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Are you selling your gold?
With the high gold prices over the last couple years we have seen quite a few businesses get in the gold game. I have seen some companies selling gold and countless ads for companies who buy scrap gold and allow you to sell yours for cash. Just because I was curious about the gold selling process, I did a bit of research.
It turns out that selling gold should probably used as a last resort to get some extra cash, rather than a quick way to get rich. Even with gold prices being high, your gold jewelry will lose a lot of its value when sold to be melted down. Once it is melted all the value of the craftsmanship and design of the piece is lost. The only value is in the metal itself. From the figures I have seen selling your gold jewelry could cost you 75% of its retail value. It may be worth considering reselling the item as jewelry rather than for its melted value.
If you are going to be selling gold jewelry these are a few things to consider…
- Sell pieces that have little resale value (i.e. old class rings, earrings without a mate, and broken pieces).
- An appraisal may be expensive, but it will give you the most accurate information. Check out these sites for appraisers (National Association of Jewelry Appraisers and the American Society of Appraisers)
- Jewelry stores generally offer better prices than pawnshops.
- If you mail your gold to a company for cash, make sure the package will be insured.
Here a quick lesson about gold weights from MSN Money…
- The price of gold based on a troy ounce of 24-karat, or pure, gold. A troy ounce contains 31.1 grams, or 20 pennyweights. (You can find the current price for gold at Kitco or Goldprice.org.)
- Gold less than 24K is discounted proportionately: 18K is 75% pure gold, 14K is 58.3%, and 10K is 41.7% gold. Gold jewelry of 10K or more will have a karat stamp.
Have you sold any gold to be melted? Were you happy with the amount you got paid?
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A week ago, when the remnants of Hurricane Ike passed by, we had a series of flash floods that did a good chunk of damage in the midwest. My sister’s car got filled with muddy water as a result of one of these flash floods. She filed a claim with her insurance company (AAA) for the damage and I just talked to her yesterday about how everything is going with it.
There have been a few lessons that she (and me as well) has learned about flood damage to cars…
Watch where you park your car
She told me that she was parked in the absolute lowest spot on the parking lot. Obviously, if there were going to be a flash flood, the water would fill those lowest areas first. Most of the other cars on the lot weren’t even at a risk of getting flooded, her car just happened to be in the wrong spot at the wrong time.
If you do have flood damage to your car - don’t clean it!
After she found out that her car had been flooded, she did what most of us would naturally do: she started cleaning it. This seems like it would be a good idea, but it now turns out that since she did such a good job cleaning it that the insurance company is not being very generous for the repairs. My hunch is that they think she may be filing a false claim. The damage appraiser from the insurance company appraised the damage way below what it will likely cost to fix, I know they normally go a little low, but this isn’t even in the ballpark. The repair shop that is going to be fixing the car said they have never had a flooded car that wasn’t totaled as a result of the extensive damage from the flood. So, when the insurance company is only estimating a small fraction of what it will likely cost, it makes me wonder.
Take pictures of the flood damage
This is something most of us know to do when we are in a car accident. But when you are not even sure you will be filing a claim, it can be easy to overlook. Pictures of the flood damage could be even more important than an accident, because often times much of the obvious indicators (mud, sticks, plants, etc) can quickly be removed. Pictures proving that the car was in that condition can be very helpful when dealing with insurance companies.
No one wants to buy a flood damaged car
Doing a bit of research about flood damaged cars, my sister quickly came to the conclusion that no one really wants to buy a flood car. She found page after page talking about why you should never buy a car that has been in a flood or how to tell if a car has had flood damage. Since there have been so many hurricanes and floods in recent years this seems to be a cause for concern when buying a used car.
Once a car has had flood damage..
- Any remaining warranty is voided
- Electrical and mechanical components will probably fail early
- Mold and mildew can be very difficult to get rid of
So, it becomes very clear why no one wants a flooded car.
These are a few things to look out for if you are not sure if a car is a flood car…
- Check the interior - Examine the trunk, glove compartment, dashboard and beneath the seats for signs of mud, rust or silt. Look for discolored, faded or stained upholstery and carpeting. If the carpeting doesn’t match the interior or fits loosely, it may have been replaced.
