Ok, maybe its technically not a new bank, they used to be GMAC and changed the whole brand last May, but the whole new persona and semblance of being a younger, nimble, “hip” bank is probably going to do wonders for them.  Older more “wiser” banks have been shown to be full of greed and malice and Ally hopes to stay away from that.

The data sheet on what you can get through them as far as services aren’t necessarily mind blowing but they are definitely competitive.   And since they have few competitors, they aim to stay around.  At this time, their online savings account has a higher interest rate than most money markets.  Worth a look!

[Edit: Below are the brand new rates]

A more current reason I am such an advocate for (self disciplined) financial education is due to the fact that 2009 is going to be nasty. As in not pretty. The economy feels like its fluttering around zero and might be stabilizing over all but its reactionary to flaky news. So you think you know all the ins and outs? What about your own general feelings with respect to currency? Here are few things from around the web you probably had no idea about:

1. More of our fantasies are about money… than sex.
    
2. If we could have any luxury in the world (and money didn’t matter) more of us would choose to spend money on a butler and a maid than anything else.
    
3. 90% of Americans who own pets buy them Christmas gifts.
    
4. Money is the leading cause of disagreements in marriages (after lack of communication).
    
5. 65% of Americans would live on a deserted island all by themselves for an entire year for $1,000,000.
    
6. For $10,000,000 most of us would do almost ANYTHING! Including abandoning our family and friends and our church. A very high percentage of us would, for that same amount of money, change our race or sex. And, 1 in every 14, would even murder someone for ten million bucks.
    
7. What’s really strange about this is, the statistics remain the same whether it’s ten million dollars all the way down to three million. For three million bucks, most of us would do the same horrible things we would do for ten million. But, guess what? Few of us would do these things for a “measly” two million.
    
8. 92% of us would rather be rich than find the love of our lives.
    
9. Here’s a weighty one: Money (or the lack thereof) is the biggest stress inducer in the lives of Americans. We worry more about money than our marriages, our health, or even who’s going to win the Superbowl Game or come out on top in the latest Survivor TV show.
    
10. If you get your money out of a Hitachi ATM machine in Japan, it will be laundered. The way they do it is, they briefly press the bills between rollers at high enough temperatures to kill most bacteria.
     
11. Women have very fixed ideas on how much they are willing to spend on a bra. 38.3% of women won’t spend $30 for a bra. 28.4% won’t spend $50. 10% would pay as much as $75. And, only 3.5% would shell out $100. But, you know what? Almost 20% of women say they would pay almost anything for a bra. This is because they consider (and I guess so do a few men) that the contents of what those bras are encasing is of extremely high-value.
     
12. Nearly half of the people who sell their houses with furniture included will take all the light bulbs out of all the lamps when they vacate the premises.
     
13. Most people won’t bend over to pick up money lying on the sidewalk unless it’s at least a dollar.
     
14. Most Americans think pennies are a pain in the ass and the U.S. Mint should stop making them.
     
15. Authorities say counterfeiting poses no major threat to the economy. Of the $620 billion in U.S. currency circulated worldwide, only a fraction of 1 percent is counterfeit. Authorities said that only one bill in every 10,000 is a phony. Nationwide, financial institutions and businesses turned up $43 million in counterfeit money in fiscal 2002, down from $47.5 million the previous year.
     
16. Do people care if their bills are crisp? Indeed, they do. Fresh, crisp, clean bills are considered much more valuable than those which are old, wrinkled and dirty.
     
17. I once sent a ‘dollar bill thank you’ letter to a guy who sent a sincere letter back to me bitching the free $1 bill I sent him was wrinkled instead of crisp as I had described in the letter.
     
18. Let’s flip a coin and try to guess whether it will come up heads or tails. Three times as many people guess ‘heads‘ than ‘tails‘.
     
19. Here’s one I personally think really sucks: One out of every four Americans believe their best chance of getting rich is by playing the lottery (Not really safe for work and very mean link).
     
20. How about this one for a shocking fact: 5% of lottery ticket buyers buy 51% of all tickets sold. (Trust me, none of these people belong to the “Einsteins of America Society”.)
     
21. A staggering 74% of us are influenced by how much we can win in a lottery as opposed to the odds of us winning.
     
22. That’s a good thing for the Government because the odds of winning a lottery jackpot are about 10 million to 1.
     
23. A person who drives 10 miles to buy a lottery ticket is 3 times more likely to be killed in a car accident while driving to buy the ticket… than… he is to win the jackpot.
     
24. Sunday newspaper coupon inserts are the second-most read section of the paper, after the front page.
     
25. Few people know it but, you can buy single-disease insurance. Beware.
     
26. Only 6% of people in America regularly buy clothes tailor made just for them.
     
27. Here’s one that’s really important: 63% of us decide NOT to buy a product advertised on the Internet… because… we think the shipping and handling charges add too much to the order.
     
28. Eight times as many Americans would rather use an ATM than deal with a real live teller.
     
29. This one’s going to blow your mind: 83% of Americans still pay with checks instead of credit cards!
     
30. Almost 30% of us say we would need 3 million smackaroos to feel rich. This ties in with the fact most of us would do anything for as little as $3 million… but… not nearly as many of us would do those identical things for a measly $2 million.
     
31. Here’s another fact which is really, really important: 80% of Americans say giving personal information (especially their credit card information) over the Internet scares the living shit out of them.
     
32. Two-thirds of Americans say they wouldn’t let their spouse spend the night and have sex with another person for a million dollars. Many of these people are liars. There’s a big difference being asked if they would do it for a million dollars… as opposed to… handing them a paper sack containing the million fungolas and simply saying, “Here, you can have this if you’ll let me sleep with your sweetie tonight.”
     
