Not quite a year ago, I highlighted SmartMoney’s rating of the best online brokers. Today, I thought I’d take a closer look at the results of their 2009 survey.

As you skim through the list (reproduced below), you’ll notice that it’s quite similar to last year’s version. There are, however, some differences. Here’s a quick rundown of their most notable findings:

• E*Trade retained the top spot, excelling in all categories across the board.
• TradeKing slipped one spot for third to fourth, though they still shines in terms of trading tools and customer service, and their commissions are still significantly far lower than their nearest competition.
• Zecco is still hanging on near the bottom of the list. They have barebones offerings, but also offer free trades if you meet their balance requirements.
• ShareBuilder climbed a few spots from the bottom of the list, primarily because they added 300 new mutual funds to their offerings.

The best brokers of 2009

Here’s a full rundown of SmartMoney’s list:

1. E*Trade
2. Fidelity
3. Charles Schwab
4. TradeKing
5. TD Ameritrade
6. Muriel Siebert
7. Scottrade
8. Firstrade
9. OptionsXpress
10. Banc of America
11. Just2Trade
12. WellsTrade
13. ShareBuilder
14. Wall Street*E
15. Zecco Trading
16. SogoTrade

Interestingly, none of Consumer Reports’ best broker picks made it onto SmartMoney’s list.

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A few weeks ago, we received a letter saying that GMAC Bank had been re-branded as Ally Bank. We actually opened a GMAC account last fall (more on this below), so I was quite interested when I heard this news.

If you’re in a rush, and just want the executive summary, here it is:

Ally Bank is a great online savings option. They’re FDIC insured, they offer a wide variety of products, they don’t have any minimum deposits or balance requirements, and they don’t have any account maintenance fees.

If you’d like more info, read on…

A short history of GMAC/Ally Bank

The GMAC brand actually goes back to 1919 when GMAC Financial Services was established as a wholly-owned subsidiary of General Motors to provide financing for automotive purchases following WWI. GMAC eventually branched out into retail banking, offering savings account, certificates of deposit, money market accounts, etc. under the GMAC Bank brand.

In 2006, GM sold a majority stake in GMAC to private investors, thereby providing a bit of distance between the now-bankrupt automaker and the financial services company. Nonetheless, the name stayed, and consumers no doubt wondered about the stability of the bank given its apparent connection to GM. Hence, the name change — Ally Bank.

Having logged in and poked around, it appears that little else has actually changed — and that’s a good thing. Their rates are still highly competitive, and the web interface is as convenient and functional as ever.

Ally Bank products and rates

We were first attracted to Ally Bank last fall by their high CD rates. At the time, we were looking to set up a five year CD ladder, and we also wanted to keep things fairly simple. We were thus pleased to see that Ally offered the highest rates across all maturities.

One particularly interesting product is what they refer to as their “no penalty CD.” This CD allows you to lock in a great rate (though not quite as high as with a traditional CD) while still retaining the flexibility to break the CD without penalties. Thus, if an emergency arises, or if rates simply raise, you’re covered.

Note that they also have a highly competitive online savings rate, as well as a slightly lower (but still high) money market account rate just in case you want a check card and check-writing ability.

Customer service

When it comes to online savings accounts, I look at one thing above all others — the interest rate. Nonetheless, it’s still nice to be able to reach out and touch an actual human being if/when trouble arises.

The good news here is that Ally not only publishes a customer service phone number in the top right corner of the page, but they also disclose the expected wait time right next to the number (see below).

I just tested the system at 9:10 AM Eastern on a Monday morning and, sure enough, they picked up less than 10 seconds after I indicated that I wanted to speak to a CSR.

Closing thoughts

If you’re looking for an excellent online bank with highly competitive rates, you should seriously consider Ally Bank. We’ve been very happy with them over the past eight months or so, and have actually been thinking about opening another account with them to hold cash for a trust that my wife and I manage.

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Peer-to-peer lending has become increasingly popular in recent years. In fact, the Harvard Business Review named it as one of their “breakout ideas” of 2009. While I’ve long been a skeptic of this sort of thing, I ultimately gave in and decided to find out what all the hype was about. Earlier this spring, I opened an account with Lending Club, and I’ve since started lending out money. Today, I’m going to give a brief overview of Lending Club and provide a walkthrough of the signup process. In a forthcoming article, I’ll actually walk you through the lending process.

What is Lending Club?

Lending Club is a social lending network that helps match people who need to borrow money with those that have money to lend. Borrowers with good credit can get loans at better rates than are available from “conventional” funding sources, and lenders enjoy rates that have averaged 9.05% annually over the past 18 months. This beats the heck out of any so-called “high yield” savings account. Keep in mind, however, that your investments are not FDIC insured, so you have to be comfortable with some level of risk.

