It's Just Money

$100 from Washington Mutual for Opening an IRA (with a bonus math problem at the end)

I don't know if this is a company wide promotion, or just at my local branch.  The other day, I walked inside to deposit some funds.  Yes, I'm one of those guys who actually prefers to go inside rather than use the ATM.  Just don't trust those gosh darned newfangled gizmos!

As I waited in line, a sign caught my eye.  "Open a Wamu IRA with $100, and we'll give you $100!"  And right in the middle, in someone's messy handwriting, "and deposit $100 per month automatically."  So, when I got to the teller, I asked her for more info.  She took my name and number and told me that the woman who handles that is out.

The next morning I get a call from the "woman who handles that."  I asked about the restrictions.  None apparently.  It can be a traditional or Roth IRA.  You can open a savings account, CD or opt for one of the mutual funds that they offer (all load funds).  The only requirement is that I set up an automatic transfer from my checking to my new IRA of $100 per month.  The $100 bonus will be deposited to my account after the first 30 days and will be credited as a current year contribution.

I went in that afternoon to set up a Roth IRA in a 10 month CD.  It was their highest rate with an APY of 5.10%.  I made my initial deposit of $100, and signed the automatic transfer form to make $100 monthly transfers.  Here's the way I see it.  In order to fulfill my commitment, I will have made $1,300 in deposits.  $100 for the initial deposit, and 12 months at another $100.

At 5.10% and an additional $100 deposited after the second month, my balance at the end of 13 months should be $1,444.12.  That's not exact, as the CD is only a 10 month.  At the end of the 10 months, I'll have to put it in something shorter term.  But for the purposes of calculation, we'll assume 5.10% for the life of the account.

If that is my balance at the end of the 13 month commitment, I will have effectively earned a IRR of 47.69%.  Obviously, this impressive rate is due to my making the minimum deposits and taking advantage of the $100 bonus.  I am considering adding my 2006 Roth contribution to the same account, substantially reducing my effective rate.  However, I'll just engage in a little mental accounting, and tell myself that I am earning 5.10% on the 2006 money, and 47.69% on the 2007 contributions.

Heck, even if I add the $4,000 to my calculation, my IRR is still 15.63% for the entire account for the 13 month period.  Of course, this assumes that my calculations are correct.  Maybe I should write to Frank to verify my math.

Actually, here it is for Frank or any other math/excel geeks.

Back to the Basics: Staying out of ChexSystems

You check your credit report once a year.  Well done, you have kept a clean credit report.  There is something that will never appear on a credit report, but can be even more damaging to your ability to establish good banking relationships in the future.  ChexSystems!

Most people have never even heard of ChexSystems.  Many people who have been reported to ChexSystems do not even know about it until they walk into a bank and try to open an account.  So, what is it and how can it affect you?

Washington Mutual Servers Down for Two Days

For the last two days, when I tried to log on to my account at Washington Mutual, I received an error message.  Worst of all, here is how the error message goes,

Our online services are temporarily unavailable. Our technical staff is working diligently to restore service.

Bill payments and transfers scheduled during this period will be initiated as scheduled.

To apply for a home equity loan or line of credit please contact us at 800.933.3590.

You may also want to visit the wamu.com home page to learn more about the products we offer.

We regret any inconvenience and thank you for your understanding.

Are you kidding me?  I'm just trying to check my accounts to see if transfers have been complete, and the following happens:

Operation Hope: Teaching Kids about Money

I mentioned before that I am volunteering for an organization called Operation Hope.  They have a program called Banking on Our Future.  The objective is to go to high schools and junior high schools, mostly in lower income neighborhoods, and teach the kids about money, basics of banking, credit and investments.

I went to my first class this week, and really had an amazing time.  So, here's the story.

Who else thinks the number of banks is shrinking?

The announcement that Wachovia is taking over Golden West Financial has got me thinking.

Where I grew up, in a suburb just outside Los Angeles, there was a major street where you could find almost every major west coast bank.  There were the mega banks, Bank of America, Wells Fargo and Citibank.  There were the mid sized or regional banks like Security Pacific, Union Bank, Cal Fed Bank, Glendale Federal Bank, World Savings, First Federal Bank, Fidelity Federal Bank, Home Savings, Great Western Bank and Lincoln Savings. Small ones like Coast Federal, Hawthorne Savings and Downey Savings.  There was even an international presence with Sumitomo Bank, Dai Ichi Kangyo Bank, HSBC and East-West Bank.

If you drive down that same street today, you'll find the mega banks and the foreign banks, and that's it.  So, where did they all go?