Why I Quit My Job

I just finished watching an episode of the TV show “The Office” and it started me thinking about how and why I quit my previous job. 

I imagine my story isn’t all that different from yours if you’ve ever left a job you were unhappy with.  If I had to guess, there were probably some changes that made the job less enjoyable or even totally unbearable for you.  It got to a certain point where you were unhappy enough that it was worth the effort and risk to leave your job and find something new.

It was no different for me. The small and innovative software group I started with was absorbed over time into the much larger parent company.  The resulting job left me miserable all day long, or at least 90% of most days, and I knew that I had to make a change.

Change or Die?

Our world is changing faster with each generation and if you can’t adapt to things that come your way then life as you know it will die.  That sounds kind of dramatic and honestly it’d be much simpler if things didn’t change so quickly but it’s something we all have to deal with. 

For example, let’s say your company decides that you need to start traveling around the country for one week a month to respond to changing market conditions.  The first thing you have to decide is whether you’re willing to leave behind your life one week out of each month.

If the answer is no then you’re in a potentially maddening position.  If you can afford to quit your job and find a new one then everything is fine.  However, if you can’t quit for financial reasons then suddenly you’re forced into living a certain way that makes you unhappy.

Freedom to Choose

When life changes and puts us in situations like this we sometimes describe ourselves as feeling stuck or trapped because we don’t feel like we have any options.

We really want the freedom to be able to choose but if our financial situation removes most of our options then we can get really cranky.

While not having options does sound depressing, the good news is that if you prepare yourself then you should have options when these inevitable life changes come your way.

Better Times

Thankfully I was able to quit my job because we had done the prep work over the previous several years.  My life is so much better now than it was a few years ago but I feel badly for the people that are still working at my old job. I actually go into a lot more detail about how it all played out and the people left behind in a story called Life’s Too Short for a Crappy Job.

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Costco Discounts and the Worst Credit Cards

Costco memberships and fake credit cards have been the topics of choice for me in my latest articles over at Wisebread.  I thought you might find a few good tips in some of them so I wanted to share a little about them.

Costco Discounts

I’ve become a fan of the warehouse club ever since I discoved some Costco membership discounts and became a member.  I surveyed a bunch of friends with little kids to find out what kinds of things they bought at Costco and organized them by category.

• How Parents Save Money at Costco

Worst Credit Cards

I had some fun inventing fake credit cards like Santa’s Sleigh Miles Card, Ebenezer Scrooge Charity Card, and the Rudolph Red Card for this one.  Basically I went over things to avoid in certain types of cards and suggested some alternatives. 

For the travel cards I pointed out Blue Sky from American Express and the Southwest Rapid Rewards card.  For affinity cards I suggest using a cash back credit card instead and donating the rewards. As an alternative to the Rudolph Red card, which tries to help keep you out of holiday debt, I propose using a cash back debit card instead.

• The Worst Holiday Credit Cards

Balance Transfer Dating

This was another one with a little different take – I looked at balance transfer credit cards from the perspective of the dating world.  My favorite tip was probably that no one, lenders or girlfriends, wants to build a relationship with someone who “gets around”.

• Balance Transfer Dating Guide

That’s it for the Wisebread wrap-up, if the ones next month are any good I’ll let you know about them as well.

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Blue Cash $25 Promotion

Our Blue Cash card was the topic of a nice chat I had this week with Reuters journalist Linda Stern.  She was looking for examples of people who were using rewards credit cards and she ran aross my article on how we use our AmEx Blue Cash card.

I wrote the article several years ago so her first question was actually whether we still used the card or not.  I explained how we used the card for most of our consumer purchases and why I think it’s one of the best cash back cards out there.  It does have a spending tier before you start earning 5% cash back on certain items but we always cross that without difficulty.  This year was even easier since we did remodeling on the house we bought and put a lot of the expenses on the card to earn cash back.

Blue Cash Complaint

I also told her that one of my biggest complaints about the card was being resolved.  Currently you only redeem your cash back earnings once a year with a statement credit but American Express is updating the card so that you’ll be able to redeem them as soon you’ve earned $25 in cash rewards.

