2009-2010 Best Value Home Renovation Projects

I like taking a look at this list every year because it gives me a good understanding of what makes a good renovation project, in terms of ROI, and what makes a terrible one. When it comes down to it, I know it’s not about ROI. You don’t add a deck to your house because of the ROI, you add one because you want a deck. You put a bedroom above the garage not because some book says the ROI is high, you do it because you want a place your guests can stay that beats an air mattress in your study.

However, if you have several projects on the list and you aren’t sure which one to take on first, a list like this could help break the tie.

I haven’t looked at the list since 2008-2009 but not much has changed. Back then, the best renovation you could do was the addition of a deck, with a recoup of 81.8%. This year, the best major project is the addition of an Attic Bedroom (wood deck addition came in #2).

As you can see, the recoup values have fallen a little, which I believe reflects the softer housing market, but they’ve been falling a few fractions of a percent every since I’ve been looking at the list. One interesting note from the original list is that there is one midrange project that is “profitable,” replacing the entry door (steel) with an ROI of 128.9%. It’s a cheaper project ($1,172) so getting a return isn’t as difficult, especially when it’s such a big aspect of curb appeal.

Worst ROI project is a home office remodel (48.1%) and the addition of a sunroom (50.7%). However, like I said earlier, sometimes you want to do a project because you’ll enjoy it, not because of the ROI. Sunrooms are great if you love them… but they won’t make you any money.

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Top Personal Finance Blogs Roundup

Every few weeks a random person usually emails me with their latest list of “best frugal bloggers” or “best personal finance bloggers” and I usually ignore them. It’s not that I don’t enjoy a good superlative or two, it’s just that these lists often have an ulterior motive. That said, I didn’t respond that way when the guys at Money Crashers unveiled their top PF blogs list, which looked quite similar to Wise Bread’s more venerable Top 100 personal finance blogs list. The two are similar but not the same, each using a different equation to calculate awesomeness, but I’m honored that Bargaineering appears in the top ten of both.

Here are this week’s gems:

I’ve long argued that creating a budget is absolutely crucial in getting your finances on track but I’ve never explained how as elegantly as Jeremy has in his post on how to create your first budget.We’ve been cooking a lot lately, mostly because we enjoy cooking and taking advantage of our local farmer’s market, so this latest Fresh Air show with Harold McGee was in our wheelhouse. It’s always interesting to learn the science behind cooking.If there’s a tax cut and no one hears it, did it really happen? The trouble with cutting people’s taxes and not telling them is that you don’t get political points. If you cut them in a way that makes them very visible, people may not spend those cuts (which is the point of using them as stimulus). It’s quite a conundrum… it says something that President Obama went in the direction that helped the American economy the most, not the one that helped himself and the Democratic Party the most.You still have time to open up a Roth IRA, Pete shares his thoughts on the Best place to open Roth IRA.It’s a few weeks away but if you’re a Vet, here are a few Veteran’s Day Discounts.Flexo takes a look at some Mint data, some interesting stuff in there.

Anyone else remember the Super Mario Bros infinite 1-up trick? In an interview, Shigeru Miyamoto explained that it was included on purpose. Remember this trick?
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What is Quantitative Easing?

Quantitative easing, known as QE, is a monetary policy used by a central bank to increase the money supply by increasing the excess reserves. In layman’s terms, they inject a lot of new money into the money supply through open market operations. If this sounds like the central bank is just printing more money, you’re right (technically they just make up money out of thin air electronically, no actual printing is necessary). The specifics of how they do this are probably not important to 99.99% of us, but they’re explained below, but what is important is why a central bank like the Federal Reserve would want to do this.

(in case you were curious) The central bank essentially credits its own account with new money and uses that money to buy assets from banks, thus increasing the reserves at those banks. Those banks can then lend that money out at a multiple based on the reserve ratio. If the ratio is 10%, then they can lend out 90% of the amount of the added reserves. Reserve ratios are the percentage of an asset they must keep as reserves (so if you have $100 and the ratio is 10%, you can lend out $90). The next bank can lend out $81, keeping $9, and so on and so forth.

