AskDong

I got my girlfriend an iPod Touch for Christmas. Her Palm Pilot and iPod Nano were both getting long in the tooth. I had given her the Palm Pilot for her birthday 3 years ago, and the Nano about 2 years ago as a Valentine gift. I thought the the Touch would be great replacement for both devices. I thought about the iPhone, but she’s on contract with Verizon. In addition much of her family and friends are on Verizon including myself. The touch seemed like a good compromise.

One problem currently with the iPhone and the iTouch is the lack of 3rd party applications. Apple has so far locked down the device, though it has promised to deliver an SDK in February. For those non-geeks in the audience, a SDK is a Software Development Kit, basically a set of tools and applications that allow programmers build programs for a given device. Without the SDK, programmers can’t officially build applications for the iPhone. This lack of an SDK and official support from Apple has meant a relative dearth of iPhone applications.

One of the programs my girlfriend uses on her Palm is inExpense. It’s a basic personal finance tracking program. It’s not much more than online checkbook, but it works great for her because she’s organized and meticulous. It’d be utterly useless for me as I’m neither organized or meticulous. I need things to be as automated as possible. I can’t be bothered with having to enter my expenses. My time is too valuable, or so I like to believe. The only available, non web, personal finance application I know of is PocketMoney which is in beta. Given that SDK is due for imminent release, I think it might be best to hold off a bit.

In all of this there is a larger issue of what the role of mobile personal finance applications are? Personally the only area I need to track is my cash expenditures, but at the same time I do like the idea of tapping into my overall financial picture on the go. Realistically however, there’s really no reason for me to know exactly what my net worth is at any given time. If my sense is off by a couple hundred dollars that’s not make or break. In my younger years knowing what my balance was on any given day would’ve been more important. I think a good portable personal finance application augments a larger system. For example while I don’t use Quicken anymore being able to note cash transaction on the go and then being able to reconcile them within Quicken is a useful feature.

On this 2nd to last day of the year, I thought I roundup some various year end related posts. There’s still one business day to act quickly on some of this advice.

• My Money Blog discusses some end of the year tax moves
• Jim give us some dumb year end moves. I guess you should avoid these on monday.
• Plonkee explores her goals for next year. Sometimes finishing the year is mostly about looking towards next year.
• Paid twice looks back at her 2007 goals, and forward to 2008.
• Gather Little By Little offers a guide to paying year end property taxes. My property taxes on my rental are paid quarterly, and paid via an escrow account attached to the mortgage. As a result I don’t have this problem, but it’s good to know how to plan for it.

I’ve managed to check off some of the items in my own list, though I haven’t gotten around to opening a 529 account. However since I don’t have any kids, nieces and nephews, the 529 account is not a huge deal.

I was talking earlier today with a coworker about the vacation rental he was splitting with a few friends of his. He’s renting a ski house with a few buddies of his for the winter. Anyone who has rented a ski house knows that not all the rooms are the same, and we were discussing how they were splitting the rooms. There’s usually a nice comfy master bedroom often with a private bathroom. Then there are the smaller rooms, often containing tiny bunk beds. Given the disparity in accommodations, the master bedroom is usually highly sought after especially amongst vacationing sets of couples.

The question is then how do you decide who gets which room? For a shorter term rental I think it’s best try to be accommodating. For example if there’s one couple and three people who are are “alone”, the couple probably should get the nice room with the private bath. I think most people would agree on that. The problem is that more often than not, different individuals or couples have similar claims to the nicer room. Personally I’m ok with luck deciding the matter, but I generally don’t care that much about where I’m sleeping. I used to take a trip with a few buddies of mine to Whistler, and what we used to do was play cards each night for choice of sleeping locations. We played Asshole, and the rank at the end of night determined which bed or share of a bed each person got. The Asshole slept on the couch. We felt that was fair if not equitable.

I know others who think that the person who has done more work to book the house should get preference. On the surface this seems only fair. If you’ve done more work, you should reap the rewards of that work. However that begs the question of who gets the privilege of booking the house? Often times who does the booking is an arbitrary decision, other times its a perk more than a responsibility. Many people want to be the one booking because it allows for more control.

Like any matter concerning money and people, the clearest way to avoid problems is to spell things out in as much detail as possible beforehand. Don’t all show up and drop off your stuff in the master bedroom. I say if you think the choice of rooms is going to be an issue, set the terms of choice before arriving and make it financial. For example when a friend of mine and her roommate had to decide who got which room in their 1500 apartment they put out silent bids for the bigger room. The person who bid higher paid the average of the two bids. So my friend put in a bid of 800 and her roommate bid 900. Her friend got the bigger room and paid 850 while she paid 750 for her smaller room. This method gives the person who values the better room the better room at price that is fair to all involved. You can extend this method across multiple people and rooms by requiring a bid for each room.

