Credit Card Debt
In the past, I have taken money from credit cards at 0% APR and placed it into high-yield savings accounts or similar safe investments that earn 4-5% interest or more, and keeping the difference as profit. I even put together a series of step-by-step posts on how to make money off of credit cards in this way. However, given the current lack of great no fee 0% APR balance transfer offers, I am have not been as active in this “game” recently. My credit score remains high enough that I haven’t seen any negative actions.
Retirement and Brokerage accounts
The market rally was sustained during April, so our predominantly passive investment portfolio increased a bit. We contributed another $2,312 in 401(k) salary deferrals this month including company match. See my investment portfolio page for more details.
I get attracted to various different ideas as time passes, but I really haven’t changed my investment portfolio in about two years now. I always need to remind myself to stick to the basics.
Cash Savings and Emergency Funds
Our cash savings rose again, and although I want to keep one year of expenses for our emergency cash reserves, I need to start putting more money to work in the stock market and other investments. It’s just hard to let go of the security of cash right now. We are contemplating whether we want to save up for a rental property.
Home Equity
I used the same internet valuation tools as before – Zillow, Cyberhomes, Coldwell Banker, and Bank of America (old version).
I have zero personal input here, I just average out what the sites say. They say up. The number shown is after an additional 11% reduction to be more conservative. Not that it really matters, as I am primarily focused on paying off the mortgage, as outlined in my quick and dirty plan for financial freedom!
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I would imagine that its not only the lack of good 0% balance transfer offers but also the lack of “high yield savings accounts” that would make the balance transfer game considerably less worthwhile these days. If there’s one out there still at 4-5%, I’d love to know about it.
For folks that like to do this type of stuff, the one option remaining is to open and close frequent flyer mileage credit cards with big sign-up bonuses, and keep them in rotation. I know a guy who racks up hundreds of thousands of frequent flyer miles this way. It’s more effort than I’m willing to put into something like that, but he loves it and gets lots of free trips.
Regarding whether or not you should get a rental. I’ve thought hard about doing the same thing and, for now anyway, decided against it. The reason is simply this: I think the profit would be too little given the amount of time and energy. Plus, I don’t have the fixer’ up skillset and would have to hire a handyman. My guess is between your blog and other job, you would find being a landlord way too much of an inconvenience to merit the small return.
Jonathon,
how do you save 7800 a month? i know you have 2 incomes. Are you just that frugal?
If you are looking to pay down your mortgage quickly, why not take some of the cash that’s parked and pay your mortgage!
you put away more cash last month than my wife and i bring home in a month.
we clear $5K, you saved $8K.
also, home prices – my house was appraised 13% higher than what the websites say it is worth – I have talked to others in my area who have experienced the same thing (for refinancing) – cannot tie these numbers to sales. the only 2 sales by people I know were rush situations done in 2 weeks from listing date – they each sold for closer to what the online sites say, maybe 1% more.
James – I agree, but if the housing market wants to give up some cashflow-ing properties, I just need to find a reliable and affordable handyman to fix things for me. 😉
Nuri – Yes, this is the result of two six-figure incomes in an expensive area of the country. We have no kids, so expect income to drop later. Our housing costs are also high, but we try and keep everything else as low as possible (car, food, utilities, etc.)
Johnathan
Did you get 500$ bonus from optionsexpress?
FYI
The following link provides a calculator that I use to estimate the value of my home. In my opinion, this website gives much more reasonable price estimates. You just enter you state or metropolitan area (MSA), enter you purchase price, and enter the quarter you made the purchase. They also have historic home prices.
http://www.fhfa.gov/Default.aspx?Page=86
@Citizen – According to the terms of that promotion, the $500 bonus will be deposited into the account on May 15th, 2009. I’m crossing my fingers for a smooth ride.
@glcruiser – Thanks for the link, I hadn’t seen that before. Always good to have another point of view.
Hey Jonathan, I see you have a cash worth of more than 100K. Would you mind telling specifically how do you put this reserve to work?
Wow, how did you manage to save $7,810? Excellent job, especially in this economic environment.
WHen you use the Coldwell Banker site, do you estimate using the lowest or the highest value? It seems to make a broad difference.
@20 – The cash is spread out between high-yield checking accounts, savings accounts, CDs, money market funds, and/or savings bonds. Basically whatever I blog about here. Most are between 2-5% right now.
@Joe – I just take the average of the high and the low, and use that.
@Phinance, if you were making 20k a month saving $7,810 is quite possible. Unless you have an addiction, may it be drug, prostitutes or shopping, you could do it as well.