My random thoughts,useless and useful informations I gather, my financial thought process, investments, research, general knowledge, frugal consumerism ideas, Best deals - a mixture of all these are in my blog entries

Tuesday, January 24, 2006

Jan 24th - Just another day wasted

Nothing much to add.. Feeling lazy..really lazy

Yesterday I bought Aetna(AET)for $90.00 Ameritrade commission 10.99. Received the check from Universal Citi card cashback bonus for $130.00. free 1 month trial (coupon code USATODAY9)is too slow for me - just six movies in 13 days so far even after I viewed and returned every movie within 1 day. I prefer NETFLIX !
Postponed PC files backing up one more day coz I am too lazy.

Monday, January 23, 2006

New vehicle purchase - The frugal dilemma

It has been almost a 9 year itch now. I haven't had that sweet exotic smell of a new vehicle for a long time. I keep driving my 9 year old car and 10 year old van for such a long time now, I really getting that urge to buy a new vehicle. I have all the means to justify it, wanting a new and much reliable vehicle, with all those new gadgets, spacious roomy cozy looking interiors and trendy look. I have available finances, ( I have a great credit score, good income - if I want i could finance it with cash). I often rent van for long distance trips anyway. Hey after all money is for enjoying, to have a better living and happiness,,right ? One must take time to slow down a bit and smell the flowers..right ?

As I am looking into some of the practical choices, a mini van with reasonable equipment package should be around 26k to 28 k. Well you know these trendy japanese market leaders mostly has a high mark up. that number is not very about a used vehicle, may about 3 years old where I could get the best value on the depreciation curve, may be a vehicle still within manufacturers warranty ?

I did some calculations...including the mathematics of all hidden charges to find out the REAL cost of owning a new vehicle in comparison with keeping my existing workhorses for another 3 years. I know, another three years is a real stretch, may be my considerations will change in the due course. The results really shocked me.

1)Cost of the Money raised for the vehicle ( either lost interest or APY on the loan), In my case I would say I am going to use cash of 27k, otherwise would have fetched me a very conservative interest rate of 5% across 3 years= 4370.00
2)Higher Insurance Cost for newer vehicle with full coverage=2700
3)Depreciation in 3 years(avg-various blue books)=9800.00
5)Higher taxes on registration etc =300.00

That is a whooping 17,170.00 for 3 years !!!

Holly Molly !! For now, I am going to just scratch that itch and drive my vehicles as long as I can. May be I will buy a used vehicle, may be I will even buy a new vehicle..but not for now. Looking at the calculations, renting a van for long trips sounds good. But I still need to stop and smell the roses on the way.....

Sunday, January 22, 2006

A tale of two births - Expenses again

Now that I've created a spread sheet of the second birth and provided the details, it forced me to walk through my memory lanes to the birth of my first born. It was all together a different tale all together. Year 2003, It was relatively a complex birth, new experiences, more stressed, a lot more anticipation. Everything was great until the labor, then it was very stressful until we left the hospital. We stayed 4 days instead of a normal 2 day for a natural vaginal delivery.
Yes, every birth is truly unique.

Back then my insurance was worse too. Higher deductible of $1000.00, Hospital copay of $250.00, Rx COPAY OF $25.00 and coinsurance for hospital stay was 80%.

The total expenses(out of pocket) from pregnancy test, prenatal care thru OBGYN, delivery and post partem visits and medications amounted to $4204.70. (Insurance company paid total was $7846.42) . OBGYN visits are part of a prenatal+ delivery package so there were no individual charges, there were 4 additional Ultrasound scans due to a suspected fetus problem. The Hospital expenses-delivery for the mother $2586.62, for the baby $1248.11. anesthesia costs $176.00. It was 3nights and 4 day stay.

Friday, January 20, 2006

Baby Birth - Expenses

People out there who is either expecting a baby or planning to have one, must be wondering what are the costs involved with a hospital delivery. I did and I never could find anything. Yes each pregnancy and child birth is unique, so you cannot plan every expenses.

Well we were lucky to have a normal un-complicated delivery and a reasonable insurance coverage this time. I have documented all Doctor, labs, medication and delivery related expenditures here. My insurance coverage has a $20.00 copay, doctors visits are 100% covered after the copay, annual deductible $500.00, Labs are covered at 100% if it is part of a doctor visist and the lab work is billed by the doctors office. After deductible expenses are covered at 80%, and hospital stays are covered at 90% with no hospital copay.

The total expenses(out of pocket) from pregnancy test, prenatal care thru OBGYN, delivery and post partem visits and medications amounted to $1906.65. Insurance company paid total was $7793.27 . OBGYN visits are part of a prenatal+ delivery package so there were no individual charges.

The Hospital expenses-delivery for the mother $1221.32, for the baby $515.33. Anasthesia costs $221.31. It was 2 nights and 2 day stay at the hospital spanning about 56 hours.

Wednesday, January 18, 2006

Hospital Bills

I wonder why they make the hospital bills are so difficult to understand. From my previous bad experiences with Hospital bills and Insurance, I always make sure I get a detailed itemized bill from them and check for every line item, compare the benefits from my insurance plans and how the claims are being paid. It always has errors, it makes me wonder is it deliberate.

Corruption is every where, that's why some Health insurance companies provide you incentives to review your bills and if you find that you been over charged, they pay you a reward. Check your health plans.

