Picking up Nickels

Friday, November 11, 2016

November 2016 Financial Asset Roundup

Here are my current financial assets as of the market close on November 10th, 2016:

Asset Oct
Checking 1,244 1,529 285
Money Market 82,260 82,686 426
Savings Bonds 109,663 109,745 82
Treasury Bills 0 0 0
CDs 39,555 39,666 111
Brokerage 123,083 126,233 3,150
401k 131,906 130,210 -1,696
Roth IRA 111,871 112,082 211
SEP IRA 560,487 565,452 4,965
529 Savings 143,297 143,590 293

Total Assets $1,303,366 $1,311,193 $7,827

Despite some volatility courtesy of the US Presidential election, the S&P 500 is up 1.44% since the last update:

(chart courtesy of google.com)

On the jobs front, the unemployment rate for October dropped to 4.9% with 161,000 new jobs created. Oil prices have dropped to the $44 level, which was reflected in my recent heating oil delivery priced at $1.95 per gallon.

On the financial front, this month is the time to make my Series I savings bond purchase. After maxing out my 2016 limit in a couple of weeks I will probably follow that up with another purchase in early 2017 due to the attractive 2.76% composite rate for the first six months. I also typically make Roth IRA contributions for myself and Mrs. Frugalson by now, but I have decided to hold off on contributing until our 2016 personal income tax returns are complete. While it is a nice problem to have, I do have to keep an eye on the Roth IRA contribution limits since my wife returned to the workforce a few years ago.

On the non-financial front, the biggest thing on my mind are the plans for our country that our new President will move forward with. As of now, his potential impact the economy, taxes, the stock market, inflation, interest rates, our freedoms, etc. are a great unknown. My hope is that the great success I've been fortunate to have since I began this blog 10+ years ago will continue.

Tuesday, October 18, 2016

September 2016 CPI-U numbers released: November 2016 I Bonds are a buy!

The U.S. Bureau of Labor Statistics released the September 2016 Consumer Price Index (CPI-U) inflation data this morning, which increased by 0.24% last month.

As always, now is one of the best times to consider purchasing I Bonds. The reason for this is that we now know what the rate of return for October 2016 I Bonds will be for both the first and second six month periods, which is important since I Bonds must be held for 12 months before they can be redeemed.

Using the CPI-U data from March 2016 (238.132) and September 2016 (241.428) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2016 issue I Bonds.

That means these bonds would earn the current anemic rate of 0.26% (using 0.10% fixed & 0.08% variable) for the first 6 months and 2.86% (combined 0.10% fixed & 1.38% variable) for the second 6 months. It goes without saying that it makes sense to wait until November to make the purchase to avoid six months of 0.26% interest. Even though we only know the interest rate for the first six months of November 2016 Series I savings bonds, a minimum composite rate of 2.76% (assuming a 0% fixed portion) is market beating when compared to short term investments like the 1 year CD @ 1.30% APY currently being offered at Everbank.

I will personally be buying the maximum amount from treasurydirect.gov in November since I haven't made any online I Bond purchases so far 2016. In fact, a 2.76% rate is so attractive in this environment that I will probably purchase even more in January 2017.

Wednesday, October 12, 2016

October 2016 Financial Asset Roundup

Here are my current financial assets as of the market close on October 11th, 2016:

Asset Sep
Checking 1,123 1,244 121
Money Market 82,348 82,260 -88
Savings Bonds 109,538 109,663 125
Treasury Bills 0 0 0
CDs 39,447 39,555 108
Brokerage 128,940 123,083 -5,857
401k 133,788 131,906 -1,882
Roth IRA 112,682 111,871 -811
SEP IRA 564,930 560,487 -4,443
529 Savings 142,986 143,297 311

Total Assets $1,315,782 $1,303,366 -$12,416

The S&P 500 continued to fall since the last update, dropping 1.03% during that time:

(chart courtesy of yahoo.com)

On the jobs front, the unemployment rate for September rose slightly to 5.0% with 156,000 new jobs were created. Oil prices have continued to rise to the $51 level as OPEC has agreed to production cuts.

On the financial front, it is almost time to decide on a Series I savings bond purchase. The September CPI-U inflation numbers are due out next week, and the data should validate the position that waiting until November to make the purchase is the way to go.

On the non-financial front, thankfully there isn't much to report. The weather is changing (A/C is off, heat is on) and I have been taking advantage of the cool Fall weather to try to get my lawn whipped into shape for next year. Winter is coming!