- Equipment test -Test the lights, windshield wipers, turn signals, cigarette lighter, radio, heater and air conditioner several times to make sure they work. Also, flex some wires under the dash to see if they bend or crack, since wet wires become brittle upon drying and can crack or fail at any time.
- Use your nose -Smell for musty odors resulting from mildew and look for a well-defined line or watermark.
- Get it inspected - Go to a trusted mechanic for a pre-purchase inspection. Always get vehicles checked BEFORE handing over any money.
- Carfax - Get a Carfax vehicle history report. They can reveal many hidden problems in a vehicle’s past, including flood titles and will indicate if a vehicle has been titled/registered in at-risk areas during flood and hurricane seasons.
This post was featured in the festival of frugality.
Do you have any stories about flood damage to any of your cars?
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What is a Money Merge Account?
Maybe you have heard about this whole Money Merge account thing or United First Financial and wondered what it is. I did too. I first found out about these programs a little less than two years ago and did some quick investigating, but didn’t do enough research to fully understand the Money Merge thing.
Disclaimer: I do not currently have a Money Merge Account. All the information included here about them is from interviews, research, building Excel spreadsheets, and my own calculations - not my own personal experience using them. I say this because there very well could be some pieces to the puzzle that I am missing, if you see any please share them in the comments.
Also, right off the bat, this product is not designed to be a quick fix to pay off your mortgage and it should only be used by people who are very disciplined with their finances. Honest MMA companies and sellers of the products have said that themselves. If your life is a financial mess, you need to get it cleaned up before considering a Money Merge Account.
So what is it anyway?
In researching this, I found a couple of good explanations of what a Money Merge account actually is. TheSimpleDollar defines it as:
A “money merge account” is a special home equity line of credit placed on your home. Every time you receive a paycheck, the whole thing goes straight towards first paying off any balance in your money merge account, then the entire remainder of your check goes towards paying the interest, then the principal of your home loan. Let’s say you had a mortgage with $1,500 payments and you set up a money merge account. Each month, you received $3,500 in paychecks, but only spent $1,200 (and sometimes less). That means that automatically $2,300 (and sometimes more) goes towards that mortgage each month - an extra $800 towards principal every single month. This means a 30 year mortgage would be paid off in 13 years and two months.
GetRichSlowly defines it as:
- The homeowner sets up a home-equity line of credit (HELOC), borrowing against the value of his property.
- Some large sum is withdrawn from the HELOC and used to pay down the primary mortgage.
- The homeowner does not deposit his paychecks, etc. into a traditional savings account, but applies them to pay down the HELOC.
- From time-to-time, another large chunk of money is taken out of the HELOC and applied to the primary mortgage.
- In case of emergency, the homeowner takes more money out of the HELOC.
- Though the HELOC will likely have a higher interest rate than the primary mortgage, it’s actually cheaper to maintain because of the way the interest is calculated.
MMA Pros
- Pay your home off in less than half the time (for most people)
MMA Cons
- You probably won’t know for sure what kind of results you are going to get with the program until it is up and running.
- You will need to open another line of credit.
- You have to have to be bringing in more money than what is going out each month in order for it to help much.
- You have to very closely track your payments!
- It will can become very difficult to budget since everything is coming out of the same bucket. And if you you begin spending more than you would otherwise because of that lack of a budget, you quickly nullify the potential gains possible.
Interview with an MMA company
I recently had an interview with the owner of Smart Equity. He agreed to give me some of his time to answer questions that I had about the Smart Equity MMA program and Money Merge Accounts in general. After talking to him, I felt like I got a better understanding of what was actually happening with the system.
The Money Merge Account system
For me, I think I figured out (someone please correct me if I am wrong) a good way to think about it…
Let’s say you had a $100,000 mortgage for 30 years (@ 7%). You would be paying 7% interest on that $100,000. What if you could transfer $10,000 of it into a loan that didn’t charge interest? You would then have a $90,000 balance on your mortgage being charged the 7% and $10,000 that you still had to pay for, but that was at 0%. I think this is what is essentially happening in the Money Merge programs. Once the $10,000 was paid off, you would then move another $10,000 to a loan with no interest. Then you would be down to less than $80,000. If you continue this cycle, it would be paid off very quickly.
