Money Blue Book

The first month of the new year was a good month for me financially. Now you must be wondering to yourself – how can that possibly be – especially considering that my calculated net worth dropped in excess of $15,000 for the month of January. Well, because I only show a singular snapshot of my financial picture in each of my monthly net worth updates – they generally don’t reveal sufficient cash flow numbers to offer one a complete picture of my true financial health from all appropriate angles. Thus, the balance sheet numbers reflected on these reports can at times be somewhat misleading, as in this particular case. At first blush, my January numbers would seem to suggest that this particular month was a disappointing one. But truth be told, in terms of earnings stability and projected future income potential, January 2010 was yet another reliably steady month for me.

For January 2010, the combined income accumulated from this personal finance blog, the revenue generated by my other online affiliate ventures, and the part time income I earned from my small legal practice as an attorney – all saw slight increases. However, much of the income stats were gobbled up by the hefty estimated tax payments I had to make to the federal and state government during the month. Because I operate my small business and solo legal practice using a cash basis form of accounting, I don’t spread the estimated quarterly tax payments evenly throughout the year, but rather record them on my personal financial balance statements only when they are actually paid out – resulting in these precipitous drops in total net asset value that occur four times a year.

There was one major financial hit however which came from a furious stock market correction that reared its ugly head at the latter half of the month, which pretty much wiped out the hefty gains I would have been on track to record. But as far as the worth of my stock investments go, I don’t generally pay substantial attention to them – as I see them as long term investments that will ultimately pay off years down the road. Month to month dips in stock portfolio value don’t generally rattle me in any significant way (so long as there aren’t serious financial Armageddon type issues lingering in the market). On the whole, so long as I can continue to pull in a steady income with my online website businesses and small legal practice, I am generally content to stay the course. No one ever said becoming a millionaire would be easy, as there are bound to be unexpected bumps on the road. But so long as the rules haven’t changed to any major degree, the economic and financial landscape will inevitably improve in the long run, and such long term investments will ultimately enjoy much success.

My Current Net Worth and Financial Status Update Compared To Last Month

Paying My Quarterly Estimated Taxes As A Self Employed Taxpayer

For those not familiar with what quarterly estimated taxes are in general, or not sure as to why they took such a big bite out of my networth this month, here’s a quick explanation. Estimated taxes are basically the  income taxes that self employed individuals like myself  pay on income that is not subjected to withholding. This income includes everything  from self employment income, interest, stock dividends, rental income, and gains from the sale of assets, etc. It’s important to pay attention to this obligation, because failure to timely pay the quarterly assessed estimated taxes on time does result in a hefty penalty and associated interest charges, even in those cases where you are ultimately due a refund when you file the tax return.

Most people never have to deal with paying estimated taxes because their employers usually already withhold their federal, state, and social security taxes on their paychecks. But for self employed small business owners like myself, because we don’t have someone else to withhold these types of taxes for us, the Internal Revenue Service (IRS) has mandated that we do so ourselves – requiring us to make four projected pre-payments throughout the year at set intervals on April 15, June 15, September 15, and January 15 of the following year. One of these hefty tax payment dates occurred in January, which is why the vast bulk of the income I generated during the month was siphoned off to pay the Man. But next month, my networth will likely return back to its regularly anticipated upward growth trajectory.

Buy Low, Sell High – And Continue Investing In A Down Stock Market

Some are saying that we are up for another routine market correction after a somewhat furious run up from spring 2009, while others are running around in circles predicting another major collapse again. But once you cut past the rhetoric and emotional hyperboles, you realize that it’s really just business as usual. The economy naturally ebbs and flows and there is always bound to be good stock market days and bad ones as well. But if you are generally optimistic about the distant future as I am and are willing to make your long term investment bets today, I am confident that years from now, your investments will pay off quite handsomely.

While I keep a rather sizable amount stored away in my safe and secure FDIC insured high interest bank accounts for emergency fund purposes, the vast bulk of my savings reside in discount broker accounts – invested into a variety of long range investments. I intend to stay invested for quite a few years – at least 3-5 years before I plan to engage in any significant portfolio reshuffling. I think the market is currently at its low and that all indicators strongly suggest that there is only tremendous upside from hereon. It is certainly possibly for the market to continue getting spooked and experience a pullback, but I don’t think we are in for another financial Armageddon scenario or are on the verge of a serious economic depression – the likes of which were talked about during the early part of last year. We are definitely on the road to economic recovery – however, admittedly, the road is long, and heavily paved with pot holes and obstacles.

