As featured in The Wall Street Journal, Money Magazine, and more!

April 2011

Since last summer, credit card offers have been a bit of a mixed bag. While rewards programs and sign-up bonuses have been increasing, the issuers have also been increasing fees and interest rates. If you use a credit card, always make sure to pay your balance off in full every month, keep your spending within your credit limit, and choose a credit card with the rewards program that best matches your spending patterns.

American Express is offering, the Blue Cash Everyday® Card from American Express, that could be a contender for a credit card to consider, if you qualify.

A previous version of the Blue Cash card included a very decent rewards program. Cardholders earned 5% cash back on everyday purchases (spending on gas and groceries and at drugstores) after spending $6,500 each year and 1.25% on those purchases prior to reaching that spending threshold. Spending on all other purchases in other categories earned 1.25% after reaching the $6,500 threshold and 0.5% beforehand.

The largest complaint from customers was that they had to spend too much money each year in order to receive top rewards, so American Express modified the offer to make the card more attractive. Now there is a special offer to get up to $300 back which ends on June 15, 2016.

The Blue Cash Everyday® Card from American Express now offers rewards so Cardholders can get cash back in the following amounts for eligible purchases:

  • 3% cash back at U.S. supermarkets, up to $6,000 per year in purchases (then 1%)
  • 2% cash back on gasoline at U.S. gas stations
  • 2% cash back at select U.S. department stores
  • 1% cash back on other purchases

While the top cash back rate is now 3% rather than 5%, the possibility of getting the top cash back rate on more of your spending helps make up for the difference. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit.

The Blue Cash Everyday Card from American Express offers a 0% introductory APR on purchases and balance transfers for 12 months. Once the introductory rate has expired, your APR will be a variable rate, currently the standard purchase APR is 13.24 percent – 23.24 percent depending on your credit history. Compared with other rewards credit cards, that APR is at par. Even so, if you do decide to sign up for this card, make sure to avoid paying interest by paying your bill in full every month. If you don’t, no rewards card would be worthwhile.

The Blue Cash Everyday Card from American Express has no annual fee.

American Express has seen the rewards program improvements with Chase and Capital One and is moving to be more competitive, so this card is worth taking a closer look. You must have excellent credit to be approved. Visit the application page for the Blue Cash Everyday Card from American Express for more information or to apply.

Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.


Whether it’s extreme couponing or group-couponing, the idea of saving money has the country frantically searching for deals and spreading the word through social networking. I’ve had to hide a number of friends whose total social discourse has been reduced to posts about their favorite deals — and WRITING IN ALL CAPITAL LETTERS when they’re sharing a deal that benefits them if their friends sign up, too. The fact that “couponing” is an accepted word in a culture that doesn’t frequently verb nouns unless the words truly speak to the zeitgeist indicates that we may be working so hard to save money that it may have the opposite effect.

Don’t get me wrong. In general, saving money is a great idea. Most people need to do more of it. Although the trend seems to be embedded in today’s social consciousness, perhaps due to the recession and the struggling middle class, couponing does not always coincide with saving money.

In fact, couponing encourages consumers to spend more than they would have otherwise. Getting new deals every day in an email inbox lets marketers walk in your home and sell you products you don’t need and wouldn’t have purchased if you didn’t willingly invite them in. Spending hours scouring for coupons or driving miles out of your way to save a few dollars is an inefficient use of time and money. Your time spent attempting to save $0.50 on a can of beans could be better spent earning several dollars with a quick task or more working overtime at your job, helping you afford beans at the everyday price — and more.

Furthermore, certain deal sites are known to make deals appear more attractive than they are. For example, one coupon I saw recently looked like a great deal: $200 off a notebook computer, for a limited time, through a deal website. A price history check showed that the deal was only $50 off that retailer’s normal price — and another major website without a special deal was offering the same computer for $100 less than the “deal” price.

The deals propagated online — especially those that persist from the same retailers — are only popular because they work for the retailers. Retailers pay fees to companies like LivingSocial and Groupon, so if they weren’t profiting from the arrangement, they would stop offering the deals. Merchants are profiting because consumers respond to these marketing tactics with the belief that they’re saving money. According to the latest government surveys, consumer spending is increasing. The increase may be due to the perception of deals or due to an improving economy, but regardless of the reason, retailers are not slowing down their relationships with deal-broadcasting services. This is an indication that people aren’t just shifting purchases from a non-deal to a deal; they are purchasing more than they would be otherwise.

