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Since the price of gas has been going up so much lately, I have tried to make a conscious effort to try and drive less. Besides the fact that is makes sense for me economically, it is good for the environment as well. I am proud to say that I have gone over an entire month without filling up my tank. What makes this even more impressive is the fact that my car only gets about 250 miles per tank. The last time I filled up my car was 7/22/2008. That makes it a month and three days as of today, and a month and four days as of tomorrow.

I have a few theories about why I managed to accomplish this feat. 21 days had been my previous tops since I bought the car in October 2007. The main reason I think that has contributed to my decrease in driving is my new living location. Previously I had to drive back and forth to the park and ride each day. It worked out to about 8 miles each day in driving. It doesn’t sound like much, but if you think about it, that is 40 miles per week. My car only gets about 17 mpg in the city, so that means I went through 2.35 gallons per week. Now I have an extra 2.35 gallons per week to do something else with. I can also walk to the grocery store now instead of always having to drive. That saves at least 2 miles per trip as well.

All in all I can’t say I am too upset with not driving as much. It has definitely saved me a bit of money as well.

When I moved into a more expensive living situation, I knew that I needed to so something to ensure that I would always have the funds available to pay rent on time. I currently pay $735/month for a studio apartment in the Seattle area. Based on my research, it is a good price given the area it is in. Since it was so much more than my usual rent, I decided to create a rent savings plan.

I figured there are roughly 21 week days during the average month. I then took $735/mo and divided it by the 21 days and I got $35/weekday. So each weekday I have my financial institution automatically transfer $35 from my checking to my savings. By the end of the month, I should have the $735 needed to pay rent.

This is an easy way to plan ahead for expenses without having to do a lot of thinking about it. The small daily transfer gives me some consistency, rather than a larger transfer at the end of each week where I may forget it is going to take place. If I had it my way I would have the transfer take place each day of the month, but my institution does  not support that.

I think that anyone who is having trouble making an expected monthly payment on time should consider taking up this savings method. It really works for me and this type of budget could easily work for you too! I encourage you to give it a try.

In a way to raise deposits, credit unions and banks have started coming up with clever ways to get people to bring more deposits to them. The majority of these plans come in by way of offering higher rates in turn for some sort of favor on your part.

This is how the typical deal looks.

The institution will advertise an abnormally high rate given our current market conditions. This typically runs somewhere between 5% - 8%. There are typically a few catches though.

• The high rate is usually paid on only a set amount, like the first $1000 for example
• Many require you to have direct deposit through them
• Most require that you are signed up for some sort of online banking feature (usually eStatements, or logging on a certain number of times each month).
• Some require that you do a certain number of debit transactions each month.
• Other interesting rules exist as well.

If you are willing to follow the rules that they set forth, you can find yourself earning a decent interest rate, especially given current market rates. Over the next few weeks I am going to review some of the major promotions that are occurring in Washington State.  I might branch out to other states as well if I find something interesting. I am planning on disclosing the exact details of the promotion, like what you need to do to qualify. I will also state what type of person might be interested in these programs. Another thing that I will disclose is the amount of additional income that you will earn by signing up for this program. This way you can see how much extra you are really earning for all that extra work!

After 5 years of having an account with RBC Dain Rauscher, I have finally closed it out. I realized that at this point in time having a full service broker wasn’t right for me. I first opened the account when I was 18 because I wanted to invest in some stock. The first and only stock transaction I did with them was purchase 20 shares of Microsoft. I was pretty excited when I made the trade, but that soon changed when I found out what the trading commission for it was. It cost about $65 to make the trade. When you factor that out, you find that the stock will have to rise $6-$7 before you make any money. That made me pretty upset, but I didn’t sell because then I would have eaten $130. So I hung onto it ever since.

