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My Money Blog:

Well, the CPI-U that I recently questioned went up 0.9% in March alone. I guess you can’t hide everything. So, is it time to buy some Series I bonds? First, refer back to this earlier post for a primer as well as some background information. You can ignore the predictions since we have the actual data now.

Calculating the Rates For Next 12 Months
If you buy by the end of April, the fixed rate portion of I-Bonds will be 1.2%. You will be guaranteed an variable interest rate of 3.08% for the next 6 months, for a total interest rate of 4.28%.

After that, the rate will adjust every 6 months based on the previous 6 month’s worth of inflation data. The next adjustment will be in May, based on September-March 2008 data. We can effectively predict this now using the prediction method explained here:

Sept 2007 CPI-U was 208.490. March 2008 CPI-U was 213.528. 213.528/208.490 = 1.02416, or a semi-annual increase of 2.416%.

Total rate = Unknown fixed rate + 2 x Semiannual inflation rate + (Semiannual inflation rate X Fixed rate)

If we assume a fixed rate of the current 1.2%, we get
Total rate = 0.012 + (2 x .02416) + (.012 x .02416)
Total rate = 1.2% + 4.86%
Total rate = 6.06%

Possibly Good Short-Term Investment?
A known “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month as if you bought it in the beginning of…

My Money Blog:

If you have a Citibank credit card and are collecting ThankYou points, you are probably familiar with the various gift cards available at approximately a 1 point to 1 cent ratio, or 10,000 points = $100 gift card. You may even be familiar with the Fixed Point redemption option for travel. This not-so-publicized option allows you to redeem 20,000 ThankYou points for any domestic coach flight up to $400 in value (per Expedia.com). That’s nearly twice the value, with no blackout dates, no seat availability issues, no 14-day advance booking requirement. You do have to pay the taxes and fees, however, which can be up to $50 if there are multiple stops. (For details see the FAQ, click on Travel Rewards.)

It’s actually quite nice, and I have booked a ticket before this way before. The problem is, they have been gradually restricting which credit cards are eligible to redeem this options. The list went from virtually all Citi cards to the sad, lonely list below:

As of April 15, 2008, ThankYou Members with Smith Barney Accounts, Citibank Accounts, Expedia® Accounts and the following Card Accounts are eligible for Fixed Flight options: Citi PremierPass® Cards – Elite Level and Citi® ChairmanSM Cards. All ThankYou Members can book variably priced Travel Rewards online.

This only left me with either gift cards or the variable point flight option, which is not horrible but much worse in comparison. Essentially one point = 1 cent, so 20,000 ThankYou points would only cover a…

make it! Finance and Investment Blog:

Most variable rate home loan products today come with the option of 100% mortgage offset through the use of savings accounts. Many people are ignoring these to opt for a fixed rate and surety of payments, and as far as I am aware there are no fixed rate products that offer 100% offset (please contact me if you know of any).

UPDATE: 

CUA appears to offer fixed rates in combination with 100% offset. It will be interesting to see if their pricing relative to variable rates differs substantially from other fixed rate offerings to take this into account. Link: CUA’s Fixed Rate Loans

For the disciplined, these can be one of the best investments going. They offer substantial tax benefits, and a very high effective return — if you are disciplined enough not to spend money you have access to. More on that later …

I’ll start with a brief introduction of how a mortgage offset facility works.

The facility basically entails having a bank account opened, of which the balance will be offset against your home loan when calculating interest. Most mortgage offset facilities that I am aware of allow you to have multiple accounts offsetting your loan, without charging any additional fees.

When calculating interest on your home loan, which is calculated on a daily basis (and usually charged monthly), the bank will use the following formula (simplified):

Interest = ((Balance of loan) - (Combined balance of offset accounts)) * Interest Rate

Without an offset facility the formula is simply:

Interest =…

Yielding Wealth | Personal Finance:

This is a guest post by Heather Johnson.

You’ve heard the success stories probably more times than you can count. People always talk about how they built their own personal wealth and had excellent success in their financial endeavors. Unfortunately, no matter what people say, there’s no perfect way to build wealth, and for every far-fetched success story, there are probably many more stories of failed attempts at making cash. That being said, I’ve decided to offer some practical advice on building personal wealth, and obtaining personal financial security. It’s not some get-rich-quick scheme, but rather five ways one can help work to build his or her own wealth and achieve financial stability.

1. Get an Education – The fact remains that with increased education; one’s earning potential drastically increases. If you took college courses, but never finished the degree, you should seriously consider doing so. Some have stereotypical views concerning online education or finishing a degree in an on-campus setting after a certain age, but that shouldn’t dishearten you. The bottom line is that education is one of the best ways to drastically increase wealth in the long run. While it can sometimes get costly in the short-term, if you are able to take out loans, earn scholarships, or finance your education in another way, the benefits can really pay off.

2. Manage Your Money Well – Managing finances is one of the most challenging things for many people in their daily lives. It’s no secret that…