33. The average wedding in America costs a staggering $20,000.
     
34. More than one-third of American women consider money more important than good sex to the success of a marriage.
     
35. According to Employee Benefits Research Institute 96% of all people who have jobs right now won’t be eligible for their full Social Security benefits when they reach age 65.
     
36. When it comes to houses, more than anything else, people want a state-of-the-art kitchen.
     
37. When people shop for a car, what they want more than anything else is reliability for the best possible price.
     
38. One of the best ways to raise money for a charity is to have a free dinner for a lot of people and have an empty envelope tucked under their plate… for the express purpose… of making whatever size donation they want.
     
39. People tip more on sunny days than they do on dreary days.
     
40. More than 80,000,000 people call the I.R.S. Information Hotline phone number every year. One-third of those calls go unanswered. And, according to the Treasury Department itself, 47% of the answers the ‘get-through’ callers receive are incorrect.
     
41. Almost two out of three people have modified their financial behavior because of their fears.
     
42. Almost three times as many people who live in the South worry about losing their jobs as compared to people who live in the Midwest.
     
43. Which would you rather do: Shop till you drop… or… have great sex?  For men, this is a no-brainer.
    However, more women would actually rather have an unlimited shopping spree than spend a weekend with a fabulous lover. In fact, the #1 favorite fantasy of women is to have a blank check to shop at their favorite store.

How did we ever get to the point of needing $700 billion dollars from the Federal Government?  Were the regulators asleep at the switch or were they simply out smarted by the markets?  Did greed win over principles on Wall Street?  These are great questions that will probably be the topics of countless books over the course of the next ten years.  Of course, I don’t have the answers, but I do have an opinion, that you can take for whatever it’s worth.   Here is my quick and dirty version of the root cause of our current financial crisis, described by the following primary actors:

The Federal Government’s Role- The Federal Government has advocated home ownership for some time now.  The idea has essentially been the cornerstone of the American dream.  The Government practically begs citizens to purchase a home by offering tax incentives, Government backed mortgages, and various other programs designed to aid in purchasing a home.  The reality is that many people simply should not purchase a home, even if on paper it’s somewhat affordable.  (If you have time, read this article where we weigh the pros and cons of Renting vs. Buying).

As a homeowner, I completely understand the desire to own a home, and I think everyone should purchase a home at some point in their life to avoid rent or mortgage payments during retirement, but our desire to own homes has helped banks create exotic mortgage products that put us in the situation we are in today.

Securitization- You have likely heard this term thrown around in the news the past couple of months.  Securitization was a major reason we had a housing bubble and the major reason banks could offer so many nontraditional mortgage products.  Think of securitization like a mutual fund, its the process that bundles multiple mortgages into one security, like a mutual fund that holds various stocks.  As banks sold loans to homeowners, they would then bundle these loans or securitize them into securities that could be purchased by investors.  Investors of all types (this is where investments banks really lost their wallet) would then purchase these securities full of mortgages from the banks.  In turn, the banks would have capital from selling these loans, which allowed them to sell even more mortgages.

As the housing business began to boom and home values started going through the roof, everyone wanted in on the action.  Thus, more consumers took out mortgages, more investors purchased these mortgages through securitization, and the banks were rewarded with even more capital, which allowed them the freedom to become creative (the creation of ARM loans).  Investors were particularly drawn to these investments for a couple reasons.  For one, mortgages were originally thought of as one of the safest investments you could make.  Two, because a lot of these loans reset to higher interest rates, investors would only see their profits increase, which made these seem like no brainers.  Lastly, these securities or bonds were rated by credit rating agencies AAA, the best rating a bond can get (we’ll get to this later).  As you can see, securitization of mortgages was the fuel that fed our housing fire.

Credit Rating Agencies- As I just mentioned, credit rating agencies also played a role.  The main job of credit rating agencies is to examine securities like bonds, and assign a rating to it—the higher the rating, the safer the investment.  Investors took a lot of comfort in securities loaded with bad mortgages because of the high rating assigned to them, which only helped encourage the lending of these mortgages.  Credit rating agencies have come under fire since our housing crisis has unfolded and deservedly so.  They are now under the radar and regulators are paying closer attention to them.

One of the main problems I see in the system of credit rating agencies is the conflicts of interest that exist.  Basically, the system works like this; financial institutions will go to a credit rating agency as a customer and pay the agency to rate their security.  The credit rating agency then finds itself in a tight spot because they are in competition with other rating agencies to rate a particular financial institution’s securities favorably, or they might leave and get a rating they like better from a competing agency.  As you can see, companies seeking ratings are shopping around for the best possible rating and agencies are trying to please the customer in order to get repeat business.  This system is flawed and needs to be addressed.

Regulators- Lastly, I believe it’s worth looking at the role regulators played in the housing meltdown.  Because there are various regulators that have jurisdiction over various issues, some products go unregulated or lightly regulated.  For example, until the crisis, mortgage brokers did not have to register like broker dealers who sell securities.  The value of registering mortgage brokers is great to consumers because bad actors are in a database, easily accessible to consumers shopping for mortgages, not to mention potential employers looking to hire mortgage brokers.  I realize this is just a small piece of the pie, but this has been a positive that has come out of our mess.  Another problem with regulation is the constant turf war that goes on.

Each regulator is out fending for themselves and always trying to justify their existence.  Many times, this is a good thing because it forces regulators to take action.  But in this case, because the jurisdiction among investment banks and other major players involved in selling mortgage products was unclear, no regulator really wanted to step in, rather some backed away.  This is why you’ll hear me say regulators and regulation is needed, but they have to keep pace with the markets and at the same time cannot infringe on market innovation.  This is no small task, but it seems a new administration and Congress is sure to tackle the issue of assessing our current financial services regulatory framework.