Cashing In and Taking Advantage Of Credit Card Rewards and Bonuses

This month I also happened to redeem a rather large chunk of the credit card rewards I’ve accumulated over the last many months – converting my various credit card reward points into usable currency – namely, gift cards. Overwhelmingly, the more lucrative card reward program I use at the present time is the Citi Thank You network, with the American Express Blue Cash program being a close second. Because I used reward credit cards to pay for pretty much everything I purchase, I tend to rack up a substantial amount of reward points in a very short period of time.

The amount of credit card reward points I had accrued after only a year of routine credit card spending was rather enormous (in my opinion) – an amount that exceeded a value of $1,500. Ultimately, I decided to convert the majority of them into gift cards to places like Marshall’s and Macy’s. I don’t go shopping for clothing very often, but I’ll probably go on a small shopping spree in the near future with my new found loot. I had the option to convert my accrued credit card reward points into a cash lump sum, but for those who are familiar with credit card rebates and rewards, the point to cash conversion rate is frequently pretty low – and you tend to lose a big chunk of your points during the conversion process. While pure cash back credit card rewards are more versatile and bypass the hassle of having to manually convert accrued points into usable gifts or rewards, I’ve found that point based reward programs tend to offer a higher purchase rebate percentage. If you don’t mind a little work or putting in a little effort towards micro-managing your points, you’re better off going with a point based reward program.

I know credit cards tend to get a very bad rap with many out there believing them to be the source of all evil as evidenced by the government’s recent crusade to regulate every aspect of how credit card issuers run their businesses. However, I personally feel credit card programs are what you make of them. If you spend responsibly and pay off your balances in full every month, the credit card usage incentives they provide can be extremely lucrative. Even those who persistently carry monthly balances are not without options – there are a variety of 0% balance credit cards and low interest credit card deals out there for the qualified applicants to take advantage of. Keep those FICO credit scores high and monitor them regularly with programs like MyFICO Score Watch like I do, and you’ll ensure that you’ll always have access to the best credit card offers according to your personalized needs.

Review Of The Balance Transfer Credit Cards I Use To Pay Off Debt

As a fan of balance transfers and zero percent credit cards, I’ve been feeling rather forlorn these past few months. With the recent enactment of new laws and regulations clamping down on how credit card issuers run their practices, it seems the era of 0% balance transfers and 0% APR deals has finally reached its apex and is now beginning its downward decent into the annals of credit card lore. Only a mere few years ago, one could effortlessly lighten the burden of high interest credit card debt with the assistance of balance transfer offers – lucrative deals that dangled everything from waived transfer fees to long term interest free durations that extended into perpetuity for the entire life of the loan. At its heyday, it was a common place to hear stories of those who were able to engage in balance transfer arbitrage and profit immensely from the 0% APR offers that credit card companies issued to attract new card members to the fold. Back then, the savvy and opportunistic card arbitrager could simply apply for a credit card, obtain a 0% balance transfer, pay no money up front, and immediately transfer the free funds into a remarkably high yielding (5.00 – 6.00% APY) online savings account – reaping what was essentially free interest profit.

Sadly for those of us who once depended on these types of offers for so long, those days are now sorely missed and all but gone, as such once abundant deals are edging ever closer to extinction. With the devastating credit crisis having made its presence keenly felt in all aspects of the U.S. economy, credit card issuers have pretty much pulled out their most lucrative balance transfer offers. Nowadays, balance transfer durations are getting shorter, the balance transfer fees are getting higher, and ordinary purchase interest rates at the conclusions of promotional periods are all witnessing substantial increases.

