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I Will Teach You to Be Rich, a Six-Week Boot Camp With Ramit Sethi

by Flexo on November 3, 2009

in Personal Finance

While I was in California this past week, I spent a few days at my brother’s new apartment before his wedding this past Saturday. Among the piles of books not yet placed into a bookcase was something familiar: I Will Teach You to Be Rich by Ramit Sethi (review here). Ramit is a colleague of mine, a personal finance blogger who published a book that quickly became a favorite.

How Ramit saved my brother

My brother, who we’ll call Stewie for the sake of anonymity, is both a systems administrator and a musician; he earned good money from a day job which he then used to help fund his band’s national tour last year. But tours are expensive and money runs out. When I asked, he credits Consumerism Commentary and Ramit’s book with helping him get his finances in order and out of debt from the tour, and I think he mentioned Consumerism Commentary only to be nice. Stewie is an avid reader and has read a number of other books about basic money management and investing but I Will Teach You to Be Rich is the only one he feels provided concrete advice and suggestions for being smart about money.

I know Stewie was truthful because when he gave me a check to pay for the restaurant hosting his wedding ceremony and reception, the check was drawn from a Schwab Bank Investor Checking account, an account recommended several times throughout Ramit Sethi’s book.

The six-week “Boot Camp”

Today Ramit Sethi is releasing a new project. He has created a “Boot Camp,” a six-week program designed to empower participants to make better financial decisions. Through the Boot Camp, Ramit places participants with similar financial goals together and provides them with the tools, information, and most importantly, the motivation to get started and the group accountability to maintain action.

Here is how it works. At the start of each week, participants receive excerpts from I Will Teach You to Be Rich with additional content and worksheets. This is followed with a webcast, a video discussion on the week’s topic, downloadable so you can watch or listen on your iPod or computer when you have time. Each week will also feature special guest speakers including Andrew Jolls (ex-executive of FICO and founder of VideoCreditScore.com), Charlie Hoehn (author of Recession-Proof Graduate), and Chris Guillebeau (traveler and author of The Art of Non-Conformity). A complete curriculum including guest speakers is included below.

If Ramit had created the Boot Camp one year ago, I would have recommended the program to my brother. And this is coming from someone who was originally a skeptic of Ramit. When he first launched his blog in August 2004, I wondered how a pompous graduate student at Stanford could teach people to be rich without a long history of personal experience being rich. But his writing is captivating, he understands people, and provides the tools for getting things done.

How much does it cost?

At $199, the program might be a bit expensive for someone who is trying to figure out how they’re going to make their next rent payment. I’m confident this program will help a participant save at least $199, recovering the cost of the program, and the tools within will provide a lifetime of benefits. Ramit is offsetting the high price by offering a 30-day money-bank guarantee, so you can participate in most of the program and back out before the end if it is not working for you.

I’m generally a critic of seminars like Rich Dad Academy and Landmark Education, but with Ramit, I know the information will be sound, specific financial advice designed to inspire and motivate, not an up-sell scheme where you have to pay more for the “deluxe” package in order qualify for the useful information.

I expect the next time the Boot Camp is offered, the price will be significantly higher as he tweaks the service to include more materials and guest speakers.

Registration for the Boot Camp is only open through Friday, November 6.

Here is a taste of the Boot Camp, a twelve minute video of Ramit Sethi talking about automating your finances with specific tips for setting up accounts and directing your funds to the right places at the right times. (If you are reading through an RSS reader, you may need to click through to view the video.)

If you want to listen to more from Ramit before signing up, listen to my interview with Ramit from earlier this year. If you opt to join the Boot Camp, come back and let us know whether you like it.

Boot camp curriculum and guest speakers

Week 1: Optimizing your credit cards
Speaker: Andy Jolls: Thursday, November 12, 10:00 pm EST

Week 2: Beat the banks and negotiate for lower bills
Speaker: Charlie Hoehn: Thursday, November 19, 10:00 pm EST

Week 3: Open 401K and Roth IRA
Speaker: Chris Guillebeau: Tuesday, November 24, 10:00 pm EST

Week 4: Conscious Spending
Speaker: Penelope Trunk: Tuesday, December 1, 10:00 pm EST

Week 5: Automation
Speaker: Shannon Sofield: Thursday, December 10, 10:00 pm EST

Week 6: Investing – setting up portfolio
Speaker: Pam Slim: Thursday, December 17, 10:00 pm EST

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Spend Money to Save Money: Smart Power Meters

by Smithee on November 3, 2009

in Frugality

We all have power meters attached to the buildings in which we live, and the little needle keeps spinning around and around, ad nauseum, at least until solar panels become affordable. I recently read a story of a family who managed to install solar panels, and while that would normally have cost over $20,000, with various national and state rebate programs, they only spent $8,000.