Its also worth looking at other timelines to try and piece together this whole mess, here is a doc that does a really good job of breaking it all down, albeit somewhat exhaustively.

Who’s to blame?
There has been a fair share of finger pointing going on since the foreclosures first sprouted.  Regulators have been pointing their finger at other regulators.  Industry leaders have been pointing their fingers at regulations, credit rating agencies, and even Congress.  Congress has been pointing their fingers at virtually everyone but themselves.  As much as everyone wants to blame one party for the crisis we find ourselves in today, the reality seems to be that everyone deserves a little bit of the blame, including the consumers.

All of the roles I talked about above, in my opinion, helped us get to the point we are currently at.  There’s no one person or entity to blame, rather a system that was flawed and leaders including consumers that were greedy.  It’s easy for us as consumers and investors to look the other way when things are going really good, like they were during the housing boom.  It’s easy to not ask questions and jump on board like many homeowners, investors, and financial institutions did.  It’s embarrassing that we didn’t see what was coming sooner, because in the end, it seems like common sense.  Going forward, I hope we learn a lesson and get back to old school financials, where if it’s too good to be true than it is and if you can’t afford something, you can’t have it.  $

My day job, working in Government Affairs in Washington, DC, has given me an insider’s perspective on the makeup of the bailout package and the politics that have gone into the drafting of the legislation.  If you find yourself confused, don’t feel bad, I have found that many Congressman and Senators are equally as lost and are relying on party leadership and staff to help aide them in their votes.  Frankly, some questions asked by Congress during hearings that took place last week with our top financial leaders (U.S. Secretary Paulson, Federal Reserve Chairman Bernanke, and Chairman of the Securities and Exchange Committee Cox) were asked without any true understanding of the makeup of our financial markets in addition to an inexcusable knowledge of the subprime debacle (an issue we will cover on Friday).

As legislation continues to fight its way through Congress, we thought it would be helpful for us to put a real word spin on the issue as well as offer our opinions, formed mostly by observing firsthand the Congressional hearings of last week.  We will write a short series this week, covering a different topic each day that will hopefully help you better understand the crisis and feel more confident and secure about your financial holdings.  The order of writings for the week is:

•    Why Does Congress Need to Pass Bailout Legislation?
•    Understanding the Crisis: Timeline of Failure/Who’s at Fault?
•    What is Actually Included in the Bailout Legislation?
•    Insiders Perspective: Embarrassing Congressional Reaction to an Originally Dangerous Bailout Plan

MYM Series: Why Does Congress Need to Pass Bailout Legislation? 1 of 4

While it’s debatable, depending on your political views, if Congress should intervene in the markets at all—it’s not debatable to conclude that our markets are facing something so severe and so unprecedented that any valid comparison is only to the market crash during the Great Depression.

Lending
According to Secretary Paulson, one of the main threats our housing crisis has on the U.S. economy is the availability of credit.  When banks started realizing their bets on the housing markets were drastic mistakes and subsequently cost them money hand over fist, they found they no longer had any money or capital to continue with their everyday business—lending.  Although the concept of lending to get out of debt seems ridiculous, it’s important to remember that lending is a lifeblood to our economy.  If banks can no longer afford to lend money, consumers can no longer borrow for a house, car, or lines of credit.  Small businesses can no longer get the money they need to prosper or even begin.  Students could not take out loans to attend college.  As you can see, our economy truly relies on lending, which is one enormous reason Congress is desperately trying to pass legislation ASAP.

The reason lending is such a fruitful endeavor is because only about 10% of the money lent out needs to be backed up.  They can claim interest to be paid to them on the full amount while only having to give out a much smaller amount.  Its essentially the interest the banks are after.

Scared Investors = Panic Selling
Another very important and often overlooked reason Congress needs to pass bailout legislation is the affect these failures by our major financial institutions (“Super-Banks”) would have on the overall market.  Not only would credit begin to dry up, but investors would start thinking with their feet, and running out the door.  Major selloffs in our markets, like we experienced yesterday, could continue.  The reality of such a scenario would most likely put the U.S. markets in a deep recession, possibly taking years to overcome.  Most damaged by this would be senior investors currently living in retirement.  Although they thought they saved enough, the loss they would experience from selloffs would force them to start living off their principal savings rather than pull from interest earned.  We could have a wave of retirees simply running out of money.

We Need Financial Institutions to Succeed
Lastly, the overall health to our financial institutions is something we all benefit from.  Congress has taken numerous calls from constituents begging them to vote against any sort of Wall Street bailout because they feel taxpayers should not be on the hook for Wall Street’s failures.  While there is a lot of truth in these concerns, it’s important to realize the severe threats of doing nothing poses.  In addition, it’s likely many of these constituents calling their Congressional Representatives live in a house afforded only by the lending techniques that eventually buried our economy.  While I believe those that acted fraudulently in the housing crisis deserve to get punished, our Government must act quickly to first stabilize the markets or we will all be punished by their behavior.

Current Bailout Legislation Concerns
Just like you, I have many reservations about the latest bailout proposal.  I’m not thrilled with the Treasury Department receiving an unbelievable amount of power and money, especially at the same time.  I’m not happy that ultimately a new Administration and subsequently a new Treasury Secretary would be tasked with taking over Paulson’s expensive plan.  I hope that any passed legislation addresses the issue of CEO’s getting paid millions to walk away from jobs of which they sucked at.  While it may be necessary, I’m not thrilled that the proposal includes monies to bailout foreign banks that have business in the United States.

