CostCo Convert!

After a very serious hiatus, the Armchair Fiduciary is back in the saddle. I have been kept quite busy by these crazy markets and more importantly a beautiful little girl who had colic (over now, thank goodness!). Let me just say if you have the miracle cure for colic you can be a gazillionaire because the shell shocked parents of babies with colic would buy with reckless abandon. Anyway, while I was away I "discovered" Costco. We had previously been Sam's Club shoppers, but Costco after inspection is far better. I love their gas... its super cheap (I haven't found cheaper around me) and it seems they have it with their stores more consistently than Sam's. Also, they sent us about $1000 worth of coupons of which my wife found more than $50 we will definitely use. That alone pays for our membership. By the way, if you review their financials you will find that their profit basically adds up to their membership fees which means they really charge the bare minimum they can get away with on their merchandise. If they didn't charge a memberhship fee they would lose money, isn't that nuts? Bottom-line, I really think there is no better deal than Costco and I've been converted.

Online Eyeglasses Experiment: Part 4

Well, I finally have all my glasses. Let me just say the best service of all was my lense replacement on my old frames performed by eyeglasspeople.com. The whole transaction went seamlessly and they even called me with a couple questions about my order to make sure they had it right. I would highly recommend them. Likewise optical4less.com took a while to deliver my entirely new glasses because they came from Hong Kong, but the glasses are great. Finally, after a lot of hassle including a trip to my eye doctor to find out my glasses were made wrong 39dollarglasses.com even delivered me a pair of glasses that work. I had such a hard time I would never recommend them to anyone, but at the end of the day they delivered the product they promised, it just took way too long.

So after all this would I buy glasses or replacement lenses online again? Absolutely. The cost savings are just too great. I got 2 new pairs of glasses and a replacement lense for less than the price of my original glasses. Despite some bumps along the way, the process was relatively easy with the exception of 39dollarglasses.com. I think online eyeglasses are the way to go.

Watch out for gift card expiration and fees!

Well the holidays have come and gone. If you were a good boy or girl, chances are you got a gift card from somebody for something for Christmas, Hanukkah, or New Years. Now that the dust has settled, don't forget to use those cards instead of letting their issuers get the better of you by charging you extra fees or worse yet deeming your gift card expired.

Thankfully, the fine folks at Bankrate have you covered when it comes to gift cards. They have a pretty extensive list of gift card providers and the various "catches" associated with them. They also have a great article on the pitfalls of gift cards.

The bottom line with gift cards is pretty simple. If you have a "credit card" style gift card from Am Ex, Discover, MasterCard, or Visa hurry up and use it because it is wasting away as we speak due to the fees they are charging you. Likewise, cards from malls waste away quickly with all the fees they charge. Many retailer gift cards lack fees, but some may expire so be sure to know the fine print.

Happy shopping!

Online Glasses Experiment Part 3: Optical4Less Delivers!

Well, they took a couple weeks to get here (as is to be expected when they come from Hong Kong), but my glasses arrived and they work great-- no space alien looking cats! Total cost including shipping: $75. I highly recommend optical4less.com. I now must send my old glasses to the eyeglasspeople.com to have my lenses changed, I will be sure to let you know how it goes. Finally, I am still waiting for 39dollarglasses.com to send me a label to send the glasses that were made wrong back. Their customer service has been abysmal. I would avoid buying anything through them.

The Cheaper Alternative to Glasses: A Failed Experiment So Far.

Well, my cheap eyeglasses experiment is a dismal failure so far. The pair I ordered from 39dollarglasses.com came quickly enough (within one week), but there was one problem. When I put them on my fluffy litttle black cat looked like a blurry fire-breathing space alien (I'm still having nightmares)! Everything was blurry, even moreso than without wearing the glasses at all. Well, I knew that meant one of three things: 1) I had entered the prescription info wrong, 2) my doctor had written down my prescription wrong, or 3) the glasses were made wrong. It was pretty clearly not number 1. My receipt matched my prescription exactly, so I had entered it correctly. I had to go back to my doctor's office to resolve number 2. Sure enough as soon as he put the glasses in his machine he was like "These are really messed up." All signs pointed to #3. It turns out they made the left eye +1.25 instead of -1.25. Also the right eye power was -2.0 despite me entering -1.5. Needless to say I am feeling like I got what I paid for. I emailed the company about 2 days ago explaining the problem and despite an automated reply that said I would hear from them in 24 hours, I have heard nothing yet. Meanwhile, undeterred I entered my prescription at optical4less.com and we'll see if they can come up with something better. I have not sent my old frames to the eyeglass people yet to be replaced because I want to be sure I have another pair that I can use as a backup first. However, their box for me to mail my glasses to them arrived in a jiffy so at least so far they are living up to their promise to make ordering lens replacements online easy. The saga continues...

