Techie Diva presents the HP Magic Giveaway

Techie Diva is giving away $6000 worth of electronics. Hurry now, today is the last day to enter. Here's a snippet from her blog posts.

As we mentioned in our teaser post, Techie Diva has teamed up with HP and Microsoft to offer our readers the chance to win $6,000 worth of electronics. The HP Magic Giveaway is all about sharing the magic, and ONE lucky winner will win the entire package on December 12, 2008 right here on Techie Diva. We wish we could divide the bundle and have several winners instead, but we can’t. The good news is several other sites are holding a similar contest on different dates, so you still have a chance to win until December 22, 2008. We’ve teased you enough about this giveaway, so keep reading below for the rules, the prize, and how you can enter to win the HP Magic Giveaway here on Techie Diva.
WHAT YOU’LL WIN
HP TouchSmart IQ816 PC
HP HDX 18 series Premium Notebook PC
HP MediaSmart Connect
HP Pavilion dv4 series Entertainment Notebook PC (with Windows Live)
HP Mini 1000 (with XP)
HP Photosmart C6380 Wireless AIO (printer)
Microsoft Windows Vista Ultimate/Home Premium or Microsoft Windows XP pre-installed on all units (Mini 1000 runs XP)
Microsoft Office Home and Student Edition 2007 (Student-Teacher Edition) – 1 DVD with 3 licenses
Microsoft Windows Live
Corel VideoStudio X2
HP 564 Photo Value Pak
Kung Fu Panda (1 widescreen DVD; 1 widescreen Blu-ray disc)

For more information, visit her blog post: Techie Diva presents the HP Magic Giveaway at Techie Diva.

If I were to win this contest I would be a scrooge and hog it all for myself. Just kidding. I would give it to my wife for her business, of course. And I deserve to win because I'm a slumlord.





Common Sense Personal Finance

All This Volatility Is Driving Me Nuts

Common Sense Personal Finance

All this volatility in the market is really crazy, so I decided to change my strategy. I think that value stocks are more stable during these volatile times. After all value stocks are great value because they are generally underpriced, and therefore they are already below market value. When the stock market moves down, the value stocks generally don't move down as much as the rest of the market, and so they are generally more stable.


The best way of buying value stock is by buying Warren Buffet's Berkshire Hathaway stock. He is, after all, the third richest man in the world. Anyways, I set a limit order to buy BRK.B at 3600, but, alas, I only put in an order for 2 shares.

When The Volatility Dies Down

Common Sense Personal Finance

When the volatility from the market crash yesterday dies down, I think I'm going to invest in some mutual funds. I like emerging markets. I was thinking of investing in DFA Emerging Markets Small Cap (DEMSX), which has an YTD return of 28.44%. The total expense ratio is only 0.81%, and there is no front or back end load. The other option might be to go with an emerging market ETF. I was looking at Vanguard Emerging Markets Stock ETF (VWO), which has a YTD return of 17.96%.

I like to diversify my portfolio a little by investing in worldwide funds or total stock market indexes or total international stock market indexes. I am looking at Nationwide Worldwide Leaders (GWLRX). The other ones I'm looking at are the Vanguard Total Stock Market Index (VTSMX) and Vanguard Total International Stock Index (VGTSX).

Then I looked at some balanced funds. These are mutual funds that invest part of the money in stocks and part of the money in conservative assets like bonds. I was looking at Dodge and Cox Balanced Fund (DODBX). It has a YTD return of 5.35%. Hopefully it is more stable than having money completetly in stocks. I fund that has slightly better returns is the Fidelity Balanced Fund (FBALX), which has a YTD return of 8.46%. I was also looking at Vanguard Target Retirement 2050(VFIFX), which has a YTD return of 7.63%.

For growth, I was looking at Powershares Golden Dragon Halter USX China ETF (PGJ). It's basically a China ETF. China ETFs have been going down since mid-July, and so when it stabilizes, I might start buying this fund.

