Citibank WANTS me to use their money to make more money!

Quick definition for you

Credit Card Arbitrage: The act of taking low interest rate balance transfers from your credit card company in cash and investing it into money-making ventures like CDs, money market accounts and (gasp!) even the stock market.

I want to warn you right off the bat, though, that you should only put the money into accounts that are guaranteed to earn more interest income than what you’re paying for the balance transfer. That means don’t invest it in the stock market! You could end up in the red and owe more money than you withdrew in the first place.

Inspecting a problem, getting a wad of cash

Earlier this month (July), I noticed a $0.00 charge on my Citibank credit card statement just identified as “Membership Fee July 08 - June 09“. Even though it was $0, I wanted to make sure it wasn’t some sleaze phishing for active credit card accounts, so I called Citibank. I found out quickly that it was from Citibank directly, and they do this “for every card, even if there is no annual fee”. Seems a waste of their resources to bill people for nothing and then field calls asking what it’s for, but Ok.

But while on the phone, the account representative informed me that “I had a special offer of a 0% balance transfer offer with a 3% fee or a max of $75“. First, most credit cards have removed the caps on their transfers because they knew people with good credit were just withdrawing the money and sticking in the bank. They were losing money on the deal!

But the next statement really caught me off guard. It went something like this:

You can use the money to pay off another balance, to take a vacation, to pay tuition or even just stick it in a high-interest bank account“

WOW! They’re now promoting credit card arbitrage! Or at least this rep was.

So I took the money. It’s 0% until March 1, 2009, so about a 7 month deal once you take out the time to get/cash the check, deposit it, then pay the money back at the end of the term.

But before I took the money, I asked for a credit line increase. It was previously at about $12,000, but I got him to bump it up to $13,400 without dinging my credit score. And instead of taking out ALL of the balance, I left a $900 buffer and only took $12,500. It’ll still ding my credit, but I don’t have plans anytime soon to refinance the house or get another loan.

What will we do with the money

I will admit up front that I agreed to taking the money without any real plans for it. That’s counter to the last time I took out a major chunk of cash. The last time was early 2007 when I took out $15,000 to pay the Chevy Malibu off early. I planned that whole activity in advance and created an aggressive repayment schedule (which worked excellently).

This time, though, I have the following options:

1. Throw it all towards the truck loan to avoid paying interest: This idea has merits, but unfortunately, we wouldn’t pay off the entire loan with the $12,500 (unlike with the Malibu), and we would be committed to paying off that whole amount in 7 months when we have a big vacation, Christmas and tuition coming up.
2. Buy a bunch of useless crap: Yeah, I had to throw this one in there. I’m still really tempted to go get a big TV, or new furniture or numerous other things that we don’t need, but I’m resisting!
3. Stick it in our ING Orange Savings account: Even though ING Direct doesn’t have the highest rates (currently 3.0% APY) compared to eTrade Max Savings (3.3%) or HSBC Direct (3.5%), we already have the account so it’s convenient. I tried chasing rates before and I didn’t care for it. We could earn about $220 in interest this way.
4. Stick it in a 6-month CD: Using Bankrate.com, I see the highest 6-month CDs are sitting around 3.60%. It’s more money than the 3% from ING Direct. I could just open an HSBC Direct account, get close to the same rate and have a more liquid account.

So ultimately, I think we’ll just stick the money into our savings account and have it earn us money. We’ll earn more than the $75 we paid for the transfer while still having the money if we have to pay it off earlier (no idea why we would need to though). It’s a nice idea to pay down the truck more quickly, but it’s just exchanging debt for debt (and credit card is the worst debt anyway!).

Earn a Six-Figure Salary? Then Live in a Shed!

Here’s a brief article about a maintenance man in New York who lived in the back of a shed…but earned a $100,000 salary.

I don’t say I blame him, but the odd thing was at the end of the story:

The worker is being charged $2,500 for the time he lived there. Now he’s living with his wife at a home in Pearl River, about 3 miles away.

So he already had a home where his wife lived? That doesn’t sound like mooching then. It sounds more like convenience to be closer to work.

When I worked in York, PA, and we still hadn’t decided whether to move from DC to PA yet, I traveled up on Monday mornings, stayed in a rented room ($350 per month I think), and drove back home on Fridays. It was tough because we just bought our first house and that left Stacie to maintain it AND the pool during the week.