As I announced last week I’m making a home purchase. I actually locked in a rate right before the Christmas, though I wish I locked in rate a week before I actually did. During the week of 12/3/2007 rates were some of the lowest we’ve seen in a long time. However at that time I hadn’t even agreed to a purchase price. I wasn’t comfortable locking in rate without knowing that I would actually be purchasing a place. Had I locked on December 5th when I started shopping around, I could’ve gotten a 15 year fixed rate mortgage for 5.25%. Instead I locked in rate of 5.5% for a 15 year or 5.875% for a 30 year mortgage.

While it’s probably not a good idea to “time” a mortgage rate, that doesn’t mean that a sense of timing isn’t important. Mortgage rates tend to track the 10 year U.S. bond (or the 30 year bond). Below are two charts. T he first chart is of rates for a 30 year mortgage from bankrate.com for the last three months.  The second chart is for the 10 year bond for the last three months from Yahoo Finance. Awfully similar wouldn’t you say?

Predicting where rates will go is difficult, but knowing that rates are good doesn’t have to be. There is natural bottom for interest rates - 0%. Nominal rates will never be lower than this. Below is a chart of the yield on the 10 year bond for the last 5 years.

You’ll never know if you’re at a bottom of a dip, but you can know that you’re in a dip. Generally speaking when buying there’s not really an opportunity to “time” the rate. The timing of the rate is generally determined by the circumstances of the purchase. Timing is much more important for a refinance. Given that even a no closing cost refinance actually does cost something, there’s something to be said for getting the timing right. The no closing cost refinance is only seemingly costless because the person refinancing gives up something on the interest rate. There’s inherent value in the option of being able to refinance at a later date.

This isn’t my first real estate purchase so I had experience with mortgage shopping. The previous experience with both purchasing and refinancing twice proved extremely helpful this time around both shopping for a rate and having a better understanding exactly what different trade offs were. You can look forward to a more extensive post on my mortgage shopping experience.

I got an email late last week from mint.com. I hadn’t logged into my account in the last few months and mint.com was checking in up on me. I appreciate the check in even if it’s from an automated email bot. Ioriginally signed up for mint under it’s invitation only beta program about 2 weeks before the public launch of the beta. I like mint. I think they have a nifty interface, and enjoy many of the automatic reporting features. While I think mint’s suggestions/advertising on how to save money by switching accounts can be useful, it isn’t particularly useful for me. For someone who isn’t already activelyoptimizing his or her cash/bills, I imagine the mint suggestions do offer some low hanging fruit.

If I like the mint service, why haven’t I logged in over 3 months? I’ve had no compelling reason to. I’m already an avid user of Yodlee.com. Every account I have being aggregated on mint.com I also have on Yodlee and then some. Yodlee also aggregates my investment accounts that mint does not.  While on the surface, mint and yodlee are competitors, below they are clearly more partners than competitors.  From my understanding yodlee serves as Mint’s aggregating technology back end. Yodlee’s business model is centered around selling it’s aggregation service to financial instituitions, while Mint is more interested in servicing individual clients (and selling them something else ).

Mint’s focus is on tracking spending, and it does an excellent job of that.  The most difficult part of expense tracking is categorization.  Mint’s automatic categorization of credit and debit card spending is very good.  What Mint is not particularly good at is reconciling.  I have many more accounts than the average consumer.  I have almost half a dozen bank accounts, and three credit cards I use actively.  Mint does not reconcile payments, and transfers withing those accounts to give me a good picture of how money is flowing.  I actually do a good job of getting a feel of how I’m spending my money even without account services such as mint.  What I don’t do well is balancing my checkbook.  I don’t balance it at all, and just occasionally do a spot check to make sure nothing is wrong.

Given that mint is good at tracking spending, you would think it would be also good at tracking earnings. However, an “Earnings Trend” is oddly missing. Mint promotes alternative savings accounts with higher interest rates, you would think it would at least have tab to track those earnings. My other complaint is that if it’s going to be pitching better bank accounts or credit cards, mint should at least have the terms of my current accounts correct.  It does not.  For example I have Chase Freedom card on which I get 3% cash back on my common purchases, and 1% on everything else.  Mint quotes it as 2% and then recommends the Chase Subaru Platinum card which I doubt is a good fit for me.  However what’s more egregious is that it reports my Citibank Ultimate Money Market account as earning no interest at all. That’s far from the actual case.

Given the shortcoming as related to earnings and reconcilation, I’ve started to rethink how best I can use mint.  I’m removing all my bank accounts from the register and just leaving my monthly bills and credit cards. I am curious to add depth to the way I track spending and appreciate Mint’s charting features, and comparisons to national averages. Everything else on mint is just clutter for me, and doesn’t really add value.