Before You Do A Balance Transfer Make Sure You Pay Off Your Balance

Common Sense Personal Finance

I almost fell for this one. I have a credit card with 10k balance at 3.99% for the life of the balance. The credit card company sends me another balance transfer check for 0.99% for six months. Should I go for the 0.99% for six months?

NO!

Here's how they will get you. If I do an additional balance transfer at 0.99% without paying off my 10k balance transfer at 3.99%, then when I pay my bill, the credit card company will apply that bill to the balance with the higher rate, which is the 10k at 3.99% until the 3.99% balance is paid off. The monthly payment I pay will never go towards the balance at 0.99%. The promotional rate for the 0.99% will expire, and it will jump back up to 21%. Once the 0.99% balance jumps back up to 21%, then the bill starts getting paid against the 21% balance. They always pay the bill with the higher rate first. And it is only then that I can pay off the balance at 21%. But still they were able to force me into paying finance charges at 21%, which is something that I normally would not do. Those sneaky little devils. Thought you almost had me there, didn't you?


It's a variation of the shell game mentioned here regardig Home Depot, except that in my case the payments are applied toward the balances with the highest rates instead of the lowest rates. But generally, if you specify how your payment should be applied when you send in a payment, they will apply it according to your instructions. In my case I want the payment to be applied toward the 0.99% balance because that promotional period would end more quickly than the 3.99% balance. The 3.99% balance is good for the life of the loan until the loan is paid off, and so it is worthwhile for me to maintain the balance with the 3.99% rate. Whereas in the Home Depot case, it was beneficial for the consumer to pay the higher interest rate balances first because those balances were at 21%.

I Have A New Stupid Idea

Common Sense Personal Finance


Let's say you need to borrow 80k. And let's say you can borrow 100k or 80k, and they will both be at the same rate. Assuming there is no prepayment penalty and assuming that both loans are at fixed rates, say 6%, for example. Should you borrow the 80k or the 100k?

I would borrow 100k and then immediately pay off 20k, so essentially I would still have a loan of 80k. Why would I do that? Isn't this the same as borrowing 80k to begin with?

No it isn't.

I loan of 100k with a prepayment of 20k is more advantageous than a 80k loan. There's a few reasons for this:

With a 100k loan, your payments are fixed at a higher monthly payment. The extra that you pay every month goes into the paying off the principal. The interest that you pay in both plans are the same because the remaining principal is 80k in both plans. You have essentially raised the amount you pay toward the principal in relationship to the amount of interest. You end up paying off your loan faster, and you pay less interest overall.

A loan for 100k for 30 years at 6% is 599.55 per month. If you pay off 20k initially, you would pay off the loan in approximately 18.5 years, with a total interest cost of around 52k. A loan for 80k for 30 years at 6% is 479.64 per month. If you do that then you will pay around $92,670 in interest.

You save around 40k, and you shave off 11 years from your loan, by borrowing 100k and then paying back 20k immediately.

Opportunity Cost -- What Does It Mean?

Common Sense Personal Finance

Another reader mentioned opportunity cost in the comments.

Opportunity cost is the difference in return in choosing one action over another action.

For example, if I choose to put money into something that returns 2% versus something that returns 6%, then I would have lost an opportunity to make 4% more. That 4% is the opportunity cost.

Negative Arbitrage-- What Does It Mean?

Common Sense Personal Finance

One of my reader left a comment about not being able to make money from negative arbitrage. What does that mean?

Negative arbitrage is the opportunity lost when the issuer of a bond takes the proceeds of a debt and invest that money into an investment vehichle that returns a lower rate than the rate at which the bond is paid out to the debt holder.

In other words if I borrow at 7.75% but then I put that into a CD that only pays 5%, then that's 2.75% negative arbitrage that I have incurred.

Borrowing Money To Fund A House -- How Stupid Can I Get?

Common Sense Personal Finance

The other day I saw a house that I really like for 500,000. I had no money for a down payment, so I financed the whole thing at 6% interest rate for thirty years. The house has consistently appreciated at a rate of 6%. Everybody thought I was nuts. Even my wife said I was stupid. She said, "Look if you borrow at 6% and then the house appreciate at 6%, then you break even. How can you make money doing this?"