From what I understand, this is a very generalized example of what is going on with a Money Merge account. The MMA software does the number crunching for you and always keep you at the most optimal point to pay down the mortgage the quickest. While the software would definitely make this an easier and probably safer process, you could still get great results doing it yourself.
For example, Using the details from the example above…
- 30 year $100,000 mortgage at 7%
If you paid $10,000 at the beginning of the year with your credit card that had 12 months of 0% you would have to pay $833.33 each month to have it paid off in a year. This assumes that you have an extra $833.33 every month over and above your normal expenses. If you repeated this process each year (according to my calculations) you would have the house paid off in about 7.5 years. In those 7.5 years you would have paid $29,912.69 in interest charges. This would have been a savings of $109,596.21 in interest charges if you did this method rather than just paying your payment each month for 30 years.
You can see an example of some calculations I made below…
I will be the first to admit that a $100,000 mortgage or having $833.33 to pay extra each month may not be realistic for most. It is just to illustrate the point and I picked simple numbers to make the example clear.
You need to have extra cash for the Money Merge to work well
What I see from all this is that, just like any mortgage pre-payment plan, the speed with which the mortgage is paid off is directly related to the amount extra you have to put towards it. If you only have $50 a month extra to throw towards your mortgage, sure the MMA software will help a little bit and may even pay for itself over time, but you are not going to be able to pay off your 30 year loan in 11 years. In the example we had above paying principal only on the mortgage would take 12.5 years and that is assuming the whole $100,000 was at 0%, which the Money Merge can not do. It takes it in chunks so that you have large chunks that are getting lower interest rates, but it can’t take the whole mortgage.
A local news broadcast about MMAs
http://www.youtube.com/watch?v=90PgchHluM4
Dave Ramsey’s take on money merge accounts
http://www.youtube.com/watch?v=viuUY47wLjs
My final thoughts on Money Merge Accounts
Doing the research, building spreadsheets and running the numbers has led me to one conclusion. It is worth your while to pay extra towards your mortgage. Regardless of whether or not you use the MMA software, it is worth trying to pay some extra principal on your mortgage on a regular basis - it greatly shortens the time you will be paying on the loan.
From what I can tell, the Money Merge software will amplify the process and will help you stay on track, but if you don’t have extra money to pay towards your mortgage, don’t waste your time.
Also, I will say it again, because it bears repeating: you need to have your finances in order before even considering something like an MMA. If you ever pay bills late, if you can’t balance your checkbook, if you don’t know exactly what is going on with your finances, I do not recommend Money Merge Accounts. If that is you right now, I would suggest trying to pay extra towards your mortgage each month and if you can do that successfully for a while, then it may be worth considering.
If you are interested in starting an MMA, I recommend the guys from Smart Equity. They were very helpful and gave me hours of their time - phone calls, emails, research just to help me understand the product. At $695 their MMA is the cheapest one I have found out there (compared to the $3500 UFF product) and customer support is included.
This article was included in the Carnival of Personal Finance
So, those are my thoughts on Money Merge Accounts. I would love to hear from people who are currently using them or who have more information about them in the comments below!
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It’s good to check your credit report. It’s bad to pay for it. It’s worse to think you are getting it free and then you get charged.
Apparently, that is what these guys have been doing. They seem to have been doing a big advertising push lately, I have seen quite a few of their commercials. Have you?
You can read more about a personal story of someone getting ripped off by these guys here.
In the meantime if you are wanting to check your credit report go to AnnualCreditReport.com. While they do have services that they charge for, you can still get a copy of your report from the big 3 services through them for FREE.
And here is a little bit more reading to keep you busy…
- The Honda fit gets some glory (I love my fit!)
- How and why you should live a more simple life
- 10 tips for college bound students
- The top home maintenance tasks you ignore
- Camping for beginners
- Homemade bread for beginners
- 10 things that rock about being debt free
- Are you building credit or debt?
- 10 habits that bosses love
- 9 tips for going to one income
- A series of personal finance basics
- Biblical advice on privacy
This was featured in the Carnival of Personal Finance
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What happens to my gift card if the retailer goes bankrupt?
You might have heard about the recent bankruptcies of Bombay, Sharper Image, and Linens-N-Things. Well, I hope you don’t have a gift card for one of them still sitting in your drawer. According to the recent issue of Money Magizine, you are not likely to get anything from them. It is possible that you could get a fraction of what it was worth, but not very likely.