Blue Cash Promotion

Anyhow, not long after getting off the phone with Linda I received an email that American Express is running a promotion where you can earn a $25 bonus when you open a new card.  Not sure if they’re trying to keep up with all the other credit card offers out this season; whatever the reason it’s a nice bonus.

American Express has run other $25 promotions this year but they were for current card members only.  For every friend or family member you referred, you’d get a $25 statement credit.

This one is different, it’s for new card members.  If you signup for the card you get a $25 statement credit once you’ve made $500 of purchases.

 

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Helping Those Without Insurance or Health Care

I’ve written a lot lately about health insurance and health savings accounts. Sometimes I get so caught up worrying about health care costs that I forget there are many people in the world that don’t have health care, let alone health insurance.

Addressing this global health need seems like such an enormous task, it’s hard to know where to start.  Luckily there are people who aren’t deterred or overwhelmed and are taking actions to make a difference.  Below we’ll hear from a friend of mine and a supporter for one of these initiatives called Peace Care.

A Holiday Giving Message

First of all, I would like to extend a very special thank you to Ben for allowing me to use his Money Smart Life forum to talk about a cause that I am very passionate about – Peace Care.  While a little off topic from the usual money management themes, the holiday season is great time to think about how fortunate we are and seek out opportunities to help those that are less fortunate. 

If you are already an active participant in a charity, great!  If you are looking for an opportunity to support a charity, please check out Peace Care and consider making a small donation through the fundraising site Tipping Bucket.

What is Peace Care?

Peace Care is a nonprofit organization with the mission of cultivating collaborative, community-level global health solutions.  Peace Care’s founder, Dr. Andrew Dykens, is a Peace Corps veteran and founded Peace Care as a vehicle to link his resources as a medical doctor with underserved communities much like the one he served as a Peace Corps volunteer. 

Peace Care hopes to have an impact by building health care capacity in low income countries which are impacted by a shortage of 4.3 million health care workers globally, according to the World Health Organization. 

Charitable Donation Drive

Starting December 9th and continuing through December 19th, Peace Care is partnering with Tipping Bucket to run a 10-day online fund drive to raise $10,000 through collecting micro-donations of as little as $1.

The proceeds from this drive will be used to fund a collaborative project between Peace Care, the Peace Corps, the health district of Saraya, Senegal and the University of Illinois Chicago to improve health care delivery within the local existing health care system. 

Specifically for this project, they will focus on cervical cancer screening and prevention, prevention of sexually transmitted illnesses, and diarrhea prevention.  You can learn more about this project on the Peace Care Sengal page.

What is Tipping Bucket?

Tipping Bucket helps non-profits, social businesses, and startup social entrepreneurs leverage social media to fund projects that do social good.  This approach is designed to open philanthropy to all who want to make the world a better place – not just the wealthy and powerful.  You can learn more about Tipping Buckets on the Peace Care Sengal page.

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Gettting from Prepaid to Postpaid

Today’s post is a guest post from Tim Chen, CEO of NerdWallet. Tim writes about credit cards for the Forbes Moneybuilder Blog, Huffington Post, and the Christian Science Monitor.

For those with limited credit or bad credit, prepaying for services is a fact of life. This can include cell phone bills, debit cards, secured credit cards, and even cable service. However, while some of these prepaid services help you tread water, few of them actually help you build credit.

Now if you need to rent a car or buy something online with no credit history, there are really only two options for using plastic. You can either go with (i) a prepaid debit card, which you load money onto like a gift card, or (ii) a secured credit card, which requires you set aside upfront collateral at the bank, but after which works just like a normal credit card.

These two types of cards have very different fee structures and very different pluses and minuses.  But the secured credit card option is a rare way to prepay and still build credit. It’s a much better alternative than going with a prepaid debit cad, which we’ll explain in great detail below.

At first, the two types of cards work in a similar manner. Generally speaking, you must have a social security number to open an account. Then you put in a few hundred bucks, and get a credit line (secured credit card), or debit card balance (prepaid debit card) equal to the amount you put in.

However, after you spend money on a prepaid card, you have no obligation to pay it back, since it’s subtracted directly from the balance. That’s not the case with a secured credit card – you must pay what you spent at the end of each month, or else you will get charged late fees and interest, just like a normal credit card, despite the fact that they are holding your upfront deposit.