But I can make money doing this. In thirty years, I'll be laughing my way to the bank. 500k compounded annually for 30 years at 6% = 2.8 million dollars. That's how much the house will be worth in 30 years. The loan will cost me $3000 per month for 360 months or a total of 1 million.

That's a net profit of 1.8 million. Whoever said that a 6% loan and 6% appreciation is the same thing?

You can make even more money if you don't take out a loan and you take that 3000 per month and you pay yourself that 3000 and grow it at 6% for thirty years. Then you would have a nest egg of approximately 3 million dollars (see table below). But that's not really my point. The point I'm trying to illustrate is that a loan of 6% is not equivalent to an appreciation of 6%. The point is that I can make money if I borrow money and invest it at the same rate.

			0
3000	0.005	1.005	3015
6015	0.005	1.005	6045.075
9045.075	0.005	1.005	9090.3
12090.3	0.005	1.005	12150.75
15150.75	0.005	1.005	15226.51
18226.51	0.005	1.005	18317.64
21317.64	0.005	1.005	21424.23
24424.23	0.005	1.005	24546.35
27546.35	0.005	1.005	27684.08
30684.08	0.005	1.005	30837.5
33837.5	0.005	1.005	34006.69
37006.69	0.005	1.005	37191.72
40191.72	0.005	1.005	40392.68
43392.68	0.005	1.005	43609.64
46609.64	0.005	1.005	46842.69
49842.69	0.005	1.005	50091.9
53091.9	0.005	1.005	53357.36
56357.36	0.005	1.005	56639.15
59639.15	0.005	1.005	59937.35
62937.35	0.005	1.005	63252.03
66252.03	0.005	1.005	66583.29
69583.29	0.005	1.005	69931.21
72931.21	0.005	1.005	73295.87
76295.87	0.005	1.005	76677.35
79677.35	0.005	1.005	80075.73
83075.73	0.005	1.005	83491.11
86491.11	0.005	1.005	86923.57
89923.57	0.005	1.005	90373.18
93373.18	0.005	1.005	93840.05
96840.05	0.005	1.005	97324.25
100324.2	0.005	1.005	100825.9
103825.9	0.005	1.005	104345
107345	0.005	1.005	107881.7
110881.7	0.005	1.005	111436.1
114436.1	0.005	1.005	115008.3
118008.3	0.005	1.005	118598.4
121598.4	0.005	1.005	122206.3
125206.3	0.005	1.005	125832.4
128832.4	0.005	1.005	129476.5
132476.5	0.005	1.005	133138.9
136138.9	0.005	1.005	136819.6
139819.6	0.005	1.005	140518.7
143518.7	0.005	1.005	144236.3
147236.3	0.005	1.005	147972.5
150972.5	0.005	1.005	151727.4
154727.4	0.005	1.005	155501
158501	0.005	1.005	159293.5
162293.5	0.005	1.005	163105
166105	0.005	1.005	166935.5
169935.5	0.005	1.005	170785.2
173785.2	0.005	1.005	174654.1
177654.1	0.005	1.005	178542.4
181542.4	0.005	1.005	182450.1
185450.1	0.005	1.005	186377.3
189377.3	0.005	1.005	190324.2
193324.2	0.005	1.005	194290.8
197290.8	0.005	1.005	198277.3
201277.3	0.005	1.005	202283.7
205283.7	0.005	1.005	206310.1
209310.1	0.005	1.005	210356.6
213356.6	0.005	1.005	214423.4
217423.4	0.005	1.005	218510.5
221510.5	0.005	1.005	222618.1
225618.1	0.005	1.005	226746.2
229746.2	0.005	1.005	230894.9
233894.9	0.005	1.005	235064.4
238064.4	0.005	1.005	239254.7
242254.7	0.005	1.005	243466
246466	0.005	1.005	247698.3
250698.3	0.005	1.005	251951.8
254951.8	0.005	1.005	256226.6
259226.6	0.005	1.005	260522.7
263522.7	0.005	1.005	264840.3
267840.3	0.005	1.005	269179.5
272179.5	0.005	1.005	273540.4
