Illiquid assets

Business Week inspired much yelping in the blogosphere this week with a splashy cover relying on some incredibly dodgy math. "How This Kid Made $60 Million in 18 Months," touts the cover ... glossing over the small detail that the profiled digg founder hasn't "made" any major cash money from the site and that the $60 million is a plucked-from-the-vapor calculation based on some unnamed sources' estimates of digg's worth. (The site currently claims $3 million a year in revenue. Mature companies generally get acquired for a single-digit multiple of their annual revenue. Early-stage ventures with very bright prospects go for higher multiples, but still, this is some impressively bubble-era math Business Week is doing.)

Plenty of others have kicked and dismantled this article in better detail than I can, but what caught my attention about the story from a personal-finance perspective is how nicely the flap over it illustrates the difficulty of valuing illiquid assets. Not many of us own potentially million-dollar Web companies, but almost all of us have assets that are valuable but not easily valued.

Homes are the most obvious case: a house is worth only and as much as a buyer will pay for it. What makes an apartment that sold for $200,000 in 2001 "worth" $400,000 today? Only the complex magic of supply, demand, and all the real-estate-ecosystem forces acting to influence them.

But houses, at least, have established guides for estimating value short of actually selling them, including appraisals and the constant data flow of nearby home sales. There are lots of assets we pick up with even more opaque financial valuations.

For me and David, the big financial X is our book collection. One of the items on my 'I really will deal with this ... eventually ...' list is getting renters' insurance. If our apartment flooded or burned down, one of our biggest financial hits would be writing off or replacing the 2,000 to 3,000 books we cohabitate with. (I'm slowing cataloguing the collection over at LibraryThing.) The overwhelming majority of our books are very standard, easy-to-find items that could be replaced for less than $5 over on Abebooks. Our "collection" is hardly the sort of thing Nicholas Basbanes will one day lovingly chronicle.

Still, hoovering books at the rate we do means you're bound to sweep up a few valuable ones, both intentionally and serendipitously. But attaching a "valuation" to books -- or any other collectable with a secondhand sales market but little intrinsic value -- is a tricky business.

I end up thinking of three separate "valuations" for our books. First, there's the dollar figure of what it would cost to replace them. If my copy of the Codex Seraphinianus were destroyed, I'd need to budget a few hundred dollars to re-buy a similar one. I could go through every book in our library, figure out a reasonable replacement cost to re-purchase the book, and assign a "value" to our collection that way.

But that value would have little relation to the dollar figure our collection would bring in if it were sold, either piecemeal or as a whole. Every bookseller knows that the retail price of a book is a significant markup over its wholesale cost. Bog common books that cost me $1 to buy on Abe would fetch me only pennies if I tried to sell my copy. For 95% of our collection, the replacement cost "valuation" would be significantly higher than the dollar amount for which the books could actually be sold.

Which leads to the third "valuation" for our collection: the wildly variable "value" of the handful of genuinely scarce items. Here, the value is directly dependent on how much time you have to seek a buyer. If we had a financial catastrophe and I needed cash immediately, I could eBay our Codex for $100 or so and get that price fairly quickly. But if I wanted to get top dollar for our copy, I could probably hold out and eventually get at least $350 (it's a very nice copy of an in-demand edition) for it from a dealer or another collector. So what's a more accurate valuation for the book: the 'liquid' value for which it is immediately sellable, or the harder-to-realize, higher price an appraiser or collectors' guide would assign to it?

This is all fairly academic, since I'm not planning to sell of our books or stress about an appraisal for insurance. I'm sure that if I really cared, there are formal answers for how to value things. I just find it intriguing to have a portion of my 'wealth' tied up in something that can't sensibly be given a fixed financial value.

And hey, my valuation challenges are minor compared to what art collectors must go through.

Inflicting further pain on Time Inc

The Washington Post's Checkout blog picked up my Time subscription saga today, so here's an update: I eBay'd it. Paid $10, and didn't end up missing any issues after all. Looks like eBay will be my route for all future magazine subscriptions! And just in time. New York magazine has this crackheaded notion that it's going raise prices to $40 per year, up from the $15 I've been paying ...

(As someone who makes a living writing things for Big Publishing, I'm very sympathetic to publishers' need to turn a profit. But trying to pry high subscription rates out of loyal subscribers isn't the way to do it -- I imagine the sales departments, which bait advertisers with big circ numbers, scream in horror every time nasty renewal practices force churn.)

A medical catch-22

Lately my main financial occupation has been researching medical parity laws and investigating the likelihood of successfully challenging an insurance company's coverage caps.

I like my new job a lot, but as I've mentioned earlier, one area where it falls way short of my last job is on insurance. I'm now with Blue Cross/Blue Shield. I've always chosen PPO options for my insurance, even when it costs more, because I want the option of going out of network if I need to. I was prepared to choose the PPO option and pay more with Blue Cross -- until I realised that it not only carries a higher monthly premium than the EPO (that's fine), it pays less on in-network services. Unlike every other insurance plan I've had, Blue Cross doesn't cover all in-network medical costs (minus co-pays and deductibles). It pays 90 percent -- but if you're on the PPO plan (paying the higher monthly premiums), it only covers 80 percent of in-network services. The PPO plan also carries a higher deducible and an out-of-pocket maximum that's twice the EPO plan's maximum.

