 2012. After that, capital gains on long-term investments will be taxed – but likely still at a lower rate than your marginal tax rate.

Understanding these differences might prompt you change your mind about when you sell an investment, since you might save money if you wait a little longer.

About the Guest Author
Miranda Marquit writes about personal finance for a variety of web sites. She has her own blog at AllBusiness.com, and provides content for InsuranceQuotes.org, a site providing online insurance quotes.
If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Finding the Best Credit Card for You

What's the best card in the world? It’s a low APR card with 0% balance transfer until the end of time, travel rewards so generous that you earn a free flight once a month and the most cheerful customer service you've ever experienced. And, of course, it doesn't exist.

Credit cards are about tradeoffs. If you want a low APR, you won’t get many rewards; if you want to earn airline miles, you’ll pay a higher interest rate and probably see annual fees. And if you have bad credit, your choices are more limited than most. The bottom line is that the best card for you depends on, well, you.

Credit Revolvers
Do you maintain a balance month-to-month, using the revolving credit line instead of paying off your balance every month? If so, you should look for a card that has low interest rates and fees. The easy part is finding a card with no annual fee; those come fairly standard with low APR’s. The key is to search around for a low interest rate. Credit unions are not-for-profit financial institutions that almost always have lower rates, and are more accepting of bad credit. Oh, and forget about rewards. Any rewards card will come with a high interest rate and/or annual fee, and anything you earn will be erased by the interest you accrue.

0% balance transfer: Now that you know you’re looking for a low APR, the next question is whether you’re carrying a balance. If you are, or if you want to consolidate your debt at a lower rate, take a look at a 0% balance transfer card. These offer promotions where the balance you shifted doesn't accrue interest for the 6-24 month introductory period. The Discover More Card, for example, is currently offering no interest on balance transfers for a full 24 months.You should go with one of these balance transfer cards if – and only if – you know you can pay off your debt in the promotional period; afterwards, the interest rate shoots up. Keep in mind, too, that many of these cards come with a one-time fee of around 3% of your balance. Make sure to factor that in when you make your calculations.

Low purchase APR: If you’re not carrying a balance, or if you can’t pay off your balance in time but still think shifting your balance is worthwhile, go for a straight-up low purchase APR card. For example, IberiaBank offers cards with rates as low as 7.25%, compared to the national average of nearly 15%. Like a balance transfer card, some low APR cards also offer a 0% purchase rate introductory period, and you should similarly be cautious that you don’t get caught when the rate goes up.

The Convenience Crowd
Transactors use their credit cards only as a convenience, building up a credit score but never carrying a balance month-to-month. If you’re one of these, you don’t need to worry as much about interest rates, since you pay off your balance every month. Instead, look for a good rewards card.

One aspect that’s given more weight than it deserves is the annual fee. Don’t be opposed to paying on principle; if your stellar rewards make up for the fee, the card is a good option. Three things that you should consider:

Introductory bonus: While low APR cards offer intro periods with no interest;rewards credit cards offer signing bonuses of extra miles or points, a waived first annual fee, or a free night at a hotel. Many times, these up-front rewards make up for the annual fee. Be careful, however, to weigh the signing bonus against the overall rewards rate. If the great one-time bonus comes with lukewarm rewards rates and you plan to hold the card for a while, you should reconsider.

Base rewards rate: Most cards give something like a mile per dollar or 1% cash back, but a few standout cards pay 2% on all purchases. Read the fine print: some rewards rates only kick in after a certain amount is spent. For example, a card may give 0.5% rewards on the first $5,000 spent and 1.5% thereafter. If you spend $10,000, your effective rewards rate will be 1%. The Escape by Discover Card is a great option that pays 2% back in travel rewards on all purchases, regardless of how much money you spend, and it offers $250 worth of bonuses for signing up (1,000 points per month for 25 months). This bonus more than covers the $60 annual fee for a few years.

Category rewards: Many cards give extra rewards on certain categories, some specific to the card and some that are announced every quarter. You may earn additional rewards on groceries, restaurants, retail stores, travel, and more. Some cards offer as much as 5% back on a given category. Pick a card that matches your spending patterns: if you fly a lot on American Airlines, don’t get a Southwest Rapid Rewards card; don’t waste your time on a gas credit card if you always bike. And, as always, look at the details: some cards have spending caps, and many don’t give rewards at warehouse stores like Sam’s Club or Costco.