276540.4	0.005	1.005	277923.1
280923.1	0.005	1.005	282327.7
285327.7	0.005	1.005	286754.4
289754.4	0.005	1.005	291203.1
294203.1	0.005	1.005	295674.2
298674.2	0.005	1.005	300167.5
303167.5	0.005	1.005	304683.4
307683.4	0.005	1.005	309221.8
312221.8	0.005	1.005	313782.9
316782.9	0.005	1.005	318366.8
321366.8	0.005	1.005	322973.6
325973.6	0.005	1.005	327603.5
330603.5	0.005	1.005	332256.5
335256.5	0.005	1.005	336932.8
339932.8	0.005	1.005	341632.5
344632.5	0.005	1.005	346355.6
349355.6	0.005	1.005	351102.4
354102.4	0.005	1.005	355872.9
358872.9	0.005	1.005	360667.3
363667.3	0.005	1.005	365485.6
368485.6	0.005	1.005	370328.1
373328.1	0.005	1.005	375194.7
378194.7	0.005	1.005	380085.7
383085.7	0.005	1.005	385001.1
388001.1	0.005	1.005	389941.1
392941.1	0.005	1.005	394905.8
397905.8	0.005	1.005	399895.3
402895.3	0.005	1.005	404909.8
407909.8	0.005	1.005	409949.4
412949.4	0.005	1.005	415014.1
418014.1	0.005	1.005	420104.2
423104.2	0.005	1.005	425219.7
428219.7	0.005	1.005	430360.8
433360.8	0.005	1.005	435527.6
438527.6	0.005	1.005	440720.2
443720.2	0.005	1.005	445938.8
448938.8	0.005	1.005	451183.5
454183.5	0.005	1.005	456454.5
459454.5	0.005	1.005	461751.7
464751.7	0.005	1.005	467075.5
470075.5	0.005	1.005	472425.9
475425.9	0.005	1.005	477803
480803	0.005	1.005	483207
486207	0.005	1.005	488638
491638	0.005	1.005	494096.2
497096.2	0.005	1.005	499581.7
502581.7	0.005	1.005	505094.6
508094.6	0.005	1.005	510635.1
513635.1	0.005	1.005	516203.3
519203.3	0.005	1.005	521799.3
524799.3	0.005	1.005	527423.3
530423.3	0.005	1.005	533075.4
536075.4	0.005	1.005	538755.8
541755.8	0.005	1.005	544464.6
547464.6	0.005	1.005	550201.9
553201.9	0.005	1.005	555967.9
558967.9	0.005	1.005	561762.7
564762.7	0.005	1.005	567586.5
570586.5	0.005	1.005	573439.5
576439.5	0.005	1.005	579321.7
582321.7	0.005	1.005	585233.3
588233.3	0.005	1.005	591174.4
594174.4	0.005	1.005	597145.3
600145.3	0.005	1.005	603146
606146	0.005	1.005	609176.8
612176.8	0.005	1.005	615237.7
618237.7	0.005	1.005	621328.8
624328.8	0.005	1.005	627450.5
630450.5	0.005	1.005	633602.7
636602.7	0.005	1.005	639785.8
642785.8	0.005	1.005	645999.7
648999.7	0.005	1.005	652244.7
655244.7	0.005	1.005	658520.9
661520.9	0.005	1.005	664828.5
667828.5	0.005	1.005	671167.7
674167.7	0.005	1.005	677538.5
680538.5	0.005	1.005	683941.2
686941.2	0.005	1.005	690375.9
693375.9	0.005	1.005	696842.8
699842.8	0.005	1.005	703342
706342	0.005	1.005	709873.7
712873.7	0.005	1.005	716438.1
719438.1	0.005	1.005	723035.3
726035.3	0.005	1.005	729665.4
732665.4	0.005	1.005	736328.8
739328.8	0.005	1.005	743025.4
746025.4	0.005	1.005	749755.5
752755.5	0.005	1.005	756519.3
759519.3	0.005	1.005	763316.9
766316.9	0.005	1.005	770148.5
773148.5	0.005	1.005	777014.2
780014.2	0.005	1.005	783914.3
786914.3	0.005	1.005	790848.9
793848.9	0.005	1.005	797818.1
800818.1	0.005	1.005	804822.2
807822.2	0.005	1.005	811861.3
814861.3	0.005	1.005	818935.6
821935.6	0.005	1.005	826045.3
829045.3	0.005	1.005	833190.5
836190.5	0.005	1.005	840371.5
843371.5	0.005	1.005	847588.3
850588.3	0.005	1.005	854841.3
857841.3	0.005	1.005	862130.5