That is one hell of a stick Blue Cross is wielding to get you on the EPO plan.

Which I grudgingly elected. And now, of course, the doctor I want to see is out of network, meaning I'll be paying out of pocket for my visits. Even if I'd gone with the PPO plan, I probably still would be -- I don't think this routine stuff will exceed the PPO plan's deductible.

Meanwhile, David is separately insured through his company's plan, with Aetna. Overall, I suppose I can't gripe too much about Aetna. We've had annoying problems with bills being processed incorrectly, but that seems par for the course with medical paperwork. The overall coverage levels at Aetna are way better than mine through Blue Cross, and apparently better than industry average.

However. Like pretty much every insurer, Aetna caps outpatient visits for some conditions at 30 visits a year. After 30 visits, no more coverage -- it's like being completely uninsured.

This strikes me as a financially stupid approach, for both the insurer and the customer. Medical conditions requiring treatment don't magically disappear after a set number of treatment visits. If the condition gets worse, it could result in hospitalization -- and that's much, much more expensive for Aetna than continuing to pay for outpatient care would be. If a doctor is still saying the care is essential, then the insurance company should at least consider paying for it.

With insurer decisions to stop paying for treatment, you can appeal. It's a frustrating process with no guarantees, but the research I've done suggests that if you squeak loud enough and have the resources and persistence to jump through all the spiky hoops the insurers lay out, you stand a reasonable shot of getting what you're after.

But with these preset limits on coverage outpatient care, the insurers fall back on policy and flatly refuse to make exceptions. An appeal from the doctor handling our case was apparently rejected. A really well-done article in the Times Union newspaper last year found that no provider interviewed had ever heard of an insurance company making an exception.

I'm still going to file a written appeal with Aetna, even if it's fruitless, just to get a written response. I want papers I can hold in my hand while I continue yelping.

But what is really infuriating me about all this is the idea that we're paying $250 a month for medical coverage that is going to be utterly useless for the services we actually require for the rest of this year. Yes, if one of us breaks a leg, it'll come in handy again. Great. But for the care we actually need, we'll be paying out of pocket. Which would be much easier to afford if not for the whopping bill we pay each month for insurance.

Eternal vigilance, or, 'Why Stacy is cranky with Amex, New School and Aetna'

Sorry for the long patch again of radio silence -- it's been a month of travel and bureaucracy. I'm in one of those stretches right now where I feel like my sole purpose in life is to facilitate the movement of bits of paper.

This week, it's New School University I'm shuffling paper around for. I'm heading into my third and final year of finishing off a degree there. When I enrolled, New School kindly gave me two scholarships. I hadn't directly applied for these and had no idea exactly what they were for or how they worked, but the financial aid office told me they would be renewed each year automatically, so long as I didn't flunk out. Excellent.

Less kindly, New School has flubbed the renewal each year. The first time, I was willing to chalk it up as oversight. Twice makes me question the competence of the financial aid office.

When I got my financial statements last year, my scholarships weren't listed. Fortunately, the problem was easily solved: I fired off an email to the financial aid office, and got an email back the next day saying "whoops, we'll fix that." A day or so later, the scholarships showed up in the online financial system info. Yay. One was for half as much as it had been the previous year, but the other was for twice as much. Since the total amount worked out to what I was expecting, I shrugged and went with it.

This year, the scholarships once again failed to show up in the records. However, this time my email about it went unanswered. So I hauled myself in to the open office hours yesterday to attempt to straighten it. Scholarship 1, I was told, should show up every year -- it not doing so this time was an oversight, and oops, they'll fix that right away. Scholarship 2, however, the counselor said, is need-based, and since my FAFSA kicked up a higher "student contribution" amount this year, my scholarship died.

Grumble. No one told me it was need-based, I muttered. But, ok. At least I have an answer, and since I do make more now than I did in past years, I suppose I can't complain too strenuously.

But when I checked the records this morning, I saw that Scholarship 1 came through for the same amount it did last year -- which is half what it paid out the first year. Last year, I had Scholarship 2 balancing that out. Since Scholarship 2 is now gone, Scholarship 1's decrease is an issue. It looks like I'll be dragging back to the financial aid office. Grr.

Meanwhile, Amex has finally just resolved the last of the complications from my April credit-card-information-theft incident. Despite Amex's "we'll take care of contesting everything" assurances, several of the charges stuck, until I called and filed another round of protests. Two were take off my bill a month later, but Amex declined to reverse one charge -- the Domino's pizza order. Its denial letter said I had apparently authorized the charge, and included a signed receipt as proof. A receipt from Philly, which I was not anywhere near at the time, signed in handwriting that isn't mind. Grr. (This entry is bought to you by the word "Grr.")

So I called Amex again, protested again, and this time it worked. This week the Domino's charge finally came off my bill, and I got an "oops, sorry!" note in the snail mail.

I'm also hacking through piles of paperwork from the ongoing medical drama. That will be another entry. But the whole paperwork stack, and the frequency with which I find myself spending time sorting out overcharges and erroneous charges, suggests that people who don't do this end up paying a lot of fees they shouldn't have to. I wasn't always as organized as I am now about finances. ("Gibbering ball of denial" would more accurately describe me and my financial strategies for the first year or so I was out of college.)