Borrower requirements

While there are two sides to all peer-to-peer lending transactions, I’m writing from the perspective of a lender, because that’s how I’ve been using Lending Club. Nonetheless, I think it’s worth talking about the requirements for borrowers, as it’s important for prospective lenders to know what they’re getting into.

Borrowers must have a credit score of at least 660 based on a credit history spanning at least one year and with at least three accounts listed, two of which must still be open. They can’t have any current delinquencies, recent bankruptcies (past seven years), open tax liens, charge-offs, or collections within the past twelve months. If you’re curious how you stack up, you can take a free peek at your credit score using either FreeCreditReport.com or MyFICO.

Beyond the above, borrowers must have debt-to-income a ratio (excluding their mortgage) has to be less than 25% and their credit utilization has to be less than 100%. In other words, they have to fit the profile of a reasonably responsible borrower. Loans are unsecured, and range in size from $1,000-$25,000 with a three year term.

Lending details

Lenders invest in “notes” that represent small portions of an individual loan. The minimum investment is $25 per note, so you can really spread your risk around if you wish. You can either select loans yourself or rely on LendingMatch, which creates a portfolio for you based on your desired investment amount(s), interest rates, and risk profile.

Each month, as the payments are received from borrowers, Lending Club deposits the principal and interest back into your account (after deducting a small fee). You can either withdraw these funds or reinvest them in additional notes. While the loans themselves are not insured, your uninvested cash balance is covered by FDIC insurance.

Note that there are some state residency and income requirements for investors. As of right now, individuals in 25 states can invest in notes, though Lending Club has applied for approval in all remaining states, and is adding them in on an ongoing basis. As for the income requirements, I’ve heard through the grapevine that these aren’t really enforced, so you shouldn’t run into any problems.

If you don’t live in an approved state, you can still open an account and buy/sell notes on the secondary market using the Lending Club note trading platform.

Opening an account

Opening a Lending Club account is a very easy, three-step process.

Step 1: Set up your login credentials.

Simply visit Lending Club, enter your e-mail address and desired username, and click the “signup” button. From there, you’ll set up your password, security question, etc.

Step 2: Enter your name and contact information.

On the next page, you’ll enter your name, social security number, birthday, address, and other contact information.

Step 3: Enter your bank account information (optional).

This step is only necessary if you want to be able to transfer funds directly between you bank and Lending Club. I want to be able to do this, so I went through the process.

After that, keep an eye on your bank account. Lending Club will initiate a small debit (less than $1). Once you verify this amount, your bank account will be linked up and ready for transfers.

That’s it. Like I said, very easy. If you’re curious about investing through Lending Club, keep an eye out. I’ll be publishing a followup detailing the loan selection and funding process sometime soon. In the meantime…

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Consumer Reports just released the results of a survey aimed at identifying the best brokers in America. They surveyed over 9,000 readers, asking them about their experiences with various brokers between January 2008/January 2009. Topping their list were USAA Brokerage, Vanguard, and Edward Jones.

USAA Brokerage

USAA has received high marks in the past for other financial offerings, including their online banking service and insurance offerings. It therefore comes as no surprise that their online brokerage service ranked so high. Commissions start at $11.95/trade, but come down from there depending on trade volume. Unfortunately, USAA is only available to current and former military personnel and their families. Update: I just received an e-mail from USAA clarifying that certain financial products, including their brokerage, are available to the general public.

Vanguard

CR’s second pick, Vanguard, offers a wide variety of low cost mutual funds as well as a regular brokerage service. I’m a huge fan of Vanguard’s mutual funds, but I’m not crazy about their brokerage service, primarily due to cost — their standard rate is $25/trade. Nonetheless, consumers rated them highly for above average phone service. I can actually vouch for this myself; whenever you call, you’re almost certain to get a competent, helpful phone rep.

Edward Jones

I drive by an Edward Jones office on the way to work every day, but I must admit that I know very little about them. They are a “discount full service brokerage” that competes with the big boys in the investment world, but their online presence sucks (in my opinion). They ranked high for personal service but, based on their website, their commissions appear to be a trade secret, and it’s not even clear if you can trade online.

Best of the rest

Their list of the top ten best brokers was rounded out by:

• Charles Schwab
• Scottrade
• Fidelity
• TD Ameritrade
• T. Rowe Price
• A.G. Edwards
• E-Trade

Closing thoughts

This list is a good start, but if price is an important consideration, then I suggest that you check out my list of the best online brokers. If you’re willing to look around a bit, you can easily push your commissions below $5/trade, and still maintain a good customer service experience. For example, TradeKing offers $4.95 and award winning customer service.

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In spite of the ongoing credit crisis, Discover has launched a new credit card. It’s called the Escape Card by Discover, and it offers some fairly generous travel rewards as well as a 25,000 mile bonus, whih is the equivalent of a $250 signup bonus. The reward program offers two miles for every dollar spent. The miles never expire, and there’s no cap on how many you can earn.