They suggest that you start spending if you have a gift card for…
- Blockbuster
- Eddie Bauer
- Express
- Petco
- Toys R Us
Each one of these companies recently had their credit rating drop below investment grade. That is not necessarily an indication that they will go bankrupt, but definitely a cause for concern.
Personally, I often spend gift cards as soon as I get them, but they say that half of all Americans have an unused gift card laying around somewhere. It’s free money. Get spending!!
But I hate that store, I will never use it!
Can you imagine Paris Hilton trying to use a Home Depot gift card?
I can’t either. If you are in a similar bind with some of your unused gift cards, check out these sites. Each one allows you to sell the giftcard outright (at a discount) or trade it with other members.
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This is a reprint of an article I wrote for Being Frugal a few days ago…
When I was about 14 years old, my uncle suddenly and unexpectedly went home to be with the Lord. He had meticulously taken care of the finances for their family and left my aunt on a very solid financial foundation. Obviously, this didn’t take away the pain of him being gone, but his preparation eliminated additional stress that would have been present without it.
It’s one of those things we all prefer not to think about, but it is always better to be prepared. My aunt is still reaping from what my uncle sowed by having his things in order.
My FLOP
Being impacted by my uncle’s premature death and wanting to do everything I can do to help my wife, I decided to create a system for keeping things organized.
It has been a work in progress over the last few years, but has evolved into a very helpful tool. Simply put, it is a single file or location for all your financial account details. I call it a FLOP (Financial Life on One Page). FLOP sounds a little cooler than FLOOP, but not much 
In adding to it over the last few years it has come to have three main purposes. The first being that it is a:
1. Balance Sheet
One of the best pieces of advice I received about 5 years ago, when I started my journey to clean up my finances was to keep a balance sheet. I didn’t really understand why at the time, but I did it anyway. I have updated it twice a year since I started it and it has been a great source of encouragement as I have fought to get out of debt.
The reason it has been such a source of encouragement is because a balance sheet not only takes into account the debt you have been paying off, but all of your good financial decisions. So increasing your savings, paying down debt, making wise purchases all will affect your balance sheet in a positive way.
Also, looking at the size of your debts or assets does not necessarily give an accurate report of your financial condition. To get a accurate picture of your financial situation you need a balance sheet to calculate your net worth. It is very easy to do and is just a big subtraction problem:
Assets - Liabilities = Net Worth
If you have never started a balance sheet, I recommend doing it. It is a simple way to track your financial progress as you move towards your goals. For most people it shouldn’t take more than an hour to gather up all your account balances and asset values.
And as with most things, you are either moving forward, or you are going backwards. If you are increasing your assets or minimizing debts your net worth should be growing. If your net worth is getting smaller, then it is an indication that you should re-evaluate how you are spending your money. And even if your situation is not very encouraging, it will force you to see the financial truth so you can make adjustments as needed.
How to create a balance sheet
- Use Excel, Google docs, or some other spreadsheet software.
- List every Asset you can possibly think of from cars to stocks to jewelry for the amount that you could quickly sell it for. (To save time, you can lump together smaller assets like “misc. household items”) Total these items up to get a subtotal of your assets.
- Below the Assets total, list every debt or liability that you have. Mortgages, credit cards, student loans, they all apply. Total your debts to get your liability total.
- Subtract your liability total from your asset total to get your Net Worth.
2. Organize all my login information
Another piece of good advice I got a few years back was to create an extremely unique login ID and use it for every website that I had an ID for. I followed the advice and it has helped, but it is not a fail-proof system. Some sites require your email address, some want more than 8 characters, some want less, etc. And in this day in age, where you just about need to login to open your refrigerator, it can be difficult keeping track of all your login information.
After adding all your accounts in the balance sheet section above, you should have all your account information listed already and you can just add a column to add your login for that company. If you use various passwords you could list them in another column as well, but consider using a password hint rather than the actual password. I still come back to my FLOP at least once a week to figure out a login that I forgot about.
3. Financial roadmap for my wife
The third and most important reason for my FLOP is for my wife. In most families, one person manages the finances and has a better understanding of the overall financial picture. I am that person in my family. Are you that person in yours?