From a retailer’s point of view, a deal that goes viral is great at first. It brings in a good profit right away — but these customers don’t stick around. In fact, many retailers complain that these are some of the worst customers they have. These buyers will be off looking for the next deal. No retailer would be able to afford creating once-in-a-lifetime deals every month to retain extreme bargain hunters, and some don’t want to.

I’m not calling for an end to the frenzy over the possibility of saving money. I do think it’s best to be an educated consumer, and that means taking a second to ask yourself a few questions rather than blindly jumping on the deal bandwagon.

  • Is this something I need, or am I only buying this because it was marketed to me?
  • Is this really a good deal or does it only look like one?

This may be too much to ask for many people, but any pause filled with a short burst of mental activity before a purchase can’t hurt.


A few months ago, I initiated the process to roll over my pension to an IRA at Vanguard. Leaving my job early, but after having worked at the company long enough to be vested in my pension, I chose to receive a lump sum of my accrued pension, about $18,000, rather a lifetime annuity of $65 per month. The transfer was finalized this week after a long delay. It’s time to turn my attention to my 401(k).

It often makes sense to roll over a 401(k) when you leave a job. I’m considering a 401(k) rollover to a discount brokerage to alleviate some of the problems I have with my former employer’s retirement plan. These problems are common among employer plans, even those managed by the same discount brokerages you’d likely consider to receive a rollover.

  • Management fees. Most employers’ 401(k) plans have expensive management fees. One third of the investment options in my company’s 401(k) have expense ratios over 1%. I am choosing Vanguard for comparison because most of my other investments are held there and the management fees are low. My 401(k) balance right now is a little above $100,000, so a difference of 50 basis points in an S&P 500 index fund is worth $500 a year. I normally wouldn’t throw $500 out the window.
  • Investment options. In my employer’s plan, I’m limited to 15 investments. That may be a larger number than what many other employers offer, but it’s a drop in the bucket compared to what I’d have access to if I move the 401(k) elsewhere. A brokerage can provide investment opportunities in the form of stocks, bonds, mutual funds, ETFs, metals, real estate, and more. All of these can be part of your IRA, in many cases allowing you to defer tax on your gains until you start receiving your distributions. My choice, though, is Vanguard, where I would choose to invest only in Vanguard’s mutual funds. Even this option provides more flexibility than leaving the funds in my former employer’s retirement plan.

Once you decide that you don’t want to keep your 401(k) at a former employer, you will need to decide the destination of those funds. These are the typical options:

  • A brokerage, providing the most investment choices.
  • A mutual fund company, like Vanguard, offering limited but low-cost choices.
  • Your new employer’s retirement plan, possibly offering limited and expensive investment choices.
  • Your bank account, possibly triggering income tax and penalties.

For the first three options, you can limit yourself to as small an amount of trouble as possible — rollovers seem to involve at least a minimum of some trouble — by initiating a direct rollover. This way, the funds are sent directly to the new retirement plan provider. There’s no risk of you accidentally keeping some of the funds. The fourth option should be considered only as a last resort. If the funds are designated for retirement you might as well leave them in an account that you can’t touch, avoiding extra expenses.

When you are considering a rollover, keep in mind the form of your funds in your 401(k). For example, some of my retirement funds at my former employer are in a Roth 401(k). When I move these investments to Vanguard, I will need to handle the rollover separately to ensure they end up in a Roth IRA. If you have an after-tax 401(k), these funds will need special consideration, as well. Some brokers and mutual fund companies won’t accept Roth or after-tax rollovers, so verify your chosen recipient can handle your entire 401(k) before you initiate any changes. I’ve found it helpful to speak with a representative at the company who can review your entire 401(k) to increase your confidence that you’re choosing the correct retirement plan options.

The last consideration should be whether your new asset allocation, after the rollover, should match your old asset allocation. My current allocation is a bit of a mess:

International 23%
Large Cap Growth 22%
Large Cap Value 22%
Real Estate 14%
Company Stock 8%
Mid Cap Growth 5%
Mid Cap Value 5%
Small Cap 1%

I could choose either to invest similar amounts in funds that roughly match this investment mix or just put everything into the total stock market index fund. This is the my current dilemma, and I’d want to decide what to do before initiating the rollover. It won’t hurt you in terms of taxes to transfer money from one fund to another within your 401(k), so take this opportunity to rebalance your portfolio.