Given that these miles are worth $0.01/each (more below), this is the equivalent of a 2% cash back reward. As far as redeeming your miles goes, you can use them on any airline for any flight. Simply purchase your ticket(s) with the card and then redeem your miles at a rate of $100 for 10,000 miles.

If you’d prefer non-travel rewards, you can redeem your miles for gift cards from over 90 Discover partners. Gift card redemptions start at 1,000 miles. Alternatively, you can convert your miles into statement credits, though the exchange rate here is only $25 for 5,000 miles.

As for the 25,000 mile bonus, you’ll receive 1,000 bonus miles per month for the first 25 months as long as you use the card at least once per month. This card also comes with 0% APR on purchases for six months.

The only real downside to this card is that there is a $60 annual fee. However, the bonus miles more than cover this amount for the first two years. All in all, the generous rewards make this card awfully tempting.

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Last night I finally found the time to open an account with DollarSavingsDirect. For those that are familiar with it, DollarSavingsDirect is a new(ish) high yield savings bank. Amazingly, despite month of falling rates, they managed to stay atop my list of online savings account interest rates with a juicy 4.00% APY.

While DollarSavingsDirect is a relative newcomer to the online banking game, it has an older sister named Emigrant Direct. In fact, both banks are owned by the same company (Emigrant Bank), and even share an FDIC certificate (and thus they have a common FDIC insurance limit). In fact, aside from the name, it’s hard to tell them apart — they have the exact same online interface.

Oh, and then there’s the small matter of their rates… As noted above, DollarSavingsDirect pays 4.00% APY, whereas Emigrant Direct is languishing back at 2.50% APY. While I’m not sure of their motivations, it appears that Emigrant Bank wanted to attract new money without paying their existing customers a premium.

Opening an Account

Whatever their motivation, the current rate at DollarSavingsDirect is high enough to get my attention. While I doubt it’s sustainable, I’ll take it while I can get it.

Step 1: Select your login credentials.

The application process starts by asking you to choose a username and password.

Step 2: Enter your personal information.

The next step is to enter your personal information, including your social security number and driver’s license info (this is standard fare for banks).

Step 3: Enter your address and choose an account type.

Next up… Your address. They actually need both your current address (along with your time at the current residence) as well as your previous address. I’m guessing that this is part of their identity verification process, as they can check both addresses against your credit record.

If you choose a joint account, you’ll be asked to enter all of the same information for your joint account holder.

Step 4: Fund your account.

The final step is to fund your account. As usual, I chose to link the new account to our local checking account. Note that DollarSavingsDirect requires a minimum deposit, so it’s not quite as forgiving as some of it’s online banking brethren. We went with the minimum for now, and will move more money once everything is up and running.

And that, my friends, is it. As things stand, we’re awaiting final approval — apparently it’s not fully automated, and I applied in the middle of the night. I will update with more details and screenshots once they provide us with full access.

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Over the weekend, I opened an account with Zecco. I’ve been meaning to do this for quite some time, but never found the time to do so. In case you’re not familiar with Zecco, they burst onto the scene back in July of 2006. Their name, which stands for “Zero Commission Cost,” pops up in pretty much every discussion of the best online stock brokers, so I thought I’d check them out.

Advantages of Zecco

The primary advantage of Zecco is, not surprisingly, cost. They currently offer up to ten free trades per month as long as you maintain a balance (include stock holdings) of at least $25,000 (there’s no minimum to open an account). Otherwise, trades will cost $4.50 — still pretty darn cheap. Options trades go for $4.50/trade + $0.50 per contract.

What’s the catch?

According to there site, there is no catch. They say that they can give away free trades because: (1) it’s cheap to run an online broker, and (2) they make money on interest income and options trades. They have, however, been criticized for poor customer service and a lack of fancy trading tools. That doesn’t really concern me, as I’m primarily interested in using them to buy (and hold) ETFs.

Opening an account

Given the above, I decided to give Zecco a try. What follows is a walk-through of the account opening process. All told, it took less than 10 minutes to set up a joint account. It would be even quicker for an individual account.

Step 1: Initiate your application.

Simply visit Zecco and click the “Open an Account” button. You’ll be greeted with a page that looks something like this:

Simply enter your desired username, etc. and click “Sign Up.”

Step 2: Enter your personal information.

You’ll next be asked to provide some personal information…

…and provided with an opportunity to enter a Zecco promotion code. Unfortunately, I haven’t run across anything particularly valuable, so I didn’t bother.

On the next screen, you’ll be asked what sort of account you want to open. If you select “Joint,” then you’ll have to supply information about the co-owner.

Next up… Contact info for both you and the account co-owner (if applicable), followed by a request for your social security number(s). They also ask some questions about your employment status, income, and net worth, as well as a standard set of conflict-of-interest question that are required by the SEC.

