The Best Cash Back Credit Card Analysis For The Happy Rock
Posted by The Happy Rock on March 31, 2008
About a month ago, I switched my only credit card from my Sunoco Mastercard which I have had since college to the Chase Freedom card. Why? Because I was leaving money on the table since I wasn’t taking advantage of the new breed of cash back cards that have come out in the last few years.
Using my spending history I was able to quickly see how my Sunoco Card matched up to my other options. My Sunoco card offered 4% cash back on all Sunoco purchases and 0.5% up to $7,500 then 1% on everything else. It should be noted that when I called to cancel, they offered me six months of 5% back on gas and groceries. I probably should have taken that deal and waited to switch, but I was to intent on canceling. It is at least good to know that even credit card rewards can be bargained through a simple call and some competition.
The Chase Freedom Card offers 3% back on $600 a month in your three highest spending categories and 1% on everything else. They also allow you to save your cash back until you hit a $200 balance and then they will send you an check for $250, an extra 25% reward. You also gets $50 cash back after your first purchase.
The Amex Blue Cash offers 5% cash back on gas, groceries, and drugstore purchases and 1.5% on everything else after you spend $6,500 for the year. Before that you earn 1% on gas, groceries, and drugstore and 0.5% on everything. This would be the best single card if you could spend $6,500 really early in the year, but for my calculations I assumed distributed spending.
In the final analysis I chose the Chase Freedom card not only because it would earn me the most cash back for my spending habits and a $50 first purchase bonus, but it is also accepted everywhere credit cards are accepted, unlike the Amex Blue Cash. I know that I could do better using the Blue Cash or using both of them, but my general principle is to keep the system simple. I personally don’t want to waste any mental energy on trying to extract an extra few dollars in credit rewards. I would rather focus on things like income generation, family, and giving that all provide much better returns on my energy. I have been happy so far with the new card, and the $50 was quickly applied to my account. The website is solid and the Chase Freedom connects directly with Quicken to save me time. I am quite The Happy Rock with my new card. Plus it is shiny and new!
If you have COMPLETE control of your spending it is probably worth looking in getting a decent cash back credit card. I probably cost myself $2,000 in the last 5 years by not switching sooner.
Just to keep the record straight, despite my affinity for Dave Ramsey’s principals I slightly disagree with his views on credit card for those that have firm control of their spending. For those that are getting out of debt or don’t have control of their spending I would recommend canceling the card until you have complete control over your expenses, spending, and bill paying. For me, I didn’t understand the responsibility of that credit requires early in college, but I learned from my defaulted Sears card experience and have not paid a finance charge or fee in 10 years. That is the kind of spending history that I would recommend attempting to use a credit card to their benefit, otherwise it will probably costs you more than the measly rebates will gain you.
Note : For those that Drive a lot the Citi Driver’s Edge offers 6% on gas, groceries, and drugstores for the first year and 1% on everything else, plus a penny for each mile you driver. With a long commute that could add up to big bucks. The one caveat is that the cash back must be used for a car purchase within 5 years.
» Filed Under Credit Cards, Personal Finance Systems, Spending
How Much House Can You Afford?
Posted by The Happy Rock on March 30, 2008
Or maybe how large a car payment can I handle?
Every were you turn online calculators and salesman are always telling us the maximum we can spend on any given purchase.
It’s the wrong question!
So you can afford a $200,000 house that has the extra big yard that, but it is 50% of your take home pay. Or maybe you can afford the next size SUV that gets 15 – 18 miles per gallon for a mere $450 a month. What the salesman and free online calculator from a site that is is trying to lend you money forgot to mention is that we are being set up for financial failure. What there aren’t telling us is that the payment is probably more money than we can handle. What they forget to mention is what happens when the dual income family loses one of the incomes or some extra medical bills roll in.
It’s the wrong question, but what are the right questions?
» Filed Under Materialism, Psychology of Spending, Spending
Why APY Matters And The APR Lies
Posted by The Happy Rock on March 28, 2008
APR and APY. I know that I have had to look up the difference more than once in my life. It is one of those facts that is easy to understand, but they easy to forget. The numbers are usually similar, but the subtle difference can cost you a lot of money. So, what do they mean and what is the difference.
Annual Percentage Rate(APR) is the rate that a company assigns to the financial product. If a credit card has a 12% APR that means that will mostly like charge 1% a month for 12 months. If you carried a $10,000 balance on a 12% APR credit card, the simple interest would be $10,000 * 12% or $1,200 dollars in interest for the year. Seems simple enough, but what about the APY.
