Drive Free Cars for life!

While taking part in Dave Ramsey's "Financial Peace University", we heard a great example of how you could turn traditional thinking around, and make your money work for you.

They started the lesson out by talking about how the average new car payment for 1/3 of car buyers is $475 with a loan term of 6 years (for a $26,000 car with 9.6% interest). Most people will just assume that they will always have a car payment, and that having a car loan and payment is just a part of life. It's something that you can never get away from!


According to Dave Ramsey, if you turn that thinking around, within that first six years you can get to the point where you'll never have a car payment again!

How it works

Let's say the car you're driving now is worth $1500, and instead of paying a dealer $475/month for a new car like most people do, you save that money for 10 months. At the end of 10 months you'll have $4750, along with another $1500 from the sale of your old car. With that money you can buy a new car worth $6250.

If you keep going along those lines for another 10 months, you'll have another $4750. At the same time you'll probably be able to sell your new $6250 car for just about what you paid for it. That means you'll have $11,000 to spend on another new car, just 20 months after you started with a $1500 car!

Let's say you decide to keep that new $11,000 car for the full six years it would have taken to pay off a new car with a loan. Continue paying yourself that $475 payment every month for the remaining 52 months, and put it into a good mutual fund. If you receive an average return of 12%, then you'll be sitting on over $32,000 dollars after the 6 years is up.

You're home free - free cars for life!

If you go now and buy a nice used car for $12,000, you'll still have 20 grand sitting in your "car replacement fund". If that fund continues gaining 12%, even if you never add more money to the fund, you'll be able to buy $14,000-18,000 cars every 5 years from now on! The interest you're gaining in that account will pay for your new cars for the rest of your life!

How do I retire rich?

Here's the fun part. Once you've established your car replacement fund, from then on you'll be ok to take that $475 you would have used to pay for your new car loan, and invest it in a mutual fund. If you gain 12% interest, here's how the numbers work out if you invest that amount for 10, 20, 30 and even 40 years:

• 10 years - $100,000
• 20 years - $470,000
• 30 years - $1,600,000
• 40 years - $5,588,385

So there you go, Dave Ramsey's plan to drive free cars and retire rich. While it does depend upon you earning a good amount of interest through your mutual fund, as well as some other assumptions about car values, it doesn't sound impossible to me. I know we would never pay $475/month for a car, but at the same time this example really brings home the idea that the returns of compounding interest are something we all need to strive towards gaining.

Let me know what you think about this plan in the comments!

Just a friendly reminder - from now until May 15th, if you sign up for a new account for Revolution Money Exchange, you'll also get a $25 sign up bonus. To sign up all you have to do is click on the button below, and you'll be taken to the first page in the sign up process. If you sign up through my link, I'll also get a $10 bonus.




I signed up for and received my $25 bonus almost instantly, as well as several referrals for friends. I transferred it directly to my local checking account. Free money - can't beat that! Don't miss out - sign up today!

LINKS:
Revolution Money Exchange

When my wife and I bought a new house in 2006, it was an exciting time for us. We were living in a townhouse that we owned, but we just wanted a little bit more space than what we currently had.

We looked for a new home for almost 1 1/2 years, looking at both new construction and existing homes. After countless open houses, model homes, real estate agents and a lot of number crunching we finally bought a new construction house just down the road from where we lived.


The process of buying a new house was an expensive one, and one we'll be better prepared for next time. Here are just a few of the expenses we didn't fully realize we'd have - or how expensive they would be, when we purchased our home. Hopefully this list will allow you to go in with your eyes wide open.

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If you haven't already heard all the buzz in the blogoshpere about a new service called Revolution Money Exchange, you probably just haven't been paying attention.

A couple of months ago they popped onto the scene as a challenger to paypal.com, and other money transfer services. While their $25 signup bonus is what initially got me to jump on board, I have since come to enjoy some of the other benefits of the service. Some of those benefits include:

• Unlike paypal, it is free to transfer money directly from account holder to account holder. No more having to wince every time 3% of my hard earned logo design money disappears right off the top.
• Transfers to my bank were quick and easy.
• Referrals! ($10 for every referral)

Now I have to admit that there were a couple of downsides as well:

• No credit card payments, only direct account transfers (this could be good too?)
• Few options for setting up buttons/etc for on your own blog/website. I'm sure they'll have more options available soon.