Pros of Prepaid Debit Cards

– No obligation to pay back money spent each month, on top of what you already put in upfront, so you can’t overspend.

– Ability to receive direct deposits and use in-network ATMs for free, though if these are your priorities, our analysis of debit cards vs checking accounts shows its cheaper to just get a checking account.

Pros of Secured Credit Cards

– Build a credit history.

– Lower fees, if you get one from a big national bank. While shady online secured cards have huge fees, you can generally get one from your local bank with a $30 or lower annual fee. That’s not bad compared to prepaid cards, which typically have $3-6 per month maintenance fees, and charge $3-6 each time you reload the card, not to mention ATM fees, balance inquiry fees, and activation fees.

– If you get a secured card from your local bank, expect to be offered an unsecured credit card after 12 to 18 months of good behavior. With continued good behavior on an unsecured card, you will start to qualify for high-end cards like 0% balance transfer cards and cash back credit cards.

– Avoid getting ripped off. Despite what they might claim, prepaid debit cards leave you exposed to all sorts of fraud and the risk of mysteriously vanishing money, fraud, and loss via merchant disputes, as hundreds of complaints about the nation’s largest prepaid card issuer would suggest. The complaints about customer service are simply horrifying.

The credit that a secured credit card helps you build or rebuild will open up new doors for you. It allows AT&T to offer you a “postpaid” cell phone plan, it allows banks to issue you a credit card, and one day down the road it could help you secure a car loan or home loan.

A Secured Card + Checking Account Beats a Prepaid Debit Card
Based on normal use, prepaid debit cards are more expensive than checking accounts. We conducted a hypothetical test, where we compare checking account fees at the 10 largest checking account providers, versus fees for 10 popular prepay cards, including the most popular one in America, the WalMart MoneyCard. The average prepaid debit card costs $19.14 per month, and the average checking account costs $6.82 per month. We explain how we calculated these numbers in the appendix.

Thus, we recommend that you get a secured card and checking account, rather than relying on check cashing services combined with a prepaid debit card. In both cases you have no privacy, as they require social security numbers. But the secured credit card & checking account gives you better protection and costs less, while building credit.

*Appendix
For prepaid debit cards, we assumed your monthly usage would include 1.5 ATM withdrawals, 8 purchases, 2 reloads, and 1 balance inquiry. We compared cards from Green Dot, Walmart MoneyCard, NetSpend Visa, Emerald Card, Rush Card, Vision Premier, Western UnionMoneyWise, AccountNow, ACE Cash Express (NetSpend), and PayPower.
For banks, we assumed your initial checking account would start with $100, and that you would use an out of network ATM once a month. We compared checking accounts from Bank of America, Capital One, Chase, Citi, HSBC, PNC, SunTrust, TD Bank, US Bank, and Wells Fargo.

About NerdWallet
NerdWallet helps you find the best credit card, by sorting nearly 600 credit cards by best rewards and lowest APRs. 

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Chase Blueprint Review

Chase Blueprint is a program available to Chase credit card holders that’s designed to help customers pay off their credit card balances.  Ideally you wouldn’t carry a balance at all but the reality is that many people are in credit card debt. 

If you do pay off your balance each month then there really isn’t anything in the Chase Blueprint for you.  On the other hand, if you are carrying a balance on your Chase card you should checkout their Blueprint. Just be aware that simply enrolling in the free program won’t get you out of debt.  You have to follow the steps and stop adding new debt to make a dent in what you owe.

Chase Blueprint Details
The idea behind Chase Blueprint is to help you create a plan for better managing your money — and your debt. Of course everyone’s situation is different so the program has four different features to help you plan and track your debt payments and spending.

• Full Pay
• Split
• Finish It
• Track It

Here are some of the details on each of the Chase Blueprint features:

Full Pay – No interest on recurrent monthly expenses: You can divide your spending into categories. If you have recurring expenses, such as bills that you pay, groceries or gas, you can designate those specific areas as recurring. Then, each month, Chase will tote up those expenses separately from your total spending. As long as you make your Blueprint payment in full (Chase will tell you what that is), you won’t pay interest on those charges. You pay interest only on carried balances and one-time purchases that are not included in your recurring categories.