865130.5	0.005	1.005	869456.1
872456.1	0.005	1.005	876818.4
879818.4	0.005	1.005	884217.5
887217.5	0.005	1.005	891653.6
894653.6	0.005	1.005	899126.9
902126.9	0.005	1.005	906637.5
909637.5	0.005	1.005	914185.7
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924771.6	0.005	1.005	929395.5
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955496.5	0.005	1.005	960274
963274	0.005	1.005	968090.4
971090.4	0.005	1.005	975945.8
978945.8	0.005	1.005	983840.6
986840.6	0.005	1.005	991774.8
994774.8	0.005	1.005	999748.6
1002749	0.005	1.005	1007762
1010762	0.005	1.005	1015816
1018816	0.005	1.005	1023910
1026910	0.005	1.005	1032045
1035045	0.005	1.005	1040220
1043220	0.005	1.005	1048436
1051436	0.005	1.005	1056693
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1067992	0.005	1.005	1073332
1076332	0.005	1.005	1081713
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1093137	0.005	1.005	1098603
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1110111	0.005	1.005	1115661
1118661	0.005	1.005	1124255
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1135891	0.005	1.005	1141570
1144570	0.005	1.005	1150293
1153293	0.005	1.005	1159060
1162060	0.005	1.005	1167870
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1179724	0.005	1.005	1185623
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1197566	0.005	1.005	1203554
1206554	0.005	1.005	1212587
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1242957	0.005	1.005	1249172
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1446456	0.005	1.005	1453688
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1551112	0.005	1.005	1558868
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1572677	0.005	1.005	1580540
1583540	0.005	1.005	1591458
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1649871	0.005	1.005	1658120
1661120	0.005	1.005	1669426
1672426	0.005	1.005	1680788
1683788	0.005	1.005	1692207
1695207	0.005	1.005	1703683
1706683	0.005	1.005	1715216
1718216	0.005	1.005	1726808
1729808	0.005	1.005	1738457
1741457	0.005	1.005	1750164
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1812584	0.005	1.005	1821647
1824647	0.005	1.005	1833770
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1848954	0.005	1.005	1858199
1861199	0.005	1.005	1870505
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1885873	0.005	1.005	1895302
1898302	0.005	1.005	1907793
1910793	0.005	1.005	1920347
1923347	0.005	1.005	1932964
1935964	0.005	1.005	1945644
1948644	0.005	1.005	1958387
1961387	0.005	1.005	1971194
1974194	0.005	1.005	1984065
1987065	0.005	1.005	1997000
2000000	0.005	1.005	2010000
2013000	0.005	1.005	2023065
2026065	0.005	1.005	2036196
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2052392	0.005	1.005	2062654
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2078982	0.005	1.005	2089377
2092377	0.005	1.005	2102839
2105839	0.005	1.005	2116368
2119368	0.005	1.005	2129965
2132965	0.005	1.005	2143630
2146630	0.005	1.005	2157363
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Borrowing Money To Fund My Savings -- How Stupid Can I Get?