As you may be aware, the current federal funds rate is remarkably low – target is 0 – 0.25%. If additional stimulation is needed, they can’t exactly lower the federal funds rate to under 0%, then banks would be paid to borrow money from the Fed (and they would borrow an infinite amount!).

Quantitative easing is just another monetary policy tool they can use to inject money into the money supply to spur lending and boost the economy.

The biggest risk is hyperinflation, as it’s happened in a variety of places. Whenever you print more money, you devalue existing money since the underlying characteristics of the economy have not changed. Simplistically, if your economy is worth $1000 and you have 1,000 bills, each one is “worth” $1. If you print 1,000 more bills, each one is really worth just $0.50. In enormous economies worth trillions of dollars, the degree to which you print more money has the effect of nudging the economy in certain directions. The risk is that a nudge becomes a push or even a shove… down a hill. (Think: 1920s Germany following World War 1 and Zimbabwe in the early 2000s)

There you have it, quantitative easing in a nutshell.

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What is the Best Roth IRA Broker?

Every week I get at least one email from a reader asking me which broker is the “best” for their Roth IRA. The number of emails jumps exponentially after the new year and, fortunately, falls after April 15th! You have until April 15th, 2011 to decide if and how much you will contribute to your Roth IRA for 2010. If this is the first year you’re contributing to a Roth IRA, you’ll also have to pick who you want to watch over your money.

Before you decide where to put your money, you really need to decide what you want to invest in. If you want to invest it in mutual funds, you’ll be best served going with the company that runs the funds you like. The two big names in the mutual fund space are Fidelity and Vanguard. If you really like their funds, I recommend you open a mutual fund account directly with them because you will be able to buy and sell shares for free.

If individual stocks are more your thing, then you’ll want to pick a broker that offers services you like at a cost that’s affordable. Discount brokers are all the rage these days, with sub-$5 stock commissions and all the research you could ever want. My personal opinion is that as long as you can satisfy the minimum balance requirements and the fees aren’t expensive, the broker is less important. I personally like TradeKing because their customer service has been rated one of the best and I’ve never had issues with it myself (I use their online chat feature all the time). They aren’t necessarily the cheapest anymore, there are a few even cheaper, but there’s a bit of an inertia effect there (I have my stocks there and I don’t trade much, so I don’t want to go through the process of moving them).

I’m about to provide you with a bunch of information from a variety of brokers but I want you to know one thing – it doesn’t matter which broker you pick. It is more important that you start contributing towards your retirement as soon as possible because each year you wait is another year you lose out on gains. Some will charge you $15 a trade, some will charge you $5, but those all pale in comparison to how much you lose if you let that decision paralyze you.

* Zecco offers 10 free stock trades a month when you maintain a $25,000 balance or execute at least 25 trades a month, otherwise it’s $4.50 a trade.

Vanguard is a special case because they have two types of accounts. They have a fund account where you can only buy and sell Vanguard funds, those fees are listed in the above table. They also have a brokerage account where you can buy stocks, bonds, ETFs, etc. The fees for both are different. Here is the full fee schedule for the brokerage account. I’m not really sure why they segregate it in this way, it’s annoying, but they like to keep the two worlds apart.

If you have a Roth IRA, where do you keep it and why?

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Finovate Fall 2010 Recap

As many of you know, I spent the first two days of the week attending Finovate Fall 2010. It’s billed as a demo of the cutting edge in personal finance technology and it certainly delivered the cutting edge, it’s just that the cutting edge in finance just doesn’t appear to be as sexy as the likes of other areas (pesky security issues and whatnot). Larry Chiang, someone I had a chance to hang out with (he’s been mentioned in the past on Bargaineering), said it best (and I paraphrase) – “Banking 2.0 is like Web 0.9.”

Sounds a little harsh but there is one caveat – I think there’s a lot of stuff in fraud detection and other financial technologies that is cutting edge and certainly not web 0.9. The problem is that these technologies are also invisible to folks like you and me, it excited me but it’s really relevant to bank technologists. Since they were outside the scope of Bargaineering, I won’t be covering them, but as a former software engineer some of that stuff was interesting to listen to.

