Archive for March, 2007

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Travel Complaint and Flight Problems?

Saturday, March 31st, 2007

I took a Thursday morning flight on American Airlines. I sat between two friends, which was fine, but we are all 6’3″ and a combined 650 pounds. Now in the past this would not be a problem, however, with airlines cutting corners it was not a fun time. The flight back was worse because I was stuck between one friend and an extremely large man–bigger than my other friend. American Airlines charged a pretty penny even though we bought the coach tickets six months in advance. I had to scrunch into a ball not to be knocked around the entire 4-hour flight. Now this flight problem points to the fact that airlines like American are going to go out of business soon because they cannot charge higher prices with equivalent or lesser accomadations.

A travel complaint happens to everyone, and when you are done with your flight what should you do?

The Wall Street Journal has an excellent article on what airlines do when you complain.

Posted in Household | 1 Comment »

Web Savings from ebates

Friday, March 30th, 2007

Many people today get points or money back when they charge items on their credit cards. Now their are websites, that are affiliates, of major retail, travel, etc. companies. These companies pay ebates.com and fatwallet.com for bringing you to their site and then you purchasing something while there. Ebates and Fatwallet pay YOU money to purchase something using their site to buy something from a company that they are an affiliate of.

For example, today I had to book travel plans for a business trip I will soon be taking. I went to ebates and fatwallet to see if they were affiliates of airlines and online hotel sites. Ebates provided the best deal. I am flying American Airlines to New York for the same cost as if I were to buy the ticket elsewhere, but with ebates I will get $2 back. Hotels.com offered 4% back if I booked my hotel through ebates. I did and I will receive $25 back just for booking travel I was going to book anyway.

Web savings from ebates and fatwallet are tough to beat and easy to use. Check out other sites out there that offer this service and you can add more cash back on purchases you make.

Posted in Household | No Comments »

Earnings Conference Call Glossary

Thursday, March 29th, 2007

Conference calls are essential to understanding the health and future of a company you invest in or plan to invest in. Unfortunately, industry jargon and acronyms can make this process intimidating. Below is a earnings conference call glossary that will get you up to speed:

  1. Annual report – Publicly held companies issue an annual report at the end of their fiscal year. The annual report contains useful information, but the information can be stale and often almost half-a-year out-of-date.
  2. Cash and cash equivalents – Represents the total amount of cash, plus short-term investments that will be converted to cash within three months. Look on the balance sheet of your stock.
  3. Conference call – Earnings conference call, or quarterly conference call, or an analyst call, is an event when you call in (or go to online) to hear the company’s management discuss the past quarter’s results and to look ahead. Only a few years back these calls were only made available to Wall Street analysts and large institutional investors. The calls contain discussion of the business by both the CFO and CEO and then, typically, audience questions follow.
    The Question-and-Answer period is when the real information you want is revealed.
  4. Earnings – Earnings (aka, net income) measure the profits of the company. Earnings= Revenues (aka, sales), minus all company expenses.
  5. Earnings per share – Aka, EPS, is considered very important to many investors and companies. EPS: divide earnings (net income) by the total number of stock Shares Outstanding. The EPS represents your theoretical per share of stake of the company’s profits. It is also used to compute other important metrics such as EPS Growth and Price/Earnings Ratio.
  6. EPS Growth – EPS growth has a lot do do with the long-term success of a company. Management of the company will note EPS and its relative growth or decline. Year-over-year growth, compares time periods from one year to the previous (e.g. 2006 to 2005) Growth rate is derived by subtracting the previous EPS from the most recent EPS, then divide that sum by the previous EPS. A result of .10, means there was a 10% growth rate. Sequential EPS growth. Sequential growth represents the change from one quarter to the next (Quarter 4 2006 compared to Quarter 3 2006). Sequential growth can be deceiving because seasonal fluctuations in earnings can cause one quarter’s earnings to be lower than the previous quarter. Earnings during Christmas can blow away a company’s Q3 earnings, but that does not mean the company is doing good or bad.
  7. Individual Investor – Individual investors are individuals who buy and sell stocks for their own personal portfolio.
  8. Net Income – Same as Earnings.
  9. Press release – Before a conference call, many companies issue a press release. Remember that press releases are written by the companies, and not by a reporter. A press release does not necessarily reveal the truth best it is often written by the company.
  10. Regulation FD – Regulation FD, or “Regulation Fair Disclosure,” was first implemented by the Securities and Exchange Commision (SEC) in October 2000. All non-public information that is revealed, must be revealed to everyone at the same time.
  11. Stock options -Stock options are issued by companies to their employees. When these options are exercised this increases the total number of shares outstanding and therefore, decreases the earnings per share.