Step 3: Account settings and funding options.

Finally, sign yourself up for paperless statements and paperless trade confirmations (if you don’t, you’ll face fees of $2/paper statement and $1.50/paper confirmation) and then choose your funding option. We went with ACH, so we’ll have to wait a couple of days for the trial deposits to be made.

Almost done… Just agree to their terms and conditions and then verify all of the information that you’ve entered. That’s all there is to it.

Our account was approved within a few minutes, and is now up and running and fully accessible. That being said, there’s not much more I can do at this point until the trial deposits arrive. At that point, I’ll just hop back on over to Zecco to verify the amounts. Once that happens, I’ll transfer some money and poke around a bit more.

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I’m in the process of reading The Four Pillars of Investing (an excellent book, by the way) and I thought I’d share with you some of William Bernstein’s insights into investing. According to Bernstein, you really only need guidance in two areas: asset allocation and self-discipline. And how should you go about learning about these things?

He starts by saying:

“Whatever you do, do not watch Wall Street Week, Nightly Business Report or CNBC. With the extra hour or two you’ll gain each week from turning off the TV, I would start a regular reading program.”

He then goes on to list the books that he recommends for inclusion in your new reading program. Given that I recently put together a rundown of the best books about money based on the opinions of a handful of other bloggers, I thought I’d likewise publish a list of Bernstein’s favorites, many of which I haven’t read (and a few of which I’ve never even heard of).

First up, two classics:

» A Random Walk Down Wall Street

Author: Burton Malkiel
Length: 416 pages
Amazon rating: 4.5 stars
Bernstein says: “An excellent investment primer.”

» Common Sense on Mutual Funds

Author: John C. Bogle
Length: 496 pages
Amazon rating: 4.4 stars
Bernstein says: “More information than you ever wanted to know…”

According to Bernstein, if you read these two books, you’ll know more about finance than 99% of all stockbrokers and most other finance professionals. At that point, you’ll be ready for what he calls his “postgraduate course,” which consists of the following ten books:

» A Fool and His Money

Author: John Rothchild
Length: 272 pages
Amazon rating: 4.5 stars
Bernstein says: “Ground level trip through Wall Street in the 1980s… eye-opening.”

» Where are the Customer’s Yachts

Author: Fred Schwed
Length: 208 pages
Amazon rating: 4.6 stars
Bernstein says: “Ground level trip through Wall Street in the 1930s… eye-opening.”

» Once in Golconda

Author: John Brooks
Length: 307 pages
Amazon rating: 4.2 stars
Bernstein says: “How Uncle Sam got his hands on Wall Street.”

» Devil Take the Hindmost

Author: Edward Chancellor
Length: 400 pages
Amazon rating: 4.5 stars
Bernstein says: “A history of manias and crashes over the centuries.”

» Bernard M. Baruch: The Adventures of a Wall Street Legend

Author: James Grant
Length: 365 pages
Amazon rating: 4 stars
Bernstein says: “A better grasp of capital markets than anyone else I know.”

» Money of the Mind

Author: James Grant
Length: 528 pages
Amazon rating: 3.7 stars
Bernstein says: See above.

» Minding Mr. Market

Author: James Grant
Length: 424 pages
Amazon rating: 4.5 stars
Bernstein says: See above.

» The Trouble With Prosperity

Author: James Grant
Length: 368 pages
Amazon rating: 4.1 stars
Bernstein says: See above.

» Capital Ideas

Author: Peter Bernstein
Length: 352 pages
Amazon rating: 3.7 stars
Bernstein says: “An engaging history of modern financial theory.”

» Winning the Loser’s Game

Author: Charles Ellis
Length: 182 pages
Amazon rating: 3.8 stars
Bernstein says: “A succinct look at money management.”

According to Bernstein, all of the above titles are easily accessible to the average reader. But if you’re good with numbers and don’t mind a bit of effort, you should also consider the following:

» Global Investing

Author: Roger Ibbotson and Gary Brinson
Length: 339 pages
Amazon rating: No review yet
Bernstein says: “A… view of stocks, bonds, commodities, and inflation the world over.”

» Asset Allocation

Author: Roger Gibson and John Templeton
Length: 317 pages
Amazon rating: 4.4 stars
Bernstein says: “Excellent primer on portfolio theory and… allocations.”

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I’ve been on a bit of a reading kick lately, so late last week I decided to solicit book recommendations from a few of my fellow bloggers. I asked each of them to recommend one (and only one) financial book, and to also provide me with a sentence or two describing why they chose that particular book. Amazingly, there was very little overlap in their recommendations. The end result was the following list of a eleven great books about money.