No matter what your spending habits or priorities are, there are a few guidelines everyone should follow. Know how long you plan to keep the card, and remember that jumping from card to card impacts your credit score. Research a card before choosing. Depending on your credit score, you may not qualify for the lowest APR advertised, and if your score has taken a temporary hit, hold out for just a bit. Be smart, be thorough, be realistic.

About the Author
NerdWallet.com is a website dedicated to educating consumers about credit cards, as well as helping them to compare credit card offers.

Guest Post: Five Steps Towards Automating Your Personal Finances

Managing your own finances can be daunting, time-consuming and overwhelming. The task requires careful attention to detail and keeping track of a large amount of data. Aside from the frustration, it is a waste of time to move various amounts of money between different accounts. Making this entire process automatic will save you time and free you from the stress of manually tracking where your money goes each month.

Direct Deposit
Almost every bank and credit union nowadays uses direct deposit. Instead of receiving your wage from your employer and taking it to the bank, your employer deposits your wages directly into your checking account. Not only does this make getting paid easier, it also eliminates the risk of losing a check or having it stolen. This is only the first step. You must have money in your account before you can manage it.

Paying Your Bills
For monthly bills that are a fixed amount, such as mortgage payments, making them automatic is easy. Most banks offer an automatic bill payment system. What they require are the names, addresses and account numbers from each of your billing statements. You then set up a recurring debit for a specific amount on a specific date each month from your checking account.

Recurring annual expenses, such as car insurance, automobile club fees and registration and license fees can also be automated. Since these are usually fixed, you can take the annual lump sum and divide it by 12. This gives you the amount you need to save each month so you will have the money when the bills are due. Set up an automatic debit each month into your savings account.

Savings and Investment Accounts
Automatic debits are not just for paying bills. You can also use them to transfer money every month into your savings and retirement accounts. With a savings account, you can start with a small amount and if you want to increase it, just login to your account and change it. A retirement account often has a cap on the amount of money that can be invested each year. Divide the cap by 12, schedule an automatic monthly debit for that amount into your retirement account, and you are set.

Overdraft Protection
Having direct debits from your checking account raises the concern about potential overdrafts. Many banks allow you to set up a savings account specifically for overdraft protection. Should the balance of your checking account ever hit zero, the bank will automatically debit your savings account with the outstanding amount.

Automatic Reminders
Sometimes money just gets screwy. You can tell your bank or credit card company to notify you if anything strange happens, like an unusually large debit over a certain amount. You can also have them notify you if your entire balance goes over or under a defined limit.

There are some transactions that simply can't be automated if you are self-employed. An example is invoicing a client or supplier. For these, use a calendar service to send you emails or text messages reminding you of what needs to be done.

Does Automation Help?
Automation helps in the following ways:

• cuts down trips to the bank teller
• reduces check writing
• saves postage costs
• erases worrying about due dates
• eliminates scheduling your monthly cash flow
• reduces stress
• saves time
• makes bounced check and late fees obsolete

About the Author
Matt is a blogger who works for an Australian-based credit card comparison website, which is designed to help Aussies compare balance transfer offers and low rate cards to reduce the amount of interest they pay per month.

Guest Post: Planning a Vacation When You Have Credit Card Debt

Excessive credit card debt is highly stressful. Working your way out of credit card debt may well be a very long-term project with many luxuries falling by the wayside. However, one item that simply can’t be neglected is a vacation. This is particularly true if the family has always gone on vacation and you use this time to relax and rejuvenate before facing another year.

Most individuals with excessive credit card debt immediately stop using the credit cards. This is important so as not to accumulate more debt and interest charges. That means vacations may need to be budgeted carefully and some corners cut so the family can enjoy the holiday but the credit card debt doesn’t become larger.

Use Prepaid Credit Cards
One of the most valuable features of a credit card on vacation is that there is no need to carry cash. However, when planning a budget vacation and avoiding more credit card debt using pre-paid cards can keep the family on a budget but relieve the necessity of carrying cash.

Car rental is not possible usually when using pre-paid cards but a budget vacation usually won’t include car rental anyway. Decide how much cash and load the prepaid card with that amount, usually it is wise to go with the highest estimate. Prepaid credit cards can be used at almost any ATM to withdraw cash.