Hopefully, a decision is reached in the short-term that will give our markets a little stability and more importantly, some confidence.  In the long-term, the U.S. needs to take a step back and look at the regulatory structure that allowed our crisis to happen and legislate changes that will help our regulators keep pace with the innovation in our markets without infringing or discouraging the innovation that makes our markets so great. $

“What we need are not only a few simple step to get us on the right track but also the ability to STAY on that track. Before you think to yourself, ‘I need more money,’ think about making the most of what you already have.” -Ben Leonard

Got a quote you would like featured?  Send it in!

When you get a home loan, you have to pay interest.  That’s the deal from the start and there’s no way around it unless you have a rich uncle who just gives you a large sum of money, or you win the lottery.  Either way even that takes a hit; it gets taxed and believe me, statistically you won’t win the lottery.  Or even know someone who does.  If I am proven wrong on that one, you can send me $1,000 to prove it. 

So here is the question:

There seems to be a new system of making a mortgage payment out there and I am wondering if it is worth looking into.  I’ve heard a little about it here and there and have done a little reading about it, but I don’t have enough of a background to make a lot of sense of it or to be able to tell if it’s a legit concept.  Basically what I understand is that it uses the money you already have (sitting in a checking account – they call it idle money) to pay down the average daily balance of the principle which I guess then reduces interest.  They say it can help you pay off your mortgage in about 7-12 years without increasing your payments at all.  Apparently the idea is coming from some math geniuses in Australia.  They wrote a software package that does the stuff for you, but I’ve read that it’s possible without the software if you know what you’re doing.  Any thoughts?

Here is a link to one of the sites where I have read about it – http://www.amazines.com/article_detail.cfm/318683?articleid=318683

Thanks,
Ted

The system from Australia he is talking about is call Mortgage Interest Buster and I would like to recommend anyone reading this to try and find more information about this and send it in so that we can have a more clear idea about its legitimacy.

I would love to write back to Ted and tell him that it seems like an awesome idea and that he should go for it and he will end up making a killing just flipping houses.  But I really can’t.  On paper it seems like it could work but there are about a dozen alarm bells and their respective red flags going off left and right for me.  I made a list:

1. There is almost nothing out there on the internet about this system.  The systems website has a fair amount of information, albeit they state the obvious and have very little proven fact.
2. Why isn’t it being used absolutely every where?  If it were easy, wouldn’t it be called “The Way?”  MY friend Danielle says that from time to time.
3. Is it standard to use a home equity line of credit to make payments on your mortgage?  Or convert it into a mortgage checking account?
4. Where is the glowing testimony of this software that simulates the Australian banking system?
5. And how much is the system that does all this?  $3,500.  Seems like a lot of dough for payment software.
6. If this is so selective, why is it not an option?  And don’t say its because the banks will lose money.  There could be someone reputable that would benefit from this and they would push it.  But they aren’t.  Why?
7. You must have a second mortgage.  What if thats not an option?

A quick note, I would like to show everyone the website that houses two “instructional” videos for this, straight from their website: a short 12-13 minute video and a longer more in-depth 25 minute video.  Please, let me know your thoughts.

So lets say this works.  Is this something you should do?  My gut reaction is full of skepticism.  I don’t like the idea of taking out a HELOC in order to live.  There is way too much hocus and pocus here to illicit any kind of positive recommendation.  Sure you can pay bi-monthly or even daily I am sure, if you wanted to deal with the paper work.  It is possible but not like this.  Unless you are making headway against your principal, you are just making more frequent payments on smaller interest payments.  Lets look at some truths about home finance:

1. There are no good mortgages below 3.5% for 5 years.  If there are then they are called ARMs and you will end up paying even more when the ARM resets.  This a big factor as to why this country is in such trouble to begin with.  It used to be that money was cheap to get a hold of from one bank to the next and they could make those offers.  Policy will and has been passed so that requirements are stricter.  Check this link out for more information.
2. The only way to safely diminish the life of any loan, be it house car or other, is to increase your payment towards your principle.
3. There is a way to take advantage of a pre-payment plan for your mortgage in order to pay it off sooner, but there is no way you should have to pay $3,500 for it.  They have you take a second mortgage (the first mortgage is conveniently a prerequisite to joining in the program), and you leverage that to make payments.  What they don’t tell you is that the little amount you do end up reducing your interest through this forced increased payment system does not really come from any elaborate system.

In conclusion, I don’t believe there are any short cuts.  If there is a way to make this work, and if you did successfully take a second mortgage that had a lower rate than your first, you should not need a $3,500 piece of software to manage it for you by mucking around in your accounts like a rabid kangaroo.  (It is from Australia after all.)  My recommedation to anyone who wants to decrease the life of a loan is to dedicate an extra 10% of your income to the principal.  It is possible but don’t waste a mortgage payment, or two, of $3,500 to do it.  Do your homework and incorporate due diligence into your research.  Let us know what your experiences are as well!

Washington, DC is very accessible from three different airports: Dulles International Airport in Virginia, Reagan National Airport and Baltimore Washington International Airport.  Also helpful when searching for the cheapest plane tickets is to search using WAS, this will search all three airports at once.  The easiest to get into the city is by using Reagan National Airport as it sits directly on a Metro Train rail, which permeates into the city.  I really like Prime Time Money’s article on Frugal Things To Do In Dallas, TX so I am going to use his style as a template.  Hopefully he won’t mind. 

Getting Around
Public transportation is one of the highlights of DC as the Metro can take you almost anywhere you want to go.  There are also tour buses all over the place that will give you a wonderful tour of almost all of the historic landmarks.