Someone (exactly who seems to be controversial) famously said that "eternal vigilance is the price of liberty." It seems it's also the price of financial security.

On pennies and yuppie food stamps

A recent acknowledgement from the U.S. Mint that rising metal costs now mean it's more expensive to make a penny (manufacturing cost: about 1.2 cents) that to buy one have sparked a fresh wave of news articles about the imperiled penny and editorials calling for its death.

I don't have strong feelings either way on the fate of the penny. I do actually drag them around in my wallet and spend them, and don't see much about the weight of my wallet or my spending habits changing if they get exterminated. On a practical note, my Aussie partner David notes that when Australia off'd its pennies, no one really felt the loss. Cash transactions are rounded to the nearest five cents, and credit transactions continued to be calculated as they are now.

In other money matters, the recent wave of massive storms in the Northeast has rendered the $20 artistically inaccurate. The Washington Post reports that one of the storms' fatalities was one of the two elm trees pictured on the back of the bill, framing the White House. Frame your $20s and pennies now -- they're becomming historical artifacts!

Dropping to one paycheck

One of my friends posted today about how her family is making life work on a single income. The aspect of it that intrigued me the most is: plan. This is a terribly basic thing, but I still struggle to implement it in my daily financial life. The thing savings buys you isn't more stuff, it's flexibility. The value of have flexibility when you need it? Priceless.

Real estate: Buying doesn't always make sense

Greetings from Seattle. Another city, another free rental car upgrade -- National had no compacts in stock, so I ended up driving off with the same mid-size I had just declined to pay an upgrade charge for.

Someday I hope to acquire the skill of regular blogging. For now, I'll have to be sporadic -- sorry! But be assured that even if I go silent for a stretch, I'm not abandoning the ship.

I finished one of the house-buying books I mentioned earlier, June Fletcher's House Poor: Pumped-Up Prices, Rising Rates, and Mortgages on Steroids. My verdict: It's a clip job, but a pretty decent one. In the acknowledgments, Fletcher makes a comment about the project coming together very quickly. She's been covering real estate for two decades, lately for the Wall Street Journal, and my guess would be that a publisher approached her about striking while the market is hot and scraping together information from her articles for a quickie book.

Which means there's some definite filler in the already-fairly-slender (224 pages) book, like the "Going Global" section with snapshots of, say, buying conditions in Panama. I would guess that almost no one picking up this book is actually looking to buy in Panama, and people who are will need a lot more data (and more current data) than this offers.

For those at the earlier stages of considering real-estate purchases, though (like me!), House Poor has value. The main point I took away from the book -- and I think it's a pretty useful one -- is "don't fall for the line that everyone needs to buy, quick quick quick!" Fletcher has covered several complete real-estate boom-and-buy cycles, and she doesn't endorse the notion that buying an apartment/house is always a smart investment -- even for your primary residence. On a purely financial level, renting can be smarter in a number of circumstances.

For instance, one of her anecdotes concerns a couple that bought at the height of the last boom in D.C. -- and found, three years or so later, that they couldn't resell the house for enough to cover its mortgage. Over the last few years, with prices skyrocketing double-digit percentages each year, it's tempting to see real estate as the investment that just keeps giving. But booms always inspire that sense of frenzy -- and booms don't last indefinitely, no matter how much industry observers cry "but *this* time the fundamentals are different!"

Friends of mine in the D.C. area just had to sink five figures into a complete overhaul of the piping in a house they bought only a year or two ago. If your house is intended as your long-term primary residence, you sigh and grumble about those sorts of unexpected costs, but can take some comfort in recognizing that they'll be amortized over the lengthy time you spend in the dwelling. If this is a house you intend to unload in five years? If prices don't jump a *lot*, you may not recoup what you've paid for those unexpected fixes.

There are, of course, non-financial advantages to owning. I want to decorate and have the freedom to treat the place I live as *mine.* I'm willing to spend extra money for that psychological comfort. In NYC now and for the foreseeable future, buying costs a fair bit more than renting a comparable apartment. Even if I crunched numbers and discovered that the equity of owning a place didn't offset the costs -- that renting and investing would be a more financially advantageous option -- I would still buy, for the psychological reasons.

However, I likely wouldn't if I knew I'd be reselling in less than, say, a decade. Imagine a couple with part-time kid custody. They know that when the kids leave for college, they'll move to a smaller place in a better location. They're deciding whether to rent in the interim or buy a larger place that they will eventually sell and "trade in" for the smaller one. It isn't a given that this couple should buy. Depending on the relative costs of each option, and the likely appreciation in housing prices in their market, it may be wiser to rent, sock away difference each month between what they pay for rent and what they would have spent to buy, and use that cash pile -- rather than equity/appreciation from the house they would have bought -- to fund their eventual trade-up.

Fletcher kicks around such scenarios to make the point that buying real estate is a complicated calculation. That alone makes House Poor helpful and interesting. It's also a good basic reference for information on how things like interest-only loans, reverse amortization, PMI, and other logistical considerations work.

'The check cleared' doesn't mean what you think it does

Like many people these days, I deal with actual paper checks rarely. I write one a month for my rent, cash one perhaps every few months, and deal with all the rest of my financial matters (paycheck deposits, bill paying, etc) electronically.