I’m penning this post on the train ride home to Baltimore so much of this is fresh in my mind. I’ll do more in depth looks at some of the companies I had a chance to talk with but these were just some of my thoughts about the companies I saw.

There are a lot of personal finance management (PFM is the acronym I learned this week) applications out there! We all know the now-deadpooled Wesabe and the now-acquired Mint, but there were several at Finovate with a decidedly different feel. MoneyStrands uses intelligence (and they showed me a slick looking integrated budgeting tool that I think will help a lot of people budget), Kiboo facilitates conversations between parents and their kids, Pageonce with their slender dashboard and powerful smart phone capabilities (fully functional PFM entirely wrapped up in an app), and of course, Yodlee.

A company that I didn’t know beforehand, except in passing, was Wonga. They are located in the UK, no operations in the United States, and they give short term loans (under 1,000£, fewer than 35 days). I sat with their CEO Errol and chatted for quite some time, so I got a chance to really know him, as well as his company. To say there can’t be a more standup guy than Errol in what’s really considered the “pay day loan” business would be an understatement. (case in point, they reject 70% of applicants and they don’t sell that data… most companies would sell it to their partners) I won’t be reviewing them in a separate post because they aren’t available in the United States (though they should be), which is why they get a small shout-out in this wrap-up.

There were 7 Best in Show awardees – Betterment, BillShrink, Bundle, Dynamics, oFlows, PayNearMe, and Secure Key. Keep on the lookout for reviews of Betterment and BillShrink’s new StatementRewards offering. The others I either didn’t get a chance to talk (Bundle, PayNearMe) to or weren’t relevant to you guys (Secure Key).

All in all, the show was great and well organized. I think that the presentation format of 7 minutes per presenter was great, it kept the demos going quick and kept them fresh. There were adequate breaks, which gave you a chance to meet with companies, meet with other attendees, and watch the presentations at your leisure (they were broadcast into the demo area). It’s no surprise Finovate often has a waiting list (I heard from a presenter that the wait list was around

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New 2011 Form 1099-K

Back in college, I used to sell all sorts of things on eBay for a little extra cash. Two of the more legitimate things I sold were John Deere hats, made popular by Ashton Kutcher and his Punk’d show, and Washington Wizards Michael Jordan jerseys, made popular when Jordan made his brief return to the NBA. Back then, as is the case today, eBay sellers had to report that income on their income tax returns. Many don’t because there’s no checks and balances in place forcing them, there aren’t any W-2s or 1099-MISCs for them because eBay doesn’t pay them, a multitude of sellers do.

The times have changed and now the IRS has produced a draft Form 1099-K used to report Merchant Card and Third-Party Payments made to your ID number (social or employer ID number) in each month. This is a way for the IRS to capture some of the underreported income since sellers will not have to reconcile the third-party transactions, such as through PayPal, with their incomes.

There are a few huge caveats. If you have gross sales of less than $20,000 a year or fewer than 200 transactions, then 1099-K reporting will not be necessary. This is so your small time sellers, like those emptying their attics, don’t get stuck with a paperwork nightmare while actual businesses are still on the hook for sales.

This new form isn’t limited just to PayPal and eBay, though chances are that’s what most of you guys, myself included, are most concerned about anyway.

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How To Win McDonald’s Monopoly Game

MacDonald’s Monopoly game for 2010 has started!

McDonald’s announced that this year’s Monopoly game will start on October 5, 2010 and end on November 1, 2010 (official rules)

Every year McDonald’s runs its very popular Monopoly game where you get a Monopoly property sticker/game piece with selected items. If you get all the properties in a color group, you get to win that cash prize. In addition to these properties, you can get instant win stickers as well for free Wi-Fi time, Wal-Mart gift cards, McDonald’s food, and even a 2011 Shelby. The cash prizes range from $5 up to $1 million!

The secret to winning a prize in the McDonald’s Monopoly Game is to understand how the game works. McDonald’s is pretty savvy about how they setup the game. You win prizes when you collect all the properties in a particular color group. They control the number of prizes by limiting one of the properties, usually the last property listed alphabetically, and the key is to find those “rare” pieces.