• Metro
  This costs a few dollars each way depending on where you would like to go.  Some say that DC has one of the nicest train systems in the country, but if you ride it everyday…ugh.  In any case it beats New York’s tunnels in cleanliness and ease of use from what I hear.  Take a look at the map and use Google and see where you need to go and head in the right direction.  Don’t worry if you get turned around, you can always go back: once you are in the system you can move around as you please and will only be charged as you leave.  A Day Pass makes it very easy to take advantage.  (On a side note: I take this an hour each way to work and its one of my biggest financial gripes.  $10 a day!  But I use it to commute…)

• Tour buses
  Most of these are double-decker and cycle through the city for most of the day.  At first it was strange to me to have tourists watching me walk to work but I have gotten used to it.  These go to all the historic sites which we will get to in a bit.  For prices and routes, see here.
• Tourmobile
  These are longer extended buses that also have “Free All Day Reboarding.”  This might be favorable as I read in the paper a few days ago that the trees along some of the paths for the double decker tours are a little low at the moment and its like a scene out of Indiana Jones up there.  Either way, its great time though.

Historic Attractions
For the most part, these are all free, or are very affordable.  They are also very rich in history as many are integral to the foundations of America so be prepared to learn.

• The White House – The most famous house in America.  While free, the process to get a tour is arduous: a request must be made through one’s Member of Congress and are recommended up to 6 months in advance.  The site does have video tours though.  Frank has done a White House Tour and recommends it to anyone who knows they are coming to the city in advance.
• Washington Monument – An old attraction, 555 feet, 5/8 inches high and can be seen 30 to 40 miles away on a clear day.  A great spot on the 4th of July, although we can watch from the building where Frank and I work.
• The Capitol Building – The main focus from our offices windows, and an amazing place to visit.  Frank comes here often although you will need a tour, free of course.  Personal tours are free and made by your member of Congress.  I recommend going this route versus the Capitol tour guides just because of the freedom it allows.  The Capitol building is Franks favorite building in DC, the history is amazing.
• Thomas Jefferson Memorial – The author our country, he shaped many of our ideals.  Very nice place right on the Potomac.  A great site for the Cherry Blossom Festival as well.  See below.
• Lincoln Memorial – You may recognize this as many movies show this memorial, sits on the reflecting pool where you can look down and see the Washington Monument and the Capitol Building behind it.
• National Mall – The center of the city where most of the touristic action is.  You can’t miss it.  No really…its huge: almost 2 miles long and covers over 300 acres!

• Ford’s Theatre – The famous theatre where Lincoln lost his life when he was assassinated by John Wilkes Booth.
• Iwo Jima – The official name is the Marine Corps War Memorial and it depicts the famous flag raising on Iwo Jima during World War II. The memorial is dedicated to all Marines who have given their lives in the defense of the United States since 1775.
• Vietnam Wall – A very popular memorial that has thousands of names, worth visiting
• Mt Vernon – An amazing site  on the Potomac, this is where George Washington actually used to live.
• National Zoo – This is a surprisingly large zoo with tons of attractions.  Not quite as big as the San Diego Zoo but worth visiting.
• Pentagon – While you can’t really get a very good tour of this building (free although a reservation is required), you will most certainly go past it if you are anywhere south of DC.
• U.S. Supreme Court Building – I was surprised to see such a humble page for this, but when the renovations are done you could visit this for free as well.
• National Archives – This has everything, and I mean just about everything.  Really cool stuff!
• Library of Congress – If you are a big fan of reading, then this is recommended for you.  I haven’t been yet but I have a huge picture of it in my office.  Very inspiring.

Did I mention that Georgetown is also a really cool part of town to check out?  Not all of it is frugal but there are some nice historic dives to share a beer after walking all day…

Museums
These are some of the best in the world: be warned, you cannot do very many of these in one day.  Be ready to do some walking inside these massive buildings, although they are very worth it.  Use Google Maps to find what you are looking for here.  All Most are free!*

• International Spy Museum – You get to go on an actual spy mission and much of what is on display has been stolen.  Very cool stuff.  There is also a Spy Store where you can buy real spy gadgets!*
• Smithsonian Institution – A huge compilation of museums, spanning an area from 3rd to 14th Street.
• National Gallery of Art – See famous works of art from all over
• National Postal Museum – Pass this everyday on my way to work, awesome for the stamp lover!
• Natural History Museum – Inspires curiosity, discovery and learning, one of the more famous.
• National Air and Space Museum – One of my favorites, has all the artifacts from first flight to space shuttles and capsules.
• Crime and Punishment Museum – Everything ranging from jails, to torture, seems grim but interesting
• National Building Museum – Famous buildings, architecture, form and structure
• Newseum – The worlds most interactive museum, dealing anything and everything news related.*
• United States Holocaust Museum – Not for the faint of heart, I wouldn’t bring children.  Very informing: you have never seen anything like this on TV.
• And several more…

[*-Edit: Thank you to a reader who correctly informed us that the Newseum is $20/adult and the Spy Museum ranges from $13 t o$35.  We still feel that over all the attractions to Washington DC arer pretty strong for the frulgal minded.]

Other
An important event here in DC is every springs Cherry Blossom Festival.  The pictures are the best but to see it in real life is breath taking.  I will warn you though, DC gets extremely busy.  There are people from all over the world that come to see all the mass of blooms along the river.  Couple that with a back drop of gorgeous memorials, and its an impressive site!  Oh yea, and its free too…

We have many other special events but to be honest, they are so many to mention here…and this is already getting to be a very long article.  Let’s move on, shall we?

Restaurants
This is one that might not be as frugal as you would have liked.  There are zillions of places to eat but none are extraordinarily affordable that you would like.  There are a few that warrant a visit…

• Ben’s Chili Bowl – Of course I would have to recommend this one.  Not only does it have the same name, but it is world renowned for its chili dogs.  Its at the top of this list and is a must.
• OpenTable.com – you can actually use this for any restaurant almost anywhere but its very well fleshed out for DC.
• Dirt Cheap Eats – Like I said before, there is too many to go into here.  I am sure some of our local readers will have input on this and wholeheartedly welcome them in comments.