Wow. Imagine having $8,000 to spend.

We’re customers of Green Mountain Energy here in Dallas, so our bill payments go toward producing more renewable energy (see the big bathtub analogy for more on how this works). But the hardware is operated by a company called Oncor, which has decided it’s time to upgrade our power meters to be smarter. Oncor worked through some calculations (Surcharge Analysis PDF) and figured that the best way to install them would be to charge the average customer $2.12. Every month. For eleven years.

That’s $291.72 for a new power meter.

Within the last month, a hundred grants were given out to companies making improvements to power meters. The company in our area was not one of them. So residents of DFW are likely stuck with the fee.

On their FAQ about the Advanced Meters, Oncor made this suggestion for dealing with the extra $2.12 per month:

How can you offset this fee? Just replace a 100W light bulb with an Energy Star CFL light bulb and you could save more than $2.30 a month.

That’s cute, and likely true, but I don’t believe we’re still using any of the old style bulbs at our house.

This entire scenario of being charged over an eleven-year period for something that won’t be available to everyone until 2012 would be supremely depressing, were it not for the fact that I’m a big data nerd. I love efficiency, and you can’t improve efficiency unless you know exactly what is being wasted. A smart meter will do that for me.

Google PowerMeterBut what’s depressing again is that I could have this right now, for only $200. The Energy Detective (TED) Series 5000 is a device that attaches to the power control panel on the inside of your house, rather than the outside. Other than that, it does all the same stuff: analyze your power usage in real-time, and over regular intervals, then adjust your behavior accordingly.

I’d be excited to get a TED set up in my house, then walk around unplugging one thing at a time, finding the major offenders, maybe put some devices on a schedule; or find out exactly how much we’d save by keeping the house, say, 2 degrees warmer. Those are just a couple of examples. For all I know, more energy is being wasted when two particular devices are running together for one hour than by running both separately for one hour each. Like I said, I’m a big data nerd.

I’d be very interested to hear your story of using a smart meter. Has anybody had the pleasure, yet?

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Delta Airlines: Good Airfare But Not My Favorite Airline

by Flexo on November 2, 2009

in Travel

As of this past Saturday, my brother is now a married man. He and his wife live in California, and I spent Halloween attending their wedding and the past week visiting with my family in that state. I am happy I was able to take a week off from my day job and spend it with my relatives for the occasion. It was a beautiful ceremony and a fun reception and party, and within a few weeks, the new couple will be traveling to Costa Rica for their honeymoon.

The wedding was on Halloween, but costumes were not required.

I was happy to find a great deal on airfare for the cross-country travel. Delta Airlines offered a rate of $250 including tax for the round trip travel from John F. Kennedy International Airport to Los Angeles International Airport. This rate is about $100 less than the lowest rate I have ever paid for a trip for the Philadelphia or New York area to the Los Angeles area and several hundred dollars less than the typical rate.

In order to qualify for this low rate, I had to make a few sacrifices:

  • DeltaJFK is not my preferred airport. Either Newark Liberty International Airport (EWR) or Philadelphia International Airport (PHL) are more convenient.
  • When checking in for departure online, I was charged $15 for checking a bag in addition to my carry-on luggage.
  • After arriving at the airport, checking my luggage, and proceeding through security, I was directed towards a shuttle bus to take us to our gate at a different terminal.
  • On the flight, we are treated to amenities like a full-featured, personal media center but if we want a meal we would need to pay at least $8.
  • The seats on the flight offer less legroom than I am used to from other airlines like JetBlue and Continental. By the time I booked the flight, exit rows and bulkhead seats were unavailable.
  • LAX is not my preferred airport, either. A better choice for the Los Angeles area, where my brother lives, is Long Beach Airport (LGB). When visiting my mother, I would prefer John Wayne Airport (SNA) in Orange County.
  • Unable to check in online in advance for the return trip, I was charged $20 for having a bag checked. I also left a tip for curbside check-in.