Budget Vacation Accommodations
Take the family camper, recreational vehicle or tent. Rather than spending a lot on hotels, renting a camping spot or parking at an RV spot can save hundreds of dollars that might have been spent on hotels. Additionally family cookouts and camp cooking are possible in these venues. They can give the holiday a picnic feel and are much less expensive than eating at a restaurant.

Vacation apartments can be the most budget friendly choices when planning a trip lasting over a week or two. Often these apartments can be found at a very modest price for a short period of time and most will include kitchenettes. Cooking breakfast in the apartment before going out for the day, packing lunches and returning to cook dinner can save a lot of money when in a strange city.

Bed and breakfast lodgings are available in some areas. They can range from very expensive and luxurious to charming and moderately priced. Most owners of B&B are happy to accommodate families and, off-season in most areas will see a reduction in pricing for all accommodations.
If you do elect to stay at a hotel or motel then make sure you choose one that allows kids to stay free. This can save a lot of money over children being charged the same as adults.

Plan off Season Family Vacations Where Practical
Family vacations that include visits to theme parks are usually much more budget friendly when planned during the slower seasons and during the week. Weekends are usually resort, beach, and park areas busiest times. Tickets to events and entry to theme parks are almost always less expensive during the off-season and during the week. When visiting places like theme parks it is wise to remember that accommodations located closest to the theme parks and attractions are usually the most expensive.

Reducing Travel Expenses When Planning a Vacation with Excessive Credit Card Debt
Although air travel is often, the fastest way to get to a destination it is not always the most budget conscious. Travelling by car may be far more budget friendly and allow the family to enjoy some of the countryside as well. If the travel is to be by air, consider travelling on a standby basis during off-season. The reduction in price can be astounding and shop for deals on flights offered by some airlines.

Have a friend or family member drive your family to the airport and make arrangements to pick them up. This can save quite a bit on airport parking. When the family arrives at the destination, consider using an airport shuttle to take you to your hotel or accommodations or use public transportation. Taxis at airports often charge an airport fee and this can add up. Many historic cities feature bus tours that are reasonably priced and far less expensive than using a taxi to get around.

An entire family vacation can also be planned in a rural setting. Renting a lake cabin in off-season can provide plenty of entertainment for the kids and relaxation for the adults at a budget price. Camping hiking and outdoor sports are often very budget friendly vacations and also healthy.

Choose Closer to Home Vacation Spots
Although exotic destinations may have been your vacation spots in former years when taking a vacation with excessive credit card debt, choosing vacation attractions closer to home may be more economical and help you keep to your budget. Many local destinations and theme parks, camping sites and attractions are overlooked in vacation planning. However, they can be less expensive to get to, pose fewer problems as far as lodging and home is just a few hours away in some cases.

Avoid Unnecessary Purchases
On a budget family vacation especially if excessive credit card debt is already a problem there can be a lot of expense avoided by not purchasing a new set of luggage, new outfits or making do with the old ice chest another year. Souvenirs are another area where expenses can be cut; park and city souvenirs are lovely but can be very expensive and add to the price of a vacation.

Although planning a family vacation with excessive credit card debt will require more planning than perhaps in other years, the vacation experience can be just as relaxing, thrilling, and enjoyable with a little planning. The difference may only be that you have a budget this year you will stick to and avoid spending more than you can afford or intend to spend. Vacations are incredibly valuable tools for recharging the family for another year and do not necessary have to sink you further into credit card debt.

About the Author
This is a guest post was written by Mirsad Hasic. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

PFStock Readers Have Above Average Retirement Savings

For several months, readers have been responding to a survey of retirement saving on PFStock. The poll is now closed and the final results are in. A total of 32 readers voted on this poll. The poll is based on my April 2010 post about retirement savings. This post contains data from the Employee Benefit Research Institute (EBRI) about retirement savings in the United States. One conclusion of their research is that the majority of Americans have less than $25,000 saved for retirement. However, PFStock's reader survey paints an entirely different picture.

Below are the results of the reader poll compared against the data in the EBRI survey.

How much have you saved for retirement (exclude primary residence and defined benefit plans)?

Retirement Savings	EBRI Survey	PFStock Survey
less than $1,000	27%	0%
$1,000 - $9,999	16%	3%
$10,000 - $24,999	11%	6%
$25,000 - $49,999	12%	9%
$50,000 - $99,999	11%	15%
$100,000 - $249,999	11%	25%
Over $250,000	11%	40%

Note that the percentages do not add up to 100% due to rounding.