Compare These Factors When Reviewing Prospective Balance Transfer Cards

But while harder to find, balance transfer cards still exist, at least for the time being. For those who wish to take advantage of these limited time offers, it’s important to recognize the critical ways that today’s balance transfer offers have changed compared to years past. Here are the crucial balance transfer terms and conditions to always consider:

1) Length Of Time Of the Promotional Periods: Presently, zero percent balance transfer periods range from 6-12 months with only a few rare programs that offer terms beyond a year. Obviously, the longer the term the better, but even enjoying a 6 month promotion at 0% APR is less onerous of an interest penalty burden than enduring the same time period at a whopping 15-25% APR or more (which is what many credit card companies are gouging their customers with these days).

2) Balance Transfer Fees: While introductory 0% APR no balance transfer fee cards are still around, they are increasingly very difficult to find. Currently, the standard balance transfer fee for most cards is slated at 3% of the total amount transferred. While there are still a few offers out there that do offer the next best alternative – capped balance transfer fee charges at a maximum of $75.00 or so, those types of attractive offers are dwindling as well.

3) Credit Card Sign Up Bonuses: While 0% credit card promotions are dwindling, incentive rewards and sign up bonuses are still plentiful. It’s best to seek out cards that offer special sign up rewards whenever possible. There are actually quite a few offers out there that pay anywhere from $50 to $100 or more for new members. By taking advantage of these sign up rewards, one can greatly minimize the impact of the 3% balance transfer fee charges that many introductory balance transfer offers impose.

4) Annual Fees: Avoid credit card offers that levy annual membership fees if possible. There is simply no reason to pay such petty charges as there is a wide selection of no annual fee cards out there to choose from. The exception to the rule is if the card offers a special sign up bonus that pays for the annual fee altogether.

The Top Balance Transfers: 0% APR Credit Card Offers That I Use

While it’s presently no longer reasonably profitable to continue playing the credit card arbitrage game, balance transfer cards can still be a reliable method of debt reduction and a source of emergency funding for those drowning in debt or suffering from a bout of unemployment. While a host of alternatives to balance transfers have emerged, they still remain very effective and accessible solutions for individual and families looking to manage their debt.

If you’re looking for breathing space and extra time to pay down your existing credit card balances without the stifling pressures of the high interest gun pointed at your head, a balance transfer credit card that offers a 0% APR introductory rate may be right for you. But here’s a little warning. While 0% and low interest balance transfers are effective tools for reducing the burdens of existing credit card debt, if you aren’t diligent in ensuring that you follow the appropriate rules and conditions to the letter, you may unwittingly put yourself in a worse off position than before. When you obtain your balance transfer offer, you should never use your promotional credit card for additional purchases but instead focus exclusively on using the interest free grace period towards paying down existing high interest debt. Remember, you ought to engage in 0% balance transfers only if you’re serious about getting out of debt, not merely as a way to engage in delayed gratification by using the interest free funds to go on a self defeating shopping spree.

As I frequently get emails and requests from readers asking me for recommendations on what I believe are the best balance transfer offers available today for those looking to pay down debt, I’ve included a very short list below of my conclusions. The following is a list of what I would personally use for balance transfer purposes. Note that a few of the balance transfer cards below even offer zero percent rates on purchases along with the balance transfers to boot. A few even tout special sign up bonuses as well.

1) Discover More Card – No annual fee. Offers 0% APR on balance transfers and purchases for 6 months, with a 3% balance transfer fee. However, all new accounts receive a $50 cash back bonus after $500 in purchases is made with the card. At the conclusion of the balance transfer period, the card reverts into a handy cashback rewards card of 5% and up.

2) Citi Platinum Select Mastercard – No annual fee. This very popular offer from Citibank offers 0% APR on balance transfers and purchases for up to 12 months. There is a balance transfer fee of 3%. As a non-rewards card, the Citi Platinum Select’s natural interest rate is also comparably lower than other reward based cards.

3) Citi Forward Card – No annual fee. This Citibank credit card offers 0% APR on both balance transfers and purchases for 7 months, with a 3% balance transfer fee. But with this special link, new card accounts can get a sign up reward that’s equivalent to a free $100 gift card at a variety of stores, trade-able for cash. To qualify, you’ll need to make at least $250 worth of purchases and elect to receive paperless statements within 3 months of account opening. The Citi Forward card is a very highly touted cashback rewards card as well.