Whether you’re looking for a book (or two) for yourself, or hoping to pick up a gift for someone else, there’s bound to be something of interest on this list…

The Automatic Millionaire

Author: David Bach
Length: 272 pages
Amazon rating: 3.9 stars
Recommender: Jeremy @ GenXFinance

Jeremy says: I’m a pragmatist, so I really appreciate his matter-of-fact presentation of personal finance issues. There are no secrets to obtaining wealth, no special investments to get into, or even the need for professional advice. All you need is a little common sense that enables you to watch your spending, live within your means, and to pay yourself first–even if that is a bit cliché. This book is an extremely easy read that tackles core issues, and it should be read by anyone who wants to improve their finances.

The Total Money Makeover

Author: Dave Ramsey
Length: 272 pages
Amazon rating: 4.5 stars
Recommender: NCN @ NoCreditNeeded

NCN says: Easy-to-read, this book provides step-by-step instructions for creating a budget, getting out of debt, and living without credit cards. If you are thinking about getting out of debt, this book is a ‘must read’.

Debt is Slavery

Author: Michael Mihalik
Length: 128 pages
Amazon rating: 4.5 stars
Recommender: JD @ Get Rich Slowly

J.D. says: This self-published book is simple, clear, and direct. It doesn’t offer details on how to open an IRA, but it does explain the mental hurdles one needs to overcome in order to take control of his finances.

Founders at Work

Author: Jessica Livingston
Length: 500 pages
Amazon rating: 4.7 stars
Recommender: Will @ Wise Bread

Will says: Filled with inspirational interviews with founders of tech startups — who started billion dollar businesses with nothing more than pure passion and a fanatical belief in themselves — it is the bible for anyone looking to become an entrepreneur. This book inspired the Wise Bread founders to start our own blog publishing company.

The Intelligent Investor

Author: Benjamin Graham
Length: 640 pages
Amazon rating: 4.6 stars
Recommender: Ben @ MoneySmartLife

Ben says: I’d recommend this book to anyone wanting to understand fundamental analysis of a business and its stock. I love the distinction that Graham draws between an investor and a speculator; it runs through my head every time I make an investing decision. I’d go with the revised edition of The Intelligent Investor with commentary by Jason Zweig; it really helps apply Graham’s principles to today’s financial markets.

The Millionaire Next Door

Author: Thomas Stanley & William Danko
Length: 272 pages
Amazon rating: 3.9 stars
Recommender: FMF @ FreeMoneyFinance

FMF says: I like this book because the simple principles it teaches have guided me through several years, helping me to substantially increase my net worth during that time.

The Number

Author: Lee Eisenberg
Length: 288 pages
Amazon rating: 2.9 stars
Recommender: Flexo @ Consumerism Commentary

Flexo says: The author takes the approach that his readers are not simple-minded. Rather than “talking down” to readers like most financial authors, Eisenberg respects his readers and presents his points through stories without dumbing down the content.

The Richest Man in Babylon

Author: George Clason
Length: 160 pages
Amazon rating: 4.7 stars
Recommender: Jim @ Blueprint for Financial Prosperity

Jim says: This book does what no other personal finance book does. It keeps the generally simple tenets of personal finance very simple. Too often books try to be very complicated so they sell more copies, but The Richest Man uses very easy to understand allegories that won’t trip anyone up.

Stocks for the Long Run

Author: Jeremy Siegel
Length: 436 pages
Amazon rating: 4.2 stars
Recommender: JLP @ AllFinancialMatters

JLP says: This book is a great way to familiarize yourself with the workings of the stock and bond markets. Dr. Siegel does a wonderful job of explaining the workings of the markets and how, although stocks are quite volatile over the short-run, they have historically been the best way to build wealth over the long run. There’s even a fourth edition of the book in the works, which should be on bookstore shelves any day.

The Wealthy Barber

Author: David Chilton
Length: 224 pages
Amazon rating: 4.6 stars
Recommender: Jeffrey @ SavingAdvice

Jeffrey says: This book isn’t written like a typical personal finance book. Rather, it’s more like a novel with the lessons inside the story making it easier to read than most personal finance books. It’s a great first book for beginners wanting to get their toes wet and their personal finances in order.

Your Money or Your Life

Author: Joe Dominguez & Vicki Robin
Length: 400 pages
Amazon rating: 4.4 stars
Recommenders: Trent @ The Simple Dollar and Leo @ ZenHabits

Trent says: Your Money or Your Life is the only personal finance book I’ve read that bridges the gap between money management and the deepest core values that I hold in my life, and the principles hold true no matter what your values are.

Leo says: There is good advice in books by all the personal finance experts, but YMOYL actually changed my life, my perspective on life, and changed the way I see money. It made me realize that life is more than buying things and working… and that we are making choices about what we want to do with our lives.

So there you have it… Eleven great book recommendations from twelve great bloggers. Thanks to all who contributed!

