Picking up Nickels

Thursday, April 15, 2010

March CPI-U numbers released: April 2010 issue I Bonds worth considering

The U.S. Bureau of Labor Statistics released the March 2010 Consumer Price Index (CPI-U) inflation data yesterday morning, which increased by 0.41% month over month.

As I have mentioned before, now (along with the release of the September CPI-U) 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 April 2010 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 September 2009 (215.969) and March 2010 (217.631) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for April 2010 issue I Bonds:

That means these bonds would earn a rate of 3.36% (using 0.30% fixed & 3.06 variable) for the first 6 months and 1.84% (using 0.30% fixed & 1.54% variable) for the second 6 months. Based on this, I believe I Bonds are once again a competitive investment when compared to something like the 12 month CD @ 2.00% APY currently being offered by Southeast Financial FCU.

I believe that April 2010 I Bonds are a pretty compelling buy during the low rate period we're currently in. I plan on buying $10,000 ($5k paper & $5k electronic at treasurydirect.gov) worth of April 2010 I Bonds myself and will reevaluate what to do with them in April 2011. Considering that it is believed that the FOMC could keep short term interest rates low through 2011, I may just hang onto these for a while..

Monday, April 12, 2010

April 2010 Financial Asset Roundup

Here are my current financial assets as of the market close on April 9th, 2010:

Asset Mar 2010 Apr 2010 Change
Checking 515 534 19
Money Market 40,471 45,646 5,175
Savings Bonds 25,985 26,009 24
Treasury Bills 0 0 0
CDs 112,576 114,737 2,161
Brokerage 87,284 90,869 3,585
401k 87,393 90,741 3,348
Roth IRA 40,350 41,682 1,332
SEP IRA 199,342 206,242 6,900
529 Savings 43,378 44,704 1,326
Total Assets $637,294 $661,164 $23,870

We've had another strong month from the S&P 500 as the index gained 4.26% since the last update:

(chart courtesy of msn.com)

We actually had some job growth in March, although the unemployment rate continued to hold steady at 9.7%, although some naysayers believe it will continue to go up. Oil prices have been relatively flat, trending to around $84 per barrel this morning.

Most of my time over the past couple of weeks has been sucked up dealing with the flooding we had on our property two weeks ago. While our basement and yard are mostly dry, we're looking to spend a bit of cash on tidying up our sump pump installation, adding some water-resistant basement storage, having some electrical work done (including purchasing a generator), and finding someone to deal with our flooded landscaping. I heard one local weatherman say that we've had six months worth of rain in four weeks, so I want to be prepared to handle that a bit more gracefully should it happen again. On a more positive note, I did sign a contract extension with my largest client and am pleased that I will continue to work with them through mid 2011.

Moneywise, I took the proceeds from my maturing one year Bank of America CD @ 2.65% APY and moved it to a Penfed 5 year @ 3.50% APY CD before they dropped their rates back to 3.0% APY. Also, with the March 2010 CPI-U numbers coming out on Thursday, I'm guessing that I will be ready to max out on April 2010 issue paper and electronic Series I savings bonds since they will offer a compelling alternative to current 1 year CD offerings like the 2% APY CD now available at Southeast Financial FCU. Once I finally start tackling my post-flood to do list, I'm looking to share the results of my research and experiences like I did with my driveway paving project. Hopefully my findings will help someone else out there if they have the misfortune of being dealt a similar (soaking wet) hand. :)

Tuesday, April 06, 2010

Please God, make the water stop!

It was one week ago today that I woke up and found 3.5" of water in my basement. Prior to that, we've never had a drop of water down there for the 10+ years we've lived in this house. Over the course of a few hours, that 3.5" increased to 6" (no thanks to my wimpy 1/6 HP pump) by the time a local company arrived on the scene to pump us out and do a rough install of a sump pump.

Our basement has been dry for several days now, but that is only because the new sump pump is now dumping water outside 2-3 times per minute instead of the 5 times per minute it was kicking in last week. We were given a generic looking Utilitech pump (apparently a cheapie exclusive to Lowe's), and while it saved our butts when we were getting desperate, I'm pretty nervous that it will fail under such a heavy workload. :( Based on what I've read online, I'm trying to find a 1/2 HP cast iron Zoeller sump pump, but I seem to have a better chance of seeing a unicorn than finding the pump I want locally.

Other than the joy of the Feds declaring that most of the state is a disaster area, I have a nice new stream running through my property and a series of sinkholes where the guy that built my house so kindly buried the stumps from our trees. If anyone out there ends up building a house some day, Do not let them bury any stumps on your property! I've been plagued by sinkholes for years, but this water-filled mess is by far the worst:

Keep the faith and stay dry out there...