So what are you waiting for - sign up now before the Tuesday, April 15th $25 bonus deadline comes and goes! Click on the link below to sign up:

According to the Sun Financial Diary Vanguard has just revealed plans that they have to release a total global stock index fund.

As most new investors like myself are learning, buying index funds of the entire markets are a great way to buy stocks without thinking too hard about it. You buy a share in the fund and you then own a piece of the markets the same size as they are found in the major indexes. The returns for these index funds are reliably good, and can be a great low cost way to "set it and forget it" when it comes to your investment. From the Vanguard press release:

Vanguard filed a registration statement on Wednesday, April 2, 2008, with the U.S. Securities and Exchange Commission (SEC) to offer a global equity index fund: Vanguard® Global Stock Index Fund. The fund will offer three share classes—Investor, Institutional, and ETFs—that are expected to be available in the second quarter of 2008. This will be Vanguard's first passively managed global index fund.

The new fund will seek to track the performance of the FTSE All-World Index, a float-adjusted, market capitalization-weighted index designed to measure equity market performance of large- and mid-capitalization stocks worldwide. The fund will invest in a broadly diversified sampling of securities from the target benchmark, which comprises more than 2,800 large- and mid-cap stocks of companies in 48 foreign countries. Approximately 55% of the index is made up of stocks from outside the U.S.

The fund's ETF shares are expected to be offered with an expense ratio of 0.25%. Investor Shares, which will require a $3,000 minimum initial investment, are expected to be offered with an expense ratio of 0.45%, and Institutional Shares, which will require $5 million, are expected to be offered with an expense ratio of 0.20%.

Sounds like this may be an attractive option for a lot of people who want to be more passive about their retirement income.

As I discussed in my "Is it ok for a Christian to invest in "Vice Stocks"? Part 1" series, index funds still may be a bit problematic for those who want to avoid owning stocks in morally problematic companies altogether. Something to keep in mind when deciding whether to invest in this new global index fund.

LINKS:
Vanguard Press Release
Sun Financial Diary

I recently posted a deal on this website to get all of your movie rentals for free through redbox.com. The post has gotten quite a bit of traffic, so I thought it was only prudent that I share something that a reader made me aware of a couple of days ago. Some redboxes around the country have fallen prey to people stealing credit card information through credit card skimmers. From redbox.com:

A few days ago redbox detected and removed an illegal credit card skimming device at one of our 7,400 locations. At the same time, redbox also discovered evidence of skimming attempts in two other locations.

Locations with evidence of skimming attempts:

- 1101 South Rural Road, Tempe, AZ (device removed before retrieval by perpetrator) - 1620 El Paseo Road, Las Cruces, NM (evidence of skimming attempt) - 2330 East Lohman Avenue, Las Cruces, NM (evidence of skimming attempt)

Skimming involves the placement of an illegal device above the credit/debit card reader on a vending machine, ATM, or in this case a redbox. These devices are used to illegally read or store personal credit card information. Redbox is not aware of any fraudulent activity or transactions using our customers' accounts and does all it can to minimize the risk of this happening.

You can help. It never hurts to pay a little extra attention and check for any unusual activities or changes to your local redbox. If you suspect the redbox has been tampered with (see below for pictures of redbox approved credit card readers and of skimmer devices), please contact 630-756-8866, e-mail alerts@redbox.com or notify the store/restaurant manager of your concerns immediately.

Skimming is not new It has been attempted numerous times on ATMs, gas station pumps, and now redbox has been targeted. Redbox has been aware of these industry threats and has spent significant time and resources to prepare for them. The 7,400 redbox locations are visited frequently by redbox associates to maintain smooth operations and an optimum customer experience. In this case, a redbox associate found evidence of skimming attempts and initiated the actions in the team's response plan (including this message).

Redbox greatly values our customer relationships. As a result, redbox is open and direct in our communications about this type of situation. The redbox team also utilizes industry-leading technology to ensure you have a safe shopping experience and aggressively combats attempts by criminals to defraud customers. Please see the questions and answers below for some additional details on skimming and how redbox ensures the safety of your account information.