4) Escape by Discover Card – This special Discover travel credit card promotion offers a 0% balance transfer and 0% purchase period for 6 months, with a 3% transfer charge. It also offers new card members the mile rewards equivalent of a free $100 gift card. The new bonus miles earned upon sign up can be exchanged for cash, gift cards, or other travel rewards.

5) Miles Card by Discover – No annual fee. Get a 0% APR offer on balance transfer and purchases for 6 months, with a 3% balance transfer fee. While there is no official cap on balance transfer fees with this offer, the Miles Card by Discover does offer a nice sign up bonus that’s enough to instantly redeem for a versatile $100 gift card - swappable for cash, statement credit, or free airline tickets – thus reducing your effective balance transfer fee burden.

6) Citi mtvU Platinum Select Card – No annual fee. Based on credit history, student applicants who qualify can receive 0% APR on balance transfers and purchases for 7 months. The Citi mtvU card is one of the best, if not the best card for students looking to rack up lots of free money in the way of cash back rewards for purchases at the conclusion of the balance transfer period.

As a long time apartment renter for many years, I’m finally on the verge on purchasing my very first home. As such, I’ve been super keen on tracking my credit reports and credit scores closely in recent months to boost my attributes as a prospective mortgage loan seeker. For a while now, I’ve been spending a tremendous amount of time learning everything I can about home mortgages and figuring out how to position myself to ultimately qualify for the very best rate on a home mortgage  loan. One of the most crucial pre-requisites I’ve discovered about interest rates for mortgages and personal loans in general – is the shear importance of having a clean credit report and a good credit score. Banks, credit unions, mortgage brokers, and even credit card issuers utilize credit reports and credit scores to ascertain the credit worthiness of loan applicants – mulling over everything from the number of timely on-time credit payments and the severity of late payments, to the age and number of active credit accounts. Such historical data is compiled and reviewed by the lender to determine the appropriate interest rate the lender must charge the loan applicant to compensate the lender for the level of credit risk that it must expend. Those applicants with banged up credit histories and low credit scores tend to get slapped with higher interest rate fees on their loan offers than those with stellar credit histories. Individuals who have decent credit reports with good credit scores to match almost invariably enjoy much greater access to the best mortgage rates and the best credit card offers than those without.

Credit scores are important because they are basically summary reflections of what’s found on your credit reports, and are one of the primary quick and easy short cut tools that lenders use to predict how likely you are to make your future credit payments on time. Thus the revealing nature of your numerical credit score has a direct impact on what type of mortgage loan rates, credit card offers, balance transfer deals, and auto insurance rates you can qualify for. Clearly, having a good credit score makes your financial life a lot easier and helps you save money in the form of lower interest charges whenever you need to apply for a loan or tap into credit based products.

The Definition Of A Good Credit Score Depends On What You Intend To Do With It

For starters, it’s important to understand that the importance of your credit score is relative and contingent on what you intend to with the score. Its utility also depends on which particular credit score you are talking about. While it’s always a great idea to monitor your routine credit score changes if you’re one of those like myself who occasionally depend on 0% balance transfer credit cards and balance transfer alternatives for emergency fund purposes, only if you’re planning on seeking credit or a loan within the next year would I recommend that you place so much immediate attention on your score. If you are not in the market at the present time for a mortgage or aren’t planning on applying for a P2P personal loan or credit card within the next 12 months, your credit score is certainly not something you ought to overly fuss over. While one’s credit score has far reaching effects beyond just loan applications and approvals (impacting prospects such as employment screenings and housing background checks), its primary purpose still revolves around its importance in helping you secure the very best interest rates and terms when you need access to immediate credit. If you’re thinking of getting a mortgage loan for example, knowing your credit score is important because it may let you know if you need to take immediate action to improve your score so that you can push yourself into a higher credit score tier and thereby increase your chances of qualifying for a lower interest rate on your loan application.