Tuesday, September 13, 2016

September 2016 Financial Asset Roundup

Here are my current financial assets as of the market close on September 12th, 2016:

Asset Aug
Checking 4,931 1,123 -3,808
Money Market 74,471 82,348 7,877
Savings Bonds 109,382 109,538 156
Treasury Bills 0 0 0
CDs 39,336 39,447 111
Brokerage 132,403 128,940 -3,463
401k 133,082 133,788 706
Roth IRA 112,957 112,682 -275
SEP IRA 561,443 564,930 3,487
529 Savings 142,190 142,986 796

Total Assets $1,310,195 $1,315,782 $5,587

The S&P 500 fell slightly since the last update, losing 0.76% during that time:

(chart courtesy of yahoo.com)

On the jobs front, the unemployment rate for August remained at 4.9%. However, "only" 151,000 new jobs were created, which is less impressive than the 255,000 number from the previous month. Oil prices are up a bit to the $45 level, and I continue to see regular unleaded gasoline sold locally below the $2 per gallon price point.

On the financial front, my asset level has reached a new all time high for the fifth month in a row, eclipsing the previous high from last month. Of course, that was made possible by the 2016 SEP IRA contribution and the distribution I took from my S Corporation since the last update. I don't anticipate any other moves in the near term though.

On the non-financial front, the young Frugalsons are back in school once again! This blog has been around long enough to see them make their way from elementary school to high school. Soon enough they will be out there on their own. :)

Wednesday, August 17, 2016

My Strategy for Buying a New Car

I recently bought a new car and wanted to share the process that I use with the hope that it may help someone who may not know where to start. In my opinion, car buying is a far more unpleasant and convoluted process than it should be. Car dealerships sell multiple cars per day and are staffed by professional negotiators that have the average car buyer (who may buy one car every few years) at a great disadvantage. To get an idea for what goes on behind the scenes at a car dealership and how they view customers, I highly recommend reading the Edmunds.com article "Confessions of a Car Salesman", which oddly seems to have disappeared from their web site (see an archived MS Word version here).

Before you are ready to buy

  • Test drive cars at a dealership you probably won't end up buying from. While you should give the salesperson that you are working with every opportunity to earn your business, chances are that they will not be able to match deals that you can find via contacting dealers online. Keep in mind that the salesperson will probably be eager to get you to sit down and discuss pricing after the test drive. During my initial visit to the dealership I always tell them that we are just starting the process and are trying to decide on what car we are going to buy and name some competing makes and models that I am considering. Even if I love the car and know I want to buy it I will never show my hand before I've thoroughly researched the car and what others are paying for it. It goes without saying that now is not the time to say "Oh, I LOVE the red one!". ;)

Once you know the make and model you want to buy

  • Have your financing in place before you start talking pricing, even if you do not end up using it for your purchase. My personal favorite is the pre-approved automobile loan draft from Penfed, which is basically a credit union "blank check" pre-approved for a specific amount. You simply use this like a regular check to purchase your vehicle with the loan interest rate and terms already in place. For Penfed, I called their main number (800-247-5626) and spent about ten minutes on the phone with a helpful CSR applying for the loan and getting a quick approval. The Penfed loan terms were locked in for 90 days and I also elected to pay a $15 fee to have the check sent to me via next day Fedex instead of waiting for standard USPS delivery.
  • Know the available manufacturer incentives for your vehicle of choice and when they expire (they can be found on the manufacturers web site like acura.com or at other sites like edmunds.com or kbb.com). If you have the option of cash back or a low financing rate, use a calculator like this one at Bankrate.com to determine which is the better deal. FWIW, in virtually every scenario I've run for my car purchases it was a better deal to take the cash back and finance elsewhere.
  • Research what others in the country are paying for the same car. Some car buying sites will list the average price paid by others who live in your neck of the woods (Edmunds.com has True Market Value (TMV®), carsdirect.com has "Target Price", etc.), but I don't put much stock in these numbers since I've always been able to negotiate a lower price ($1,000+) on my own. In my opinion, the best place to learn what others are paying is to find a brand/model specific forum. For example, when I was researching the Acura TLX I found the tlxforums.com site. From this discussion, I was able to see what others were paying for this car all over the country. I also found out about an unadvertised $1,500+ edmunds.com exclusive incentive from this discussion. We didn't end up buying the Acura because Mrs. Frugalson preferred the Nissan Maxima, but this type of information is invaluable when you are trying to determine if you are getting a good deal on your car purchase.
  • Ignore the invoice price, since it has no bearing on the actual dealer cost for the car. Miscellaneous manufacturer kickbacks to the dealer that the consumer never knows about allow the dealer to make a profit even if they sell the car for below invoice price. Focus on getting the best price you can without worrying about "dealer cost" or other meaningless distractions.
  • Use the manufacturer and dealer web sites to research area inventory for models with the specific colors and options that you are interested in. If possible, note the VIN number for specific cars that you may want to target. For our purchase I targeted all dealerships within a 45 minute drive from my home.
  • Consider a leftover car from the previous model year. We ended up buying a leftover 2016 Nissan Maxima at a nice discount since the 2017 models had started to arrive on the lot. The 2016 and 2017 Maximas were nearly identical, except the 2016 model can be had for a lower price.