Those electronic transactions come with elaborate consumer safeguards. As many times as I've had my accounts used fraudulently, I've never been personally libel for any of the losses. Not so with checks. If a check you deposit bounces, you eat the loss. Here's the not-so-well-known catch: A check can bounce long after the bank has cleared it and released the funds.

That's the foundation for a nasty scam that seems to be picking up steam. The Washington Post wrote about it recently in "Banks Honor Bogus Checks and Scam Victims Pay," and a friend got targeted this week through a resume he has posted on Monster.

Here's the basics of how it works. The scammer makes contact and arranges to send you checks, with the understanding that you'll cash a large check and then wire a percentage of it -- minus a generous fee/commission for you, of course -- back to him or another party. Online job boards seem to be a breeding ground for this. From the WashPost piece:

In February, about a year after Gaston had posted her résumé on a job-search Web site, she received an e-mail about a part-time opportunity: to work as a courier for money for an international charity that builds homes for people in disaster areas. Her assignment was to deposit local donations into her own bank account, wait for the checks to clear and then wire the money to another address. She was told she would be paid 7 percent of every donation check, with a guarantee of $500 the first week on the job.

The phishing email my friend received proposed a job as "transfer manager."

The task of the Transfer Manager is to process payments between our clients and our company via checks, bank wire transfers,Money Orders. ... It’s a commission based position. You will get about 8% of each processed payment.

The trick is that banks are required by law to clear checks within a day or two of deposit. That's too short a timeframe for them to actually pull funds from the check-writer's account and guarantee the transaction's authenticity. So, banks will clear funds and make them available in your account -- but if the check later proves fraudulent, the bank will return crying fraud and yank the money right back out of your account.

In the scam, it's too late at the point. The victim has already sent much of the 'cleared' cash back to the scammer, leaving them holding the bag for the loss.

Even certified checks are subject to this authenticity-verification delay. The only safe practise seems to be refusing checks from those you don't have a trusted relationship with. If you absolutely must take a check from an unknown party, don't release the funds for several weeks, until there's been plenty of time for the transfer to be proven genuine.

Materialism vs Experiences

When I was ten and first started paying attention to my allowance money, I resolved to only spend it on tangible things. A sandwich would disappear once it was eaten, so what was the point? I reasoned. I would keep my money for lasting objects.

Eighteen years later, my philosophy has basically done a complete turnaround.

I still spend plenty of money on things. I cheerfully describe both myself and my spouse David as materialists, because we are clutterrats who accumulate lots of things -- books lead the list, but we also round up souvenirs quite a bit when we travel, and have an assortment of collections. David must have three or four dozen baseball caps lurking in our single closet. Living in a tiny NYC apartment does curb the clutter instinct.

But a much larger percentage of our income now goes to 'experiences,' particularly travel. I bounce around a lot for work, but David and I also spend a pretty hefty sum visiting friends and new places. (Forty states down, ten to go ...) I also routinely drop more money that younger-me would ever have imagined sane to dine out. I like to cook, and do so at least a few times a week, but I also really like eating my way through NYC's abundance of excellent restaurants.

Every so often I mentally wrestle with this mindset. Is it really smart to spend so much of my income on ephemeral experiences? On the other hand, there isn't a lot (beyond books) in the way of material goods that I really covet -- and the experiences I've had shape who I am.

This idle musing was underlined when David presented me with my birthday present last night (6/6 -- I'm a devil baby!): A bottle of Grange, Australia's famed Very Best Wine. I nearly keeled over. On our last trip to David's homeland, we took the Penfolds tour, and for years I'd heard stories from David and other Aussies about the wonders of Grange. Our wine budget is set considerably below the Grange threshold, though, so I never really expected to try it anytime soon.

I drink $20 wines fairly routinely, and I've had occasion to try a few in the low-three-figures range, though almost never when I'm paying. (Ah, the perks of business dinners ...) But I've never before confronted a bottle of wine that costs in the range of what I used to get paid for a week's work when I started my career.

Part of me knows there's absolutely no way to financially justify spending that sort of money on a fleeting extravagance. And part of me says it's an experience I'll always remember.

Financial decisions are funny things. How we choose spend our money really does say a lot about who we are.

My annual wrangle with Time Inc.

A few habits from my childhood have proven impossible to shake off, and reading Time is one of them. My browser homepage is washingtonpost.com, which keeps me somewhat attuned to the daily news cycle, but I've never subscribed to a daily newspaper myself (though my parents had a WashPost subscription for as long as I can remember) -- I lack the time and discipline for that kind of reading. I rely on a weekly newsmagazine to make sure I don't miss anything huge. Time brand loyalty runs deep. Although it's gone through periods of being frustratingly fluffy, I've always stuck with the magazine. The idea of switching to Newsweek or U.S. News and World Report feels wrong on some sort of cellular level; my family is a Time family, and that's that.

Not that Time Inc. hasn't done its best to drive me away. My subscription has been running for close to ten years now, and I'm sufficiently addicted to the magazine that I don't want to have a gap between renewals. The sensible thing would be annual auto-renewal, right? Cheaper for them then trying to win my business afresh each year, and easier for me.

But why would a magazine publisher do the sensible thing when it can instead inflict pain and suffering on loyal subscribers?