These are some basics that will help you get through your next earnings call.

Posted in Investing, Stocks | No Comments »

A Decade of Credit Card Debt . . . Gone

Wednesday, March 28th, 2007

I know a lot of people these days put themselves in a big credit card debt hole and it is almost impossible to get out of. This debt for me started about 10 years ago when I decided to go for a PhD. I did not have regular work at the time while attending and after a semester I decided it was the wrong decision. This put me in credit card debt because I was charging most expenses because I had little money coming in.

This one choice lead to years of credit card debt because of many factors, but it is all gone as of March 31, 2007. Fortunately, I never paid any interest on this debt because my credit is very good (I received 0% credit card balance transfers and purchases several times). I am also fortunate because it did not lead to other credit prblems as it does with many people. I am grateful to finally be out of debt and come out relatively unscathed.

At the same time (about one month ago) I finished paying off my student loan. That was a relief as well. A lot of money will be freed up, but new expenses have come up since all this good news has happened.

It is possible to get out of credit card debt. It does take patience and disipline.

Posted in Credit Cards | No Comments »

What Are ETFs?

Tuesday, March 27th, 2007

The exchange-traded mutual fund around since the early 1990s. They combine index investing with the lower costs and liquidity of individual stock ownership. But are ETFs a good match for your portfolio?

 What exactly is an ETF?
Exchange-traded refers to shares that trade all day on major stock market exchanges. Funds are investing vehicles that have many thousands of companies under one umbrella, typically with an investing theme, like technology stocks.

There are ETFs to represent virtually any segment of the market. Therefore, if you are about to dive into ETFs look examine your portfolio and see where you can get more diversification.

If you want some indexing in your portfolio and want to invest a lump some, ETFs provide some flexibility you might find useful. Unlike mutual funds, ETFs can be bought or sold anytime the market is open via your brokerage account.

ETFs are not a good choice if plan to dollar-cost average, because of the trading costs. A mutual fund would be more appropriate in this circumstance.

  • Taxes: The big buzz about ETFs is their tax efficiency. The big “tax event” for ETF shareholders happens when you sell your shares, hopefully at a profit, after which you’ll pay capital gains taxes.
  • Expense ratios: By construction, ETF investors have less exposure to capital gains taxes than mutual fund shareholders. Mutual funds can have high turnover rates and that can cost you a lot of money. ETFs do trade, but much less than most mutual funds. Annual expenses for ETFs range between 0.1% and 0.65% and are deducted from dividends. Index mutual funds charge anywhere from 0.1% to more than 3%.
  • Minimum investment requirement: Mutual funds often ask for a chunck of change to start an account. With an ETF, as long as you have the money to buy one share and can pay the transaction fee you are good to go.
  • Ease of use: Very liquid and easy to trade.


Do your homework and know what you are investing in. So make sure the ETF label matches the underlying securities you want to buy.

Posted in Investing | No Comments »

Life Insurance: Buying a Term Policy

Monday, March 26th, 2007

As responsibilities have grown my wife and I have gone forward with getting life insurance for both of us. We have been married for about 15 months and have owned a home for 4 months so we should have started this process earlier, but we didn’t.

We each are going with a 20-year term policy for $500,000. When the policy expires, hopefully we will no longer need to consider the life insurance money necessary to pay for bills. Plus, hopefully we will not have to used it either.

So about a month-and-a-half ago we set up a life insurance physical for each of us. The insurance physical was about 45 minutes for each of us. During this time they draw blood, take measurements and ask a lot of health-related questions.