From these statistics, I found it interesting that a large percentage of PFStock readers fall into the higher retirement savings categories. Fully 80% of PFStock readers have more than $50,000 saved up for retirement.

Over the years, I've written several posts about Net Worth for PFStock. Sometimes I've received very insightful comments that try to explain why such a large discrepancy exists between my blog readers and the general population. This one reader comment seems to provide some insight into the discrepancy:

This poll brings to light several questions including are readers of financial blogs more financially savvy? Are they taking the information they gain from online and putting it to practice? Even the fact that they are on a financial blog demonstrates their interest in properly managing their finances and their financial security and thus impacts the way they spend and save. It's a very interesting poll to say the least.

Another reader submitted this comment:

Whether or not the figures reported [in the poll] are accurate, they're not representative. People with a high net worth (or at least an above average interest in personal finance) will be over-represented due to self-selection.

Since you, PFStock readers, answered the poll, I'll ask if you would like to share your insights on this data? As always, anonymous comments are welcome on PFStock.com.

For reference, the original EBRI survey can be found here.

Additional related posts:
Annual Income and Net Worth (7/10)
Annual Income Survey (2/10)
Net Worth Update (8/09)
How Much Do You Make? (4/09)
Net Worth Comparison (6/08)
Are You Wealthy? (3/08)
Calculating Net Worth (9/06)

PFS

Guest Post: 5 Ways to Overpay Your Mortgage

There are obvious advantages to paying off debt as early as possible. First, there’s the availability of more money. Second, nothing feels better than being in a debt-free position. For most people, purchasing a home comprises the largest amount of debt for the longest period of time. Many people no longer find comfort or security in 30-year loans since it means they’ll be in debt for a major portion of their lives. Given the instability of the economy and job market, deciding to pay off a home as soon as possible would insure that no matter what happens, a family has a roof over their heads. There are several options available to homeowners, but there are rules that must be considered before deciding on a particular procedure.

Considerations Before Selecting a Plan

• While paying down the balance means less interest will be paid, it’s important to find out from the lender whether there are stipulations on the amounts that can be overpaid.
• Some lenders have little appreciation for paying off mortgages earlier than scheduled. Find out if there’s an early redemption penalty for paying off the loan early, as having to pay a penalty could defeat the purpose of attempting to pay off the loan early. Also, make sure the payments will be credited to the principal.
• The general rule is to pay off the most expensive loans first. If there’s heavy credit card debt, it may be wiser to concentrate on paying off this debt first since the interest rates are higher (possibly 15 – 20%) than mortgage loan interest rates (approx. 6%).
• If paying off earlier, the homeowner could fall short if an emergency occurs. Homeowners must remember that money paid into their mortgage will be locked into the mortgage so if needed, the only option may be to borrow by refinancing at higher rates of interest.

Options for Overpaying Mortgages

1. Make bi-weekly payments instead of monthly mortgage payments. Bi-weekly payments result in 26 weeks of payments which is 13 payments per year instead of the standard 12 payments. With this method, homeowners will find that a significant amount of interest payments and term years can be eliminated. However, if this option is offered, it will likely come with an enrollment fee, and monthly fees to be paid thereafter.
2. Perhaps choosing the extra amounts to pay and making those additional payments either each month or when convenient is the better thing to do. This method is beneficial because there are no fees attached. Adding as little as $25, $50 or $100 each month can make an enormous difference in the final balance paid and the number of years erased over the life of the loan. Since interest is calculated according to balances due, ask the lender to recalculate the loan periodically so the charges for interest rates can be properly reflected (don’t assume that the lender will automatically do this). Incidentally, it’s best to make the overpayments during the first half of the loan since this is when the most interest will be charged.
3. Take out the loan for less than the standard 30-year term; the lower the term, the less interest will be paid and the sooner the loan will be paid off. Before signing for a lesser-term loan, homeowners have to be reasonably sure that they’ll be able to make the higher monthly payment, as well as be able to handle all their other expenses and have money left over to take care of the basics like utilities, food, clothing, emergencies and leisure activities. If the loan has been paid off by the time they're ready to sell, homeowners stand to make a sizable profit no matter what the condition of the real estate market.
4. Plan to make a yearly lump-sum payment. Paying as little as $500 extra per year can result in a substantial difference in the overall amount paid and the number of years it takes to pay it.
5. Taking the above scenario a step further, by depositing a certain amount of money each month into an interest-bearing savings account, homeowners can then keep the interest earned in the account and make the lump-sum payment with the actual cash balance in the account whenever they choose. Thus, make lump-sum payments and make a little extra money at the same time!