Conclusion
As you can see, there is an amazing amount of places to visit and see here in the nations capital.  Plan your visit and come on by!  I am also interested on a personal level to hear about anyone’s experience with the touring system here in Washington…please let me know how your visit goes in the comment form after the pictures!

]]> http://milkyourmoney.com/2008/07/28/frugal-things-to-do-in-washington-dc/feed/ 29 http://milkyourmoney.com/2008/07/15/ask-us-anything/ http://milkyourmoney.com/2008/07/15/ask-us-anything/#comments Tue, 15 Jul 2008 23:54:45 +0000 Ben http://milkyourmoney.com/?p=342 We have decided to open the mail bag for comments and are curious to know more about our readers as well as field some of the tough questions out there regarding finance, be it personal, stock market or otherwise.  What are you curious about?  What is weighing heavy on your mind?  Looking for a plan of action?  We would like to answer these publicly but in the event that you are looking for answers privately, just let us know in an email or through the contact form below.  We will keep discretion.

So go ahead!  What would you like to learn about?  Anything from site SEO to the stock market…now is your chance.  If we don’t know or the question is inappropriate, we will let you know.  Be sure to subscribe so that you can keep up with everyone’s queries.

Now hold on, before you flood my inbox about how an author for a large personal finance site like this gets off going to Vegas, let me explain…There is quite a bit of valuable information I can pass along that you might find interesting.

On the way to our hotel, the cab driver asked us (in one of the raspiest voices you could imagine, “What are your plans during your stay?”  We had been a few times before, mostly in college for the annual Spring Break Trip so we kind of new what was around here to do but we feigned carelessness and said Not much, just going to hang around.  He immediately began telling us all about the restaurants both on and off the strip and explained at great length the difference in cost for each.  It was somewhat enlightening that were being given such valuable information from a man who was looking for tips.  He was a nice guy though so, we tipped him.  What he said though was important and you should take note.  If you are on a strict budget, one block away from the main drag will get you to the same places to eat at half the cost.  Having said that, lets start with food:

Food
One of the largest expenses on a trip like this, is the meals.  Every hotel is packed to the gills with amazing restaurants that you have never even heard of, food made by glamorous chefs that make more in a month cooking food, than you spend on food in a year.  With all the richness of this food comes a high price.  What I would recommend would be to go to one nice restaurant and fully enjoy it, and bring the remainder back to the hotel room.  Make another meal out of it and it as cheap;y as you can for the rest of the trip.  Commit to one great meal and then refrain.  Every expensive place is going to be the best, but be warned that food can seriously add up quick.  Visit places off the strip a little ways, try a cheap buffet, stretch your meals in your room.  Have the experience but leave some of your budget for some other adventures as well.

Drinks
Here is a tricky one.  We spent a fair amount of time at our pool, from very early in the  morning until the heat caused nausea.  At the hotel where we stayed, in the blistering heat your were offered two sizes, one that was $9 and another that was $15.  For only $6 more dollars you could double your drink size!  Bargains galore!  Then, to make things even better, you didn’t have to pay!  At least …. not for a while, they would gladly just put it on your room and you can sort it out later.  How nice!  I tell you what, these places are experts at what they do.  Buying drinks anywhere and “charging it” is epitome of “out-of-sight, out-of-mind.”  To save some money: Consider how much you might drink in an average day, factor in a 15-20% tip on that amount and bring it in cash.  Once you run out, that’s it.  The drinks are paid for and there are no surprises later.  Go to an ABC store and have your own drinks in your room.  (You will end up paying for one bottle when you buy one drink elsewhere: See Clubs below.)

Hotel
We got lucky this trip and found a great deal at the Mirage for 4 people, 3 nights at $400 for the group.  I am not sure where we got that deal but once I find out I will put an update here.  There are tons of websites that have great deals and most of the larger online airline ticket arenas also have great deals when you bundle your tickets together.  One more thing: Do not touch the mini bar.  Even if you move stuff around, its weight sensitive and you will be charged unless you put everything back and ask they your fridge be reset.  Check hotels off the strip for even better savings if you can’t get something reasonable at a mega resort.

Airline tickets
We have discussed this before and have shown that Mobissimo.com is pretty competitive as is CheapOAir.com.  For this trip we ended up with CheapOAir.com.  One pair of tickets ran about $670 while another pair a few weeks later ran about $860.  Plan in advance and you can save money here, that was a lesson I learned.  For the most part however, you really just have to dig and make a few sacrifices as far as direct flights and times in order to make it somewhat affordable.  The airlines are grasping for air (or fuel, I guess) and have a nasty tendency to take it out on the consumer.  Take your time and plan ahead and you will get a great deal.

Entertainment
Similar to plane tickets, if you spend time price comparing, you can usually find a good deal.  If you want to go to a huge show, buy them early, as prices will rise as the date gets near.  For smaller shows, see if you can get a ticket later closer to the start time as they might be anxious to get rid of some seats.  Either way, with the right amount of time you can get a good deal here.

Gambling
My advice to anyone who goes to Vegas, be very, very cautious about gambling.  You can have great fun even if you don’t gamble at all.  If you do, be sure that you know as much about whatever game you are playing like the back of your hand.  Every game in a casino is design to take your money.   And ATM’s charge at least $5 to get money out.  The very decor, sounds and smells are all engineered specifically to part you with your money.  Check this list out:

• There are no clocks.  It is very easy to lose track of time.  The longer you stay hooked up to a table, or slot machine, the more you spend and if you stay longer than intended, well that’s OK right?  Wear a watch.