Unfortunately, my health background caused my policy to be 3x as expensive as me wife’s, but they said within a year that price could be lowered. We have hard from our insurance agent and he will be meeting us soon to sign the papers.

I considered Genworth Life Insurance as well, but we stayed with Erie Insurance because of my wife’s long relationship with them.

Posted in Insurance, Uncategorized | No Comments »

Personal Finance Spring Cleaning

Sunday, March 25th, 2007

Many look to January 1 as a prime opportunity to get their finances in order. It is, but a spring cleaning can work just as well because it comes around tax time, when you are already looking over a portion of your financial picture.

Yahoo! Personal Finance has a great short article on how to do a spring cleaning of your personal finances. In addition to the six steps they provide, you can delve much deeper to clean up all the small little annoyances.

  1. If you are not doing online bill pay, now is the time
  2. Max out your Roth IRA; remember tax brackets will never be this low again so paying taxes now and investing will prevent a large tax bill in your retirement years
  3. Confirm you are taking adavantage of all tax deductions and write-offs that you can
  4. Open an online brokerage account and deposit some money into it. If you do not have one, do not have the knowledge, etc. this will give you a push to learn how to invest.

Posted in Household | No Comments »

Why Invest in Bonds?

Saturday, March 24th, 2007
While I would not recommend bond investing to an aggressive 23-year old investor, diversification serves a major purpose in most investment portfolios. Bonds are another class of investment that will lower risk and help your return in a long-term investment horizon.When investing in bonds it’s best to spread your risk over a series of different maturities, while maintaining an average maturity of your liking in your portfolio with a bond ladder.

If you were to buy equal amounts of bonds due to mature in one year, two years, three years, four years, five years. This insulates your risk of the bond market being out of favor–your average maturity is 3 years (somewhat like dollar cost averaging with stocks).
The next year your first set of bonds comes due, you would reset the ladder by putting the money into new 6-year notes. Your portfolio would remain at an average maturity of three years.The year after that, when the two-year notes matured, you would buy more 6-years, and continue to do so whenever a note matures. That would always keep the average maturity around three years.
You can do this with any kind of bond with any set of maturities you like.

Posted in Investing | No Comments »

LLC Bank Account

Friday, March 23rd, 2007

Bank accounts typcially are not a difficult proposal, but when you venture into something like a sole proprietor LLC bank account it can be a little tricky.

  • Each bank may have slightly different requirements, but you will need documents that prove your business is an actual entity.
  • Any money that you spend, period, whether or not it is from the initial $1,000 or from your sales revenues, will be eligible for a tax deduction according to IRS rules.
  • You’ll most definitely need an EIN and have to provide your Social Security number.File a Schedule C and disregard your entity for income tax purposes.
  • Report your business as a sole proprietorship.
  • You need to keep your business money separate from your personal money in order to retain your limited liability status

Each state has its own rules, so you will need to research what your state requires.

It is not as much of a chore as it might seem, but hopefully it will all be worth it when your LLC bank account is loaded with your profits.

Posted in Banking, Uncategorized | No Comments »

Buy Foreign Stocks

Thursday, March 22nd, 2007

As the stock market continues its rollercoaster ride everyone must consider a Plan B strategy to buy shares of stock outside of the U.S.A. Yes, the good ole U.S.A. continues to be a great place no matter what the stock market is doing. Good stock buys are not hard to come by, but our first rule of investing is to diversify your portfolio of stocks. Many investors know little about how to buy foreign stocks directly through exchanges, but for the most part it is simple. Buying foreign stocks, or ADRs, is a simple transaction; just like buying American stocks. Sale of this stock type is just as simple.

There are many ways to reduce risk in your stock portfolio and putting 10-20% of your money into foreign stocks is typical these days. Especially since many look at past returns and see how well foreign stocks have performed recently. Moreover, concern remains for the U.S. equity market so investing in investments that do not correlate directly with U.S. stocks is another great way of diversifying.

So if you have a brokerage account and you want to delve into buying foreign stocks you know you can do it with ease. If you are wary of doing the investing yourself there are plenty of international stock mutual funds that can be bought directly through the mutual fund or through your brokerage house.

Posted in Stocks | No Comments »

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