I got really excited when they paid their one-time $3 dividend. I was mostly excited because the dividend ($3 x 20 = $60) was almost enough to cover my commission to purchase the stock. I never really paid a whole lot of attention to the account because there was just one stock in it. A year or so later I was looking at a statement that came in the mail. When I looked at it I noticed that there was nothing in the cash account. I knew that there should have been at least $60 in there plus a smattering of small dividends plus a bit of interest from the cash account. This was a bit upsetting to say the least. The next day I called in to talk to “my broker.” Of course the broker was not available, so I end up getting passed around from secretary to secretary and finally end up with someone who sounded like they hadn’t worked there too long. I told her what happened and she said that she would look into it and give me a call back.

After about three days of playing phone tag during my lunch I finally found out what had happened. Apparently if you do not have over $100,000 in your account you are charged a $100 annual maintenance fee. When you have only ~$500 in your account that comes out to be a 20% deduction. She did seem excited to tell me though that since I only had ~$70 in cash assets in the account they only charged me that and wrote off the rest. How nice of them.

After this incident I decided to close out my account and transfer it to Fidelity. For some reason I got charged $112.98 for the transfer. I guess that is the closing fees associated with closing out an account. That seems kind of ridiculous for transferring 20 shares of stock. Between the $65 purchase price, the $112.98 close out fee and the $20 sale price, I am going to have to sell Microsoft for $9.90 more than what I bought it for to break even.

I guess there are a few lessons to be learned from this:

1. High priced full service brokers only make sense if you have a ton of money
2. If you are doing all the research to buy and sell stocks, you shouldn’t be paying a premium to do it.
3. Know the fee structure of a full service broker before you get into one. Otherwise the fees will eat you alive.

Overall I think it was a decent learning experience. Buying that first 20 shares is what really got me interested in trading. I don’t think that I would be as active into my trading today if I hadn’t started out this way. Although it may look like a wasted $270, but in the end I learned a lot about how these companies work. If you have a lot of money and just want someone to do all the work for you, a full service broker may be right for you. If you are just starting out and don’t mind doing a bit of research, then a low priced broker like Fidelity, Scottrade or Schwab would likely be the better option.

This post is going to look at some of the highest dividend paying stocks at this point in time. There are a few reasons that I have decided to look into this. First of all, my dad always suggests stocks to me because of the dividends that they pay. “You should get WXYY. They have a 4% dividend, which is much higher than you can get in a CD.” Of course just because a stock pays a dividend doesn’t mean that it is going to rise. Second, father was on the WAMU bandwagon, especially when they were paying 10%+. Look at that company now.

There is a big reason that I am skeptical of companies with high dividends. Back in 2006 I bought a little bit of stock in a company called Fieldstone Investment Corporation. They were one of those REIT companies that ended up collapsing. Anyway I initially got into the company in 2006 thinking that it might make a good play, especially with such a high dividend. At the time I think it was paying at least 15%.

As you can see from the image above, my experience with them did not go entirely according to plans. All in all I spend $1177.40 on the stock, and ended up selling for $610.03 over a course of less than a year. This was coming from a company with a 15% dividend. Who would have thought? All in all I made $98.70 in dividends from them. That makes my sell price look a bit better, but definitely a far cry from perfect.

When choosing companies to look at, I am not going to look at the companies that pay the most out per share, but I am actually going to look for the companies that have the highest dividend yield. By clicking on the thumbnail, you can see the companies with the highest dividend rates that traded for at least $10.

I did another chart where I looked at companies that were trading for at least $25 and were paying at least 10%. Here are the top 15. Click the thumbnail to see who made the cut.

So the goal for this experiment is to see whether or not these stocks beat the market, and maintain their dividend yield. My prediction is that either the dividends will be cut, or the price of each stock will drop. I think the reason that these rates are so high is that the stock has dropped quite a bit since the last dividend was paid. Since we have no idea what the next dividend will be, we have to go by what the most recent one said. I think that this produced abnormal yields.