If so, would your spouse (or other beneficiaries) know where to find your financial information? Insurance policies, bank accounts, investment accounts, safe deposit boxes?
I know for my personal situation I know a bit more about our financial details than my wife does. I use my FLOP to layout all of the pertinent details for my wife, if she ever needed them. It contains the name, phone number or web address of each institution, our account numbers for those institutions and any other pertinent info that may be needed.
I then burned the file to a CD and kept it in our safe. Every year or so I put a copy of the updated FLOP in there.
Losing a loved one is a terribly difficult process. Having a “roadmap” prepared in advance for your loved ones is a great way to help eliminate unnecessary stress.
If you are interested, you can download a copy of my template for my FLOP.
This article was included in the Carnival of Personal Finance
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The effects of inflation on my money
In the May 2008 Money magazine they had an article titled, “Life in the time of inflation.” They mentioned how the price of milk is up 13% over the last year, hospital costs 8%, and of course gas up 33% . Overall inflation being up about 4%.
There are lots of effects that inflation has on the world, our economy, and our personal lives, but I think one of the most important ones for us to be aware of is how it affects our cash.
Cash sitting in our wallets, under the mattress and even in many savings accounts is becoming less valuable because of inflation.
At 3% inflation (which I think has been the average over the last decade in the U.S.) we are essentially losing money when our cash is not earning at least that amount in interest. So, if you have a savings account that pays 1.5% interest and inflation is at 3%, you are losing spending power.
Even though your total balance in your savings account may have gone up, you will be able to purchase less with that money because of inflation.
How to best handle inflation
By having a savings interest rate that is higher than the inflation rate, you can take comfort in knowing that your money is growing in dollars as well as spending power. In times of high levels of inflation, this most likely will not be possible.
Bank CD’s often offer higher rates of return than savings and money market accounts, in exchange for promising to keep your money there for a fixed time frame.
Stocks, index funds, and mutual funds all generally offer good protection against inflation.
How to benefit from inflation
Fixed-rate debt - your mortgage, car loans, or any other loans you have at a fixed rate will be beneficial to you as the borrower. For instance, if you have a 30 year mortgage, every year further into the loan you go, you are actually using less of your spending power to pay the bills.
In theory, if inflation goes up in the U.S. by 4%, our living expenses will rise by 4%. Then (in theory) our incomes rise by 4%. But, your fixed rate debt doesn’t rise. Therefore, with all other things being equal (and assuming that we have a constant rate of inflation) your mortgage payment should be easier to pay each year as you get further into it.
This cycle is amplified and you see much greater benefits from it in periods of high inflation. The bank who made the loan pays the price because even though they are getting the same payment each month, it become less and less valuable as the loan progresses.
Bottom line: Inflation is likely to always be around, we might as well learn how to make the best of it.
Ducktales explanation of the effects of inflation
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Banking with ING can help you avoid identity theft
A study from the University of California, Berkeley was just published that measured occurrences of identity theft at the top banks. The study analyzed all of the identity theft complaints issued for a few months in 2006 and provided some clear distinctions between banks.
You can see in the chart below that HSBC and Bank of America are the most prone to identity theft. It is no surprise to me that ING Direct has the lowest incidences of identity theft on the list. If you bank with ING, you will know that they have so many security measures that it can ALMOST be annoying. But, I can’t fault them for taking my security so seriously. The increased levels of protection are worth an extra few seconds every time I log in.
I had plenty of reasons to love ING Direct before, but now I have one more. If you are considering banking with ING, let me know because I can get you $25 for opening a new account.
This study alone shouldn’t be a cause for bailing out of your bank. Identity theft is still on the rise and I assume that it will continue for a while, but that is not a reason to panic. There are simple identity theft prevention tips that everyone can follow that will greatly diminish your risk.
Technorati Tags: identity theft, ING banking, ING Direct
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Don’t be an easy identity theft target
Although some identity theft is electronic and sophisticated, most identity theft actually still takes place by dumpster diving and mail theft. So, depending on how secure your garbage can is, you may want to think twice about what you put in it. It is a great place for identity thieves to find a wealth of information about you.
Ways to prevent identity theft
Here are just a few tips and guidelines to follow for decreasing your chance of identity theft.