Glasses Are Expensive! Trying a Cheaper Alternative.

Well it's time for me to go see the eye doctor again and I scheduled my appointment yesterday. I am confident that my prescription has changed since my last visit, so that means I'll be needing new lenses. Since I only have one pair of glasses, I figured I had better go ahead and get another pair as a backup. However, the thought of paying $350+ for a new pair of glasses was terrifying me. I decided to do some research on cheap eyeglasses available on the Internet when I stumbled on Glassyeyes, a fantastic site all about buying glasses on the Internet complete with reviews of popular sites. I also found the Eyeglass People who will gladly take my old glasses and put new lenses in them for less than I would pay at the retail store. I am going to try both buying a new pair and lenses online and see how it goes. I will report back about my experience, but this looks to be one of the bigger money savers I have come across.

Black Friday and Cyber Monday Mean Only One Thing: It's Time for the Holiday Budget!

Well, its that time of year again. It's time to rush out to the stores (or click that mouse) and buy $400 laptops, $600 LCD TVs, and $100 GPS devices. Of course, those are money losing propositions for the stores (and sleep losing for you if you were one of the people standing in line at 4 AM), but the stores are counting on the increased foot traffic from everybody else who oversleeps and misses those deals to more than make up the difference. In order to not fall victim to the stores around the holidays it is critical that you go in with a clear battle plan: a holiday budget.

The concept of the holiday budget is pretty simple. Start with a total over-arching amount you are willing to spend on gifts. Set out a list of people that you need to buy for. Preferably ask those people for a list of what they would like. Match their lists to your list and budget. Presto! You have achieved holiday budget feng shui. The key here is having a plan and not just window shopping your way through your list as you will inevitably: a) spend more than you think b) buy someone two presents, and/or c) forget someone you should have remembered. If you have a plan and stick to it you will not have any of these problems.

Once you are done with this year's shopping remember how much you spent in aggregate. Then save that number divided by 12 each month next year to build up your "holiday buffer" so you don't have a nasty surprise around the holidays. It's a little like the elves building toys in Santa's workshop all year long. If they tried to build the toys of all those girls and boys in the last month of the year they would never get it all done. They have to build them a little at a time all year long. You too should save a little each month to build up that holiday shopping buffer. The exact wrong thing to do is rack up a big credit card bill at the end of the year and then spend many months and additional dollars paying it off. Trust me, your kids, family, and friends don't want you to be in that situation and neither do you. Plan ahead and avoid that trap. Credit card debt is bad debt, avoid it at all costs especially around the holidays. Your holiday budget and (next year) your holiday buffer should help you avoid the kind of credit card debt that will inspire Santa to put coal in your stocking.

Get Your Grocery Bag Rebate!

The Armchair Fiduciary spent the last week in Ireland on vacation. One thing that is abundantantly clear is that the Emerald Isles are green in more than one way. The landscape is, of course, incredibly green after what appears to have been a summer full of nothing but rain according to Irish radio stations. However, what is also clear is that this is a country full of recyclers. There are blue and red and green bins everywhere to recycle pretty much everything. Indeed, on a trip to the grocery store I discovered that they don't even offer grocery bags. You are supposed to bring your own. If you do want a bag you have to pay for it (I think it is a government levied tax). Now my hat isn't totally off to the Irish. I'm not entirely sure this policy is having the ideal effect because it seems like everyone makes 1,000 trips to the grocery store per week with only one bag in hand. What they are saving environmentally by using less plastic bags they are probably spending in gas for all those trips.