Tuesday, January 17, 2006

Thoughts on Mutual Fund selection

I am trying to compile a list of criteria's for choosing Mutual funds and write it down. I remember, when I first started investing on Mutual funds it was easy - yes stupid, but it was easy. Its was my 401k and employees were offered only 7 choices. Without knowing much about investing itself, I choose 4 funds, which had the best previous year return. Needless to mention it turned out to be the worst choices. I wonder why didn't I read that fine print in bold then... PAST PERFORMANCES ARE NO GUARANTEE BLAH BLAH. Well, even today the past performance history are main criteria but I have improvised. My thoughts are like this, and to certain extend I do follow these nowadays.

Buy only a NO-LOAD fund - I am not paying up 5% of my hard earned $ as front, middle or back load. I will live with smaller returns than paying another set of premium to invest.

Low expense Ratio, preferably less than 1.0% - Just like the first point, when you do the mathematics you would know how much these management fee etc eats into your funds. For an international fund, we could relax it limit.

Better returns than the S&P 500 index in both bull and bear periods - If the manager is not good enough to beat S&P500 consistently, why bother ? I have my index funds with minimal expense ratio.

Not more than 2 down years in any 6 year span - If the fund can't turn around the ship from two years of bad experience, that Manager is not worthy to manage your $.

Funds with at lease 5-10 year of existence with a long serving Manager(s) - well I have cheated on this criteria, may be I think that boom years of late 90's and bear market of 2000-03 changed some old philosophies, some alternate hybrid strategy funds are doing great.

Low turnover ratio for taxable account : Other than the obvious tax issues, If the manager is too trigger happy, its not a very good thing

Monday, January 16, 2006

Rest of the 2006 investment planning

As I am still pondering how I would plan my investment for the rest of the year, I am keeping a list watch list of my potential buy's - stocks and No-load mutual funds.

I am planning to increase my investments and reduce CD/MM holding. Yes I am mildly bullish for 2006. I do contribute maximum to my 401k, still waiting to fund Roth IRA and other taxable brokerage. Experts says in the long run market timing doesn't really help, but I am not convinced. I strongly feel there will be a short term pull back in prices between the earning season and Fed's meeting end of the month.

On the stock front MO,AET,WLP,GE,PFE,YHOO are front runners - that's for now.
On the Mutual Funds arena, I am not sure how to proceed. I already have Fidelity and Vanguard accounts. I would like to increase exposure to Large Cap's and International. Seems like my options are narrow with my existing Brokerages.

Sunday, January 15, 2006

Figuring out..

You know what, My NFL predictions on play-offs so far are a 100% accurate. Seahawks,Panthers,Pittsburg & Broncos. I should have been in vegas betting...woohoo !

Broncos all the way - beating Seahawks in Superbowl Extra large (XL)

Well we all know that we don't have any crystal balls - especially one that works in Wall St. Only thing we could do is to follow the usual advices.. Work hard, spend carefully, save more, invest, diversify...
I do follow these, I read a ton of garbage on finanacial ideas as well. Most of it are the same ole, same ole - repackaged, recycled materials. Today with all these information technology advances, we have too much of data, too little useful information anyway.
Personally my current biggest issues are - well few of them, My job is not something I could settle in one place, so I cannot own a home. I did not took a chance and bought a home, I was not sure howlong I would be working here. Now I feel like living in a shoe box, every year my possessions increase and apartment become more conjusted.
Along with another 100 reasons, this makes me want to change my job, but when I want to change my job, I want to make a good move. I am hoping I will be employed by someone who would match some 401k contribution unlike my current one. I thank God, that I am debt free - except my credit cards which I pay in full every month.

Sunday, January 08, 2006

First balancing act - Fund exchanges

I will be completing an exchange in Vanguard holdings (IRA). From a balanced TARGET fund, I am moving 10k to start a new investment, Vanguard PRIMECAP CORE. With my load and management fee, expence ratio sensitivity -call me frugal, I have a certain fondness to Vangaurd. Even though I am not very happy with the change in minimum investments amounts from Vangaurd, I own few of them; Vanguard 500 index, Total stock market Index, Windsor II, Wellington, STAR fund & Target Fund.
I have completed my 401k Fidelity funds balancing, well its not an overall balancing, just getting ride of some of the 'pigs' from past year, Now Fidelity accound has 50% large caps which includes my favorite Contrafund holding 20%. Midcaps holds 20%, Worldwide 15% Small cap 8% and Bond portion of Balanced fund at 7%.

Friday, January 06, 2006

Tis the New Year ! Networth Update !

The year 2005 on the rear view mirror, the networth increased from 206,886.16 to 273,316,21.
I am happy about the progress, infact I exceeded my target's well. I have been too cautious about the market direction with interest rates increases becomes a regular federal reserve exercise. I sticked with a conservative approach , mainly my investmenst were in index funds, balanced funds, Large caps and a very little on midcap and international.

Overall my 401k Mutual funds provided a 9.8% return, IRA stocks returned average 20% and Non retirement mutual funds returned an average 12%. The 12% is mainly due to a lucky market timing, otherwise those funds has an average annual return of 6.5% for 2005.
I am planning to increase my investments, but after seeing the bulls jumped out the gate in newyear I am not very sure if I should be jumping the band wagon. Bulls got a shot in the arm with the minutes from fed's - the wording has changed, but I am not so sure if I should be cheering that much. Initially my plan was to immediately contribute to 2006 Roth IRA, but now I think there will be a small market correction.
Another thought, I would like to move some funds to international, not just european but to other emerging markets of India and China. Have not decided if I should move money from a maturing CD or exchange from existing funds.
For the past few years I have been laddering CD's which is a good time tested strategy. From Jan 2005 I am enjoying the great rates from GMAC in comparison with my Credit unions savings rates.