Sincerely,

Trina Graham-Hodo
Director, Customer Service

Bill Caputo
Director, Security

Additional Questions / Answers

What is credit card skimming?
Skimming is the theft of credit card information used in an otherwise legitimate transaction. It often involves the placement of an illegal device above the credit/debit card reader on a vending machine, ATM, or in this case a redbox. For more info click these links:

http://en.wikipedia.org/wiki/Credit_card_fraud#Skimming

http://www.uboc.com/about/main/0,,2485_703976951,00.html

Where can I get more information on credit card skimmers?
Please use these links to get more information on credit card skimmers:

http://en.wikipedia.org/wiki/Credit_card_fraud#Skimming

http://www.usatoday.com/tech/news/computersecurity/infotheft/2007-07-31-gift-cards_N.htm

http://www.uboc.com/about/main/0,,2485_703976951,00.html

How do I know if a skimmer is on my redbox?
Redbox credit/debit card readers are standardized for all locations. Here are pictures of the two approved readers:

Here are some examples of skimmer devices:

Spring is here (or almost here in our case), and its a good time to do a few things around the house to make sure that you're not paying for costly repairs down the road. According to Home-smart.org, here are a few preventative maintenance tasks you can do this month to make sure your house is in good condition:

1. Check and clean mechanical ventilation system (HRV/ERV). Check your manual and follow manufacturer’s recommendations.
2. Clean or replace furnace filter.
3. Clean snow from air intakes, exhausts and meters.
4. Remove excess snow from roof to prevent ice dams.
5. Check gutters and downspouts and clean if needed.
6. Inspect basement/crawl space for seepage/leakage.
7. Do safety checks: smoke detectors, fire escape routes, fire extinguisher, carbon monoxide alarms, door and window locks.
8. Check and repair any damaged screens.
9. Adjust thermostat for season change.
10. Observe humidity levels and adjust the setting on the humidistat or air exchanger controller as needed to eliminate condensation or frost on windows.

Their website is full of great tips and step-by-step tutorials on how to do these things, and more. Check it out today and get working!

LINKS:
http://www.home-smart.org

This past January I learned a costly lesson when it comes to insurance rates, and the dangers of not continually checking your rates to make sure you're getting the best possible deal.

I had been with the same insurance company for the past 10-15 years. It was my dad's insurance company and agent, and for the most part I had stuck with him because I figured that he was getting me a great deal. The insurance company was a special teacher's union insurance company for teachers and their families, and they were supposed to be getting "good deals" for the teachers in their ranks.

I got complacent, and just assumed I was getting good coverage and rates. I stuck with them through thick and thin, even while thinking to myself, "these rates seem pretty high for someone without any tickets or accidents..?"

This past January I was talking to my father about insurance and he mentioned that he had switched from this same agent that I had because his rates were way too high. Then he told me how much he had saved by switching - almost $600 a year! That was enough to get me moving on my own insurance search.

I began my search by going to the popular insurance quote services through Insweb.com, Progressive.com and various other provider's websites. After only a few minutes of searching I realized that switching insurance was going to save me a lot of money. A LOT.

After taking a personal finance day to do some reasearch, I ended up switching my auto insurance and in the process saved almost $1000 per year! I also switched my homeowner's insurance to a new company and saved $200 a year on that policy as well.

The moral of the story? If you're wondering about your rates and whether you should switch - do the research. The money that you save will make it more than worth it!

LINKS:
Insurance Matters: The cost of complacency
Insweb.com
Progressive.com

I was over at MSN Money today reading some "money hacks", and I thought several of them were quite useful. I thought I'd share some of them here with you, and maybe even add a couple of my own.

So without further ado, here are some money hacks from MSN that you can make use of in your everyday life:

1. The four-penny hack. Want to reduce the number of pennies you lug around? Then always make sure to have four of them in your wallet. That way you'll always get silver coins back in change, rather than more pennies. Let's say your bill at the drive-through is $4.86. Hand the cashier a five-dollar bill and a penny, and you'll get a nickel and a dime in change. If your bill is $2.29, offer the fiver and four pennies; you'll get two bills and three quarters back
   
2. The credit card hack. If you pay your credit cards off in full every month (which you do, right?), you can give yourself an interest-free loan of a month or more on major purchases simply by charging big-ticket items right after your card's closing date. Let's say your statement typically closes around the 20th of the month. You charge your big-ticket item the day after, the 21st.
3. Prepay your big bills. This hack is an oldie but a goodie. Total up your big, non-monthly expenses for the year. Those can include holiday spending, birthday gifts, insurance premiums, vacations, property tax payments . . . anything that doesn't come in regular monthly chunks. Add in what you expect to spend on car and home repairs (inflate last year's bills by 10%). Now divide the total by the number of paychecks you receive each year, and have that amount transferred automatically to an account that pays a decent amount of interest (ING Direct and EmigrantDirect are two choices that have no minimums or account fees and that allow you to transfer money to and from your checking account). As the big bills pop up, you transfer money back into your checking account to pay them. No more sweating about paying for the holidays or that car repair bills -- it's already covered.
4. Program phone numbers into your cell phone. Program your credit card's hotline (in case of a stolen/lost card), your insurance carrier, and your emergency contacts (labeled ICE - Wife, ICE - Mom, etc)