Try the trick of eBaying your magazine subscriptions and you'll see that a year's worth of Time runs about $10. If I were frugal above all, I'd let the subscription die each year and eBay up a fresh one. But I'm sufficiently opposed to gapping my subscription that I'm willing to pay a bit more for a proper renewal.

I am not, however, willing to let Time Inc. blatantly hose me.

Go to time.com and click on subscribe, and you'll see a year's subscription priced at $29.95. That's been the subscription price for at least two or three years.

If I click on the Renew button and log in, what rate does it want to charge me? $49.84.

So, Time wants me to reward my customer loyalty by charging me $20 more than a new subscriber would pay. This, of course, makes my inner consumer advocate go RAAAAAR. The one year Time managed to sneak through one of those automatic renewals it routinely gets legally smacked for, I recall the rate being even higher, around the $60/year mark. (I called, screamed a lot, and got the charge reversed and the automatic renewal cancelled.)

Because the renewal disparity offends me so much, I started writing in to Time's customer service to complain about it. And discovered that if you complain about it, they go "oops, sorry!" ... and agree to bill you the lower rate.

So Time Inc. and I now have this annual Kabuki dance each June, as my subscription comes up for renewal. They invoice me for the higher cost, I write in a scathing email pointing out that their renewal rate is $20 higher than the new-subscriber rate, and two days later, they email back the form letter offering me the lower rate. From this year's installment:

Please understand that testing different rates is a common marketing practice. The offer you mention is targeting new subscribers. The offer enables potential customers to review the magazines at that low rate to decide if they would like to continue with a subscription. Because we value your business, we will be happy to extend your current subscription with that offer, if you like.

You may visit our website and renew your subscription from there. Or, if you prefer, you may return this e-mail with your full name, complete mailing address (including city, state, and zip code), and account number. Please include your order and billing instructions.

We apologize for any confusion and look forward to hearing from you!

Exceptional customer service is our number one priority.

The whole wrangle is annoying enough that I regard magazine renewals the way most people do the annual trip to the dentist. It's June? Oh, hell, time to go fight with Time again.

Please, Time Inc., can we have a cease fire? I will give you the thing every marketer dreams of, my credit card number and a standing annual-renewal order, if you will please just promise to do one simple thing: give me your lowest subscription rate. It's been ten years, and I think we're ready for that kind of commitment. It's time for us to break this cycle of dysfunction.

If not ... well, I don't want you to take this the wrong way, but ... that Newsweek does keep filling my mailbox with some alluring come-ons.

IRAs, 401ks, and other headache-inducing TLAs

I had the clever timing to start my new job just as my employer was switching 401k providers, from Scudder to JP Morgan. The various confusions meant that it's taken more than three months since I started for my 401k to be completely set up and functioning properly. So, last week I finally got around to going through my rollover forms from JP Morgan and contacting my old 401k provider, ING, about transferring funds from my old employer's plan to my new one.

ING, of course, doesn't like the idea of losing my money. The rep I spoke with first pitched the idea of leaving my existing 401k in place. Bzzt. I'd already ruled that idea out; if I need to borrow against my 401k, or even make a hardship withdrawl, that's a lot easier if the money is in my current employer's plan. The investment mix is pretty comparable at both ING and JP Morgan, so there's no edge there for ING.

Undaunted, the rep next pitched the idea of moving some of the money into an IRA at ING. It's "more flexible" than a 401k, he said. Hrm. This idea I had not considered. I've always kept all my retirement money in one 401k (I did a rollover the last time I changed jobs, five years ago) for simplicity. At some point I plan to look into a Roth IRA, but I hadn't seen any reason to check out a traditional one.

How is it more flexible? I asked. Er um, said the rep. He then offered to
"waive the fees, if that's daunting you." Fees? Grr. I don't like buying things by phone anyway, so I told them to just send my rollover forms and be done with it.

I then went skittering off to my usual information source, The Internets. However, there is not much to be found in the way of concrete details on ING's Rollover IRAs page. It looks like the main selling point is that you have a broader mix of investment options.

I'm pretty conservative with my retirement-stash investments (I'm a margarita-mix girl), and I value simplicity over penny-maximizing schemes that'll generate a .005% higher return. Anyone mucked around with rollover IRAs? Any reason I shouldn't stick with my plan to do a straight 401k-to-401k rollover and continue ignoring it all?

Back in business

Whoops, that was not intended to be a cliffhanger and long hiatus. Once again, the culprit was travel. SF & DC were lovely.

The credit reports I pulled were surprisingly accurate. It's a bit daunting to realise just how many credit lines I've had in my not-so-very-long consumer lifetime. Each report showed more than two dozen accounts -- credit cards, retail cards (usually opened for discounts, used once, and subsequently ignored), student loans, and other assorted bits. While I only actively use two credit-card accounts and my student loan lines, I apparently still have another fistful of still-living retail accounts.

Of all the dozens of accounts listed, though, all were recognizably mine. Yay no identity theft! The only inaccuracy I could find was the address listing on my Experian report, which was for an address I lived at five years ago. Weirdly, the report had both my subsequent and current addresses listed as "past" ones. Still, I doubt I'll bother correcting that. TransUnion had my correct current address. Both reports also listed as my employer the company I left about six years ago. *Shrug.*

It was interesting to see just how many inquires there were by marketers for my file -- each report contained about five pages of them. Discover apparently pings frequently. (Inquiries initiated by you, when you apply for new credit lines, are listed and treated separately. Too many of those inquires can be a red flag, since it can indicate a hunt for lots of new credit. Inquiries by marketers don't affect you credit score and profile at all.)

