26 June 2009

Finding a Better Credit Card

I have seen people unwilling to drop their credit card company.  Even with all the advantages with changing.  I myself don’t want to try and get a new credit card until all my credit card debt is gone.  Since 1 brought 3 credit cards and my wife brought 2 credit cards to our marriage we have cards from Chase, Discover, HSBC, and Wells Fargo.  This leaves a few options for us.  We want to cut this down to 3 cards.  The Wells Fargo card is a backup funding source for our Wells Fargo checking account so we will not have any overdraft charges.  It makes the checking account we have a no fee account.  We don’t even have to use the card, just have it.

Not wanting a new credit card company but wanting better rewards than the 1% we get on the Discover, Chase, and 1 of 2 HSBC cards.  So we did some shopping around for a new card.  We compared all the different cards that Chase, HSBC, and Discover have.  I exported my transaction record from Mint.com to Excel.  This let me compare the rewards formulas against my spending.  I also compared some other cards not by these companies.

Most credit cards companies will change your rewards program over the phone faster than you can fill out an application for a new card.  We found that sticking with the Discover Classic Card i have*, has better rewards than the next best option of the Discover More card.  I was surprised to see this.  I figured changing was a better option.  The best card to match with the Discover was the Amazon card from Chase.  Changing cards can get us a 15% increase in reward payout.

There are advantages and disadvantages to keeping your same credit card company.  If you are (one of the few) getting good service you continue to get that good service.  You can be getting better rewards than what you have.  The length of credit on your credit report stays the same.  You can even change your rewards package with a balance.  No balance transfer often saves 3% of any balance.  Moving to another card can improve the service you get.  You get promotions for moving.  You can get better rewards.  You might get other perks as well.  Look within your own credit card companies when changing.  You might even be able to get the promotions.  But be warned, you will almost always lose any rewards (not cashback) you already have earned.

*You can no longer get this rewards package.  It was replaced with the Discover More rewards.

10 June 2009

Rich Dad, Poor Dad

Being another staple in many financial libraries my next read was Rich Dad, Poor Dad by Robert Kiyosaki and Sharon Lechter.  This book is subtitled ‘What the Rich Teach Their Kids About Money - That the Poor and Middle Class Do Not!’  This book left me with conflicted feelings.  While reading it was suggested that the Rich Dad was made up.  I did not have a problem as he was a means of teaching the points of the book.  For the first half of the book all the points are backed by a story of how Rich Dad taught through practice then followed up with the lecture.

The second half of the book the feeling changed.  The points were no longer about Rich Dad as much as they were “Here is how i did it through Real Estate speculation.”  Each example through real estate was followed with a caveat of don’t do it this way.  Just learn the principle.  The last couple of chapters suggest to learn the process for real estate speculation go to seminars.  I was not surprised to learn that Richard Kiyosaki has a series of seminars on learning real estate.

Anterior motives aside, the principles seem sound.  The book does not ever teach you how implement the principles.  This is a good thing.  It allows the book to remain relevant longer.  Implementation is also dependant on your situation.  Many other subjects teach in a similar way.  Computer Science is one; the implementations change over time so principles are more important than thing to do.  There is a chapter at the end on things to do.  It is sparse and seems an afterthought.

Have you read this book or The Millionaire Next Door (check out my review)?  Give your thoughts in the comments.

08 June 2009

New York Number

I was reading a post on Consumerism Commentary.  Flexo’s post Let’s Stop Envying Millionaires suggests with the increase of millionaires in the world that we should look at a lighter level of savings  He also suggests that $1,000,000 won’t be enough to retire on.  He also introduced me to the best retirement calculator i’ve seen.  This calculator asks a few questions about your preferences instead of asking about money.  Based on your preferences it calculates your recommended retirement amount.  This calculator is your New York Number.

My score from this questionnaire is 20 correlating to a $1 million retirement amount.  This amount makes me feel more comfortable with the What is your current salary and how long until you retire based projections.  My normal range was $700,000 - $2,000,000.  One thing i don’t like about most retirement calculators is they want you to predict what rate of return your portfolio will have until you retire and the rate after you retire.  If i could predict the markets that well i’d be rich enough to not need to worry about financial planning.

What you you think?  How much are you planning to retire with?  How did you determine the amount needed?

06 June 2009

The Millionaire Next Door

Since i’ve gotten a few books from the library i thought i should share my findings.  My most recent read is The Millionaire Next Door by Thomas J Stanley & William D Danko.  This book has a great reputation that is well deserved.  It is based on years or research and interviews with millionaires.  It is easy to read.  It gives great insight into the difference between millionaires and their neighbors.  None of the millionaires are the ones seen on TV.  Reading this book was a great vindication for the things i’m doing.  To see i’m as or more frugal that the average millionaire in my spending habits is great confirmation that i’m on the right track.

This book is not for everyone.  This book does not teach you how to become rich.  It teaches you what those who are already millionaires are doing.  Since this is a research book it is full of research and the results.  This book will be most enlightening to those who are not frugal.  It’s biggest point is defense vs offense.  Defense of being frugal.  Defense of planning for the future.  Offense to say you must make a decent wage.  This book often tells you both are required to become a millionaire.  If you are reading personal finance blogs you are likely not going to learn many groundbreaking things in this book.  It will make you feel better about yourself that you seem to be on track.

I recommend this book to anyone reading personal finance blogs.  It can seem long winded at times.  Some people would rather skim for the bold type only.  Don’t.  Read it.  Otherwise you’ll miss learning that the profession with the largest percentage of millionaires is …