American Express Cardholder? Hurry Up and Vote in the Members Project

American Express is doing a really cool charity contest called Members Project. The way it works is simple. Am Ex members suggest projects that they think can help the world and then they collectively vote on them. Each Am Ex member who signs up and votes represents $1 that Am Ex will give to the winning project up to $5 million. I voted for DonorsChoose.org, a great charity that allows donors to choose specific projects to fund for kids at schools submitted by their teachers. You too can vote for this great project by registering at http://www.membersproject.com/ and choosing the project that says "Teachers Ask. You Choose. Students Learn." Outside of the great cash back features of my Am Ex Blue card I am proud to be giving something back to the world for spending 30 seconds to register at the site and vote. Hopefully you all will do the same! Be sure to hurry though as voting on the final 5 projects ends on August 7th, 2007. Also please Digg this post to help spread the word!

Want to make your most special date of the year affordable? Don't forget lastminute.com

Until a few weeks ago I had never heard of lastminute.com. However, upon further inspection, this is one cool site with lots of good deals. The premise of the site is simple, when hotels and airlines still have available rooms or empty seats headed into a particular day and or weekend they do a lot better selling them for something than leaving those rooms or seats empty. Lastminute.com is dedicated to making that inventory available to you.

I think it could be the ultimate spur of the moment, show stopper, add some spice to any relationship kind of date. Here's the idea. The next time things are feeling stale set aside a particular weekend for a lastminute.com excursion. Just tell your significant other you have a plan for that weekend and to stay free. Then when Friday rolls around go browse the site and find the cheapest deal that tickles your fancy. For instance, this weekend airfare and a hotel in Boston is less than $200 per person. This bit of spontaneity is sure to appreciated by your significant other and will probably be one of the coolest dates you do all year at a significant discount to retail price.

I Found a Wallet Today and Wells Fargo Wouldn't Help Me Get It Back to the Owner: What Gives?

So today I woke up and went outside (bed head fully intact) to pick up my newspaper. However, when I stepped onto my front lawn I noticed a wallet lying open there. I looked around and didn't see anybody so I went ahead and picked it up. Knowing how frantic I would be if I lost my wallet, I began looking for some way to get in touch with the owner.

Inside the wallet was some cash, a driver's license, a social security card, a Wells Fargo check card, a Saks employee ID, some various store credit cards, and the business cards of the boys Jane Doe met out at the bar last night.

Attempt #1 to return said wallet: I pop onto the Internet and go to whitepages.com. Enter Jane Doe's name. Not listed. Failure.

Attempt #2 to return said wallet: I jump in my car and drive the 10 blocks to the address on the license. I get to the apartment and look at the mail boxes. Jone Doe's box (#1) is blank. All the others have names. I ring the button for apartment #1. No answer. Damn. Failure.

Attempt #3 to return said wallet: I call Wells Fargo and explain the situation. I also explain that I understand they are not likely to be able to give me any information about Jane Doe. I ask may I please leave my contact information with you and can you call and give it to Jane Doe? No we don't do that sir, that is not our policy. Grrrr. Failure.

Attempt #4 to return said wallet: I go online and look up Saks. Thankfully there is only one in my city. I call Saks and ask for Jane Doe. I get connected to the cosmetics department:

Is Jane Doe there?
No she's not in today may I help you?
Well I have her wallet. Can someone call her with my contact information?
Sure let me take that down...

Needless to say 10 minutes later Jane Doe called and got her wallet back. It turns out she lived in an apartment next door and she lost it while chasing her dog through my yard. But what if she didn't work at Saks? Would I have had to give it to the police so it could sit in the lost and found forever? Would she have had to cancel all of her credit cards and get a new license and social security card?

It's all possible because Wells Fargo, which is a bank I am satisfied customer of, has a dumb policy in this regard. Here's just a tiny suggestion. If you want to build loyalty and have customers for life, help them get their wallet back if they lose it. That is if someone calls in and says, "I found a wallet will you please pass my contact information on to your customer?" For heaven's sake do it. I promise if I lost my wallet and you helped me get it back I would be a customer for life. This doesn't just go for Wells Fargo, all you credit card companies out there should be listening.