Considering the price was half of what I might otherwise pay for a trip to California, I was willing to put up with a few annoyances. Although I like JetBlue, I feel no particular loyalty to any one company. I do not travel enough for frequent flier rewards to have any impact on my purchasing behavior.

Do you have a favorite or preferred airline or airport? Do you stick to your favorites or are you willing to compromise on comfort for a great airfare?

Photo credit: Hong Kong dear Edward

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Podcast 28: Dan Solin, Investing for Retirement

by Flexo on November 1, 2009

in Podcast

In today’s episode of the Consumerism Commentary Podcast, our guest is Dan Solin, author of The Smartest Retirement Book You’ll Ever Read and other books in the “Smartest Book” series.

Tom Dziubek talks with Solin about planning for retirement.

Production Number: S02E02
Segment Number: 41

 

To listen, use the player above (Adobe Flash required), download the podcast here, subscribe to the podcast RSS feed, or use the iTunes link. Note: open links in a new window (Ctrl-click or Command-click) to avoid interrupting the podcast.

[00:00] Introduction from Flexo
[00:32] Interview with Dan Solin, author of the “Smartest Book You’ll Ever Read” series
– [00:48] Rethinking investing
– [02:03] Index funds
– [02:50] Exchange traded funds
– [04:19] Using your 401(k)
– [05:37] The value of the dollar
– [08:20] 4% safe withdrawal rate
– [09:14] Dan’s incident with Jim Cramer
– [13:08] Dan’s Golden Rules for Retirement
– [14:35] Fee-only financial planners
– [15:37] Registered investment advisors
– [17:35] Immediate annuities
– [19:29] Setting aside two years of living expenses
[21:35] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

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$50 Bonus for New Prosper Lenders

by Flexo on October 30, 2009

in Investing

Peer-to-peer lending institution Prosper is offering a $50 bonus for new lenders who sign up for for the service and bid on two loans. Peer-to-peer lending is an interesting way for people to qualify for loans and to lend money to others. In an economy where savings account interest rates are under 3% or 2%, it’s tempting to put cash to better use through these direct loans. There is a possibility to earn much more than you would by putting cash in a savings account as long as loans are chosen carefully and you’re willing to accept risk.

There is something appealing about working outside the banking system. Peer-to-peer lending takes a specific power of the financial industry and puts in the hands of individuals.

I tried Prosper a few years ago. A friend of mine was looking to consolidate his credit card balances, but was looking for a better option that putting several thousand dollars onto one high-interest card. His plan was to apply for a loan on Prosper and use the funds to pay off his credit cards. He would then only need to worry about one payment each month with a lower total payment and a lower interest rate than what he would likely get with a credit card.

A Great New Investment OpportunityWhen he asked me about Propser, I offered to help him out by bidding to provide a portion of the funding for the loan. The idea of being an investor appealed to me, but unfortunately, the state of Texas prevented him from participating on Prosper at that time. It is my understanding that he would qualify only for an interest rate higher than allowed by the state.

My adventures with Prosper ended before they began. And I won’t be able to get started. As I began to research investing in a portfolio of loans at Prosper and bidding on individual loans, I was greeted by this message:

Unfortunately, at this time lenders in New Jersey are not able to bid or transfer money to Prosper. If you have portfolio plans, they have been paused. You may transfer money out of your Prosper account as they become available from loan payments.

If you reside in a state where Prosper is allowed to do business, consider signing up for an account and qualifying for the $50 bonus. What is your experience with Prosper?

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GMAC Asking for a Third Bailout From Taxpayers

by Flexo on October 29, 2009

in Economy

Through today, GMAC has received government bailout funds totaling $12.5 billion. The company is asking the Obama administration for $5.6 billion more. One might say that in a true democracy, GMAC would need to ask permission from each taxpayer whose funds would go towards shoring up the company’s balance sheet, a move that would make GMAC appear more stable on paper. But we have a representative democracy, where Congress makes decisions that occasionally reflect the will of the members’ constituents.