When you're ready to buy

  • The end of the month is the best time to buy a car as dealerships may be willing to offer better deals to try to reach sales targets and receive additional financial incentives from the manufacturer. Also, since dealerships are usually busier on weekends, try to work on your deal during the day on a weekday when buying traffic is slower.
  • Use the manufacturer or dealer web sites to ask for a quote on the specific VIN numbers you have decided to target. Ask for an OTD price itemizing the price of the car, all discounts, manufacturer incentives, taxes, tags, and fees. I would suggest something like the following:


    I am interested in purchasing the following vehicle by the end of the week:

    New 2016 Acura TLX Base Model
    Crystal Black Pearl exterior color, Ebony Leather interior color
    Technology Package Option

    Would you please provide your best out the door price for a sale with no trade in for this vehicle, specifying the purchase price including all applicable incentives, taxes, tags, and fees (destination, documentation, etc.)? Please note that I have already test driven the vehicle, so there is no need for me to visit your dealership until we are ready to close a deal.

    I'm looking to act quickly, so please include your direct phone number along with your best OTD price in your email response so I can contact you once I receive the quote. Please know I do not wish to waste anyone's time and therefore would appreciate a confirmed offer.

    If the price is right, I will make this a quick sale. Thank you for your time, and I look forward to hearing from you.


    Frugal Frugalson
  • Your initial batch of quotes will probably vary quite a bit. Some will be aggressive, some will be near MSRP, and for some odd reason a few dealerships will not even bother to respond. Take your best quote and try to use it to drive down the price at the other dealers you contacted. After a few emails/texts back and forth, you will probably find a couple of dealers who will offer good pricing if you agree to a quick deal.
  • Even if you are pre-appoved for a great rate on your "blank check", don't rule out financing your car with the dealership. For each of my last two car purchases, I financed at a higher rate to get an additional discount from the dealer. For the Maxima purchase, I financed with the dealership at 3.99% to receive an additional $500 discount on the price of the car instead of using the 1.99% rate offered by my pre-approved Penfed loan. Once you get your initial statement or "welcome letter"from the lender, it is very easy to refinance that loan before you ever have to make a single payment.
  • The finance person will try to get you to purchase several add-ons as you fill out the paperwork (extended warranty, Gap insurance, paint warranty, road hazard warranty, etc.). If you think you may be interested in some of these options, try to do some online research and figure out what people are paying for the same options. The Nissan finance person was relentless trying to get me to spend $2000+ on an extended warranty, $500 on a road hazard warranty, $1000 on a paint warranty, etc., but I politely just kept saying "no". It's always interesting to have the salesperson tell you what a great car with a great warranty you are looking at only to have the finance person tell you it's a piece of junk to try to get you to buy an extended warranty.
  • Always use a credit card if you give the dealer a down payment on the car. If you end up having any problems with the dealership, you at least have some recourse via credit card chargeback if they won't refund your money. If you use cash or a check for your down payment, the dealership may not be cooperative since they already have your money. And of course, use a credit card with rewards to maximize the benefit.