For 2010, the rare pieces are:

Mediterranean Avenue ($50 prize, 5000 prizes)Vermont Avenue ($100 prize, 1500 prizes)Virginia Avenue ($200 SpaWish® Gift Certificate, 250 prizes)Tennessee Avenue ($1,000 prize, 250 prizes)Kentucky Avenue (Beaches Resorts – The Luxury Included® 4 Day/3 Night Family Vacation for two adults & two children 15 years or under, 122 prizes)Short Line Railroad (EA SPORTS Trip, 8 prizes)Ventnor Avenue ($25,000 prize, 5 prizes)Pennsylvania Avenue ($50,000 prize, 4 prizes)Boardwalk ($1 million dollar prize, 2 prizes)

If you’re curious, the $1 million top prize isn’t lump sum. It’s a $50,000 annual payment for 20 years.

The pieces (which include two “stamps”) are included on the following products: Medium Fountain Drinks; Medium and Large Hot McCafés; Medium and Large Cold McCafé including Smoothies and Frappés (excludes McCafé Shakes); Hash Browns; Big Mac; 10-piece Chicken McNuggets®, McGriddles, and Filet-O-Fish. Individuals who purchase 20-piece Chicken McNuggets® or Large Fries specially-marked packaging will receive two (2) Game Pieces (4 stamps).

As always, you can always do a little horsetrading to get the pieces that you need. Remember, if you get a rare piece, you’re pretty much set. People will try to negotiate using common pieces (Park Place is pretty much worthless, since you need the uber-rare Boardwalk piece… if you have that, you can easily negotiate down someone with Park Place since it’s worthless without you). If you need a place to trade, I’ve always suggested a place like Fatwallet Forums.

The cheapest item on the menu that offers game pieces are the hash browns. For an average of a dollar, you get two game pieces and it is slightly cheaper, and faster, than mailing in a self-addressed, stamped envelope ($0.88 for two stamps). Some people have had success just buying the game pieces without the food… since you probably don’t want to be eating a stack of has browns as a breakfast.

As for the healthiest option, I’d go with a cup of coffee or any one of their other coffee-like products.

As I alluded to before, you can always get game pieces for free. Send a “legibly handwritten, self-addressed, stamped envelope with your address (first and last name, street address, city, state, and zip or postal code) to:

2010 MONOPOLY Game at McDonald’s Game Piece Request
P.O. Box 49229
Strongsville, OH 44149-0229

In addition to the awesome property prizes, there are a number of instant win prizes. Some of these I wasn’t really a big fan of, they seem more like trial subscriptions than a “prize” that you’ve won. I’ll let you decide:

Food Prizes – Medium French Fries, any Large Beef Sandwich, any Breakfast Extra Value Meal®, Small McFlurry® or Fruit ‘N Yogurt Parfait, Small Soft Drink or Small Hot Premium Roast Coffee (excluding McCafe®), and any Breakfast Sandwich.Three (3)-Month Pogo.com™ Subscription – EA SPORTS™ video gameTwenty Snapfish® Photo Prints – With 4,000,000 of these prizes, this prize is the second most common prize.Wal-Mart Gift Card – Several prizes are Wal-Mart gift cards ranging in value from $5 (966k winners) to $5,000 (10 winners).Free RedBox Rental – There are 1,350,000 of these and this is the third most common instant win prize, with your chances at 1 in 405.Fifty Dollars – There are 4,000 of these prizes available, you get a check for $50.Five hundred Dollars – There are 500 of these prizes available, you get a check for $500.EA SPORTS Ultimate Game RoomXbox 360 Game System – There are 3,000 of these prizes available, but you will only get these off an order of large fries or Angus burger.$10,000 Dollars – Four $10,000 prizes available.$25,000 Dollars – Four $25,000 prizes available.2011 Shelby GT500 – Last but not least, there are two cars.

It doesn’t hurt to try and I don’t know how likely it is that you’ll snag a Shelby through the mail… but good luck!

(Photo: sundazed)

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