• Everything around the casino floor adds excitement.  Live music, interesting dancers, prize giveaways, cars waiting to be won with just one quarter…

• Its incredibly easy to stay alert.  The room is chilly staving off any sort of sleepiness, the drinks are quick and refreshing (and free if you are betting, another enticement), and some have even rumored that they pump oxygen into the vents to keep people awake.  I don’t believe this but who can really say for sure?

• The casino floor is a maze of multicolored carpet that and tables and machines and anywhere you want to go has to be on the other side of the games and tables.  From the moment you step away from the check in desk to start heading towards the elevator, you are haunted and teased by the most interesting games you can imagine, all of which take cash in any form.

Clubs
All I can really say about this is, stay away from them.  Girls get in free, but guys pay a small car payment just to get in.  Then you get drinks and you can forget it.  Its an incredible amount of money that you will think about for quite a long time.  They are full of awesome lights and every song you have ever heard and another half that you will never hear again.  Its like the movies.  Its insane and the people are nuts.  That’s all I can really say right now.

Most of this seems pretty obvious I am sure, but when you are there, money takes on a completely different meaning.  You feel as though you will never run out and you are just going to get this one last thing and that’s it.  Don’t get me wrong, there is definitely a time and place for Vegas and taking vacations and letting loose.  We have to do that, its in our nature.  But in moderation, of course. Plan and budget and show discipline, and you will regret far, far less.  Remember that Vegas is designed from the beginning to take your money and convince you that you need to do it.

The cab driver on the way back to the airport had less physical advice and more philisophical ideas.  He said that there were two sides, one where people visited and one where people lived.  Strange how they rarely mix.  The visited side is not meant to last, its designed almost too well.  All that opluence and glamour is being paid for constantly.  Vegas makes about $500 billion (with a “B”) a year.  Thats net, not gross.  The plane ride out there is full of energy and excitement, but the trip home is somehow so much quieter.  You will find a new appreciation for it when you get home and see your $8 six pack of beer in the fridge.  You will think about all the lights, and sounds and you realize that sometimes there are things just as good, at a regular price, under a little 40 watt bulb, in your own fridge.  $

So where do we start?  We feel it is possible and reasonable, for the average family to save $442.39 a month.  Why $442.39 a month?  Because this is the exact amount you need to save to make a million dollars in 30 years.  $442.39 invested in the S&P 500 index for 30 years earning a 10 percent averaged 30 year return would make you a millionaire, of course depending on the account, taxes may or may not factor into your return.  This is significant because you can do this with your current salary.  This is all easier said than done, but below are ways to easily cut back on your monthly spending.  Choose the ones that apply to you and watch your nest egg grow.  Remember we are only talking about $442.39 a month, imagine if you stocked more away!  Click below and check it out.

1)    Eat reasonably. You don’t have to impress your friends and family with giant steaks, fancy fish, or ribs, eat like the holiday is intended, cheaply.  Serve up some burgers, hot dogs, or chicken.  If you really want to make an impression and don’t want to spend a fortune, I would recommend grilling a pork loin or a whole chicken; both are fairly cheap and taste great!

2)     Spread the costs. Is your family coming to your home for the Independence Day festivities?  Well, since your providing the lodging and food, have them bring the fireworks.  Whatever you situation is, have a game plan to spread out the costs.  Don’t be embarrassed by asking, both families are sure to be happy with saving a few dollars.

3)    Free fireworks. Nearly every city that I have ever lived in has had a free fireworks show.  Take advantage of this and save on buying “duds.”  Of course, you can still buy the sparklers and bottle rockets, but leave the big daddies up to the city.

4)    Public beaches. Spend an afternoon by the lake or ocean beach.  Nearly every body of water has some sort of public access.  Bring a cooler and lunch and soak in the frugal sun rays.

5)    Enjoy what you already have. Just because it’s a holiday weekend doesn’t mean you have to do anything extravagant.  Enjoy the company of your family and belongings.  Take in a free parade or concert and have a normal relaxing weekend at home.  Many times, mini staycactions are better than long vacations.

Have a frugal and safe Fourth of July!  $

PROS
Its sleek, its sexy and is now more fully connected with a much faster wireless connection.  This means that you can be just about anywhere in civilization and browse the web with speeds that make it worth your while.  It plays your music, videos (YouTube as well as video podcasts) and has the ability to pin point locations through GPS.

The other good news is the new pricing plan.  If you are like me, you have the absolute lowest amount of minutes and the standard 250 text messages for about $35 to 40 dollars a month.  With the iPhone 3G, you can have this in addition to unlimited data.  Unlimited browsing.  All the web you could possibly surf at any time.  That’s a nice thing.

In addition to all this, there is also the syncing that comes with the whole package so all of the information you could possibly want are right at your finger tips.  Fingertips being the operative word as just about everything is done through the nicely done, sensitive multi-touch screen that allows you to browse, edit and manipulate all the media you could possibly imagine.  Email?  Now it works with Exchange right out of the box with push email and eats up attachments and spits them out.  All in all, it is an amazing piece of hardware.

CONS
But wait, there cant be any cons here!  What could possibly be wrong with this genius token of engineering?  Well for starters, its on AT&T’s network.  Granted, AT&T is not too shabby when it comes to coverage, but compared it to Verizon, its not good.  Verizon, hands down has the absolute best coverage.  Want proof?  For one, I travel all over the country and always have signal and cannot remember having a dropped call.  But I am not surprised as they have always been that way and that’s the main reason why I have them as a carrier.  Verizon is almost too dependable.  Apple approached Verizon first and pitched the original iPhone to them and they turned it down as quick as a bunny.  Why?  I think its because they don’t need it.  (They said they didn’t want to give that much access to Apple, and by control I think they meant money.)  They know that the other carriers can’t touch them as far as coverage goes and they don’t want to lose money in trying to woo new customers.