After you've bought the car

  • Consider refinancing your car loan to a better rate. This process is similar to the ten minutes it took to apply for the Penfed automobile loan draft. As always, Penfed is also a great choice for refinancing a loan (currently 1.99% for a five year loan), but I ended up using Alliant Credit Union (also currently 1.99% for a five year loan) for the last two car loans I've refinanced (Alliant main number: 800-328-1935). They simply need a copy of the Bill of Sale and a 10 Day Payoff Letter (typically available on the original lender's web site in my experience) to get the process started. Once everything has been approved, Alliant sends you a check that you send to the original lender for full loan payoff. You are also required to name Alliant as the lienholder on your car insurance and car title, which is pretty straight-forward. FWIW, if you are not a current Alliant Credit Union member they will pay a $100 bonus if you get an auto loan within 90 days of joining (details here).
  • A manufacturer survey will likely be headed your way. The dealer places great value on these silly surveys and it is widely known that a non-perfect score is a failing score. Even though I have never had a "perfect" car buying experience, I do try to give a perfect score if they sold me a car for a fair price and treated me reasonably well. On the other hand, this survey can be a small bit of leverage against the dealer if you have any outstanding issues or complaints with them. If given the opportunity, why not ask "What is a perfect score worth to you?" and see if you can work something out. Failing that, I wouldn't hesitate to submit a survey with truthful, but "non-perfect" scores. When I bought a Honda that was in high demand years ago, I was told by the dealer what the price would be and that there would be no negotiation. I eventually relented, but I refused to finance through the dealership with the hope of denying them extra profit from a lender-supplied loan origination fee and my phone survey from Honda honestly reflected my non-perfect buying experience.

Thursday, August 11, 2016

August 2016 Financial Asset Roundup

Here are my current financial assets as of the market close on August 10th, 2016:

Asset Jul
Checking 2,063 4,931 2,868
Money Market 76,394 74,471 -1,923
Savings Bonds 109,236 109,382 146
Treasury Bills 0 0 0
CDs 39,226 39,336 110
Brokerage 130,227 132,403 2,176
401k 126,798 133,082 6,284
Roth IRA 109,988 112,957 2,969
SEP IRA 550,841 561,443 10,602
529 Savings 139,944 142,190 2,246

Total Assets $1,284,717 $1,310,195 $25,478

The S&P 500 hit continued to hit all time highs since the last update, rising 1.79% during that time:

(chart courtesy of yahoo.com)

First, I'd like to note that this month is the 10 year anniversary of this blog! If nothing else, this blog has made me spend time each month assessing my assets and planning my savings and investments. During that decade, my assets have nearly tripled from their initial level in August 2006.

On the jobs front, the unemployment rate for July remained at 4.9%. In addition, a better than expected 255,000 new jobs were created. Oil prices have dropped to the $42 level, and I've once again seen local gasoline prices fall below the $2 per gallon price point.

On the financial front, my asset level has once again reached a new all time high for the fourth month in a row, eclipsing the previous high from last month. At the end of the month I am planning on making a 2016 SEP IRA contribution as well as taking a distribution from my S Corporation. Unless an unexpected Penfed CD deal pops up, I'm not planning on doing much else in the near future.

On the non-financial front, the biggest news is that we bought a new car in July! We were apparently a bit nostalgic over our old Nissan Maxima that we had for fifteen years, and we bought a 2016 Maxima to scratch that itch. And even though I had intended to do so when we bought our last car three years ago, I do intend to share my approach to the new car buying process. I cringe whenever I read some of the ways people get taken advantage of by car dealers, and perhaps my approach could help someone be better prepared when running the gauntlet of the new car buying process.

Tuesday, July 12, 2016

July 2016 Financial Asset Roundup

Here are my current financial assets as of the market close on July 11th, 2016:

Asset Jun
Checking 3,117 2,063 -1,054
Money Market 70,956 76,394 5,438
Savings Bonds 109,079 109,236 157
Treasury Bills 0 0 0
CDs 39,119 39,226 107
Brokerage 124,834 130,227 5,393
401k 126,186 126,798 612
Roth IRA 107,782 109,988 2,206
SEP IRA 539,140 550,841 11,701
529 Savings 137,376 139,944 2,568

Total Assets $1,257,589 $1,284,717 $27,128

The S&P 500 hit an all time high of 2,137.16 yesterday, rising 1.96% since the last update:

(chart courtesy of yahoo.com)

On the jobs front, the unemployment rate for June rose to 4.9% from 4.7%. Despite the rise, there was a big boost in hiring with 287,000 new jobs created. Oil prices have eased slightly to the $46 level (down from $48), with local gasoline prices continuing to remain relatively flat.

On the financial front, my asset level has once again reached a new all time high for the third month in a row, eclipsing the previous high from last month. I do have some cash on hand and could use that dry powder if an interesting opportunity pops up, but I'm not expecting much in the current interest rate environment.

On the non-financial front, the young Frugalsons ended their school year and have spent plenty of time recuperating from their academic endeavors. Mrs. Frugalson has also been toying with the idea of building a new deck around the pool, but there is currently no movement on that front.