Not knowing that I would leave the company and go back to DC (Rockville, MD really) after only 5 months on the job, I was very close to selling my car for a van or truck and sleeping in it during the week. I had the plan to join Gold’s Gym and shower there, and use the internet at work or the library. It would all be much cheaper than renting a room, but the legality and safety of it made me (and Stacie) second-guess the plan. Actually, it was Stacie calling me a fool for the idea.

Nevertheless, I left the company (which I regretted at the time and still do because they were great people in a great area), but there was too much turmoil and decision after they got acquired by a larger company. I went for the sure-thing: a job close to home that paid more, but I haven’t been as happy since leaving.

Maybe one day I’ll go back, but I won’t think about sleeping in the back of a van down by the river this time.

Buying into an Auto Illusion

Yes, we have 3 cars. But two are paid-off: A 2005 MINI Cooper and a 130,000 mile 1997 Pontiac Grand Am. And yes, there’s only 2 of us. And finally, yes, I ride the metro to work so I drive MUCH less than I did when I drove to work (not since 2006 really).

Back in March, 2006, I traded in my 96,000 mile 2002 Acura TL-S for a brand new, 2006 Honda Ridgeline truck. Also back then, we had a 2005 Chevy Malibu instead of a MINI Cooper. I made the trade for a truck with the following reasoning:

• We’re now homeowners, so we’ll need the hauling capability
• We’re going to start a family, so we’ll need the size and safety of a bigger vehicle
• We still weren’t certain about the Pontiac’s reliability, so that’s why we went with a new vehicle
• We already had 2 sedans, so why get another “car”?

But looking back almost 2.5 years over our decision, I can relegate every one of those reasons as pure illusions.

Haul What?

Shortly after buying the truck, I started making the joke “I have the truck, but no money to buy anything to haul“. That was when I made about $15,000 less per year than I make now (not counting the income from CleverDude.com and Building Nutrition), so now we have some money for renovations (we’ve spent thousands this summer!).

But seriously, it took about 2 years before I really started hauling stuff that I couldn’t move in a car, wagon or even an SUV (like 1200lbs of bricks or gravel). That was 2 years of $450 payments that I could have avoided.

Whahuh? Kids? Where?

So unless we were sleeping for 9 months during the last 2.5 years, I don’t think we’ve had kids yet. And we aren’t planning any soon, what with uncertainty about whether we want to stay in the D.C. area, and our general lack of energy to do much more than work and sleep.

Our Trusty Steed

Back in 2004, we had some problems with both Jiffy Lube and then a mechanic who messed up our Pontiac to the point where we just drove it to PA to our “family mechanic” (not related) to fix. He got it up-and-running in no time and it’s worked fine with about $600 in repairs or upgrades each year as maintenance. That’s less than 2 months of truck payments each year.

Honestly, I just used the “uncertainty” with the Pontiac as excuse to get a new vehicle. And I also used it as an excuse to not buy used, even though I feel the car could run to 200,000 miles with proper maintenance.

Three of a Kind?

Not much to say about the “not another sedan” deal, other than it was icing on the “Excuse Cake”. I used all of the other arguments to get a new truck; to justify why I couldn’t just 1) keep the Acura or 2) sell it and just drive the Pontiac

So Now What?

I’m closer to selling the truck than I have been since getting it, but it’s a hard sell to myself and to Stacie. Stacie will stand behind my decision either way, but that doesn’t mean she’s not asking questions first. Also, both of our sets of parents think I should keep the truck, but they both live in rural/semi-rural Pennsylvania “Truck Country”. They see the value in having a truck, but they’re not thinking of the rental options.

So as much as people ridicule us for having 3 cars for 2 people, the important people in our lives don’t want us to sell. And selling the Pontiac isn’t an option because it’s almost worthless to buyers (not to us though) based on KBB values. Also, it’s either get rid of $18,000 in debt (I could probably sell for $19k) or make $1,400.

Lastly, though, we’re not in dire need of money, and that’s what I think gets most people in trouble. We’re paying the bills just fine, but I realized that we could get ahead much faster if we had $450 more per month. I won’t say how much I make per hour, but that’s less than 2 days of work per month, and that’s why it’s hard for me to just give up the truck.

It’s convenient and we can “afford” it. But can we really afford it?

What about you? Are you, or have you been, in this situation? What did you do, or not do?

Parents, please think about what you name your kids

Just a quick rant against some of you parents out there. I know you have the dire need to “be different” than everyone else and avoid boring names like Bob and Joe for your kids, but please think long and hard about what you’re naming them and what they’ll have to deal with in school and when they’re trying to make it in the professional world (i.e. after schooling).

