Advice from the Wall Street Journal
Posted by moonimus on Jan 16, 2008
A few weeks ago, there was a column (may require registration to view) in the Wall Street Journal about reporters giving advice to WSJ readers. I’ve pulled out the summaries for those related to personal finance followed by my own comments.
The Problem: Your checking or savings account pays little or no interest.
The Fix: Shift excess cash into a high-yield online savings account.
There is no way anyone with an internet connection should not be opening an online savings account. You can try ING or HSBC which receive rave reviews. Personally, I’m a rate chaser so currently my money is at One United Bank which is earning me 5.3% APY.
The Problem: You’ve been a victim of identity theft or are worried about scammers opening financial accounts in your name.
The Fix: Freeze your credit files. Doing so blocks anyone — including yourself — from accessing your credit report and prevents new creditors from opening accounts in your name.
Hopefully you won’t ever need to do this but this is sound advice. Also if you ever lose your wallet, you should have a written inventory of your wallet with account and phone numbers for all your debit and credit cards so that you can cancel all your cards.
The Problem: Finding a parking spot at the airport during the holidays and other busy travel periods.
The Fix: Reserve a spot online. Park ‘N Fly (parknflynetwork.com) has online-reservable lots at several major airports, including Los Angeles International Airport and all three of the major airports serving the New York City area, and it has no online booking fee. ParkRideFlyUSA.com customers who park for three or more days can save 10% during the December holiday period (ending Jan. 1), winter break (ending March 1) and spring break (ending May 1).
Not really personal finance related but pretty cool if you ever need to park at the airport. Frugal folks would probably find other solutions.
The Problem: You’ve just bought a home, and you’re looking for one more tax break.
The Fix: Deduct your private-mortgage-insurance payments. So-called PMI is typically imposed on homebuyers who have equity in their house of less than 20% of the home’s value, and is designed to protect the lender in the event the borrower defaults. Payments are generally wrapped into your mortgage bill every month.
I don’t have PMI so it’s not applicable but you should check if you qualify because there are some limitations to this deduction.
The Problem: Your heating and energy bills keep climbing higher.
The Fix: Make some relatively low-cost changes to your home. Compact fluorescent bulbs use about 75% less energy than incandescents, and now come in a variety of shapes and more-flattering hues. Consider a programmable thermostat so the house isn’t being heated or cooled when you aren’t there; according to the Environmental Protection Agency, this can save you about $150 a year. Sealing holes in attics and basements with caulk, spray foam or weather stripping can reduce a household’s total annual energy bill by 10%, according to the EPA. Be aware that plasma TVs are big energy guzzlers; look for TVs with the Energy Star rating, which certifies they use less energy than standard versions.
I installed CFL bulbs in most of my fixtures but the thermostat on our heaters stink. I tried buying a timer but ran into some problems. I can’t remember where but I also read that the flat screen televisions with the energy star rating aren’t really saving you that much in electricity bills.
The Problem: You want to put your portfolio on autopilot but don’t like the one-size-fits-all approach of target-date funds.
The Fix: Build your own target-date fund.
All my retirement accounts are 95 - 100% mutual funds which is extremely aggressive but I’m looking at a 40 year time period. I think target funds are too conservative but retirement planning is all about personal preference.
The Problem: The anemic dollar is eroding the value of your investments and income.
The reporter for the journal says open a foreign currency account but I think this might be overthinking the currency issue. It’s a good diversification plan but I’d rather have liquid funds in US cash.
The Problem: Getting help with your finances without paying a financial planner.
The Fix: Consider recently launched Web sites such as Geezeo.com, Mint.com and Wesabe.com, which are making it easier to manage your money online. The services provide online tools that help users automatically keep track of their spending, set up budgets and goals, and swap tips with other users on how to save money.
I tried using mint for a while and may get back on that bandwagon but for now, I’ll stick to my custom templates in Excel.
The Problem: Fuel-economy estimates were revised for the 2008 model year but are still unreliable and hard to match in the real world.
The Fix: Consumers need to be more weight conscious — about their cars. Passenger vehicles keep getting heavier and some now weigh nearly twice what the average family car weighed 30 years ago. The heavier the car, the less reliable fuel-economy estimates tend to be.
This is an interesting fact and one I will have to keep in the back of my head when I buy my first car.
The Problem: You want to pursue a career in public service, but you are too burdened by student debt to accept the low salaries that typically come with the territory.
The Fix: Keep track of those student-loan payments. Starting with payments made on or after Oct. 1, 2007, a new federal “public service loan forgiveness program” will discharge the balance after 10 years of working public-service jobs. Those jobs include positions in government, law enforcement, public health, child care, social work and public-interest legal services. The Education Department says it will issue guidance in 2008 to clarify exactly which professions will qualify.
I’m kind of on the fence about this one. On the one side, I definitely admire and respect those who go into public service but at the same time, they have chosen this field for a reason and if they need to borrow money to go to those schools, they should be on the hook for the loans.
The Problem: You like exchange-traded funds’ relatively low cost and tax efficiency, but you don’t know how to sift through the hundreds on the market.
The Fix: Check out some new tools that help users pinpoint ETFs that best fit their portfolio.
I don’t deal with ETFs so I can’t really comment on this problem.
All in all not a bad list. I’ll add one of my own:
The Problem: We’re having a baby but have no clue what to do.
The Fix: It seems as if everyone is having a baby these days (us included) so I highly recommend two books that we continually refer to: Baby Bargains and Baby 411