Never E-mail Sensitive Information
My employer has drilled this into our heads over the last few years. They have said that email is as private as a postcard; a lot of eyes could see it before it gets to its destination. Whether or not that many eyes actually see our email, it is a good idea to err on the side of caution when using sensitive information.
So, whether at home or at work think about what gets typed into an email. Be wary of including account numbers, user names, passwords, Social Security or PIN numbers, or credit card information.
Pick good passwords
Choose user names, PINs and passwords that are difficult to guess. Don’t use your birthday, phone number or any other obvious personal data. They also say it is a good idea to type your log-in information each time you go online instead of letting your browser save it for you.
Limit Personal Information
Always use a healthy dose of skepticism with incoming calls or incoming emails. It that personal really from the company that they say they are? You shouldn’t disclose personal information over the phone or via e-mail unless you initiated the call or email.
Practice Internet Safety
You should try to avoid using public computers to review personal information and account details because simply closing your browser does not automatically clear the browser’s memory. The information stored in cache is still available until deleted.
Look for sites that offer Secure Sockets Layer (SSL) technology. You can tell if a site uses SSL by checking to see if there is a locked padlock in the lower-right hand corner of your browser window. Also, when you log on to a secure site in the address bar you will see the, “http” change to “https.” These are good indicators that the site is secure.
Protect your identity with a shredder
Buy a shredder and destroy (or safely file) anything that has credit card information or your Social Security number.
Be cautious with Outgoing Mail
Deposit outgoing mail in the United States Post Office boxes rather than your home mailbox.
Get Your Credit Report
Review your credit reports from the three main credit bureaus (i.e., Equifax, TransUnion and Experian) at least annually. Federal law requires these credit bureaus to each give you a free copy once a year. If you really want to keep a close eye on your report, you could get one from each every four months.
I recommend using annualcreditreport.com. These guys make it easy to get all three once a year for free. Many other credit report websites will make it very difficult to get the free reports. If you notice that the information on one of your credit reports is inaccurate, contact the credit bureau to investigate.
Equifax offers a service where they monitor your credit report for you. If you don’t have time to monitor it or don’t feel like it, this could be a good option. I personally have not signed up with them yet, so I can’t attest to how good they are.
If you suspect that you have become a victim of identity theft, call 1-877-ID-THEFT.
Check Your Statements
Watch for unusual purchases or transactions on your statements and report them immediately. Also, if your statement appears to have been opened and resealed, contact the issuing institution as once.
Use Antivirus Software
Make sure your antivirus software is up to date, turned on, and enable the firewall on your PC.
Review Privacy Policies
When applying for an account or ordering a product online, review the Web site’s privacy policy to make sure you are dealing with a reputable company who won’t sell everything they know about you to spammers-R-us.
Do you have any tips or tricks that you use to prevent identity theft?
Technorati Tags: identity theft
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I have had a couple of scammers attempt to get me on this, so I think I need to pass it along.
[tag]Phishing[/tag] is when a scammer sets up a phony website using legitimate company logos and tries to direct you to that site usually via email. They normally will send you an [tag]email[/tag] with a link appearing to go to the legitimate site, but it will actually lead you to their phony site.
Once at their phony site, you will be asked to provide sensitive personal information. They typically go after your username, passwords, account numbers, SS numbers, credit card numbers, and pin numbers.
A few things that are usually tell-tale signs that you are being phished:
- There will always be a sense of urgency to the email they are sending. They will want you to respond immediately or something BAD will happen.
- There may be spelling or grammatical errors. These guys usually didn’t pay attention in English class; they were out robbing old ladies.
- The link may take you to a slightly different website than what it says. Rather than Citibank.com, it may take you to Cit1bank.com. Most people don’t pay close attention.
- The email may not be addressed to you.
How to beat the phishers
- Do not email important personal or financial information. Email is not quite as private as some may think.
- Think twice about opening emails from unknown sources.
- If you do receive any email requesting personal information do not reply or click any links in the email.
- If you are unsure of the validity of an email, type the company’s web address directly into your browser or call the company directly.
- Use virus protection software.
What else?
- If you think you may have given your information to scammers, contact the company they posed as in the email. They may already be aware of the scam, but be sure to let them know immediately.
- You can forward suspicious emails to spam@uce.gov and you can file complaints with the FTC at FTC.gov.
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