A Good Credit Score Also Depends On What Credit Scoring Formula and Range You’re Using

Other than the purpose of what you intend to use it for, another important factor of what constitutes a “good credit score” is also determined by what credit scoring methodology you are using. While all of the different credit scores out there are calculated by information contained in your credit reports, including payment history and ratio of actual credit usage to total available credit, the various scores out there differ in their numerical scoring ranges. Currently, the most popular and widely used scoring system is the FICO credit score formula (the myFICO.com score) developed by the Fair Isaac Corporation. Take a look at my article about FICO credit scores if you want a good background overview on how the scores are calculated and determined. FICO scores range from 300 to 850, with average FICO scores ranging between 680-700 depending on which of the 3 major credit bureaus’ data (Experian, Equifax, or TransUnion) you’re using. Presently in the United States, the median FICO credit score is 723.

While there is no current standardization on what exactly a good FICO credit score is, generally a good number is regarded as FICOs that are at least above average or above the median score (anything above 700). If your FICO score is at least 720 or higher, I would say that you are in pretty good shape as far as your credit rating goes in terms of your chances of securing top interest rates for your loan requests. In the past, most mortgage lenders and banks have traditionally lumped those with FICO credit scores of 720 or higher with those in the 800’s – deeming both groups to be very low default risk borrowers – equally qualified for the best interest rates.

Good Credit Score Standards Have Increased In Recent Years

However, one thing to bear in mind is that credit scoring standards have increased substantially during the last few years. Particularly as a result of the recent credit crisis and subprime mortgage debacle, lenders and creditors have grown more strict in what they demand out of borrowers for the lowest interest rate offers. The definition of what’s considered a good credit score has definitely gone up the last few years. Not too long ago in 2006 for example, a FICO credit score of around 620-650 would have been regarded as a “good credit score” and more than sufficient to qualify for the cheapest mortgage rates. Those days are long gone and lenders today now demand scores in excess of 750 or more for the top mortgage rates, along with high down payment percentages of 20% or more for home loans. While FICO credit scores of 720 or higher may still be regarded as the baseline standard of constitutes a good credit score, to truly snag the best interest rate offers, you’ll likely need premium FICO’s of 750 or higher.

The Effect Of Good FICO Credit Scores On Interest Rate Qualification

As noted above, the numerical range of what constitutes a good credit score is relative, and depends on what you want to do with it. Different types of lenders implement different credit scoring ranges in their categorization of prospective borrowers in terms of credit risk. Take a look at the two FICO score tables below (one for mortgages and the other for auto loans) to get an idea of how scoring ranges relate to the interest rates each range would generally command from lenders. As you’ll note, mortgage lenders tend to demand stricter FICO credit score standards than say – credit card issuers and even car loan lenders.

Example: 30 Year Fixed Mortgage Rates For A $300,000 Mortgage Loan

Looking at the above sample interest rates on a hypothetical $300,000 home mortgage application as provided by the myFICO.com website, it’s clear that the best interest rates on home loans are available to those with FICO scores in excess of 760 or greater. Of course, it’s also important to remember that such rates are rarely exclusively determined by FICO scores alone. Mortgage lenders also rely heavily on the applicant’s documentation of income sources and available assets when determining appropriate interest rates. Let’s look at auto loans:

Example: 36 Month Auto Loan Rates For A $25,000 Car Loan

As you’ll note from the table above, the best auto loan rates can generally be qualified by individuals with FICO credit scores in excess of 720 or greater. It’s an over simplification, but it sort of gives you a broad view of what constitutes a good credit score in terms of qualifying for the best rates.

If you don’t know where your official FICO credit score currently stands or what’s on your triple credit reports as compiled by the three major credit bureaus of Equifax, Experian, and TransUnion, I recommend finding out sooner than later. You might not need to tap into your credit rating at the present moment, but it’s always good to know where you roughly stand. Here are a few ways to get your FICO scores and credit reports for free.

• Free credit scores – via myFICO.com trial offers
• FICO discount codes – for credit score savings
• Free credit reports – obtained from the federal government’s official AnnualCreditReport.com website

As a big fan of the Citi Thank You rewards program offered by Citibank for its credit card customers, I thought I was pretty well honed on all of the user benefits and purchase rewards that Citi Card had to offer. However, there’s a relatively less publicized reward program that current Citi credit card and Citi debit Mastercard members are entitled to that many are not aware of. The reward program is called Citi Private Pass. The Citi PrivatePass program itself is totally free to existing Citi Card customers to the extent that there are no extra monthly membership fees required to join. The only participation cost to you is when you actually decide to purchase reward tickets to desired events via the Citi Private Pass program. The tickets feature heavily discounted prices (or sometimes are even provided free courtesy of Citi Private Pass), but oftentimes you’ll still have to pay a small portion out of pocket .