Split – Target specific purchases: Chase Blueprint also helps you target specific purchases for pay off. If you decide to buy a new TV, and you want to set up a specific plan to have that item paid off in three months, Chase will help you figure out the payment you need to make, and remind you to make it.

Finish It – Pay down a balance: It is also possible, with Blueprint, to create a plan for paying off your balance in a specific time period. You can work out a payment plan that can help you pay off your credit card balance within a year. Chase will figure what payment needs to be made, while at the same time helping you manage your other Blueprint payments for recurring expenses or targeted purchases.

Track It – Budget tracking: You can also use Chase Blueprint to track your budget. Different categories are available so that you can see exactly what you have been spending your money on. This can help you easily see where you might need to make adjustments to your habits, and Chase will even help you stay on track with your spending plan.

Bottom line

Although it’s best not to carry a balance, if you do have credit card debt Chase Blueprint can be a helpful management tool. Like any tool, it’s only effective if you actually use it so you have to stick with your plan.

Those who would benefit most from Chase Blueprint are those who want to pay off some of their recurring expenses each month, but who are not to the point where they can pay off the entire balance at once. The Chase Blueprint program is free but only available on certain Chase credit cards: 

• Chase Sapphire
• Chase Freedom
• Slate from Chase
• Chase Ink

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2011 IRA Contribution Limits

IRA Contribution Limits 2011
IRA contribution limits are updated every year so that your traditional IRA and Roth IRA contributions have a chance of keeping up with inflation and the resulting cost of living increases.

Some years the contribution limits don’t change, the ones released by the IRS a few months ago don’t have a cost of living increase.

2011 Contribution Limits for Traditional and Roth IRAs
For tax year 2011, you can still contribute $5,000 to your IRA if you under the age of 50. If you are older than 50, you can make an extra “catch up” contribution of $1,000, bringing your total to $6,000 for the year.

It is important to note that you do not get to make a $5,000 contribution to each type of IRA. Instead, the limit applies to your combined IRA contributions. So, if you put $3,000 in your Roth IRA, you cannot put more than $2,000 in your Traditional IRA. You can, however, have a separate IRA set-up for your spouse. If you are married, you can each have an IRA in your name, which allows you to make a total household contribution of $10,000 ($12,000 if you are both over 50) for the year. If you have a stay at home spouse, it is possible to make contributions to an IRA in his or her name; this type of arrangement is often referred to as a spousal IRA.

SEP and SIMPLE plans have not changed for 2011. SEP minimum compensation remains at $550 and the maximum remains at $245,000. SIMPLE contributions remain the same at $11,500 with a catch up for those 50 and older of $2,500.

You can make 2010 tax year contributions to your IRAs until April 15, 2011 as long as you specify which tax year the contribution should be counted toward.

Phaseouts for IRA Contributions
There are phaseouts for Roth and Traditional IRA contributions. With a Roth IRA, you can only contribute if you meet certain income requirements. With a Traditional IRA, your ability to take a deduction phases out with a certain income. Phaseouts have actually changed a little bit, so it is important to be aware of them:

• Traditional IRA: Phaseout begins at $56,000 for those filing with single status, and the deduction disappears at $66,000. For those married filing jointly, the phaseout starts at $90,000 and completes at $110,000.
• Roth IRA: Phaseout begins at $107,000 for single filers, and contribution phaseout completes at $122,000. For married filing jointly, contribution limits begin falling at $169,000 and no more contributions can be made at $179,000.

You can get more information about contribution limits and phaseouts at the IRS web site.

Traditional IRA vs. Roth IRA
An IRA is a good idea, since it provides tax advantaged retirement savings. This allows you to maximize your money in a way that can’t always be done with regular investment accounts that do not have special advantages. The main difference between Traditional IRAs vs Roth IRAs are the tax advantages.

With a Traditional IRA, the money you contribute is considered pre-tax. This means that your contribution lowers your taxable income, and can help you reduce the amount you pay in taxes now. However, when you withdraw the funds in later years, you have to pay taxes on the amount you withdraw.

Roth IRA contributions are made with after tax dollars. They don’t lower your taxable income right now, but your earnings are tax free. Later on, when you withdraw money from your Roth IRA, you will not have to pay taxes on the distributions.