The report also showed, in the marketing-inquiries section, pulls by credit card companies for account-review purposes. Providian apparently grabs my report monthly. Amex picks it up only once a year or so. I wonder if that means Providian is more likely to pull the nasty trick I've heard about of yanking up your APR for missing *any* credit-card payment, not just one to them ...

Pulling my credit reports

As part of my house-buying daydreaming, I decided to do the annual credit-report pull -- now free, yay!

I did this last September, soon after it because available in New York, for David. That was tricky, since he has no credit cards in his name and has a very limited credit history in the U.S. None of the three credit-report vendors would give us online access to his reports. Each required a paper request. We filed those, and after a month or so got the reports for him from each place. (Tiny, two-page reports. Mine are like phone books.)

I'd thought I did the same for myself around that time, but I couldn't find the printouts I would have made in my files, so I decided to give it another go on Friday. The website is AnnualCreditReport.com.

First impression: This is elaborate. The site routes you in turn through each of the three reporting agencies. First up for me was TransUnion. In addition to expected stuff like my name, address and social security number, TransUnion wanted details on some of my accounts for identity verification. But credit reports are packed with dead accounts. It first rejected the number for my student loan notes and asked me instead to provide an alternative set of information verification data. Fine; I clicked the button to provide details on my revolving accounts. It came up with a list of a half-dozen accounts: three dead store accounts I probably still have open but no longer use, one long-closed card, and two current ones. I gave details on one current card. That checked out ok, but it asked for the account number for another. That too checked out -- but it wanted a third after that. I didn't have available the numbers for any of the store accounts or for the dead card. So I had to try a third verification method: Confirming old addresses. Fortunately, that one finally worked, and it gave me access.

TransUnion also wanted me to create a user name and password for returning to view the report within the next 30 days. More passwords to try to keep track of, whee. (I use CryptInfo on my Palm. It is invaluable.)

Experian was easier: It wanted me to answer a set of four verification questions, about the county I reside in, the street I used to live on, and two questions about my non-existent mortgage ('none of the above' was an option, and the correct one for me.) For return access, it wants me to keep track of the report number, rather than a password.

At Equifax, I bombed out -- it said records show I got my report from them on 9/2/05. Guess I did pull some in September after all. I'll have to hold off till the fall to pull that one.

So after all that to get the reports, how accurate were they? I'll get to that in my next update ...

Stocking my house-buying info bookshelf

Two of my close friends are in process of buying a house right now, the crazy kids. (An actual *house.* In New York City. Who knew such things existed?) This has gotten me thinking wistfully again about real estate. We're not in a position to buy anything now, and I doubt we will be for at least another year, but since I'm always information obsessive, what's to stop me getting started with some research?

Listening to these two go through the details of the buying process, it hit me how little I understood it all. Inspections? Title checks? Swarms of lawyers? Eeek! So, I asked for book suggestions. Home Buying for Dummies was enthusiastically recommended as a good overview. I'm also interested in the larger economic questions about the housing market -- how do you judge when it's the 'right' time for you to roll the dice on a purchase? The Washington Post's personal-finance columnist, Michelle Singletary, is pretty impressed by June Fletcher's House Poor: Pumped-Up Prices, Rising Rates, and Mortgages on Steroids, and makes a persuasive case for it. So I tossed that into my Amazon shopping basket as well.

I'm about 10 pages into House Poor right now. I'll report back when I've finished the books. Anyone else have recommendations?

'Don't Be Evil' investment strategies

It had to happen, I suppose. For years a handful of organizations have focused on advocating socially conscious investing, encouraging individuals and organizations to weed out of their investment portfolios those companies that perpetrate environmental, cultural and political ills. So what's a red-meat right-winger do to? Fight fire with fire (or money with money), of course, and launch a mutual fund pledged "to defend free enterprise from the Left’s use of capitalism against capitalism." Hence we have the Free Enterprise Action Fund, which Daniel Gross entertainingly smacks around in Slate today. It seems that fighting the Left's crimes against capitalism doesn't yet deliver better returns than the S&P 500.

Sort of in line with my last post: I've never been a fan of the line that a corporation's primary responsibility is to make money for its shareholders. There are things more important than absolute dollar returns, but it's become a business cliché for CEOs to spout off that their legal and fiduciary duty is to do whatever will make the most money for stockholders. Worse, this gets spun as some sort of democratic affirmation, because for public companies, anyone can be a shareholder and lots of everyday people are, thanks to mutual-fund-packed 401ks and pension plans. And, of course, we don't want to see bad things happen to corporate America and tank Grandma's pension, do we? Why, those nasty representatives in Congress considering an excess profits tax would just be snatching money from the millions of Americans with Exxon stock in their retirement plans!

Me to Congress: Please snatch money from my retirement plan. I have no idea what stocks are in the mutual-fund mix in my 401k, but personally, I'm perfectly ok with taking a hit there in return for tighter controls on the petroleum companies that are currently reporting annual profits surpassing the GDPs of most developing nations.

Someday soon I need to quit being lazy and explore options like Working Assets' range of financial products.