I bought the latest version of Microsoft Money a few months ago. I believe it is the 2008 edition, but it doesn’t say on the site that it is. I was going to buy it in the store, but I decided to instead just download it from the website. Well, you can’t just download it. You have to pay for it. They offer different tiers from $19.99 - $59.99. I think those are the after rebate prices though.

One may want to note the fine print for Microsoft Money Essentials ($19.99). “For Money Essentials, online services are available for one (1) year after activation of Microsoft Money Essentials or September 1st, 2008, whichever is earlier.” If you were planning on getting essentials and using online services, I would recommend waiting for next year’s version to come out. This way you will actually be able to use the online services for more than just a few short months.

I ended up getting Microsoft Money Plus Deluxe. It is advertised for $29.99, but that is including a $20 rebate that you have to send it. I forgot to send mine in until it had expired. I sent it in anyways, because I figured that the most I could lose would be $.41 (it was a forever stamp) for postage. A few short weeks later I had a $20 check from Microsoft waiting for me.

As far at the program as a whole goes, it is decent but leaves a lot to be desired. For starters, it is the same Microsoft Money that we have all been using for the past ten years. Nothing has really changed that much at all. I guess there isn’t a whole lot that you can change and add for a personal finance program, but it would be nice to see a few updated for my $30.

The interface is a lot cleaner and more modern looking, so I will definitely give them a pat on their back for the effort there.

…well I had written a bunch more, but for some reason it was unable to post and now it has deleted a bunch of it. At this point I don’t really feel like redoing it. Maybe later I will fill in the rest of what I had to say.

This morning I read an article on Yahoo Finance by Charles Wheelan, who authored the book “The Naked Economist.” The article was titled “High Fuel Costs Could Spur a New Rationalism.”

In summary the article basically says that people will make economic decisions based on how prices affect them. Right now the price of gasoline is the primary driver to consumer’s economic choices. He says that as the price of gas continues to rise consumers will no longer find it rational to commute long distances to work because the cost to them is so great. Wheelan predicts that as the cost of gas rises consumers will be forced to make economic decisions about where to live, work and how to commute.

Wheelan suggests four changes that could possibly be made in order to cut one’s energy spending.

• Move into a smaller house. Having a large house out in the country may be nice, but energy prices will soon have you feeling not so happy about your grand palace. When you consider the costs associated with heating and cooling your home as well as the gas driving to and from work you might start to see your energy bill skyrocket.
• Businesses may make smarter location choices. Although city commercial space is pricey, a firm will have a better chance of attracting quality employees if they are located in a central locale. “Suppose you’re considering two jobs: One is in a building three blocks from the commuter train station, and the other is in an office complex 21 miles away from anything except cornfields. How is that decision affected by $6 gas?”
• People may start moving back to the cities. Many people often consider cities to be polluted and dangerous places, but the opposite is starting to become more true. “Both Chicago and New York City had the fewest number of homicides in 2007 than in any year since the mid-1960s.” Cities also tend to have more options when it comes to entertainments as well. They tend to have more sports teams and performing arts centers to name a few. They also tend to have more universities located nearby as well. Downtown Seattle has three major universities to choose from. Larger cities would likely have even more options.

Although I currently live inside the city limits of Seattle, I will take all of these factors into consideration when my lease comes due here at the end of August. Since I use transit to get to work, the cost of driving to downtown isn’t really a factor, but instead the cost of getting to transit is more of a concern. Here is what I will be considering when I move.

• Cost of the rental unit
• Size of the rental unit
• Distance to nearest reliable bus
• Distance to girlfriend’s place
• Parking availability
• Time it takes to get to work from the rental unit

After considering all these factors, I might end up choosing a place that costs a little bit more in rent because the cheapness of another unit could be outweighed by the cost of gas to travel from one place to the next. I would also pay a premium to be close to a reliable and quick bus.

For today’s post I wanted to look into how my spending on gas as a percentage of my income has changed over the years. The period of time that this study covers is 2003 through present day. My initial guess would be that the percentage of my income that went to gas would be increasing over time since gas has continued to rise throughout this time period.