For example, how would you pronounce the following names (real names from newborn babies at Stacie’s hospital):

Orangejello

Lemonjello

Would you say “Orange Jello”? No, that’s wrong and God forbid you mispronounce it in front of the mom! It’s:

Or-an-juh-lo and Lem-on-juh-lo (sorry if I don’t know the proper dictionary syntax)

A Truly Horrific Name

Now I want to prepare you for one of the worst possible names I’ve ever heard. This is a real name as dictated by a friend who works in the Pennsylvania State Social Security offices. It’s worse than Harold Balls or Michael Hunt.

Are you ready for it?

Here it is.

Analtouch

Yeah, how would you pronounce that one? Like a bad thing that happens in prison? I would have thought so too, but nope, here’s the correct pronounciation:

uh-null-tush

Wow, what else can I say?

What names have you run across? I want some real, serious names, not some Bart Simpson hijinx. Maybe I can help get the word out to parents that they just need to think like a bully for a second (or a potential hiring manager) and wonder whether Analtouch is a good name or not.

Unless they’re intent on their child being “Dr. Analtouch, the Proctologist“

Book Giveaway #6: “Codependent No More & Beyond Codependency” [Enter Here]

Here’s the “secret sixth” book giveaway in my week of book giveaways! It’s specifically for my loyal weekend readers (considering I almost never publish on weekends). The book is “Codependent No More & Beyond Codependency” by Melody Beattie. This is actually 2 books in 1, and an excellent resource.

From the book cover:

How to stop controlling others and start caring for yourself.

Do you find yourself helping your friends far more than you help yourself? Is your life falling down around you while you’re busy propping up your friends when they’re in need? Well, that’s codependency (among other definitions). Here’s another definition:

A codependent person is one who has let another person’s behavior affect him or her, and who is obsessed with controlling that person’s behavior

I had a codependent relationship back in college with a former girlfriend. I let my need to help her overwhelm me and I lost track of myself. My intentions were totally pure as I thought I was helping her, but really, looking back, I was trying to control her life. I would tell her what she needed to do and get very upset when she wouldn’t listen. Eventually, she met another controlling guy who took her off my hands and a big weight was taken off my shoulders.

How to Win this Book

Sorry, this contest is closed. And the winner was JD! JD was trying all week to win a book and he finally did. I’ll be shipping out the book tomorrow JD!

Entering this contest is very simple: Leave a comment on this article by Monday, July 21st, 2008 at 8am Eastern.

I’ll use a random integer generator to draw the winning number and then email the winner to make sure they’re willing to claim their prize (i.e. send me their mailing address). Once confirmed, I’ll announce the winner in this post.

Feel free to subscribe to my RSS feed or email newsletter to learn when the winners are announced and when I post another giveaway. Who knows, I might toss up a 6th book this weekend (when less people check my site).

Contest Rules

• I only ship to the continental U.S. states (sorry Hawaii and Alaska)
• I will ask for your name and address for shipping, but I promise to destroy the information and never sell/share it
• Void where prohibited by law
• You can only enter ONE TIME. If I draw your name and see you’ve entered already, I’ll delete your entry and redraw.

Now comment! This is the most frugal way to get this book. It’s even delivered right to your doorstep (at my cost)!

Weekly Roundup: Pool Party Edition

Why is it that when you have a pool, you’re expected to host pool parties for all your neighbors, coworkers and friends? They automatically think that since you have a pool, you want to have people over to enjoy that pool with you. And even better, they expect you to provide food for a party too! Oh and to cook it for them also!

So one of Stacie’s coworkers told her “So when do I get to come over and swim?”. And she said it in front of Stacie’s fellow coworkers and so Stacie felt obligated to invite them over to swim this weekend…the one weekend we’re actually in town (for one day) and I can work on my class and home projects. Sigh. Just another reason to tear out that stupid pool.

From the Personal FInance Network:

- Blunt Money is finding saving money is addictive

- Canadian Capitalist is loving the bear market

- Money Ning gives us 7 reasons why we need to start budgeting now

- Four Pillars has a wacky business idea: private libraries

- Squawkfox doles out 50 reasons to go green with reusable shopping bags

From My Reader List:

- The Digerati Life exposes the MPG illusion with some clever calculations

- Pants in a Can hopes is Megadeth-loving neighbors moves out soon

- Brip Blap boils the market problems down to one piece of advice for you

- Christian PF gives us money & marriage: 7 lessons he’s learned so far

Dining as a Group. Paying as a Group.