The world of today isn’t trustworthy and the general rule for businesses now is to seriously consider what will be best and most profitable for the business. Therefore, homeowners have to look out for their own best interests and conduct research on their own. With the help of knowledgeable brokers or agents, they should strive to gain the best understanding possible of all mortgage plans and the rules that regulate these plans. Only then will homeowners have reasonable assurances of achieving their goals.

About the Author
David works at Money Choices, an Australian service where consumers can quickly compare home loans from a variety of providers.

Reader Submitted Tax and Money Saving Tips

The fifth and final winner in the PFStock Tax Tips Giveaway 2011 is Holly Blanco. She (and the other four winners) will be receiving free H&R Block At Home Online Tax Preparation. The drawing is now concluded. Thanks to everybody who entered.

I've compiled a list of the tips that were submitted by PFStock readers. Here are some of the great tax tips that PFStock readers sent in:

• My advice is to not lie about your income. Be honest and pay your taxes.
• I use the internet as a tool to make sure I'm claiming every deduction and credit that I can qualify for.
• My father was an accountant and used to say the best thing was to break even every tax year and not give the government an interest-free loan of your money (by getting a refund). I know that I'd never be able to save the money otherwise so I always made sure to have plenty of tax deducted in order to get a nice refund check. Now I make that money work for me; I put some aside every year and put it into a CD.
• I make sure that I organize all year. I have folders I make in January for that year's taxes so that come tax time, I don't have to hunt for my receipts and paperwork.
• Contribute the most you can to a 401(k) plan at work.
• Spend some time learning about every single deduction you are eligible for and then take them. Think; give away lots of stuff to charity; contribute as much as possible to retirement savings plans at work.
• File your taxes for free online. Many websites let you e-file and offer free online filing if you meet their criteria.
• Bloggers should keep track of all expenses throughout the year whether it is for mailing books for giveaways or hosting fees.
• Contact your local libraries, chamber of commerce, or city officials, to find out which agencies offer free tax filing for low-income families.
• Buy a copy of J.K. Lasser's Your Income Tax or the Ernst & Young Tax Guide to help with understanding tax laws and with preparing your taxes. Better yet, check out a copy of either one from your local library for free.
• I'm just anxious to get this done. Get your taxes done early so you don't get stressed about it come April 15.
• I came to realize the tax I paid on my car last year was tax deductible. Check for all the credits!
• I have added extra to my payroll deductions in order to make sure that I don't owe any additional taxes.
• Read PFStock and other personal finance blogs. (I think that this contributor has his own personal finance blog.)
• Order your credit report from the 3 major reporting agencies—Equifax, Experian, and TransUnion—for free once per year at annualcreditreport.com. I joined creditkarma.com to monitor my actual credit score for free too.
• If you have a complicated return work on it a little at a time so you will not be overwhelmed.
• If you find you owe every year and adjusting your with holdings just isn't working out make sure to take the number you owe each year, divide it by the amount of paychecks you get per year, and stick it in a high yield online savings account. I say add at least $5-$10 more per paycheck so you have a cushion. In the worst case, you will have extra savings!

PFStock readers also contributed these great money saving tips:

• I look at sales fliers online weekly and match coupons and sales. 
• My money saving tip is to use coupons.
• My tip is to avoid impulse purchases. Make yourself go to a store 2 times before you make a big purchase.
• My best money saving tip is to use coupons and match them up with sales.

Thanks again to everybody who participated. If you have more tax or money saving tips, feel free to share them in the comments below. Please visit PFStock again, and check back for additional giveaways in the future.

PFS

Disclaimer: Comments are user submitted tax tips. PFStock does not provide tax advice. I encourage readers to consult with a tax adviser if they have specific tax questions.