Unlike Citibank’s well known and popular Citi Thank You purchase incentive feature, which tends to focus on more tangible gift card and cash based rewards that you can accrue through daily card purchases, the Citi PrivatePass program is devoted almost exclusively to entertainment and experience based offers – providing its participants special access to free and cheap tickets to unique concerts, dining experiences, and popular sporting events. The Citi Private Pass program is not a separate card, but rather a rewards program already available to existing Citi Card customers.

Citi Private Pass Offers Free and Cheap Tickets For Special Live Events and Experiences

After reviewing the Citi Private Pass website and examining some of the promotional material, it’s clear the motivation behind the Citi Private Pass program is to help Citibank capture a greater segment of the entertainment generation, an emerging and outgoing demographic that’s willing to go out and spend money but still harbor the savvy mindset to locate the best online deals for discounts, limited time offers, and freebies. Presumably hoping to re-brand itself into some sort of entertainment conduit or facilitator for card carrying customers who are also experience seekers, the Citi Private Pass program offers Citi customers the opportunity to enjoy special VIP access to sought after events at deep discount prices that are much lower than that typically sold to the general public.

According to the folks at CitiCard, the Private Pass program offers card members a way to get access to limited pre sale tickets, obtain preferred seating reservations ahead of time, arrange meetings with their favorite musical artists, or even attend special limited opportunity movie screenings and cultural events. Reviewing the Private Pass terms and conditions and examining the entire selection of offers available to customers, I can see why the program has appeal on a diverse scale. Members can select from a very wide variety of trips and event categories – including golf, restaurants, nightclubs, shopping, sporting events, theater, and other popular activities.

The Citi Private Pass program breaks the program down into several broad experience categories, each with its own individual selections. Currently, Private Pass is touting several popular summer programs, and such seasonal programs are constantly being rolled out.

• Tickets To Music Concerts: Citibank and Live Nation are promoting discounted lawn concert tours for just $5 per ticket through the Summer of Savings event for the months of July and August 2009. Discounted concert tickets are available for a wide array of well known artists and bands such as Lil Wayne, Aerosmith, Creed, Kid Rock Depeche Mode, Nickleback, Blink-182, and even the Jonas Brothers (gag). Just go to www.citiprivatepass.com to get the special access code that allows you to take advantage of this offer.
• Tickets To Popular Sporting Events: Special exclusive discount savings for sporting experiences are available – everything from ordinary events like basketball and baseball games, to the more out of the norm – including fly fishing, river sailing, and rodeos.
• Access To Special Movie Viewings and Special Art Galleries: Many of the featured offers in this category are not available to the general public and are only available to CitiCard customers. A few of the more exclusive offers are only available to Citi Visa Signature cardholders.

If you are one who loves going out and spending money on experiences and memories rather than on mere materialistic objects that inevitably depreciate, then I think the Citi Private Pass offerings and special ticket discounts are something your lifestyle may demand. At the very least, the Citi Private Pass program is a rather interesting way to get to know what live events are happening out there if you’ve been wanting to participate in one. Simply visit the Citi Private Pass website directly and access the free and discounted selections from the entertainment category of your choice.

Remember, to participate in the free Citi Private Pass rewards program, you’ll need to be a current Citibank credit card or debit card customer. If you’re not yet a Citi cardmember and would like more information about becoming one, check out some of these popular Citi Card offers:

• Citi Platinum Select Master Card – 0 % APR on balance transfers and purchases for 6 months.
• Citi Forward Card – 5% purchase reward back for restaurants, books, movies, music, and 1% for everything else.
• Citi Premier Pass Elite Card – 2% reward points for all everyday purchases at gas stations, supermarkets, transportation lots, and parking facilities.
• Citi Forward Card for Students – 5% purchase reward back for student purchases like eating out, books, movies, and music.
• Citi mtvU Platinum Select Visa Card for Students – 5% rebate reward back for dining out, music, movies, and books, including purchases made at Amazon.com.