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Good morning, and welcome to Day #2 of the Bogleheads’ Guide to Investing October project. In short, JLP at AllFinancialMatters has organized a group book review, with different bloggers covering different chapters. For more information and links to the participating sites, please visit the project home page. With that said, let’s get to it!

While I’ve read (and greatly enjoyed) The Bogleheads’ Guide to Investing from cover to cover, I’m going to be focusing solely on Chapter Two today…

Chapter 2 – Start Early and Invest Regularly

I picked this chapter because the message that it conveys represents what is probably the most formative financial lesson that I’ve learned in my (gasp!) thirty-five years. Back in 1997, when my wife was pregnant with our first of our four boys, I picked up a book called Time is Money by Frances Leonard, and it revolutionized the way that I think about money (you can read more here).

Chapter Two of The Bogleheads’ Guide to Investing had much the same effect on me, which is saying quite a lot… After all, I’m no longer a personal finance newbie that’s just casting about for direction. Yet this chapter actually spurred me on to rethink our retirement investing strategy, and to find a few more bucks to throw at our retirement accounts.

Equal parts inspiration and information, this chapter kicks off with a section on the magic of compound interest. It then moves into a more detailed discussion of the importance of saving, and provides a number of tips on finding money to invest. These are really pretty common sense tips, but I think that they’re an important part of any treatment of personal finance. After all, you can talk about the mechanics of saving and investing until you’re blue in the face, but it won’t do any good if your target audience just throws up their hands and says:

“I know I should be doing it — it’s just that I don’t have any extra money to save.”

This chapter effectively dispels that myth and makes the case that nearly everyone can make some pretty painless changes to their lifestyle to free up at least a few bucks. And if you can’t — and I mean really can’t — then salvation is a just a raise away. If your current lifestyle truly sucks up every last penny that you earn, and you’re completely unwilling to make a change, then at the very least you should commit to using some or all of your next raise to start investing for your future. And from that point on, whenever you get a raise, increase your savings rate. You’ll never miss the money if you divert some or all of it to saving and investing before you get accustomed to spending it.

What if you’re cutting costs everywhere that you can, and you still don’t feel like you’re saving enough? Well, this chapter has the good sense to encourage you to create a side income.

I know it sounds cheesy, but the most important step really is to just get started. And the next most important thing is to stick to it. And therein lies the central message of this chapter:

The two most important things any investor can do are to start saving early and invest regularly.

For those of you that think you’ve missed the boat, keep in mind that early is relative. Sure, starting at twenty is better than thirty, and thirty is better than forty. But no matter your age, starting today is far better than starting tomorrow.

If you’re interested in learning more about The Bogleheads’ Guide to Investing, check out JLP’s review of Chapter One, or hop on over to the project home page where you can keep track of all the reviews as they’re published.

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I received an advance copy of Dave Barry’s Money Secrets awhile back, and I’ve been planning on writing a review of it ever since. Well, here we are… Almost six weeks after the official release date, and I’m finally getting around to it. So… I’m not sure where to start. For those of you that aren’t familiar with Dave Barry, he who wrote a nationally syndicated column for the Miami Herald for over 20 years (1983-2005). A very funny nationally syndicated column. He’s also published a number of collections of his columns in book form, and he co-wrote the excellent Peter and the Starcatchers, which is a prequel to Peter Pan (he’s also co-author of the forthcoming Peter and the Shadow Thieves). Thus, I wasn’t quite sure what to expect when he tackled a topic like money.

Well, all I can say is this… If you’re looking for a book that contains at least a tiny bit of useful financial information, then keep looking. But if you’re looking for a funny book about money, then this one might be just what the doctor ordered. I mean, when a book covers the following topics, how could it not be funny?

• How the U.S. economy works, including the often overlooked role of Adam Sandler
• Why it is not a good idea to use squirrels for money
• Strategies that will give you the confidence you need to try for a good job, even though you are—let’s be honest—a no-talent loser
• How corporate executives, simply by walking into their offices, immediately become much stupider
• An absolutely foolproof system for making money in the stock market, requiring only a little effort (and access to time travel)
• Surefire tips for buying and selling real estate, the key being: Never buy—or, for that matter, sell—real estate
• How to minimize your federal taxes, safely and legally, by cheating
• Why good colleges cost so much, and how to make sure your child does not get into one
• How to reduce the cost of your medical care by basically not getting any
• Estate planning, especially the financial benefits of an early death
• And many, many pictures of Suze Orman

So what’s not to love?

To be totally honest, I’m a bit torn on this one. While Barry is definitely a very funny and creative guy, his schtick can get a little tiresome when it’s spread across 240 pages. All in all, I found this to be an amusing book to thumb through, but the goofball humor wore a bit thin over the course of the book, and I really didn’t feel compelled to just sit down and read Money Secrets.