Why I'm not trying to maximize my money

Back from the road again -- travel and blogging just don't mix well for me. I see my post about keeping separate accounts with my spouse generated comments while I was gone. One point in particular caught my attention:

My wife and I used to operate the exact same system as you and I have to say the best financial decision I ever made was to change this round. ... Our savings rate has tripled since we started doing this and yet we haven't felt deprived. We have just stopped wasting money.

That makes sense to me. It also touches on one of the fundamental issues that got me started on thinking and blogging about personal finance: What do you prioritize over "more money"?

For me, it's a pretty long list. Heading it is "a lifestyle that means I can think about money as infrequently as possible." David and I would spend less if we had joint accounts and cleared purchases with each other. I'm absolutely certain of that. We would also spend more time wrangling with each other about finances. I'm willing to trade away a few hundred dollars a month in additional savings to spare us that stress. I'm also aware that the choice is a luxury I'm very fortunate to have.

Money, in the absolute sense, doesn't interest me. This is why I don't have any desire at all to be an "active" investor -- stocks, interest rates, esoteric investment vehicles and other moneymaking schemes don't seem like any fun to me. Paychecks from our day job are enough for me and David to live on and meet our (admittedly too minimal) savings goals; if I'm going to invest my free time in something, it had better entertain me, and monitoring investments would not.

I will be the token "I hate money" personal finance blogger :)

A very annoying form of rebate

David got a new cell phone and plan last month from Cingular which came with a $20 rebate. We did all the usual annoying rebate stuff, including waiting close to two months for the refund, which arrived Friday. But here's a twist: Instead of the check I expected, what arrived is a prepaid Visa card, preloaded with the $20 rebate.

I think that's pretty obnoxious, because it'll be hard to use all $20. The letter it came with suggests that if you want to use the card for a purchase of more than $20, you request that the merchant run the purchase twice, once for $20 and then once for the rest of the balance, paid with cash or another credit card/check. I've occasionally split bills in weird ways at restaurants, but I've never tried such a thing in retail shops, and I can't imagine it would get a terribly favorable response.

The poetically just thing to do, ofc, would be to use the prepaid card to pay $20 of David's next Cingular bill and force them to handle the split payment. We have the monthly bill set to automatically charge to our Amex. I wonder if it's worth wranging with Cingular customer service to skip the autobill next month and pay with the prepaid card.

Probably not.

Sigh.

What do you really need in your 'emergency' fund?

The question came up this week in a chat area I frequent: When do you declare your emergency fund full? Financial pundits like to throw around suggestions about 'have three/six/eight/a bazillion months of cash on hand,' but what are people really setting aside as a cushion?

Here's an article on the topic I like: The $0 emergency fund. The author's argument is that these days, with easy credit and all sorts of savings and investment options available to regular consumers, what you really need isn't cash but flexibility.

Jonathan Clements of The Wall Street Journal drew a lot of heat a few years ago when he confessed to keeping only a month's worth of expenses in his emergency fund. He wanted his money working for him in the markets, not disappearing inch by inch as taxes and inflation took their toll.

But Clements' view is shared by many financially sophisticated folks who would rather take more risk -- in stocks, in real estate, in their own businesses -- to get better returns. And that approach can be perfectly legitimate, as long as you can quickly get your hands on enough money when you need it.

This makes a lot of sense to me. A 'real' emergency -- a job loss, a medical crisis, draconian rent hikes, etc -- is something that throws your usual life into chaos. You can't effectively plan for such things. What you can do is give yourself as much flexibility as possible. Having lots of savings is a great cushion for all sorts of unexpected life events, but you don't really need all that much sitting in a basic checking account or stuffed under the mattress in $20 bills.

There are a number of savings/investment options that give you near-immediate accessibility to your money, like money-market accounts or straight stock-trading accounts. A level up, there are vehicles like short-term CDs. I just checked my bank's rates, and the rate difference between a 1-year CD and a 5-year CD is less than 0.10%. With so little incremental difference, there's no reason not to opt for the shorter duration and have your money more liquid.

The real decision point comes when you're considering tying up your funds in something difficult to quickly liquidate -- like real estate or a business venture. There, I think the 'flexibility' comes into play. The investment may eat up an uncomfortable share of your 'cash' savings, but: do you have other ways of tapping cash if you need to, like lots of available credit, a home-equity line, a 401k loan, and so on? So long as you *can* get three/six/eight/a bazillion months of available money if you need -- and everyone will have to come up with their own comfort-level number to fill in that blank -- it doesn't seem essential that the money actually be cash.

So what's my own emergency-fund strategy? I'm trying to save up about $5,000 to put in a money-market account, where I can grab it instantly if needed. I have a significant chunk of available credit -- enough to pay most of my living expenses for about six months, I think. And I have about an equal amount available for borrowing against on my 401k.

My next 'major' cash-immobilizing purchase will likely be a primary residence. If we eventually get there, I expect the down payment to devour any 'emergency fund' savings we've accrued, but I won't fret too much about it as long as we have credit levers we can pull if needed.

Our best marriage decision: not pooling accounts

The best thing David and I ever did for our marriage is maintain separate financial accounts.