The phones expense is not necessarily a con, as most new phones are expected to be wicked expensive.  If you are on the fence and about to go in, you can snag it for $200 and $300 (for the 16 gig model) as long as you sign a 2 year agreement.

This agreement has a few other angles associated with it.  They state that you can get this new phone with out signing a 2 year contract and go month to month.  Then that price jumps up to $600 and $700 (for the 16 gig model).  Wowzers.  So now you have it and maybe in a few months you want to break free from the crappy coverage of AT&T.  Think your iPhone 3G is going to work anywhere else?  Doubtful.  They leave that part of the brochure.  You now have a very fancy iPod that only has 16 gigs of memory on it.

But the lowest monthly plan is only $70 bucks, thats not bad.  No its not, as long you never, ever go over your minutes: $.045 a minute when you go over.  Might be competitive but you have to feel gouged at some point.  By the way, the price difference for the lowest plan out there now (on average $35 or so) and the iPhone 3G’s is an extra $420 a year.  I am trying to think of a guaranteed advantage to go with the non-committed price.  Contracts like this seem like crap, but you’ll have to ask Frank about that.

Still no copy and paste?  No multimedia messaging?  No video recording?  No voice command?  Bluetooth for headsets only?  Third party apps might cover these but for a price, that Apple gets 30% of.  Read on…

Whats a (frugal) techie to do?  I say wait.  Wait until Google’s Android comes out.  Android is going to completely revolutionize cell phones just like iPhone did, only more so.  When Google went public, their stock did some skyrocketing that made the janitors at the Google campus millionaires.  And that was when they had a basis of about 20 million computers.  Think whats going to happen when Google gets cut loose onto 70 million cell phones.  Its going to be unreal.  Google makes its money through advertising, so the cost of production of hardware should be nil for any cell carrier to pay for the operating system.   Oh yea, and did I mention that the whole operating system was free open source?  Yea.  Google also loves voice over IP.  Thats the other thing that will blow your mind: there is going to be free wireless out there just like there are cell phone frequencies.  Google made sure of it when they pumped the price up at the auction block the FCC held.  They raised the price easily to 4.7 billion dollars so that the threshold would trigger that who ever owned it must make it available for public use.  Guess who is holding the receipt for all of that?  Verizon.

Get more tips on how to Milk Your Money here!

We realize that looking at your monthly investment statements is starting to become a drag.  Each month seems to be getting worse.  Naturally, when we see negative amounts in our holdings we automatically feel like selling.  There are times when selling is probably the best option, for example when you sell losses to offset some gains or the company is just really going nowhere.  But for the most part, holding is probably your best option and if you can afford it, purchase additional shares at a discount.  For those of you that automatically invest with each paycheck, you are in the best position.  You are experiencing losses, but are buying cheaper, which in the end will amount to less stress and a decent return.   

Remember, when you sell a security at a loss, you lock in the loss.  In other words, that money went to the left, to the left (Beyoncé anyone?).  There’s no waiting for the stock or fund to recover and this fact is easily overlooked when emotions take over.  In particular, selling off small amounts of securities sets you back in commissions as well, which adds to your loss.  I’m not saying you should hold on and never sell anything, however, when times get bad, your best bet may be to pretend you don’t notice.  Check out a previous post where we discuss the benefits of staying calm when the market falls.  $

Cons with 26 Pay Periods
It’s too easy to blow these extra checks on “stuff,” because we don’t notice the extra money is missing from each regular check.  Just like having your savings taken out of your checks each month, if it’s always gone, you don’t miss it.  In a way, it’s kind of like an interest free loan to your employer, because it’s money that could be earning interest for us – similar to tax refunds.  Although the extra money accumulated from adding just two paychecks isn’t a ton of money, its still money. 

Pros with 26 Pay Periods
It’s a mandatory savings vehicle; after all, we have no choice!  It’s like getting two stimulus checks a year (only it’s taxed).  Used wisely, these extra checks are great for paying down unavoidable debt.  Maybe your hot water heater went out and you were forced to swipe it on a credit card.  Well, you can now pay it off.  Or, maybe you have a couple thousand left on a car loan, not any more!  Another great way these extra checks can be utilized is funding an IRA to the fullest amount.  In my opinion, if your savings is low, these should absolutely be saved for the just in case moments. 

Personally, I like the 26 pay period system.  My wife and I typically try to save about 60-70% and spend the rest on items we have been wanting for awhile, that just didn’t quite fit into our budget.  You have to allow yourself to splurge every once in a while, other wise, maintaining a fiscally responsible budget gets harder and harder. $ 

This new phone service allows T-Mobile customers to stay connected using their home number.  It has unlimited nationwide calling for only $10 a month, with a 2 year service agreement and qualifying T-Mobile wireless rate plan.

Imagine what you are paying now for a home phone plan…then imagine the difference between that and $10.  Take that number and multiply it by 12: that’s your annual savings!  If your paying about $30 (plus or minus taxes), you could potentially save $20 a month, which turns into an extra $240 a year!

How Does it Work?
All you need is to plug in your touch-tone phone into the HiPort™ wireless router ($49.99) and in turn connect that to your broadband connection.  You are able to keep your same regular home phone number.  There is no additional charge for the extra features like Caller ID, Voicemail or Call Waiting.

Other Applications
Let’s imagine that you have a small business that you need some communication service with.  Get a T-mobile cell phone for the business itself so that you can have employees get in contact with you or your customers and you will in turn be able to provide the office with a regular phone line for only $10 a month.  Definitely a good deal for any bottom line.

Want to Learn More?
Head on over to T-Mobile’s Talk Forever page and read all about it.

Don’t forget to subscribe to hear more of the latest deals that could save you money!