When It Comes To Saving Money, Look Up - At The Roof Over Your Head!

Housing is the greatest living expense for most people, so therefore it’s an area where saving money can have a huge impact. Consider the home you currently live in. Is it too large for you and/or your family? Perhaps downsizing to a smaller home is something you should consider.

From 1970 to 2004, according to the U.S. Census Bureau, the average household shrank by 27 percent, but the average square footage of homes grew by 66 percent. There are several theories as to why this is happening. First of all, people want a higher standard of living. Maybe it’s about keeping up with the Joneses. Maybe it’s because of the breakdown of the American family, which makes us need more space in which to avoid one another.

Whatever the case, do we really need the extra space? In 1950, a family of four could live well in a 1,500 square foot home. Why can’t we do that today?

Aside from the price tag attached to a larger home, consider the higher property taxes and insurance rates. A bigger home also costs more to heat, cool, maintain and repair.

Renting vs. Owning
Consider renting – it’s controversial advice for Americans, who’ve been taught that part of the American Dream is to own a home. But in recent years, this American Dream has become a nightmare as mortgage rates and rising unemployment have forced many to lose their homes. While mortgage rates have hit on the high side, rental rates have remained quite manageable.

If you purchase a home, be realistic about the size of the home. Do you really need five bedrooms, or can your family make do with three and save the difference? When it comes to this question, size really does matter. And remember: you can search the sale papers each Sunday for the rest of your life, and you’ll never find a coupon for $30,000 off on a new home.

When you search for a home, shop for a mortgage. By doing so, you can find the best rate from lenders you may have never even heard of. Learn to negotiate, whether you are renting or buying, in order to get the best deal.

Insuring Your Home
If you own your home, you know you must have homeowner’s insurance. The price you pay for that insurance can vary by hundreds of dollars, depending on the company you purchase your policy from. When seeking to purchase this type of insurance, shop around. Check consumer guides, insurance agencies, companies and online insurance quote services. This will give you an idea of the price ranges and tell you who’s got the lowest prices.

You may want to consider purchasing your car and homeowner’s insurance from the same insurer. There are often discounts for doing so.

When shopping for a home, consider factors that could save you money and save you 5 to 15 percent on your premiums:

• The home is close to a fire hydrant.
• The home is near a professional, not volunteer, fire department.
• The home’s heating, electrical and plumbing systems are less than 10 years old.
• If you’re in the eastern portion of the country, consider a brick home, which is more wind-resistant.
• If you are buying home in an earthquake-prone area, look for a wooden frame house because it will more likely withstand that type of disaster.

Maintaining Your Home
Remember that there are things you can do on a regular basis to maintain your home that will save you money. These things include:

• Close the fireplace damper when not in use.
• Fix leaky faucets.
• Unclog slow-running drains.
• Inspect and test smoke and fire alarms. Replace the batteries regularly.
• Inspect and replace filters regularly in your air conditioner, furnace and pool. Keep the compressor unit of central air conditioner clean as well.
• Inspect the foundation for water penetration, settlement and cracks.
• Clean the gutters and downspouts.
• Inspect and treat the exterior wood for splintering, decay and damage.
• Check the roof for leaks or warping.
• Check for loose or cracked caulking around tiles, sinks, tubs, showers, toilets and counters.
• Inspect and replace weather stripping around doors and windows.
• Trim trees or shrubs touching the roof or exterior of the home.

About the Guest Author
Angye M. is the contributing editor for AmericaOneUnsecured.com. They help consumers nationwide obtain personal loans and business loans. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Money Market Rates 6/11

Here are the latest money market interest rates of the banks that I've been tracking on my blog. Note that these rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

1.15% Discover Bank Online Savings
1.15% American Express High Yield Savings
1.00% Ally Bank Online Savings
1.00% Urban Partnership Bank
1.00% ING Direct Orange Savings
1.00% FNBO Direct Online Savings
0.80% HSBC Advance Online Savings
0.55% Western FCU Money Market
0.30% E*TRADE Complete Savings
0.20% Citibank Ultimate Savings
0.15% Chase Plus Savings
0.07% PayPal Money Market*

NOTES: *The PayPal Money Market fund is NOT FDIC insured. In some cases, MMA interest rates are tiered. If this is the case, I usually report the interest rate at the $10,000 tier in these updates.