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I feel like I’m a bit late to the party on this one, as a lot of other people have already reviewed it, but… I just finished reading Freakonomics (actually, I listened to the audio version), and I thought I’d write a few words about it…

In short, this Freakonomics details a variety of studies in which economist Steven Levitt applied economic principles in an attempt to shed light on “the hidden side of everything.” I know what you’re thinking… Economics? Yuck! But this is actually a rather entertaining book that takes a contrarian look at crime, sumo wrestling, the KKK, real estate agents, parenting, gun safety, the No Child Left Behind Act, and more.

The basic premise of the book is that if you want to understand what’s really going on in any particular situation, you need to consider the incentives. While it felt a bit dumbed down, and didn’t contain a whole lot of truly useful financial information, I really enjoyed reading (err, listening to) it. It’s an entertaining book that encourages you to think outside the box, and it really appealed to the skeptic in me. If you’re looking for an entertaining read (or listen) I suggest that you check out Freakonomics.

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At long last… I finally got around to reading “Crash Course in Estate Planning: The Essential Guide to Wills, Trusts, and Your Personal Legacy” by Michael Palermo. I first mentioned this book over the summer, but didn’t get around to picking up a copy and looking through it until recently. In very general terms, this book is a good, non-technical reference on the ins and outs of estate planning.

The book is organized into four sections, including:

Part 1: Understanding the Estate-Planning Basics
This section gives a rundown of various types of property (probate vs. non-probate, etc.), the different tools out there (wills, trusts, durable power of attorney, living wills, etc.), an overview of the probate process, the role of the executor, etc.

Part 2: Applying the Basics: Estate-Planning Tools for Common Life Situations
This section talks about providing for children, planning for children and grandchildren with disabilities, estate planning for married couples, dealing with subsequent marriages, as well as some thoughts on charitable donations.

Part 3: Preserving Your Estate: Keeping Creditors, Spendthrifts, and the Tax Man at Bay
This section includes a general introduction to asset protection planning, and then goes on to talk about a variety of topics relating to trusts, including spendthrift trust provisions and incentive trust provisions. This section also covers the use of limited liability entities such as family limited partnerships (FLPs) and limited liability companies (LLCs) for protecting your investments.

Part 4: Estate Planning With Retirement Assets
This section covers topics related to the protection of your retirement-related assets, including 401(k)s and IRAs.

As Ric Edelman makes clear in the foreword, this is not a do-it-yourself book. Rather, it’s meant to be used in concert with an attorney, and I think that it would do well in that capacity. Not only does it provide a good overview of the pertinent topics, but it also goes into a good bit of detail in a variety of areas. Admittedly, this book is a bit dry, but that has far more to do with the topic than with the writing. In short, this book got me thinking in the right direction, and helped to crystallize in my mind exactly what it is that we need at this point (a will plus a testamentary trust to take care of our kids). When viewed in the context of billable hours, this book could save you quite a bit of money by helping you sort out exactly what it is that you do and don’t understand before you ever set foot in your attorney’s office. All in all, I’d have to recommend “Crash Course” to anyone interested in learning about estate planning. Despite having picked this up at the library, I’ll probably end up buying it myself, as this book contains a lot of valuable information, and I’d like to be able to refer back to it periodically.

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The other day I mentioned that I recently bought a new Sprint PCS cell phone, and have been playing around with a free trial of their unlimited internet access (a.k.a. Vision). The phone in question is a Sanyo MM-7400, and I thought I’d review a few of its features here for anyone that might be in the market for a new cell phone…

First off, this phone isn’t cheap. It typically retails for around $349, although you should be able to knock $150 off that with activation. I was actually able to find a reconditioned unit at Radio Shack and ended up saving an additional $70 (so I paid $129 after rebate and before tax). It’s important to note here the distinction between refurbished and reconditioned Sprint phones. The former are defective phones that have been repaired, and they carry a six month warranty. The latter, which is what I got, are simply phones that were returned during the 14-day satisfaction guarantee. These phones get cleaned up, checked out, and repackaged prior to re-sale, and they carry a full 12 month warranty. If you can find one, they really are as good as new (albeit quite a bit cheaper).

So how do I like this phone? In short, it’s great. One feature that I was looking for in a new phone was a camera. Given that we have four kids, I’m never far from a photo opportunity. More often than not, however, I don’t have a camera with me. While the quality of camera phone pictures leaves something to be desired, getting a less than perfect picture beats the heck out of getting nothing at all. Beyond sporting a VGA (i.e., 640 x 480) camera, the MM-7400 can record/playback short (and small) videos, ranging from 15-30 seconds depending on quality. Thus far, both the photo and video capabilities have turned out to be very fun features. While I don’t have much to compare to in the world of camera phones, the picture quality is pretty good (for a phone), especially outdoors. While the camera has a flash, but it doesn’t seem to do much good for anything other than extreme closeups.