Common Sense Personal Finance

You know what I just did? I borrowed 30k from my home equity line at 7.75%, and I put that into a savings account paying only 5%. I know that everybody is laughing at me and thinking I'm nuts. Even my wife thinks that I have gone off the deep end. She goes, "Don't borrow money to put into savings, you lose more money because the loan is at a higher rate. Are you stupid or something?"

Actually, borrowing money to put into my savings is really a no brainer for me. It is so genius that people think it is stupid. According to the bankrate loan calculator, if I borrow 30,000 at 7.75% for 30 years, my total interest is $47,372.52. You add that to the 30,000 for the principal, and my total payment for the loan is $77,372.52. If I put that 30k in a savings earning 5% for thirty years, compounded 12 times per year, that account would be worth $134,032.33, according to the compound interest calculator in money chimp. My net profit from this crazy move is 134,032.33-77372.52 = 56659.81. Whose the dummy, now? Now all I need to do is not spend that money for thirty years, that's the hard part. But then again, why would I spend it. That money was sitting in my home equity line doing nothing, so when the money is in my savings, I wouldn't spend it either, just like I'm not spending my home equity line.

I can even make more money by paying off that home equity line in 10 years instead of 30 years. According to bank rate loan calculator, if I pay off the loan in 10 years, the interest is only $13,203.83. If you add 30k principal to that, I would have only payed 43k. If I keep that 30k in my savings for 30 years at 5% and I pay off my loan in ten years, then my net profit from this move is 134,032.33-43,203.83 = 90828.50 over thirty years. That's roughly average out to be 3,000 profit per year. Who wouldn't want an extra 3000 per year?

I Will Teach You How To Haggle

Common Sense Personal Finance

My wife was shopping for some book cases off of Craig's list. She came across a set of book cases for $150, and we scheduled to meet with the lady.

When we first met her, she said, "You'll have to excuse the way I look. I don't normally look like this," as if we judged how well kept the bookcases are by how meticuluous she looked.

Anyways, she looked kind of scruffy looking, so maybe unconsciously her appearance did cause us to have a negative bias.

Then she showed us the bookcases. She said that she made a mistake with the prices of the bookcases and that she wanted $150 each for a total of $300. She was thinking of selling each one separately. We already knew that she wasn't getting any takers on those bookcases. If it was a hot price, the bookcases would have been gone just like that, and we would see people looking at the bookcases at the same time that we were looking at it. Why would the owner waste multiple trips showing this to potential buyers?

She had mentioned previously that she is not willing to part with them for nothing less than $200 for both. We already knew the lowest price that she is willing to go. When negotiating, never reveal that to the other party. Anyways, she revealed it.

When she asks us what are we willing to pay for them. Of course my wife starts with a low ball offer. My wife honestly told her that she was thinking of something less than $150. The seller was shocked, to say the least. The seller said that she was thinking along the lines of $250 for both. She started explaining to us that she paid over $300 for each.

We were unphased.

I reminded her that she said $200 for both.

My wife starts talking about the color looking different from the pictures on Craig's list. That's her subtle hint that these book cases are not exactly what we expected.

The seller started saying that it looks different because of her daughter's digital camera.

The seller started talking about how the bookcases have lights.

My wife then started plugging it into the outlet to make sure the lights work. If the lights don't work, then we can talk the price down.

My wife started asking whether it is real hardwood. One of the shelves look like it is not real hardwood, but the drawers do look like hardwood.

The seller kind of sense that we are not interested and replied that she doesn't want to argue with us. She said that she would rather store them then to part with them at a low price. However, she had told us previously that she really wanted to get rid of them.

We remained stoic.

Then the seller started to say that she would meet us halfway at $175.

My wife started saying that she would need to see whether she can borrow a truck or get a U-haul or something. Then my wife pretends to try to measure these book cases.

The seller started to suggest that maybe she can deliver them, but then she says that she would have to charge $200 for the book cases. That's $25 for deliver, which I think is a really good price.

Then we just ended the conversation with us either trying to find a truck or the seller trying to find someone who would deliver it. We just left it like that. The seller knew that we didn't want it. Saying we need to find a truck is just my wife's way of saying "We'll call you," which really means we're not interested.

Well, it's not our fault that the seller is not willing to go lower.