Tax Tips Drawing: Week 4

The 3rd of 5 winners in the PFStock Tax Tips Giveaway 2011 is "Henria O.". She will be receiving free H&R Block At Home Online Tax Preparation. If you haven't entered, please do so as soon as you can. Non-winning entries will be carried over to the next drawing. There are only 2 drawings left, so enter today.

Here are some of the tax tips that I've received so far:

• Spend some time learning about every single deduction you are eligible for and then take them. Think; give away lots of stuff to charity; contribute as much as possible to retirement savings plans at work.
• File your taxes for free online. Many websites let you e-file and offer free online filing if you meet their criteria.

Please keep your tax tips coming, and good luck to everybody who enters. This contest will run through February 11, with a new drawing every week until then.

PFS

Guest Post: Fed Turns Its Attention to CARD Act Loopholes

According to the Federal Reserve Board, there are a number of loopholes in the Credit CARD Act that need to be closed. The Act, which was passed back in 2009 and implemented over three distinct phases, was created to help protect consumers against unfair practices of credit card companies.

However, there are some lenders who have been looking for other ways to make money despite this new legislation, so they’ve taken advantage of some loopholes that this new law was supposed to protect against. Now, the Fed is looking to stop these companies from circumventing the law’s intent by clarifying the language of the law. But what does this mean for credit card companies and consumers?

Doing Away With Surprise Interest Rate Changes
For starters, credit card issuers will be unable to use semantics to hide from having to give notice to consumers about interest rate changes. Under the law we have today, it is required that credit card companies let card holders know 45 days in advance before raising their rates. And those that offer introductory periods on low APR credit cards have to keep the low rate for the amount of time that was specified, unless the cardholder has failed to make a payment for over 60 days. There are various lenders who have tried to get around this rule, by offering rebates to customers that can be revoked anytime, which then causes the customer to pay a much higher rate.

According to The Wall Street Journal, Citibank was caught playing a game where they would increase the interest rates of their customers to the maximum legal rate of 29.9%,and then offer them up to a 70% rebate on the interest charges if they pay on time. The catch was that Citibank held the right to stop the rebates without giving any notice to its customers.

This practice will be eliminated under the new rules. According to the Fed, any promotions that temporarily eliminate interest charges will be treated the same as promotions that offer reduced rates, and will be subject to the same protections.

Killing the "fee harvesters"
Another loophole that will be closed is the one that will stop credit card companies from stuffing cards with outrageous fees. Under the law we have now, there is a cap on what a customer can be charged during their first year of opening an account. This cap is set at 25% of their credit limit. There are some lenders who have still tried to circumvent this cap with application fees and other such fees, which they claim shouldn’t be capped, since they are being charged before the account is even opened.

According to the WSJ, First Premier Bank was using this loophole to charge an annual fee of $75 and then a $95 processing fee for cards that only had $300 credit limits. The changes that are to come will stop these practices.

Income Requirements Becoming Stricter for Credit
The final change taking place will ensure that customers will not be able to get access to a credit line unless they can really afford it. The Fed is proposing that credit card companies look at an individual’s income instead of the household income to determine their ability to make payments, when increasing their credit limits or opening new accounts. So consumers who have low or no income will need a cosigner in order to open a new account.

Although these new rules are being enforced to better protect the CARD Act, it will not prevent credit card companies from searching for new loopholes to jump through. So the question now is, how will the Fed respond the next time around, and are they always going to be a step behind credit card companies?

About the Author
This post comes from the NerdWallet.com team of personal finance bloggers and experts in helping consumers compare rewards credit cards.

Guest Post: Tame your financial worries by saving money in 2011

The current financial climate in the US has left the individuals and the families struggle to make both ends meet. One of the biggest concerns that most individuals face is maximizing their savings for future purposes. As the interest rates are gradually dipping with time, most of them are not even sure how to make the most out of their savings. Though it is easy to talk about saving money and there are many people who already are aware of some ways that can help them do so, yet very few are able to achieve their financial goals by saving money. Investing can be a certain way of earning money and boosting your savings but you need to know the difference between forex and stock market in order to take an informed decision while investing. Have a look at the ways in which you can manage your personal finances and reduce your financial worries.