However, this got me thinking. Indeed bags probably do cost grocery stores a lot of money. In the U.S. how simple would it be for a grocery store to offer you a rebate to bring your own bags (the 10 a typical once per week U.S. shopper has)? The rebate could even be slightly less than the cost of the bags so it would be win-win for the store and the customer. Well the green geniuses at Whole Foods have already thought of this. If you bring your own bags to Whole Foods they will give you a 5 cent per bag rebate. Why doesn't every grocery store in the U.S. do this? This is a no-brainer. Write your local grocery store (if you can't afford only Whole Foods) and lets start saving some money and the environment people!

Online Bill Pay: 5 Reasons You Should Use It

I am a huge fan of online bill pay. I get it free as part of my Wells Fargo PMA account. However, the vast majority of online bank accounts offer free online bill pay.

Here are my 5 favorite reasons for using online bill pay:

1. It is a huge time saver. It actually takes me less time to enter a new payee than to write a single check. For payees I already have entered I can pay a bill in about 5 seconds.
2. It keeps me organized. I can get many of my bills directly through billpay. That keeps me from having stacks of paper around the house. Furthermore, I can look up my prior payments without having to find a check book.
3. It is a green activity. How many trees are lost to paper bills each month?
4. It is more secure than you would think. I have been paying bills online for about 6 years now without a single security problem.
5. It is a modest money saver. I send probably 10 bills per month. With postage at 41 cents that's $4.10 a month I am saving in postage.

If you have been holding off on online bill pay do yourself a favor and sign up today! If I left out any of your favorite reasons for using online bill pay be sure to leave them in the comments.

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.

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.

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.

Is your car worth less than $5,000? Consider canning your comprehensive insurance.

Chances are if you are as frugal as the Armchair Fiduciary at some point you will end up driving a car worth less than $5,000. If you find yourself in this position, it might be time to cancel your comprehensive insurance and save yourself a few hundred dollars annually. In case you don't know comprehensive insurance is one of two types of car insurance. Comprehensive car insurance covers non-accident related damages such as hail, vandalism, and theft. Collision insurance is the other kind of insurance and it covers damage to property and people (i.e. medical bills) as a result of an accident. It is generally required by law in the United States.

Before delving too deeply into why one would cancel comprehensive insurance, let's understand the basic concept of insurance. Insurance companies sell policies to individuals to protect them from adverse events. The insurance company, a little like a casino, doesn't mind losing once in a while because they use statistics and the law of large numbers to predict what their losses will be and then they price their policies such that the house will win over the long term.
Individuals buy insurance because they are risk averse (and in the case of auto insurance because they are often required to by law). Risk aversion means that you don't like big negative surprises. For instance, if there is a 1/100th chance that you will lose $99 and there is a 99% chance that you will make $1 the expected value of the situation to you is $0. A risk neutral individual should not care about the outcome because their expected value is $0. A risk averse person might be willing to pay slightly more than $1.00 for insurance to protect against the $99 potential loss. This guarantees a return of slightly less than $0, but also avoids the off chance of a big loss. This may seem irrational at first but lets consider a slightly different situation where the loss is $99,000,000 and there is a a 1/100,000,000th chance of that outcome but the gain is still $1.00 the rest of the time. In this scenario giving up a few pennies might seem like a more rational decision than risking a huge fortune even if the chances of losing it are remote. When the pain of losing a lot of money is a lot more than the benefit of a higher expected value, that is risk aversion.

While insurance companies can spread their risks over thousands of customers, an individual customer only gets one shot and they therefore have a reason to be risk averse, nobody wants to be the one out of 100,000,000 and lose everything just because they are unlucky. Buying insurance helps you avoid “becoming a statistic,” but the insurance company will charge you something for the privilege.

So by now you may understand why getting rid of comprehensive on a cheaper old car may make sense. You can increase your expected return because the insurance company is going to charge you a little more for comprehensive insurance than is statistically fair so that they can make a profit. If losing your car would not bother you that much and you can afford taking a $5,000 risk then you should cancel your comprehensive insurance and just carry the collision/liability insurance required by law. This should yield you several hundred dollars of savings per year and improve your expected value while exposing you to the remote risk of a $5,000 loss if your car was totaled due to vandalism, hail, etc.

High Gas Prices Got You Down? Fight Back With Some Web Intelligence!

Memorial Day weekend is considered the start of "summer driving season" for most families. Whether its road trips across the country, travelling baseball league, or just a couple of extra picnic drives chances are we will be on the road a little more than usual this time of year. Unfortunately, the ever efficient market for gasoline knows this too and prices have crept up in anticipation of our summer time drives.