These are the steps I plan to follow once I’m ready to begin:

1. Contact the recipient. In my case, Vanguard. I can either create a new account or roll over my 401(k) into an existing traditional IRA and an existing Roth IRA. I’ll need to make Vanguard aware that my former employer will be sending a check. In some cases, you can initiate an asset transfer. Regardless of the type of transfer, the recipient will offer instructions for sending the funds.

2. Instruct the former employer’s plan management. You may need to complete forms to be mailed in or you might have the option to submit your transfer request online. You’ll need the information provided by the recipient to avoid having a check sent directly to you.

3. Choose your new investments. Remember to look at your entire collection of assets when determining your optimal asset allocation. Your investments should also match the amount of risk you’re comfortable with.

4. Verify your transfer is complete. Although I initiated my pension rollover in February, it wasn’t complete until the end of April. The process was long, but both companies completed the process as they agreed. I expect the process of rolling over my 401(k) will be somewhat faster.


For almost two months, I’ve been paying a maid service. After the initial cleaning, I waited a few weeks, and then set up a recurring appointment for a cleaning once every two weeks. For years leading up to this arrangement, I’ve balked at hiring a cleaning service. Cleaning is not a particularly difficult task, and this is not by any means a necessary expense. Furthermore, I live only with my cat. I do not have a family to look after. When first thinking about bringing in professionals, it seemed excessive.

Several months ago, I decided it was time to bring in the professionals. I had two full-time jobs that left little time for tasks like vacuuming and scrubbing the bathroom. I asked friends and co-workers living in the area for cleaning service recommendations, but this yielded no results. I turned to the internet for suggestions, and I decided to give Maids.com a try. There is a relatively local office. I called, the company provided an estimate based on my description of my apartment, and we arranged an initial visit.

The initial visit consisted of a deeper cleaning and allows the maids to determine the scope of the job. The cleaning is deeper than usual based on the assumption that this might be the first time the location was professionally cleaned, and regular upkeep would help reduce future cleaning needs. A team of four spent an hour and a half during that initial visit handling the dirty work. They did a good job, particularly in the bathroom and kitchen. However, living with a cat, the apartment never feels fully clean without cleaning the carpets. I quickly steamed some of the more troubling spots after the maids left and was pleasantly satisfied with the apartment’s appearance.

I waited several weeks before inviting the maids back, but when I did, I agreed to a reduced price by arranging a visit every two weeks. The knowledge that the maids will be arriving within days motivates me to keep the apartment tidier throughout the week. If there is no need to clean, I could still cancel a cleaning without increasing the price. At the same time, if I found myself in the position of needing to reduce my expenses, this would be one of the first luxuries to be eliminated.

There’s often a psychological barrier that stops someone from paying for a service one could do on one’s own. Some people refuse to pay for financial advice, some don’t think it makes sense to pay someone to clean a house, and some don’t want to call the plumber when there’s a problem with the pipes. It’s not always psychological, either. Hiring a professional costs money that might not be immediately available. Some people prefer taking a do-it-yourself approach to their lives, and that’s an admirable attitude. The psychological barrier comes in the thought that it isn’t worthwhile to pay someone to do something you could do yourself.

In my case, my time is valuable, and I’m sure most people have the same opinion of their time, as well. My effort is better spent working on a project or enjoying my life than scrubbing toilets. I’m not completely averse to this type of labor; I’ll do it, but I have found that it’s worthwhile for me to hire professionals who do it better and more efficiently, while my time is free to concentrate on other aspects of my life and business.

On Twitter, @27andfrugal asked how I was able to fit this expense into my budget. This cleaning service adds up to about $250 on a monthly basis. I understand that this is a price many people would not be able to pay for a service they could theoretically manage without hiring professionals. I consider myself fortunate that I can handle this expense without much detrimental effect on my finances. The $250 comes out of my net savings. This is $250 less each month I won’t have in savings, which, depending on interest rates, could add up to tens or even a hundred thousand dollars over the next thirty years. Of course, looking at that view, it’s harder to make the argument that the expense is worthwhile, but these are the caveats:

  • I can make up some of that theoretical loss with increased productivity.
  • My quality of life increases, and that has a value that’s hard to pin down with financial terms.

Cleaning is one task of several I hope to outsource. My next step is to find a virtual assistant to help keep me organized from a business perspective.


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