1. Track your monthly spending: Most Americans hate to live within a budget and this is perhaps the biggest reason of the high debt level in America. You may not want to follow a budget but this is a pre-requisite to achieving a financially secured life. Build a realistic monthly budget to track all your monthly income in accordance with your expenses. This will help you determine where to cut back and maximize your savings efforts. If you start following a realistic budget, you’ll soon be able to change your financial mentality and understand the importance of living within your means.
2. Get a high-yield savings account: You might find this term contradictory in today’s financial picture, but it’s very important to check whether or not your savings account has enough liquidity. This means whether or not you’ll be able to withdraw money from the account whenever you want. You must also be able to earn returns that will preserve your purchasing power against inflation. If you obtain these two requirements you can open an account with a reputable bank and boost your savings by building wealth.
3. Forget the plastic cards: You might find the plastic cards extremely useful as it makes everything attainable, but it’s high time that you realize that they are the things that push you towards the debt hole. If you’re seriously looking forward to boosting your savings by building wealth, you must restrain the usage of credit cards. No matter how many credit cards you own, make sure that you go shopping with cash, and not with your cards. Leave them at home, so that you can stop saving as soon as you exhaust your cash. This will help you stay away from incurring further debt.
4. Invest in the forex market: Investing is perhaps the best way of earning easy money if done cleverly. Though it is a risky venture, yet you can gain huge returns if you invest in the proper manner. You need not require huge funds for investing in the forex market and therefore you can even try this while you do not have a lump sum amount of money at hand. Know the difference between forex and stock, if you’re confused about investing in the stock market and the forex market.
   
5. Save money on your home: If you’ve fallen back on your monthly mortgage payments and seeking a refinance loan, shop around extensively so that you can strike the best and the most affordable deal with your home loan lender. If you see that a major portion of your home is left unused, you can also plan to set it on rent. This will boost your income level and thereby enhance your monthly savings as well.

Taking little steps towards managing your personal finances will help you reach a big decision that can help you great deal in the long run. Restrain yourself from pulling out your wallet every now and then. Sticking to a tight budget and spending on only that’s necessary are the key to a secured financial life.

About the Author
This guest post was written by Grace Ruskin.

IRS e-file – When Will I Get My Refund (2011)?

If you are wondering when you can expect to receive your tax refund from the IRS, they have a publication where you can look this information up. If you used IRS e-file, the information is listed in Publication 2043 for 2011. For people who efile, this publication is printed in both English and Spanish.

I copied a portion of the table below which shows when your federal tax refund should be deposited in your bank account (by direct deposit), or when your check would be mailed if you e-filed and your refund was accepted within certain dates.

IRS accepts your return (by 11:00 am) between…	Direct Deposit Sent	Paper Check Mailed
Jan 14 and Jan 20, 2011	Jan 28, 2011	Feb 4, 2011
Jan 20 and Jan 27, 2011	Feb 4, 2011	Feb 11, 2011
Jan 27 and Feb 3, 2011	Feb 11, 2011	Feb 18, 2011
Feb 3 and Feb 10, 2011	Feb 18, 2011	Feb 25, 2011
Feb 10 and Feb 17, 2011	Feb 25, 2011	Mar 4, 2011
Feb 17 and Feb 24, 2011	Mar 4, 2011	Mar 11, 2011
Feb 24 and Mar 3, 2011	Mar 11, 2011	Mar 18, 2011
Mar 3 and Mar 10, 2011	Mar 18, 2011	Mar 25, 2011
Mar 10 and Mar 17, 2011	Mar 25, 2011	Apr 1, 2011
Mar 17 and Mar 24, 2011	Apr 1, 2011	Apr 8, 2011
Mar 24 and Mar 31, 2011	Apr 8, 2011	Apr 15, 2011
Mar 31 and Apr 7, 2011	Apr 15, 2011	Apr 22, 2011
Apr 7 and Apr 14, 2011	Apr 22, 2011	Apr 29, 2011
Apr 14 and Apr 21, 2011	Apr 29, 2011	May 6, 2011

While it may be interesting information to have, this is the federal government that we are talking about. You can also check the status of your income tax refund using this link. (And of course, en Español: ¿Dónde está mi reembolso? ) You will need to enter your social security number, filing status, and refund amount to see your refund status.

I've heard some anecdotal stories about the IRS taking a lot longer to process refunds in 2010, so I would take the information with a grain of salt. I will be curious how the IRS does this time around.

Post a comment, and enter to win free tax software. As always, anonymous comments are welcome on PFStock.

NOTE: Please see the update for 2013: When Will I Get My 2013 Tax Refund?

PFS