Credit card rewards are for real

I have been through different phases as a online blog consumer. Personal finance to credit card hacking to investing to dividend related investing. I can say that now i am in a place where i have a good balance of all of these.

In my credit card hack phase (i still do a fair amount, though not as active as before) i used to hit up over 10 credit card blogs regularly, including The Points Guy, Mommy Points among others and ended up selectively applying for credit cards and getting valuable points.

Best CD interest rate

Today is the 8 year anniversary of the stock market recovery since the infamous 2008-2009 crash. It has been an amazing and unpredictable recovery to say the least. Where the market goes from here is anybody’s guess, but i think it is prudent to either not invest aggressively at this stage or pull a little bit of money out of the market and lock in some gains.

Like most financial gurus will tell you, I too believe that time in the market is better than timing the market – but taking a pause and re evaluating every now and then is not a bad strategy either.

With that said – what do you do with whatever money you have on the sidelines, waiting for a 5%, 10% or even 20% correction from this point ?

On a work visa, contributed to a retirement plan, going back now – options ?

I discussed the idea of participating in a retirement plan at work even though on a work visa in this previous post – https://desiguyfinance.wordpress.com/2012/02/29/on-a-work-visashould-i-participate-in-retirement-plans-at-work-part-1/

You did that, and ended up with a small chunk of money over a period of 3-6 years and are planning to go back to your home country, now what? Here are a few options.

Option 1 – Leave the 401k plan as is, then the following year withdraw your money from the plan,this would trigger a 10% penalty plus taxes. The good part is since your earned income will be much less than the previous year, your tax bracket will be lower than the previous few years, this means that not only do you pay less tax on your original contribution, you also pay less tax on the employers plus any growth. After paying the penalty plus taxes you will still end up with much more money than you would have without putting it away in the 401k.

Option 2 -Let the money be, move it to an aggressive growth path in an IRA.This is a smart thing, since you will have automatic diversification by having funds in not only your home country but also having money grow here in the US. At the age of 59 1/2 see how it has done and either remove it all at once or get a defined return back.(pay the taxes at that point – which may or may not be too high depending on the tax rates and growth)

Option 3 -Roll over the 401-k into a ROTH IRA, avoid the 10% penalty and just pay the reduced tax rate on the whole amount(since this year your income level and hence your tax rate will be much more favorable than the previous years). Let the money grow (with the same diversification benefit from before) and then remove the money TAX-FREE at retirement.

I am not a finance expert, so please don’t take this as an advice, these are just my opinions and may or may not be 100% accurate, but if it was me i would probably take option 3, the ROTH IRA one and end up with much more money in the future and pay less taxes today.

Sometimes it backfires.

As i say all the time, i always look around online to make the most of my online purchases. I mentioned earlier about the discover portal where you can earn 15% cashback on groupon deals.

The wife has been looking to get a massage for the longest time now, and i have convinced her that most good deals on massages are on groupon or livingsocial. They usually have a good 50% discount, so we have been looking for two to three weeks, but the ones that were available were not the kind she was looking for. So yesterday i saw this nice deal for a 50% off for the same kind of massage she was looking for, plus they threw in an aromatherapy session to go with it. She has been traveling, so i sent here a link to the deal and asked her to check it out while i had to rush out to meet my good pal for a lunch which we had been planning for a long time.

She checked it out and really liked it, so she called me while i was on my way to the restaurant and told me to go ahead and buy it. A $100 massage  plus another $25 worth aromatherapy session all for $49 – awesome, but wait i will get another 15% cashback if i use the discover portal – even better, so instead of buying this really nice deal right away from my mobile app, i decided to come back home log in to the discover site, and then link to groupon like i always do – bad move!!! It was sold out by the time i got back. Not only did i miss out on this great deal, but i also had to explain it to the wife after raising her expectations 😦

So while my general obsession habit of using the right tools to maximize value of online shopping works most of the times, its cases like these which sometimes remind me that its ok to buy directly from the website and forgo that extra cashback.

I was definitely disappointed on having missed out on this deal, but i have a feeling i wouldn’t be less disappointed if i had in fact purchased it on the mobile app and missed out on the 15% cashback. That’s just me 🙂

On a work visa,should i participate in retirement plans at work? – Part 1

With the increasing global nature of work and jobs, a lot of us find ourselves in the situation where we end up with a work visa (H1b,L1) etc after graduation from grad school or being sent over by a company to work as a consultant for a few months or years.

For those that graduate and join the workforce on a H-1b visa,a lot of questions pop up. Will i be here for a while, long enough for the company’s 401-k vesting period?, will i eventually want to become a permanent resident or citizen or will i go back home for good? All these questions and uncertainties mean that most people procrastinate and do not participate in employer sponsored 401k plans. BIG financial mistake !

Most employers offer a percent match to 401k contributions along with a vesting period (say 5% match with a vesting period of 3 years – which simply means that the employers 5% match is yours to keep after a period of 3 years). In my opinion if the employer offers any kind of match, one should participate in the 401k as soon as it is made available without bothering about what he or she will be doing or where will they be in 5 – 10 years time.