Eating Out: If You Must Do It Look for Lunch Loyalty Cards

We all have heard about 1,000 times that one big way to save money is to eat out less. However, part of the social culture of my workplace is a short walk outside to grab a sandwich or salad for lunch each day. Nevermind the fact that lunch is the 20 minutes per day that I get away from my PC and actually get a chance to stretch my legs and see daylight. Needless to say this is one "latte factor" I'm not giving up anytime soon.

While paying $8 a day for lunch isn't a great way to save money, if you find yourself in my situation you can at least try to find ways to lessen the damage. One of those ways are lunch loyalty cards. I have found that several chains including Paradise Bakery, Panda Express, and Chick-fil-A offer them and all kinds of local restaurants also offer them where I live. The typical scheme is get 10 lunch punches and get one lunch free, which equates to a healthy 9% off your total lunch bill if you are persistent about it. So the next time you stop by your favorite lunch spot, ask if they have a lunch loyalty program and/or punch card. Any other ideas? Please share them in the comments.

8 Random Facts About Armchair Fiduciary

Super Saver at My Wealth Builder has tagged me in a new blog project. This project calls for sharing 8 personal facts about myself, then tagging 8 other bloggers to do the same. Here are the rules , which were passed to me:

• Each player must post these rules first.
• Each player starts with eight random facts/habits about themselves.
• People who are tagged need to write on their own blog about their eight things and post these rules.
• At the end of your blog, you need to choose eight people to get tagged and list their names.
• Don’t forget to leave them a comment telling them they’re tagged, and to read your blog.

So without further adieu, 8 random facts about Armchair Fiduciary:

1. In addition to all things finance I like to run marathons (I have run 4 including Boston) and downhill ski.
2. Despite writing a comprehensive guide to investing a 401k, I contribute exactly $0 to a 401k.
3. The only reason I contribute $0 to my 401k is because my current employer doesn't offer one (otherwise I would max it out).
4. I have 3 cats.
5. My cats were cheap early on; $100 for two of them at the shelter and one of them my wife and I rescued from the street.
6. One of my cats had a bad kidney and that got really expensive in a hurry. I need all my money saver tips to make up for that $4000 surgery.
7. I still love my $4000 cat.
8. I drive a used Subaru WRX. It has comprehensive insurance.

Now it's my turn to tag. I tag:

Boston Gal

Personal Finance Guru

Prince Muddy Paws

Cool Cat Teacher (cats are cool, teachers are cooler)

Tom Roper

The IvyGate Summer Editors (Yes, Ivy League kids are idiots too)

Greg Hill (when he starts skiing again)

Subaru Maniac

Home Buying Series Part V: Should you get a HELOC?

Now that you have found a house you can afford and decided on a mortgage, your mortgage broker may ask you if you would like a Home Equity Line of Credit (HELOC). If you are just buying this house for the first time (with 20% down as suggested earlier in this series), I would advise saying, "No thanks."

However, if you have been in your home for several years, have significant equity in the home, and find yourself in a couple of situations I would consider a HELOC. First, if you plan on investing in something that will pay for itself (new insulation for instance) over a long period of time a HELOC could make some sense as it would allow you to start reaping the benefits now. Note: there are very few investments you will make in your house that have this kind of return. Second, if you find yourself with significant credit card debt and the HELOC is offering a much lower interest rate it may make sense to use the HELOC to pay off those cards at a lower rate. Finally, if you need a new roof and you don't have any cash to fix it a HELOC might be your only good option.

HELOCs are basically just ARMs but they generally float right away. They are a fixed line of credit that you can draw on a little at a time, pay back, and then draw again up to your maximum like a credit card. You can choose to only pay interest on them for a certain period of time (typically 5 to 10 years) and then they begin charging principal too. The interest on HELOCs is generally tax deductible up to $100k. In my opinion HELOCs are generally to be avoided, though you can see a couple cases above where I might consider making an exception.

Home equity loans are another, possibly better option, but they are usually just a lump sum. You can't draw on them, then pay them off, then draw again. The good thing about home equity loans is that you can get them in a fixed interest rate (basically this type is just a second fixed mortgage). If you are using some of your home equity to invest in your home for a one time project (like the insulation mentioned above) a home equity loan with a fixed payment might be the way to go so you avoid monthly payments that bounce around.