Annual Percentage Yield is the actual rate that you receive at the end of the year after taking into account compounding interest. Banks and lenders don’t use the simple interest formula they use compound interest. Using the compounding method on the same $10,000 balance on a 12% APR credit card, you would pay $100($10,000 * 1%) in interest the first month. The next month you will pay $101($10,100 * 1%) in interest the second month, $102($10,201 * 1%) the third month and so on until the end of the year. This compounding will actually cost you $1,268.25 interest rather the $1,200 you would have thought. That difference is the displayed in the APY. 12% APR compoudning monthly is 12.68% APY.
Earning interest on interest works for you when saving, but against you when you borrow money. Lenders will try and show you the APR, while savings vehicles will show you the APY. Either way FOLLOW THE APY.
» Filed Under Banks, Productivity(Financial)
Frugality Gone Wild : Home Contents Stolen In A Craigslist Hoax
Posted by The Happy Rock on March 26, 2008
I have seen people on Slick Deals do things that skirt the line of honesty and legality in order to get a great deal. I can even relate to getting caught up in the hype of certain deal or the possibility of free stuff. I have even contemplated doing something that I wouldn’t have regretted in the midst self created frugality hysteria. But when I read about a Craigslist hoax gone wrong, I couldn’t even believe it without reading the original article.
Robert Salisbury of Oregon came home one day to find 30 people rummaging through his house and filing there vehicles with his stuff. When he confronted the looters, they repeatedly dismissed him by referring to a printout of a Craigslist ad. Somehow a computer printout from a classified listing site gave people the right to take stuff that wasn’t theirs. By the time that the police arrived, many of his possessions were already gone. He was smart enough to grab some license plates, but the police will have to try and track down the rest and the person who initiated the hoax.
What started the whole outrageous situations was someone who made a craigslist post that said Mr. Salisbury had to leave town quickly and that he was giving away all his stuff for free.
Has anyone heard of anything so ridiculous in the name of saving a few bucks?
» Filed Under Frugality, Materialism
Easter Spending Without A Plan
Posted by The Happy Rock on March 24, 2008
I have a small confession that I need to make. We spent almost $50 this month on Easter supplies and candy. That was just for our 2 year old, since the 2 month old isn’t old enough to partake. Some of you may laugh, saying “I spent way more”, but to me that is a large sum on items that have almost no lasting purpose.
What happened? Two things, lack of planning and lack of communication. This is the first year that The Rockette and I were forced to mesh our individual preferences into our own special tradition. This normally takes some intentionality or you end up avoided the issue or fighting. We didn’t fight, so we default to each of trying to accomplish our own separate goals. Even more The Happy Pebble was inundated with stuff to the point that I think he only saw a bunch of stuff rather than a few select special items.
If we had talked about Easter spending before hand we would have had a plan for our money. As it is, the spending will come out of the money we have been putting away for adoption lawyer fees. The key here is intentionality. Even though this is a tiny sum of money, if we aren’t being intention about these decision then we set the stage for problems on larger purchases like homes and cars.
So what do we do about it. First, since we can’t return the perishable items we need to let it go. Stewing and/or blaming really won’t help. Second, we will make sure that the we have a spending plan in place before the next Easter comes. With a plan in place, I will be able to avoid the $25 spent in the local Chocolate House and come out with the one Dark Chocolate Coconut Cream Egg with my son’s name on it as I had intended.
The key is to have a plan for your money. This intentionality may look different to each person, but it will really change your finances!
» Filed Under About Me, Planning, Psychology of Spending, Spending
Forget About Buying Stuff, People Matter
Posted by The Happy Rock on March 20, 2008
Think back. What are your fondest memories in life? One of my best was a 9 day white water rafting, hiking, and outdoor adventure down the Grand Canyon with my mom. A few other that come to mind are building snow forts with my Mom and friends, a little-league no-hitter, and the craziness that was my Freshman year at college. Take a few seconds and think about yours best memories…
If you are like most people the things that came to mind had little to do with stuff and a lot to do with people and experiences. We often go through so much trouble to make money or rack up debt just to get stuff. Billions of dollars in spending are finance through credit cards and debt each year, usually just to get that nicer TV or a new car. Are you going to care about that stuff in a few years?
The lesson is.. don’t go into debt for stuff, but go into debt for vacations. We’ll remember those!