Those are the hacks listed by MSN, here are a couple of my own:

1. Keep a receipt tally instead of the actual receipts. If you are like me and you carry around a wallet and only enter receipts/expenses every couple of weeks, it can be a bit painful carrying around a big stack of receipts in your back pocket. Once you've got 10-20 receipts in there the wallet starts getting pretty thick. It can be enough to throw your back out from sitting on it funny all day. Do like I do and just cut a thin strip of paper (about as wide as a dollar bill) and keep it in your wallet. When you get a free moment take it out and enter the day's receipts in your wallet onto that paper. Be sure to note the store, expense amount and which form of payment you used for later use. You can then toss any receipts that you don't need later on for warranties, etc.
2. Save your change. Just about every day I come home with a pocket full of change from the day. What to do with that money? Instead of keeping it with you and spending in the vending machine at work, save it all up in a change jar! You'd be surprised how quickly those quarters, nickels and dimes add up. After saving up our change for a few months we recently brought it to the bank and deposited almost $60 in change. That's a nice little sum you an add to your snowflaking out of debt program!

So do you have some useful money tricks that you'd like to share? Comment below and let us know what they are!

LINKS:
12 Cool Money Tricks - MSN Money

The IRS estimates 1.3 million taxpayers who neglected to file a 2004 return are eligible for refunds, but that they had better act soon. The deadline for claiming a refund for that tax year is April 15 this year, and you must file a return to get a refund.

There is no penalty for filing a late return if you have a refund coming to you, the IRS said.

You'd think that taxpayers who face big tax bills are the ones who don't file returns, but that's not always the case. For instance, workers whose incomes fall below the filing threshold may decide to not file, said Michelle Lamishaw, an IRS spokeswoman.

"Maybe (the refund) didn't seem like a lot of money to them, or it seemed like too much bother to file, or they didn't have the right paperwork. Sometimes they may anticipate they wouldn't get a refund, so why bother, but sometimes they're wrong about that," Lamishaw said.

"There are a lot of reasons why people don't file, but it can add up to serious money for some people," she said.

The article goes on to note that it is especially important for people to file a return this year for 2007 taxes as they won't be eligible for the tax rebate stimulus package unless they do. So get crackin!


LINKS:
MSN Money: IRS has $1.2 billion in unclaimed tax refunds
IRS Has $1.2 Billion for People Who Have Not Filed a 2004 Tax Return

Geezeo.com is another one of a myriad of new personal finance sites that have popped up over the last year or two, along with competitors like Mint.com and Geezeo.com. We've already reviewed those other two services - now its time to take a look at Geezeo.

As part of keeping track of my family's finances, my wife and I need a way to keep track of our finances online. Ideally we should be able to keep an eye all of our accounts, regardless of what institution they're held at. We should be able to track balances, monitor big transactions, and be able check it from anywhere.

I signed up for Geezeo a few weeks ago, and here is what I found.

DESIGN:

The first thing you notice when you come to Geezeo.com is that they've got a clean design, with a whimsical piggy bank mascot. The page has a black border across the top with site links, and then your main account area and activities area resides at the middle and bottom of the page. When you first login you'll be taken to a summary page that allows you to add accounts, view a list of your current accounts, spending trends graphs, spending and savings goals and your discussion groups. The design of the site is web 2.0 feeling, while not being over the top with lots of shiny buttons and other miscellaneous things you don't need.

FUNCTIONALITY:
The first thing I did after creating my account was to try and setup my 8 checking, savings and mortgage accounts that I wanted to track. The credit card account setups went pretty smoothly except for my American Express card, which took several minutes to sign in. In fairness that was probably an issue with the American Express site, not Geezeo.