Rates are believed to be accurate as of 6/1/11. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list. This month at the request of readers, I added American Express and FNBO Direct to the list of institutions. Discover Bank and American Express are tied for the highest interest rate of the banks that I'm tracking.

I was surprised that the interest rates for Citibank and Chase were so low. Since I still have significant funds in these institutions, I think that it is time for me to consider moving some money around to other institutions.

So, that is the latest list of money market rates. Please let me know if you know of any higher interest rates.

DC

Need fast cash? Payday Loans Online from 60MinutePayday.com are exactly what you need.

Attack of the Groupons: 5 Great Sites for Groupon Deals

We have yet to meet one person who is not in love with the Groupon concept. It’s easy to see why: the Groupon concept is simple and attractive. Deals for just about anything from shopping discounts to service discounts are made available in certain websites and certain cities. Now, the catch is that the discount or group coupon can only be claimed if a certain number of people purchase the discount. It’s a great deal for both store owner and buyer, because the buyer gets the service for cheap, and the store owner gets enough customers to make the discount worthwhile. The success of the original Groupon concept has spurred on other companies to do the same. Today, there’s a variety of Groupon sites to pick from. Here are a few of our favorites.

1. LivingSocial- It’s safe to say that LivingSocial is one of the biggest Groupon competitors out there. Available in three countries and 89 cities, LivingSocial uses a great marketing gimmick called the "tempt strategy". If a user can tempt three or more of his friends to get a particular deal, then that user gets the deal for free. LivingSocial also has an iPhone app that allows its users to see the latest deals even while on the go.
2. Dealster- Available in over 50 cities in the United States, Dealster is another Groupon site that is slowly making it big. The great thing about Dealster is that its users are notified daily if there are any deals going on in their particular cities. Also, Dealster offers coupons that are transferrable, and can be given to friends and family.
3. Groupon- We can’t knock the original that started this awesome madness! Groupon still beats the competition as it offers more local deals in more cities in the United States compared to other group discount sites. The great thing about Groupon is that every major city in the US can more or less expect a deal to pop up every day. What’s more, Groupon purchases aren't limited to its users' needs. Users can get Groupon deals for their family, as well as Groupon gift certificates.
4. SocialBuy- This group discount site is most suited to the social individual, the one who always wants to go out. Compared to other Groupon sites that offer deals for just about anything, SocialBuy focuses on discounts for food, beverages, health products and entertainment services. Every time a SocialBuy user successfully recommends a friend to use SocialBuy, the website gives that user $10 SocialBucks to spend on the discount that he wants.
5. Homerun- Homerun is another site that uses a sly marketing concept. When you join Homerun, you are forced to use your own virtual currency to get deals and discounts. Members can choose from multiple deals within their first 30 days as members. Also, Homerun has been known to offer a lot of freebies for various restaurants and bars.

About the Guest Author
Sam Briones is a freelance writer who covers an array of topics from finding cheap auto insurance to safety tips. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Get $100 When You Open a New optionsXpress Account!

The brokerage optionsXpress is currently offering a $100 bonus promotion. First of all, don't let their name fool you. In addition to options optionsXpress also lets you trade stocks, bonds, futures, mutual funds and ETFs. And the name is really spelled with a lower-case "o" and an upper-case "X". There are a few conditions that you need to meet in order to receive the $100 bonus. But basically, you have to open a new account, deposit at least $500, and execute 3 trades within 12 months.

With optionsXpress, you will have access to innovative, powerful trading tools, investment education, and outstanding customer service. As for commissions, optionsXpress charges $9.95 for stock trades, and $1.25 per contract ($12.95 minimum) for options trades. I will also note that The Charles Schwab Corporation (NYSE: SCHW) has announced plans to acquire optionsXpress Holdings (Nasdaq: OXPS). You can read the Charles Schwab press release here.

So, if you were thinking of opening a new brokerage account, the extra $100 could come in handy. Visit the optionsXpress website to learn more.

Pension Obligation Bonds

A short video raising some important questions about pension obligation bonds.

Satirical Video

This is my attempt at humor regarding post-retirement finance.