Decisions like keeping your own name when you marry (I did that too) are very common, but I have no idea what percentage of couples don't merge their checking accounts. For us, it was an easy decision. We each make very similar salaries. We're also both alike in our habits: we fritter away a lot of money on perks like books, travel and dining out, but we're also reliable about not spending money we'll need for rent and bills and such.

We're also both prone to spending on things the other would consider stupid. David recently dropped something in the high-two, possibly three, figures for his 25th "Dark Side of the Moon" copy. (He insists this one is somehow different and special. The distinction escapes me.) I recently spent three figures on a handbag, for the first time. (David doesn't understand why I didn't spend $20 and buy one off the street. The distinction escapes him.) If such purchases were coming out of our money stash, we'd be at eachother's throats about them. But because his personal spending comes out of his account, it doesn't faze me, and vice versa.

We could accomplish something similar by pooling all our money and giving ourselves allowances, as the Make Love Not Debt pair recently discussed. For us, though, there's no pressing reason to go that route. We don't have any big savings targets we're trying to hit right now. (We probably should, like saving for an apartment downpayment, but we're not there yet.) We don't have any joint debt. We're pretty good at shifting our resources around as is sensible. When I was trying to pay off my credit-card debt, David carried my student-loan payments for years. On a day-to-day basis, whoever feels like they can spare the cash for groceries, dinner out, etc., is the one to pick up the check. For major expenses, like a vacation or a sudden cat trip to the vet, we generally charge it to the Amex (our closest thing to a shared account -- I'm the primary cardholder, but David is an authorized user and has his own card) and split it up at bill-paying time. For us, it's a surprisingly stress-free system.

None of our financial information is secret from each other, and when it comes to big savings pools, I think we both consider them 'ours' -- I may be the only one funding my 401k, but I fully expect it to be used on us both, and I regard it as a shared asset. But I like the independence of each of us having our own accounts, and being able to indulge our own spending idiosyncrasies. Having kids is the one thing I can think of that would derail this independent-finances approach. There, the expenses are so big and so shared it would be hard not to have a joint pool to draw from. But for us, I think not going the typical joint-checking route has spared us a lot of marital discord.

At least it's less painful than having my debit card hacked

Some researcher, somewhere, must have calculated the odds of having your credit-card information intercepted and used fraudulently. In the typical consumer lifespan, how many times is one statistically likely to hit the problem, on average?

I'm now on go-round #3.

Both times before, it's been my Netbank Visa/check card that got nailed. The first (I can't remember exactly when -- perhaps three years ago?) was the ugliest: someone got hold of both my card number and PIN, and made a dummy card that was used to withdraw about $1,200 from an ATM in Queens, the entirety of what was in my account. No one has my PIN, and I had my card on me the whole time this was going on. What probably happened was that my card got hit in an ATM skimming scam. I'm not completely oblivious and would likely have spotted a suspicious device, but a hot new trend in fraud is internally rigged ATMs -- and I do pretty regularly use the kind of non-bank ATMs in convenience stores and whatnot that are most susceptible to this. (Well, I did. I *try* to stick with bank ATMs now ... but I fall off the wagon a lot ...)

Clearing that up entailed filing a police report, along with all the fraud paperwork at my bank, and waiting several weeks for my money to be credited back. To NetBank's credit, they didn't hassle me too much about "they used your PIN, you must have given it out!" or anything.

About a year ago, my NetBank account got cleaned out again, though this time it was a case of more "classic" credit card fraud. One morning a blizzard of charges appeared for expensive, out-of-town purchases at stores like Staples and Foot Locker. Call NetBank, file fraud paperwork, replace card, wait several weeks for a refund, lather, rinse ...

Neither incident ended up costing me money that wasn't refunded (although I did probably spend $10 or so tracking down and faxing police forms to my bank and getting things notarized, the first time). The most painful part each time was waiting the week or so it took for my new bank card to arrive, during which stretch I had no access to cash. Ug.

So this Tuesday, I stagger home at 9:30pm from a long day spent mostly at a hospital ... and find 10 messages on the answering machine. Nine were from merchants or Amex calling to say "Hi! We want to verify this large, suspicious charge on your card!"

ARUGH.

I managed to ring back and connect to Amex's charge-verification unit about five minutes before it closed for the day. To Amex's credit, it seems like this is going to go about as smoothly as it can. They caught this early (a $500 online order from Nordstrom's was the first to set off their red-flags radar), proactively notified me, and it sounds like I don't have to file a pile of paperwork on this. They're taking care of contesting all the charges that came through on Tuesday from outside NYC, and of taking off the one suspicious charge I spotted that had already gone through. (Last Thursday, my Philly scamster apparently took the card for a trial run with a Domino's pizza order.) They also overnighted me a new card for free -- yay! It arrived Thursday.

(I initially thought that a particularly nice customer-service touch, that Amex was overnighting my card. If only my bank had done that ..., I thought. But then, on Thursday, I unexpectedly ended up putting several hundred dollars on my card -- and, lacking my Amex, I charged it to my backup Providian Visa. At which point it occurred to me that Amex has a strong self interest in getting me a new card as fast as physically possible. All those precious merchant transaction fees! Lost to a rival! Quelle horror!)

This time, the most painful part is going to be tracking down and changing all the things I have autobilling to my card. Grr.

So, three fraud-hacks in ... counts on fingers ... say about 10 years so far of active credit-using consumer life. Am I above average yet?