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Federal Tax Cut Extensions

TurboTax VP of consumer advocacy, Bob Meighan, spoke with me not long ago about the tax cuts expiring this year.  About a year ago Bob and I talked about the TurboTax online edition and tax software vs manual tax returns but this time the main focus was on tax legislation.

Since we talked there’s actually been movement in Congress towards extending the tax cuts, which is a good thing for us tax payers.  There’s been a lot of anxiety around the Bush-era tax cuts and not knowing what will happen in 2010 and 2011 has made year end tax planning more difficult.

Tax Confusion
There are a few misperceptions that Bob’s encountered surrounding the tax law discussion that he would like to clear up.  The first common misperception is that the tax law changes would impact your 2010 federal tax brackets.  Although you might make certain decisions in 2010 based on the 2011 tax laws, the tax laws that are expiring won’t have a direct impact on your 2010 taxes.

The second misunderstood point has to do with who will be impacted if the tax cuts are not extended. Tax rates will go up for almost everyone in the US, not just the wealthy. The increases will be bigger for higher tax brackets but most of us will see the impact in some way.

Tax Increases
Certain groups of people have the potential to be hit harder than others by expiring tax cuts. Bob pointed out that if the rates and thresholds are not adjusted for the Alternative Minimum Tax (AMT) that around 25 million additional people, mostly middle class, will be impacted by the AMT.

Married couples will also feel the bite if the tax cuts are not extended. Right now, the standard deduction for married couples filing jointly is twice that of a single filer.  If allowed to revert to where it was before being addressed in 2003, the standard deduction for these married couples will mean they get a smaller deduction than they would as two single people.

Retirees who live on fixed incomes will be impacted by the changes on how income and dividends are taxed.  If the top tax rate on dividends increases from 15% to 39.6%, as would happen if the tax laws expire, then people on fixed incomes would take a big hit.

Tax Planning
The next thing I asked Bob is what we can do prepare for these tax increases.  Although we don’t have control over what Congress decides to do about extending the tax cuts, there are a few things we can do to help our tax situation.

Contribute to Retirement Accounts – Putting money into your IRA or 401k can lower your taxable income and potentially move you to a lower tax bracket.  If tax rates do increase then being in a lower tax bracket can make an even bigger difference than it does now. Plus, investing in your retirement is good regardless of where tax rates go.

Charitable Donations – Money you give to qualified charitable organizations earns you a tax deduction.  It’s not just cash that has tax implications, donating items or investments can also earn you deductions. And don’t forget about deducting mileage incurred in doing voluntary work for charitable organizations.

Be Prepared – Sit down and look at your tax alternatives now.  Plan for several contingencies so when Congress does decide what to do you can take action quickly.

Tax Returns
I asked Bob how long it would take for Turbo Tax to update their software once Congress makes a decision on extending the tax cuts.  I figured it would take a while but apparently the Turbo Tax team of tax experts and software developers have been tracking the issues and updating the software to handle the majority of scenarios.

One neat thing for the growing number of Turbo Tax online users is that the online edition automatically updates  with the latest changes so the user doesn’t have to worry about downloading the updates. 

Something else cool that TurboTax is offering is free tax advice for it’s customers. If you have any questions about the tax laws and your specific situation you can ask the tax experts at Turbo Tax up until January 31st.  Until that time they’re offering to answer one tax question for each person for free at FreeTaxQuestion.com

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Scottrade Review

A Scottrade review is something I’ve been meaning to do after seeing the online brokerage rank pretty high in the SmartMoney survey of discount brokers.  With their competitive fees, low minimum requirements, and wide range of investment options Scottrade is an attractive option for many investors who like to manage their own portfolios.

Scottrade Fees

I’ll start off with investing fees since that’s one of the first things people usually ask about. You’ve probably already seen Scottrade’s ads online for their $7 trades, relatively low as you’d expect from a discount broker.  If you’re interested in options trading, those also run $7 plus + $1.25 per contract on all limit and market orders.  Their margin rates are competitive with the other national online brokerages.