I’m sure many of you have experienced (or forced the experience upon others) of “splitting the check evenly” among all your fellow diners. I know J. Money (formerly J. Savings) did recently. Well last night we were involved in a check-splitting ourselves, and I sort of stood my ground.

We had a going-away party for a former coworker at a moderatly-priced Indian restaurant in Virginia. There were 12 of us, counting the guest-of-honor, and also Stacie (even though she never worked with him). We have a rule against dining out on week nights, but this was a special occasion, so we were allowed. The guy is moving to Budapest, Hungary for an unknown number of years (he’s a British national in the U.S. as an ex-patriot for the last 7 years. Whew, I don’t envy his financial situation of converting currencies and handling pensions!).

Anywho, we split 3 appetizers among all 12 of us ($8 each), and there was so much food that I was almost full before we even ordered our main course. So instead of each ordering a meal, Stacie and I split a meal. The waiter was very pushy that it wouldn’t be enough food, etc etc., but I held firm that we would split the meal. Plus it meant room for dessert if we wanted.

Our meal was about $12, and we each had waters, so the running total is $16 for the two of us. I know our guest’s meal was about $14 (he got water too), so tack on another $3 (rounded off) to make it $19 as we were helping to cover his meal.

If you consider 20% tip and 6% tax, our own bill should have come out to be about $24 total.

Splitting the Check Evenly, but not Fairly

But when the check came and they did the math (wrong at first anyway. They divided by 12, not 11), the total per person was $22.50. Wow, nothing like spending $21 MORE than what we owed. We got a veggie dish while others got meat dishes (a $2-4 difference) and a few got Mango Lasi drinks or other fountain drinks.

So I walked over to the friend collecting the totals and gave him $27. That was the $22 (rounded down) for one person, plus another $5 to help cover our share of the appetizers.

Then I found out he miscalculated and the share per person should have been $24.50. I asked if he wanted more from us, but he declined. He absorbed the extra cost (he’s a meek individual, luckily for our wallets).

What would you have done?

I know a number of you would have shelled out the $45 for two people, while others would have asked for a separate check (yeah, try doing it in a restaurant that hates splitting checks among 2 couples, much less 12), but I went for the middle ground of offering more than our actual share of the cost, but not nearly as much as was being asked. Think I’m cheap? Think I’m a hero? Think I’m an absolutely normal, boring guy?

Book Giveaway #5: “Help is NOT a Four Letter Word” [Enter Here]

Whew! We’ve made it to the end of the week and the last (or is it?) book giveaway in my week of book giveaways! And what is the 5th book that I’ll be giving away? Well, if the image to the left isn’t a clue, then here’s another:

“Help Is Not a Four Letter Word“ by Peggy Collins

I reviewed this book a year ago, and I’ve been very tempted to give it to a few friends since then. And just this week, I had second thoughts about giving it away here, and instead giving it to my boss at work. If you want to know why, you can read the review here.

But no, I’ll sacrifice my own wants to fulfill yours. So, if you are the type that is “self-reliant” or know someone who is and really want them to be able to ask for help more often, then this book is for you. And you can get it free here!

Now for the standard blurb on how to enter and the contest rules. It’s easier for me to copy and paste, so don’t email me that I’m lazy:

Entering this contest is very simple: Leave a comment on this article by Friday, July 18th, 2008 at 7pm Eastern.

Sorry, this contest is now closed! Thanks for entering. BUT, there just might be a “secret sixth” contest starting tomorrow

And the winner is Lance (comment #18)! This is actually Lance’s 2nd contest win, as he won “Stay Healthy, Live Longer, Spend Wisely” back in April.

I’ll use a random integer generator to draw the winning number and then email the winner to make sure they’re willing to claim their prize (i.e. send me their mailing address). Once confirmed, I’ll announce the winner in this post.

Feel free to subscribe to my RSS feed or email newsletter to learn when the winners are announced and when I post another giveaway. Who knows, I might toss up a 6th book this weekend (when less people check my site).

Contest Rules

• I only ship to the continental U.S. states (sorry Hawaii and Alaska)
• I will ask for your name and address for shipping, but I promise to destroy the information and never sell/share it
• Void where prohibited by law
• You can only enter ONE TIME. If I draw your name and see you’ve entered already, I’ll delete your entry and redraw.

Now comment! This is the most frugal way to get this book. It’s even delivered right to your doorstep (at my cost)!