However, with the advent of the Internet, you can fight back against really high prices at the pump. Visit www.GasPriceWatch.com and see where the cheapest prices in your neighborhood are. Be sure not to drive further out of your way than you are likely to save, but don't be afraid to drive a mile or two to save $0.02-$0.10 per gallon. Over the course of the summer it will add up! Other sites that list gas prices include www.gasbuddy.com and MSN Autos, but I think Gas Price Watch is the easiest to use and combines great search functionality with a nice Google Map.

Getting a Loan? Be Sure to Maximize Your Credit Score First.

At some point in your life you will probably need to get a loan for a house or (hopefully not) a car. When it comes time to do this, the first thing you will want to do is maximize your credit score (e.g. FICO score) in order to minimize your interest rates and/or assure that you qualify for the loan. There are two categories of things you can do to maximize your score: 1) preventative maintenance and 2) close in priming.

Preventative maintenance on your credit score is a general way of life and should be done all the time. The key things you should be doing to make sure you have a high score are:

1. Always pay your bills on time, always. Missed payments kill your score and last a long time.
2. If you have a short credit history and decide you don't need an old credit card anymore (especially your oldest) shred the card but don't close the account. The longer your credit history is, the better your score is likely to be.
3. Don't take out significantly more credit than you need. That means not getting suckered into tons and tons of store credit cards just for a free promo. Four or five credit cards is probably fine (especially if you just kept a couple old accounts open to lengthen your history but don't use them), twenty is not a good idea.
4. Make sure your credit report is accurate. Go to http://www.annualcreditreport.com/ to get your free annual credit report and be sure everything is right. With all the fraud out there today, I definitely recommend doing this once per year.

Close in priming should consist of a couple of things:

1. Pay off your credit card bill the week before your statement closes for a couple of months before you need a big loan. Even if you pay off your card balance in full each month the prior month's balance shows up as money you owe on your credit line. Because credit card companies look at your total debt to your total credit line (called utilization) as a major factor in your score, paying off your card in advance so your balance is very low when you go to request credit will help your score.
2. Don't open a bunch of new cards or accounts before you go to get your big loan. Many recent credit inquiries make you look "credit hungry" and lower your FICO score.

Save a Bundle on Your Family Vacation: Rent Directly from Property Owners

With gas prices north of $3.00 and the dollar going straight down, whether you travel at home or abroad chances are your vacation is going to be a little more expensive this year than last. Wouldn't it be nice to save a little on accommodations? Well, instead of heading to that Holiday Inn or Marriott, stop by some of the sites listed below and rent a condo or vacation home directly from the owner. In many cases the prices listed are highly negotiable since the owner's usual alternative to having you rent is to have the place go empty, so don't be afraid to ask for an even better rate than what is posted.

http://www.homeaway.com/
85,000 vacation homes are listed here. They also recently bought VRBO.com and integrate listings from several sites.

http://www.vrbo.com/
The original Vacation Rental By Owner site with over 75,000 vacation homes listed.

http://www.cyberrentals.com/
Another VRBO-type site with 39,000 and a homeaway affiliate.

http://www.greatrentals.com/
A site very similar to VRBO, but with only 29,000 listings. Also a homeaway affiliate.

Wells Fargo PMA, the best financial combo package around?

Wells Fargo has a great combination account called a PMA account. As long as you carry $25,000 in balances in your checking, brokerage, and credit card accounts with Wells Fargo, you qualify for PMA status. You merely need to call them up and "switch" to a PMA, though none of your account numbers will change.

With the PMA account you get:

• No service fees on your checking account, including foreign ATM fees (you still have to pay the other companies' ATM fees unless you follow my advice in this previous post).
• No charge for online bill pay, which I have found to be a HUGE time saver.
• Premium interest rates on your checking account (but still not as good as the online money market accounts mentioned in this previous post).
• 100 free stock or mutual fund trades per year.
• Free enrollement in the rewards program for Wells Fargo credit cards (offers 1% cash back and is a good backup to the cards suggested in this previous post).

As far as I have seen, this is one of the best all-in-one brokerage/checking setups you can find anywhere. If you are "paying" for checking and have a brokerage account with $25,000 in it you should definitely consider switching to the Wells Fargo PMA account today. If you find a better all-in-one account please let me know in the comments.