Then I set up my main checking, savings and money market accounts which are all at the same bank. A couple of the accounts are actually under different sign-in names, which normally isn't an issue. I discovered, however, that at the time I signed up with Geezeo, they wouldn't allow more than one sign-in name for any one bank. So for now I had to manually enter the one rogue account into their system (a huge pain, and something I wanted to avoid). I talked with Geezeo support, and they admit that this is a problem, but say that they are working on a fix, and multiple sign-ins for one bank should be available soon. (Support was very responsive and helpful by the way.)


My home mortgage account was easy to setup as well - and was compatible with automatic updates, which was a surprise. Both Buxfer.com and Mint.com choked on that one. It makes it much easier when the account information updates automatically.

The 401k account had to be manually set up - but I only update this information every quarter or so anyway, so it isn't a huge deal.

Once all of our accounts were entered, we started looking around the site to see what some of the things we could do were. On their site they lay out some of the features of the software:

• Manage all your accounts (worked well for the most part)
  
• Mobile Access (not something we're concerned with)
  
• Painless budgeting (A definite plus)
  
• Create Goals (strong suit of the site)
• Join Groups
• Learn from Others

Geezeo, it seems can do a lot of the things the other personal finance softwares do, with the added benefit of active forums and groups to give the site a more social network feel to it. People supporting other people in their finance goals.

So where to start? Well, first let's look at viewing your accounts and editing tags.

When transactions are downloaded to Geezeo, they are automatically put into different categories so that you're able to track your expenses, and run queries on different income and expense areas. Previously I had gone into my transaction data and tagged all of the transactions in categories that made sense. The tagging schema was pretty easy to use, although a little confusing at first. A few of the transactions weren't tagged with the correct categories, but after making some corrections things looked pretty good.

When i looked a little further at my data I realized that somehow the system had entered duplicate transaction data for a couple of my accounts. Admittedly this may have been my fault when uploading the .ofx files for the accounts. When I looked, I couldn't find any way to delete or remove duplicate entries. This was a huge issue, one I'm waiting on an answer about from support.

In my opinion one of the strong points of Geezeo is it's budgeting tools. Once in the budget section you can choose different categories that you have previously tagged in your register, and setup a budget goal for each category. Each budget goal is represented on the page with a bright red button (if you've exceeded your goal) or by a bright green button if you've met or come under your goal. It is an effective way to keep on track, and see what areas you need help in.



Another area that Geezeo is strong in is the area of setting goals. Like the budgeting tool, you can set up savings or debt reduction goals. The tool is pretty flexible allowing you to set up a specific goal, and tell the system when it is met (for example: goal is met when account xyz has 1000 dollars in it). You can also see what other people are setting as their goals - and choose the same goals. That way you can track your progress against other users. I can see this being very helpful for those trying to get out of debt.



There are other tools that I haven't even begun to scratch the surface of, mainly the social network aspect of Geezeo. I can see how the support group type social aspect of the site could be useful for a lot of folks as well, and I'm sure I'll be checking that out more in the future.

With that said, here are a few pros and cons of Geezeo.com as I see it.

PROS:

• Simple to setup most new accounts.
  
• Eye pleasing design.
  
• Budgets: Ability to track and stay within a budget in one or multiple areas.
• Ability to track debt and savings goals: track what you owe, or what you want to save.
  

CONS:

• Problems in setting up accounts with some banks
• multiple logins not allowed with one bank
• limited options for investment and savings accounts: No simple way to setup 401k accounts or some other more advance savings options
• Clunky importing of data: Some data imports re-imported the same data as new transactions. No way to delete duplicates
  

CONCLUSION: So far in the three weeks I've been using Geezeo.com I have enjoyed using the software. The software gave us good feedback through its budgeting and goals tracking tools, and overall is a pleasure to use. On the negative side, the site still is in beta and sometimes it shows. From our clunky importing of .ofx data, to the problems with having multiple logins at the same bank, the experience left a little bit of a bad aftertase in my mouth.

I will recommend Geezeo.com to everyone out there with the caveat that you should be aware that the site is still in beta. Not everything will work as smooth as you might like. They are making improvements, however, and I expect things to get better.

If you'd like some other opinions, check out the further reviews of Geezeo.com below!

LINKS:
Geezeo.com
Geezeo.com - Money Confessions on Twitter
What money secrets do you keep? Geezeo Money Confessions
Chat, Chill, Pay the Bills
Geezeo - Check your bank account on the go
Geezeo.com - Social Networking & Personal Finance
Review - Geezeo Finance Management