Derivatives

Several words that start with D have become terms of opprobrium recently. Many have argued that debt and derivatives bear much of the responsibility for the current recessions in many countries. Some fear that depressions could follow.

Depressions may or may not be in store. But times are bad enough now and excessive debt and reckless use of some derivatives clearly deserve much of the blame.

Most of us have direct experience with debt. You give me money now and I promise to repay you later with interest. Of course it is not always this simple. The bewildering complexity of some debt instruments can boggle the mind. But at least the fundamental idea of debt is familiar.

In contrast, you may think that you have never bought or sold derivatives and have little or no notion about their good and bad features. What are they? Are they really needed? If they are malevolent why not just outlaw them?

Here is a starter course. I will have more to say in future posts.

Wikipedia defines financial derivatives as follows:

Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else (known as the underlying).

I was brought up to take umbrage when an adjective ("underlying the ...") morphs into a noun ("the underlying"), but this usage is too pervasive to ignore.

The Wikipedia definition is a good start, but let’s make it a bit more general:

 A financial derivative is a contract in which one party promises to make a payment to another party in the future, where the amount to be paid is based on the value of something else (known as the underlying) at the time.

Even this is not broad enough but will do for now.

Here is a graph of an example that appeals to many investing for their retirement years.

 

Your neighborhood bank manager, who looks a bit like the actor Jimmy Stewart, comes to you with the proposition summarized in this graph. The x (horizontal) axis shows the value at the end of the year 2010 of $100 invested today in Standard & Poor’s 500-stock index.  The y (vertical) axis shows the amount that you will receive at that time from the bank. When the time comes, the value of the hypothetical investment in the S&P500 will be computed and marked on the x-axis. Then the point on the curve directly above it will be found and the height (y-value) determined. This is what you will be paid.

 Pretty attractive, isn’t it? If the market goes up, you will get more. If it goes down, you will get $100. In finance-speak you get upside potential and downside protection. All you have to do is add your signature to the contract already signed by the bank.

 But wait. What do you have to pay for this contract?  More than $100 of course. Perhaps $110. So you could lose money, but no more than $10 out of your initial investment of $110.

 This sounds good to you, so you pay the money and sign the contract. You have just purchased a derivative. The payoff (shown on the y-axis) depends on the value of an underlying (shown on the x-axis) in the manner shown by the red curve.

 Not so fast. Recall that the red curve shows you the amount that the bank has promised to pay. Somewhere in the fine print in the contract there may be an indication that under some conditions they might pay less. Perhaps it should have said “we promise to pay you no more than …” 

 The possibility of receiving less than promised gives rise to what is known in the trade as counterparty risk. In this case the bank is your counterparty. If they were to go out of business before the end of 2010 or force you to get partial payment from a bankruptcy court, your actual payoff would be below the red curve.

 Here is a more realistic picture of what this derivative might pay you. 

You could end up below the curve. In fact, you might end up with a payoff of zero – most likely in a situation in which security markets, including the U.S. stock market, had fallen like rocks.

All this can be summarized in a formula:

The symbol x represents the final value of the underlying. For emphasis I have put a tilde (squiggly line) over it to indicate that its actual value is not known with certainty before the payoff date. The symbol y represents the value of the payoff, which is also uncertain today. The symbols f(..) represent a function, which relates the promised payoff to x.  In this case, it is the red line in our first figure – it shows the relationship between the underlying (x) and the promised payoff.

 The final term. e,  is the amount by which the actual payoff y falls short of the promised payment f(x). Since it is generally uncertain before the payoff date, I have put a tilde over it as well. If you are lucky, it will equal zero. If not, the value of e will be positive and the payoff lower than promised.

 This derivative has two sources of risk. Absent clairvoyance, you don’t know for sure what x will be. Moreover, you don’t know whether e will be zero or positive and, if the latter, how big it will be. The first is underlying risk; the second is counterparty risk.

 The press has gorged on stories of derivatives gone bad and I will reflect on some of them in future posts. Sometimes when you take risk you lose. But that doesn’t mean you should avoid risk at all costs. As we will see, a sensible approach to lifetime finance involves taking some risks and avoiding others, with or without derivatives.