Ok, so I am kidding, but question still remains “why do we get distracted by stuff?”.
» Filed Under Living with Purpose, Materialism, Psychology of Spending
MBA Complete – Was It Worth It?
Posted by The Happy Rock on March 18, 2008
This past Sunday I handed in my final paper for my MBA degree with a Marketing concentration at Drexel University’s Lebow College of Business. The finality is so fresh that end of my long two and half year journey hasn’t sunk in. It is starting though…Tuesday is my normal class night and I got to stay home with my family!
The first question most people will ask is “was getting an MBA worth”? On a personal level, it was a truly great experience. One that has given my a lot of confidence, motivation, purpose, and energy. On a business and pure learning level, I am not so sure. I think something like the Personal MBA or selected great texts from Amazon and a mentor would have been more useful and practical.
The degree cost about $55,000 in tuition and books, but that was 100% covered by my employer. I even made money, since I sold most of my books on Amazon after the class was over. The degree did cost me time, commitment, and the sacrifice of my family.
As for salary, it will be a while before I know, since I don’t get a single penny more from my current employer for finishing an MBA. One article suggests that
According to one salary guide, an MBA is worth about $10-30,000 a year over a bachelor’s degree, but the salary increase you could see may be much less — or much more. Factors that can affect your salary include:
- whether you stay with your current employer or seek a job with a new employer.
- the amount of relevant experience you have for the job you are seeking.
- the reputation of the graduate school you attended.
- the type of job you are seeking — and the level of supply/demand for workers.
- the industries where you are seeking a job.
- the location of the jobs you are seeking.
A fellow blogger with an MBA, FMF @ Free Money Finance, reported that he almost doubled his salary in 5 years during the 90′s. I have no doubt that I might see similar returns.
All in all, I am glad to be done, but it was a great experience. As I collect my thoughts over the next week or two I will provide so more insight on my MBA experience.
Quote Source: Quint Careers
Note: Picture is not me, but a graduation at Harvard the most prestigious business school in the US.
» Filed Under About Me, Chasing Dreams, Salary
The Lost Art Of Saving To Pay Cash For Purchases
Posted by The Happy Rock on March 16, 2008
Somewhere while I was digging out from $70,000 in debt, I learned that you had to be able to save and actually pay cash for purchases in order to avoid debt. Growing up this was not something that had been instilled into my thinking about money. It is something that doesn’t get much attention, but it is a needed tool in order to achieve financial success. So, let’s talk about it.
The whole system starts by extending your financial vision past the current day and thinking about purchases and bills that will be due months down the road. Then you just need to divide the bill/cost by the number of months until you need the money to come up with the monthly bill amount that will get you enough cash in hand.
For example, we know that we will need a new TV by Ferurary when US cable/antenna service switches from analog to digital. We expect to pay about $800 for a TV, so we divided that by the 12 months in the year and added that $66 dollar monthly bill to our list. Each month I transfer the money from our checking account to an ING Savings account labeled TV. When the time comes we should have all or most of the funds needed.
It really does feel good to have a plan for your money. I remember the feeling like we had really turned the proverbial financial corner when we started putting away $100 a month for auto insurance rather than paying the $3 a month service for so that we could do payments.
If you are still getting out of debt, the same strategy applies. If you don’t plan for future expenses, you will find yourself back in debt when these so called ‘unexpected’ expenses come up. With a little planning and discipline you start to realize that they aren’t unexpected at all, and that by having a plan for your money you can be in control rather than your bills.
» Filed Under Credit Cards, Financial Succes, Psychology of Spending
The Happy Rock Spends The Big Money For Tax Prepation
Posted by The Happy Rock on March 15, 2008
I mentioned previously how doing my own taxes last year almost cost me $350 in penalties and interest. Luckily I was able to get that down to around $90. This year I decided to shell out the big bucks and buy top notch tax advice and preparation, even though it goes against my frugal disposition.
Why would I do it then? Because I think it will more than pay for itself. It is one of those short term financial pain for long term benefits. FMF at Free Money Finance was the person that really got me thinking about using a CPA. Below is a list that expands on some of his great reasoning:
Time is Money. It would take me probably 10-30 hours to really do my taxes well and do enough research to feel like I wasn’t missing anything big. If my time was worth $20 an hour, that would about equal the price of a good CPA.