Consider the simple example of someone making $50,000 a year and putting 5% away for the 401k to get the employer 5% match. H1-b’s are for a 3 year period with the option to get another 3, so if this person stays with the company for those 6 years and continues to contribute regularly he will be putting away $5000 a year ($2500 employee + $2500 match, lets consider no raises for simplicity). Lets also assume that he invests that money and it does not grow at all (in reality if invested wisely, getting a 5% annual return is very realistic) so he ends up with $30,000 in his account at the end of 6 years. Not contributing at all would mean he would be getting about $1750 extra per year in his paychecks ($2500 – 30% tax), this would be a total of $10,500 (again not considering any growth).

Tomorrow i will write about the different ways the guy can make those $30,000 work for him and how almost always he will end up having a much better nest egg than he would if he simply didn’t contribute…

Part 2 – here

How i got my $200 Northface jacket at a great discount.

I like northface products, their jackets are long lasting and of very good quality. There are two things that i don’t like, one they are very expensive and two – they are almost never on sale.

Places like the northface store, Macy’s and nordstrom never have discounts on northface products. Even when macy’s has their biggest sales, they exclude these jackets, making it very difficult for deal hunters like me to get in.

I wanted to buy this amazing tri-climate jacket from northface which retails for $200, and kept looking around for over 3 months but did not find a great deal. To start with, i had decided to buy online (to save the $10 in taxes) and buy in the Oct-Dec 2011 quarter when my citi dividend card was giving a 5% cashback on department and clothing stores (essentially getting another $10 back in cashback reward)

By patiently looking around and using the right tools on cyber monday, i was able to get a great  deal. Here is how.

Purchased it on the site Moosejaw , which is a great site for jackets and gear. They were selling it at list price($200), but i used ebates to get an awesome 8% ($16) referral cashback to go to moosejaw. Moosejaw has a rewards program, where you earn 10% of your purchase value as moosejaw credit for future use, but on cyber monday they had a 5X promo, where i got 50% value as moosejaw credit ($100) for future use on their rewards website. I also registered my Citi mastercard for this great holiday offer, where if you register your Mastercard credit card number and spend $200 online with it, you’ll get a $20 gift card.

For my $200 purchase i got $46 ($16 + $10 + $20) in cashback and GC value, plus another $100 to spend at a future time, discounting my next purchase.

So by being smart about my big (by my standards) purchase, i was able to bring down the actual out of pocket cost plus get more merchandise for free.

Best Savings Account Rates.

J Money mentioned low interest rates in his post today.

I kind of agree with him in that the interest rates should remain low for a while because we are looking around for a house (with no deadline in mind – just searching with the intent of buying if we find something which is good and in our budget). When we do end up buying, we would love the rates to be in the sub 4% rates like they are now. On a very standard mortgage, we can end up saving a couple of hundred dollars just with the better interest, that would either give us a smaller monthly payment or let us buy a slightly bigger/more expensive house with the same payment set up.

It is a catch 22 situation tho, while we try to save up some money for the down payment, we would love for it to generate nice interest/returns. We wont be investing that money in the stock market because it is too short term and risky,so the only safe option is parking it in a savings account. These are giving next to nothing interest rates today –

As of today, Feb 6th 2012 some of the top interest paying accounts are –

Discover Bank	0.90% apy
Ally Bank	0.84% apy
ING Direct	0.80% apy

While all these options give less than 1% annual returns on savings, they are options to park some cash (down payment fund in my case ) for the short term, to ensure that the principal amount is protected unlike the stock market where there are no guarantees.

Super Bowl

So its the day after the superbowl sunday. It was a great game, even though the giants won.

I was a little disappointed with the ads this year, not very funny in my opinion – the one i enjoyed though was the Acura Seinfeld one –

Apart from Seinfeld himself and some of this signature lines, i loved the look of this new car, it will be interesting to see it in action on the road.

Save 15% on Groupon

In the past, i have expressed my concerns over whether sites like groupon or livingsocial will be big money spinners in the long run, while i still am not too sure about the huge valuation of a groupon, i cannot ignore the fact that every once in a while, there are some pretty good deals to be had.

We regularly dine at a restaurant close to our house, both me and Desi Girl (DG) love the food there and end up going there at least once a month. So when i see a groupon to this place offering $40 worth of food for $20 it makes absolute sense to buy it. I ended up buying 2 of those, one as a gift to DG.

If you use discover card’s shopping website called ShopDiscover, you can earn 15% cashback on all groupon purchases by simply clicking on their link to groupon. You basically save another $3 on a $20 groupon (which is already a 50% discount on $40 value to begin with). The only catch is you need to have and use a discover card for the purchase.

I use a discover cash rewards card which gives me 0.25% cash back for the first $3000 in annual spend. I usually never cross that threshold, but they also have 5% quarterly category spend cashback bonuses which i always make use of. This quarter (Jan-March 2012), it is 5% cashback on gas and movies.

This extends my theory of spending a couple of minutes before making any purchase to figure out any additional discount that can be had. $17 for $40 to spend at my favorite restaurant, makes sense to me any day of the year 🙂

Moved…

So, after playing around with WordPress for a bit, i decided to move from blogspot to WordPress. There is no single good reason why I chose WordPress over blogger, maybe the whole more cleaner look appeals more to me.

This is my first new post from this platform, I hope to be more regular in posting and building up a bigger reader base with this move. Lets see how it goes.