Once you’ve taken a few pictures and/or videos you will, of course, want to be able to review your handiwork. As it turns out, the display on this phone is great, and looking at pictures/videos on it is a joy. The colors are bright and crisp, and the the display itself is pretty big — 176 x 220 pixels. What about getting your data off the phone? While the MM-7400, like any Vision-capable camera phone, can directly upload or send pictures (or videos), that’s a pretty pricey endeavor — $10/month for Vision access plus $5/month for Picture Mail and another $5/month for Video Mail. Fortunately, I’ve been able to grab the pictures and videos off the phone using a USB cable (~$20 from Radio Shack) and the freely available BitPim. The added benefit of this approach is that I can clean the pictures up in PhotoShop before e-mailing them to people. Given this, I seriously doubt that I’ll keep the online access once the free trial ends.

Beyond having a camera, another thing that I was looking for in a phone was durability. Once again, the MM-7400 doesn’t disappoint. This phone sports a rugged plastic exterior, complete with rubber ‘bumpers’ around the edges. While this might sound kind of bulky, it really isn’t.

In terms of performance, this phone seems to pick up a great signal pretty much anywhere that I go, and the sound quality is good. Another nice feature is the speaker phone. Although it’s just half duplex (i.e., only one party can talk at a time), it works well and I’ve been especially happy to have it when I’ve found myself waiting on hold. Another positive is that the battery life has been surprisingly good, especially given the amount of time that I’ve spent taking pictures and shooting videos. This phone also comes with a bunch of other features that I haven’t played around with, and likely never will. For example, the ‘MM’ in the name stands for multimedia. Thus, if you’re willing to pay the price, you can stream video and/or music over your phone. It’s also ReadyLink capable, which is Sprint’s answer to Nextel’s push-to-talk service. Once again, you have to pay to play, and I can’t figure out why you’d bother when you can make PCS-to-PCS calls for free. I guess it might be useful in certain businesses and, now that Sprint has merged with Nextel, you’ll probably have a lot more people to talk with.

All in all, I’d have to say that I’m really happy with my purchase. I’ve already taken a bunch of priceless pictures that I otherwise would have missed, and the ability to capture videos has been great fun. If you’d like more information on the Sanyo MM-7400, complete with detailed technical specs, I suggest that you check out PhoneScoop’s review.

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At last! I’ve spent the last couple of days racking my brain, trying to remember the name of personal finance book that forever changed the way I think about money. After a good while browsing on Amazon tonight, I finally found it. But first the backstory… It was the mid-90s, I was in graduate school, and we had just had our first child. I had always been interested in money (aren’t we all?), but had never really done anything significant to take charge of my financial future. And then I picked up a copy of Time is Money by Frances Leonard at the local library.

To be completely honest, many of the details have escaped me, and I really do need to pick this book up and read it again. But what I remember the most from having read it is the sense of clarity that I got about money and the future. The subject matter was really nothing revolutionary, just the basic principle that “Money makes money, and the money that money makes, makes more money.” Perhaps I was just ready for a change, and maybe any finance book would have done the trick, but this book really did change the way I think about money and the future.

After laying out the case for the power of compounding, the book lays out a general plan for making a million. It then gives you a general rundown of the ins and outs of stocks, bonds and mutual funds. After this, there are several chapters devoted to topics such as risk tolerance, retirement accounts, and inflation-proofing your investments. There are also chapters on getting out of debt, buying a house and schooling your kids. There’s even a chapter devoted to the special concerns of women – if you’re going to live longer than the rest of us, you had better be able to pay for it! Finally, the book closes with a chapter titled “The Six Seductive Sirens of Stupidity: Words of Warning for Future Millionaires.”

While sections of it will no doubt be outdated by now (e.g., it was published in the pre-Roth IRA era), I can wholeheartedly recommend Time is Money to anyone who is starting out and just trying to get a handle on their finances. It’s easy to read, interesting, and downright inspirational. (Or at least it was to me.)

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Awhile back I picked up a fax machine, and I couldn’t be happier with my purchase. To be completely honest, I don’t send personal faxes all that often, and I almost never need to receive one. But when I do need to send a fax, there’s nothing better than dropping the form(s) to be faxed into the slot, punching in the number, and hitting that little green button.

Sure, my computer has a fax modem. But it’s a pain in the butt to get it working, and I’m always left wondering whether or not the fax went through. And if you need to sign or annotate the pages that you’re faxing, then you need to scan it first, adding to the inconvenience. As an added bonus, this particular fax machine (along with many others) can make photocopies. Granted, the copy quality isn’t that high, but it’s a heck of a lot easier than scanning and printing when you need a quick copy.

All in all this was a great purchase. I’ve already used it a few times for faxing in paperwork for some medical reimbursements, and I’m hooked.

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