Our Taxes Are Somewhat Complicated. Some of the abnormal items are a self employed spouse, home based business(The Happy Rock), and an in-home babysitter(Nanny Tax). Professional advice on just those three items will more than pay for the increased fee.
Tax Knowledge Has Long Term Benefits. Any knowledge gained now will save us money on taxes for years to come.
“Peace of Mind”. No stress!!! No fear of audits. I won’t make common mistakes. Even more than lack of problems and stress, if I connect with a high quality professional I can be assured to get as much of my money back from the government as possible.
With that said, connecting with a high quality professional is the key to most of the benefits. I tried a tax service, Liberty Tax, which is just like H&R Block and other outfits a few year ago and felt like it was a total waste of money. Basically I was just paying for someone to enter my taxes, not for any real tax advice.
So, how did I connect with a high quality CPA? There happened to be a regular commenter on The Happy Rock named Thecpa. I was able to get a very good recommendations from a co-worker and made the leap last week. Thecpa works for Zarin and Associates in Pennsville, NJ and the cost of the accounting advice will be around $400. From just two emails I am confident that I will save more than I will pay just this year. A good accountant only needed to find an extra $1000 or so in deductions to directly make the fees worth it. For me, a properly done home office deduction were I can write off a percentage of my utilities and depreciate my house will be a huge tax break for years to come.
I may even get spunky and try to do my own taxes online and see what the difference is.
» Filed Under Money Savers, Taxes
Frugal Tool Chest Tip #1: Get Money Back On Your Purchases With Price Protectr
Posted by The Happy Rock on March 15, 2008
The Frugal Tool Chest is a recurring series covering practical tips and tools that will arm you to save even more money on your online purchases. I
The first frugal tips involves a website that will notify you when the price drops on any of your recent purchases. How does this help? Well, most stores have a price protection policy that allow you to receive a refund if the price of the item you purchased dropped before X number of days post purchase.
For example Amazon’s policy is currently this
Post-Order Price Guarantee
Amazon.com’s prices for released items will change from time to time based on a variety of factors. If Amazon.com’s price for an already-released item decreases within 30 days after we ship the item to you, we’ll be glad to refund the difference in price if you contact us. Please click the Customer Service button on the right side of this page, and be sure to have your order number handy so we can assist you.
So how do you protect your purchases. Going back to the item listing for the next 30 days is just not feasible, so you let a site like Price Protectr do it for you. Here is my review…
All you do is supply the link to the item you purchased, verify the when you purchased it, verify the purchase price, supply your email, and click submit. That’s it! Price Protectr will snotify you that the item is being protected and then send another email if the price drops before the price protection policy expires for the site. It really is that easy. The have a large list of sellers that they support, but they don’t support every site.
Since I was reminded of the site a week ago by a co-worker, Ray of Taco Man and Burrito Boy fame, I have saved about$5. One item dropped on Amazon twice for a total of about $4.35.
A sample Price Protectr alert email looks like this :
Price Protectr saw a price drop on the Pinzon 400-Thread-Count 100% Egyptian Cotton Hemstitch Queen Sheet Set, Sand you submitted for price protection at www.priceprotectr.com.
You purchased the item for $42.34 and it’s now $39.99! The item URL is:
Pinzon 400-Thread-Count 100% Egyptian Cotton Hemstitch Queen Sheet Set, Sand
Please verify the item and price, and review the retailer’s price protection policy before requesting a refund.
To claim your refund: Visit their contact page, click the ‘e-mail’ tab, and choose ‘Refund Inquiry’ from the dropdown list. Or contact their customer service department at 1-800-201-7575. Hitting 7 should get you to a customer service rep right away.
If you collect your refund (or try to), don’t forget to log into your My Stuff account and leave a retailer review!
To change your notification settings, go to the account setting of your My Stuff account.
Thanks for using Price Protectr!
Following the instructions in the email, I sent a brief two sentence email to Amazon and had a refund back on my card in about 24-48 hours. The email doesn’t have to be anything special either…here is what I put in the email contact page :
The price of the sheets i recently purchased dropped a $2.35 cents since I bought them, I would like a refund for the difference as the price protection policy states.
Thank you for the great service and products.
Done! It is really quite gratifying to receive a Price Protectr alert! Give a try, you bank account will probably notice.
» Filed Under Frugal Tool Chest, Frugality, Money Savers, Personal Finance Systems, Spending
The Happy Rock is a dual writer personal finance and personal development community dedicated to creating positive change that propels us towards success.