You’ll need $500 to set up a Scottrade account ($2,000 for margin accounts) and there are no account maintenance or inactivity fees. Funding a Scottrade account is pretty flexible, with options including an ACH money transfer, a personal check, or a wire transfer. You can also transfer funds into your Scottrade account from another investment account with a different firm and they’ll reimburse your transfer fees.

Scottrade Investments

Scottrade was rated highly for their available investment products.  Using your online brokerage account you have access to stocks, options, mutual funds, ETFs, bonds, and certificates of deposit. They give you a selection of around 15,000 mutual funds (load and no-load) — 2,800 of which have no transaction fees. Scottrade also offers fixed income investments including municipal, corporate, and treasury bonds.

If you’re looking to save for education or retirement, they offer a Coverdell Education Savings Accounts (ESA) and an IRA account. There are no setup fees, annual fees, or termination fees for a Scottrade IRA.

Scottrade Customer Service

Unlike some of the other online discount brokers, Scottrade has a network of almost 500 local branches.  Personally, I don’t need to sit down with someone, I’m fine handling it all online.  However, if you like having the option of dealing with someone face to face the local branch is a nice feature.

Scottrade received four out of five stars for customer service in the broker survey so although they’re not perfect, they certainly make the effort to keep their members satisfied.  One of the things that helps them offer this level of service is that Scottrade puts an emphasis on educating their investors.

Investor Education

You may not be looking for extensive investor education, just a good place to buy stocks. However, if you are interested in learning more about investing and the markets Scottrade’s does have live webinars and on-demand webcasts for members.

They also offer local branch seminars and regional user summits that not only go over investing in general but also specific aspects of using the Scottrade platform.

Trading Security

Scottrade has been around for 30 years so they’re not a new online stock broker.  They certainly have a reputation to uphold so one of the things that they pay close attention to is your account security.  From an investment perspective, Scottrade offers $2.5 million in account protection through their membership in the Securities Investor Protection Corporation (SIPC). 

From an online perspective, Scottrade gives all their members free McAfee Security Software and suggests a security checklist to follow to protect your computer and account.  They also offer the Scottrade Online Security Guarantee, if a fraudulent trade is placed using your account they’ll reverse it at no cost to you.

Scottrade Comparison

Overall Scottrade stacks up pretty well against other online brokers.  While their $7 trades are cheaper than many other options, there are one or two discount brokers that offer lower trading fees.

Scottrade does have the lowest minimum initial deposit and has a wide selection of investment choices.  It’s also the only online stock brokerage in its class with no account closing fees or transfer fees so if you ever decide to switch to another firm it won’t cost you anything. If you want to give Scottrade a try, you can find more info here.

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Choosing Health Insurance & Hospital Rip-Offs

Health insurance is a popular subject towards the end of the year as many people go through open enrollment to signup for the following year and try and spend their funds before the flexible spending account deadline.

I’ve been thinking about it a lot this last month as we finally made the move to a health savings account and high deductible health plan.  I’ve also been writing quite a bit about insurance over at the Currency site; I’ve been talking about what works for us and some of the troubles we’ve run into.

Health Insurance: A Strategy for Year-End Savings – Read this quick, before the end of the year. I share how my wife only paid $20.28 to have all four wisdom teeth removed.  The total bill from the dentist was $857.36 and she paid a $95 co-pay the morning she went in. So the dentist actually ended up mailing us a check for $74.72 after insurance processed the claim!

Is Your Hospital or Your Insurer Ripping You Off? – Here I share some tips on how to work with your hospital to avoid getting ripped off.  I’m not exaggarating, I really do mean ripped off.  For example, being charged for a procedure that was never even done.  I couldn’t believe my eyes when I read the hospital bill for our little girl.  They billed us $800 for a circumcision, for a girl!  The bill showed she was a girl but still charged us anyway. Ridiculous.

How Much Insurance Do You Really Need? – Choosing the right amount of insurance to buy can really be more of an art than a science.  I talk about analyzing the amount you’ll need, watching your dedutibles, and looking out for exclusions.

I have another one coming up pretty soon where I talk about the things I learned that surprised me about Health Savings Accounts.  I knew the main differences between a flexible spending account vs health savings account but as I went through the process of signing up I ran across the things I didn’t expect.

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