The big risk with both of these options is that they provide you with the opportunity to overextend yourself and risk losing your home. If for some reason you can't pay your HELOC or home equity loan, you have a good chance of ending up in foreclosure since both products involve a lien on your house. I'd advise avoiding both products altogether unless you have a compelling need to use them.

Home Buying Series Part IV: Avoiding Junk Fees on Your Mortgage

When you go to get a loan your mortgage broker should give you a good faith estimate before you agree to go with them for the loan. This estimate tells you your rate and lists a number of other fees. What many people don't know is that many of these fees are highly negotiable. The fees usually don't represent anything specific but actually cover your mortgage broker's overhead. Especially if you are already agreeing to paying any "points" you should definitely not pay much more in the way of junk fees.

Here is a list of common expenses on the good faith estimate that are widely viewed as "junk fees":

• Processing Fee
• Underwriting Fee
• Document Prep Fee
• Settlement Fee
• Bank Inspection Fee
• Lenders Inspection Fee
• Application Fee

"Real" fees typically include title fees, government recording fees, an appraisal fee (you should get a copy of the 3rd party appraisal).

Now it should be made known that you probably cannot get all junk fees to go away, but when you are comparing lenders don't look at the amount of the different fees, just sum them up and view the total junk fees as a point of comparison. See if you can negotiate these total junk fees down, it doesn't matter which specific ones go away. You will likely get some song and dance about how they do have to process your application, etc. but don't budge. Junk fees are a direct cost to you and the lower they go the better off you are. Play two lenders off each other on the junk fees and get them way down especially if they are offering essentially the same interest rate.

Home Buying Series Part III: How Much House Can You Afford?

How much house can I afford? It seems too many home buyers forgot to ask that question before they got caught up in the buying bonanza of the last few years. That's why foreclosure rates are spiking. A lot of people fell in love with a house and then asked their lender how they could afford it. During a period of incredibly loose credit lenders were happy to oblige and put people in houses they couldn't afford using low or no doc loans, interest only loans, neg am loans, and little or nothing down.

How Not to Become a Statistic

There are generally three criteria for getting a conventional loan without mortgage insurance:
1) You have to make a 20% down payment on your house
2) Your monthly mortgage payment (including interest, principal, taxes, and insurance) can't be more than 28% of your gross income.
3) Your total expense obligations (i.e. your mortgage + all other debt payments) can't be more than 36% of your gross income.

It turns out if you stick to these rules you are much less likely to end up in foreclosure than someone who strays from them. For instance, if you look at the most recent Mortgage Banker's Association survey you can see that subprime and FHA borrowers (who typically have bad credit and make minimal down payments) have much higher delinquency rates (around 13%) than those with conventional mortgages (less than 3%). Now this is probably not an entirely fair example because subprime borrowers usually have bad credit to begin with so they are probably more likely as individuals to default on their mortgage anyway, but general idea is correct. Prime borrowers could afford their mortgages and subprime borrowers generally could not which is why 13% of them are delinquent.

Many people will tell you that you don't need a 20% down payment on your house. I disagree for three reasons. First, if you can save the 20% down payment, you probably have the financial discipline to make your mortgage payment. Second, that 20% provides you a cushion from an unusually soft housing market (which is what we are currently in). If you only put 5% down and then the value of your house declines by 10% you will actually owe the mortgage company money if you decided to sell right then. Real estate prices rarely fall by 20% so you should almost never run into this problem if you put 20% down. Finally, if you put down less than 20% you need to pay for mortgage insurance (typically adds 0.5% to your interest rate) which is a totally ridiculous thing to do in my opinion if you have every intention of paying your mortgage.

To get an idea of how much house you can afford, I recommend trying this mortgage calculator from CNN Money. It will tell you how much house you can afford based on your income, debt, and the interest rate you think you can get on a loan. It conforms to the 28% mortgage payment rule and the 36% total debt service rules. It also assumes you will put down 20% and avoid paying mortgage insurance as a result. For a quick view of what interest rate you might expect to pay visit Bankrate and look at the rate on the 30 year fixed mortgage.

Finally, to learn a lot more about mortgages visit The Mortgage Professor. His site is so in depth you might find yourself drowning a bit, but you will find the answer to almost any question there.

As always the Armchair Fiduciary is happy to field your quesitons. Email me at armchairfiduciary_at_gmail.com.