GMAC might receive their third bailout. Industry analysts agree that the failure of GMAC would have a devastating ripple effect throughout the rest of the economy. If GMAC fails, so would the companies who depend on GMAC to offer loans to customers, General Motors and Chrysler. The failure of these companies in turn would result in the failures of suppliers and dealers. The government has already pumped so much taxpayer money into these companies that their failure would signal a broader failure of the entire bailout process. Also, GMAC’s total bailout is still less than the financial injections Citigroup and Bank of America have received.

In personal finance, an additional bailout for a failing company would be similar to throwing good money after bad. For example, if one makes a poor purchasing decision while buying a car, costly repairs might be necessary. Rather than cutting the losses and getting rid of the car, one might continue putting money into the black hole, and after time, the money that you spent on the purchase and repairs could have purchased a nicer car that ran without problems.

There is no guarantee that another bailout will save GMAC in the long run.

GMAC is the parent company of Ally Bank, formerly known as GMAC Bank, an online bank that has drawn in more customers with a savvy advertising campaign and high interest rates. The American Bankers Association forced the FDIC to request Ally Bank to lower its rates because other banks couldn’t compete with Ally’s new strength acquired with the help of taxpayers.

If GMAC were to fail, Ally Bank depositors should be safe as long as they have stayed within FDIC’s coverage limits.

I think it may be time to start allowing companies like GMAC, those who require funding from taxpayers to improve their balance sheets and who have little prospect for paying taxpayers back, to fail. There are signs the economy is recovering. Maybe it is time to let the market and capitalism work itself out. Those companies who remained conservative will survive and those who chased bad loans and complex derivatives without sufficiently considering risk will step aside.

Do you think GMAC should receive another bailout?

Photo credit: jim.greenhill
3rd Rescue Considered for GMAC, Eric Dash, New York Times, October 28, 2009

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ING to Sell Online Bank ING Direct By 2013

by Flexo on October 28, 2009

in Banking

Here in the Untied States, ING Direct, a banking arm of the large financial company ING Group from the Netherlands, offers more than just high-yield online savings accounts. The bank also offers investments and mortgages, and some of the latter may have been too risky, like those sold and packaged into securities by domestic banks.

ING Group received a taxpayer bailout of €10 billion ($14.9 billion) and the European Commission is forcing the financial company to restructure in order to repay this loan. Part of this deal involves taking ING’s insurance companies public and selling the United States’ ING Direct by 2013.

The effect of this sale remains to be seen. Some time between today and the end of 2013, ING Direct will be owned by another company. This bank was one of the first to operate without any brick-and-mortar branches and the first to be an unmitigated success. When I first started paying attention to my finances at the start of this decade, the recommendations for ING Direct flowed from every information channel. With the highest interest rates in the savings account business, unusually capable customer service, and a slick and functional website, the bank was a favorite among the die-hard personal finance fans at the Motley Fool discussion boards.

More recently, ING Direct has moved from excellent to very good. I still recommend this bank to people who want a hassle-free experience, but their rates are no longer as competitive and their electronic checking account is not the best in class. For those with more money to put in savings, those who would benefit from a higher interest rate, I usually offer additional options.

ING Direct’s corporate message in response to those customers concerned about recent news of the impending sale is that your money is safe. I don’t think safety is the real concern. Accounts at the bank are insured by the FDIC, so even if the bank fails safety isn’t a problem. These are the questions you should have right now:

  • Who will purchase the bank and will ING Direct’s core values change?
  • If the core values change, will they be for the better (more competitive interest rates, for example) or for the worse (scaled back operations and customer service, for example)?
  • What new account fees will be introduced?
  • ING Direct employs about 1,200 in Delaware and another thousand more across the country. Will they have jobs and for how long?

These questions will not be answered for some time.

I do not see the announcement of this sale as a reason to move money out of ING Direct now. I will be watching developments closely, however. With the bulk of my savings in ING Direct, I am very sensitive to the fact that they do not offer the highest interest rate available. For years, the bank has counted on customers like me: those who first deposited when the interest rates were high and competitive and who have stayed around as other banks consistently offer higher rates. But I do not owe my loyalty to a company and will be quick to shop around if I am no longer getting a good deal considering cost, return, and service.

Photo credit: diaper
ING to sell Delaware-based bank in [sic] 2013, Eric Ruth, The News Journal, October 27, 2009
Post-Bailout Blues as Europe Orders ING Group to Sell 2 Units, Eric Dash, New York Times, October 26, 2009

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