The data that I found initially may seem rather surprising, but you must keep in mind what I was up to during this time period. 2003 through present spans when I graduated from high school to after college graduation.

Here is the data:

• 2003 14.7%
• 2004 8.8%
• 2005 4.5%
• 2006 4.1%
• 2007 4.9%
• 2008 6.7%

Of all the years I would have to say that 2005 - 2008 have the most reliable data. 2007 should realistically be 7.3%, but it is much lower due to graduation presents that I received. The income that I used for my data was for just income in general no matter where it came from.

Is 6.7% high? Well, according to an article in the International Herald Tribune (the global version of the NY Times), “Americans spend 3.7 percent of their disposable income on transportation fuels. At its lowest point, that share was 1.9 percent in 1998, and at its highest it reached 4.5 percent in 1981.” So yes, as a percentage of income I am spending much more on gas than the average American. If I keep the same driving habits as I have right now, my take home income would have to increase by 82% in order to have my spending as a percentage of income be in line with the average American. Alternatively, I could choose to drive 45% less than I do now in order to be on par with everyone else.

Here are a few possible factors that might be keeping me above the national average:

• Some people do not drive, therefore they spend zero income on gas
• The average driver likely has a higher income than I do
• My car isn’t economical when it comes to gas
• My car uses premium fuel
• Gas prices in Seattle are among the highest in the nation.

In a previous post on the Economic Stimulus checks, I noted that I would not be getting one because I was listed as a dependent on my parents 2007 tax return. My girlfriend also had the same status on her tax return, as she was a dependent on her parent’s return as well. The other day she received a letter from the IRS stating that she should be receiving her stimulus check within the next few days. If it didn’t come by then, she should expect it within six weeks. I find that interesting, because I did her return for her, and there is no reason why she should be getting one. It will be interesting to see if I receive the same letter from them, because we had the same filing status.

According to the letter that the IRS sent me earlier this year in regards to the stimulus checks, they said, “In addition, individuals cannot receive a payment if they can be claimed as a dependent of another taxpayer…” It seems as if we would both fall under those guidelines. I am curious to see if I get a letter from them about the same thing. I wouldn’t mind getting a stimulus, expecially since I just blew $200 buying Windows XP. Oh well.

I recently decided that I need to adjust my money management strategy. As you may have read in my previous post, I was attempting to find a new institution that had more convenient access. Turns out though my bank has partnered with some other banks ton increase its’ ATM network. That works out nicely for me, because with my new strategy I will be using the ATM a little more often.

So here is my new money management plan:

• Each Monday I will take $120 out of the ATM (equates to $500/month).
• I will use only that money for my weekly expenditures.
• The left over money will be put back in on Monday, and an additional $120 will be taken out.
• All coin will be collected in a coin jar to be counted at a later date.

This new strategy should allow me to better manage my money, since I will be able to physically see what I have spent and what I have left. I have always found it a lot harder to spend with cash than with my debit or credit cards. I am going to make a few exceptions for things that I don’t spend cash on:

• Rent
• Cell Phone
• Utilities
• Gas
• Gym Dues
• Car Insurance

These items will either be paid by check or automatic transfer. This should theoretically work out for me. I will keep my current status posted each week. I plan on documenting what I spent each week and whether or not I met my goal.

I have always been an active saver, but it is always good to save a little extra. Each month I transfer $416 to my Roth IRA in order to maximize my yearly contribution. I haven’t been at my job long enough to qualify for their 401k program, but once I do I will switch my contributions to them in order to maximize my employer’s matching policy. I also transfer $50 per week into an online savings account. This allows me to save the money before I even see it. That way I am not tempted to spend it. So far it has worked well. I am just afraid that I am spending more than I have left over, which is why I have switched to this savings strategy.

I’d be interested to hear how anyone else who has tried this strategy has fared. All comments welcomed.