Going Skiing in Colorado Next Season (Winter '08)? Buy Your Pass Now and Save!

A little known secret among Colorado ski resorts is that they offer the best prices for season ski passes in the spring right after the old ski season is over. Often for someone who is coming for even as short a time as spring break the following season these passes can be economical. For instance, right now you can buy a season pass to Winter Park at passwagon.com for $349. Lift ticket prices at the window are $79 during peak season so if you plan on skiing 5 days or more at Winter Park this year the season passes are your best deal. Passwagon also sells passes to Copper Mountain and Steamboat as well as combination season passes.

Vail, Beaver Creek, Breckenridge, Keystone, and Heavenly are also offering the best season pass prices of the year right now, but you have to buy them in Colorado because it is called a Colorado Pass. Otherwise you need to wait until fall to purchase a season pass to these resorts.

Aspen and Snowmass do not appear to have their season passes on sale yet.

If you are going to one of the resorts that offers these discounted season passes, don't delay because many of these "best prices" will be gone by June.

Best Cash Back Credit Cards

Credit cards are generally considered "bad debt" because the interest rates they charge are so high. However, if you pay them off each month (and therefore pay no interest) they can deliver some great perks free. My personal favorite perk is cash back because it is 100% flexible; you are not locked in to any one airline or store like most rewards cards.

Without further adieu here is a list of my favorite cash back credit cards as well as some details about them:

First Place: American Express Blue Cash

• No Annual Fee
• When you spend from $1-$6500 1.0% cash back on everyday purchases (gas, grocery, drugstore) and 0.5% cash back on everything else.
• When you spend $6500+ 5.0% cash back on everyday purchases (see above) and 1.5% cash back on everything else.
• Cash is credited to your account once per year.
• No limit to how much you can earn.

Second Place: Chase Freedom Cash Visa

• No Annual Fee.
• Earn 1% cash back on all purchases.Earn an additional 2% cash back on purchases at Gas Stations, Grocery Stores, and Quick Service Restaurants on the first $600 per billing cycle. After $600 you just earn 1% on the purchases from there.
• If you save $50 you can redeem for $50. If you save $200 you can redeem for $250.
• No limit on how much you can earn.

Third Place: Discover More Card

• No Annual Fee
• $0-$1500 0.25% cash back on all purchases
• $1500-$3000 0.5% cash back on all purchases
• $3000+ 1.0% cash back on all purchases
• You can sometimes increase your award significantly by redeeming for retailer gift certificates. For example, right now you can double your rewards at Carnival Cruise Lines, Hyatt Hotels, Sharper Image, and more. There are nearly 70 partners that will increase your reward if you redeem with them. See the full list here.
• In 4 different categories per year you get 5% cash back typically up to $500 or $1000 in purchases ($25-$50 rebate). Past categories include restaurants one quarter, airfare another, online shopping another.
• Redeem your award anytime you have $20 in rewards.
• No limit to how much you can earn.

To see how these compare I am going to assume you spend $1500 per month on your credit card. Of that $500 is for gas and/or groceries. I will also assume that once per year you spend $500 on the Discover 5% cash back items. The rebate curves are below:

As you can see if you spend much less than $1500 per month then the Chase Visa is your best bet. If you spend much more than $1500 then the American Express Blue Cash becomes the better card. At around $1500 per month you roughly break even (Am Ex is better outright, but Chase is $15 ahead when you include the $250 they will give you for $200 in rewards credit). Note that Discover is far behind, but if you use some of their double reward options they can catch up fast.

Happy shopping!

Reduce Shoe-leather Costs: Go See Your Cobbler!

Economists often talk about shoe-leather costs associated with carrying decreasing amounts of cash to stave off inflation. While they use this as a catch all category for the costs associated with increased trips to the bank, the Armchair Fiduciary suggests you start thinking about these costs literally regardless of inflation.

Did you know that most leather dress shoes can be resoled for about 1/2 the cost of a new pair or less? So can boots. What about Birkenstocks? They can be resoled for 1/4 of their cost. So the next time you are thinking about throwing out your shoes take a look at them. If the tops are fine but the soles are worn, jump on Google and type in "shoe repair" and the city you live in. Most likely, Google will list a cobbler that can refinish your shoes and save you a couple hundred dollars per year!