Quote of the Day


I am starting to think that the right way to think about blockchain and cryptocurrencies and tokens might be the way you’d think about stocks, if stocks had just been invented. Here in 2017, it is uncontroversial to say that the invention of limited-liability joint stock companies utterly changed how humans organized their economic activities, and had huge impacts on economic productivity and on society as a whole. But it is also fair to say that the first few hundred years of stocks were mostly fraud and irrational speculation. Similarly with cryptocurrencies and initial coin offerings, it is possible both that proponents’ grandiose claims about how they will transform finance and society will turn out to be true, and that most crypto stuff in our lifetimes will be nonsense.

— Matt Levine, “Money Stuff”, July 11, 2017

Random Life Update

  • As mortgage rates have dropped significantly, I’m working on refinancing my mortgage. I find it bizarre that when staying with the same bank, they need to do an appraisal to ensure that we have a low enough loan-to-value ratio, when they’re already taking the risk of having loaned us the amount of money that we have out. In fact, by lowering the payment all the refinancing is doing is lowering their risk. And yet they have to follow their procedures. Truly bizarre. On the plus side, if the appraisal comes in at less than the tax valuation, I can bring it to the Assessor’s office and potentially lower my property taxes.
  • This weekend, I’m head judging the North East Open, with the complicated logistics of having many draft pods running at once within one event. Hopefully, it will be a fun and interesting event.

Tip of the Day: Checking Credit Reports for Free

It’s handy to be able to check your credit report to ensure that the information companies are reporting about you is accurate. It’s especially important to check before you plan on applying for credit, but errors can sometimes take a while to resolve, so it’s a good plan to check regularly anyway. There are 3 credit reporting bureaus in the U.S.

Federal law (FCRA) allows you to get one report from each bureau for free every 12 months.
Massachusetts law (M.G.L. c.93, § 59(d)) allows you to get one report from each bureau for free within each calendar year. (Some other states have similar laws.)

Note that this combination means that MA residents can get a report of some sort 6 times a year, so they can check their credit for free every 2 months.

If you’re married, your spouse can check his or her credit in the alternating months, for a report of some sort on one of you every month.

For the report via federal law, visit AnnualCreditReport.com. You’ll specify the bureau to get the report from on that site.

Getting the report via state law is trickier, as you need to do it on the individual credit bureau’s web site, and they tend to bury it pretty deep.
For Equifax: http://www.equifax.com/fcra/ and select the reason “Free State Credit File (not denied)”.
For TransUnion (Updated 11/1/2013): https://disclosure.transunion.com/dc/disclosure/disclosure.jsp?. Select “Your state offers a free or reduced price Personal Credit Report”.
For Experian: http://www.experian.com/freestate/

Be sure to read carefully and be vigilant to make sure that you’re only getting the free report, and not signing up for a credit score or monitoring service at the same time. The marketing departments of these companies are very pushy.

As a side note while speaking of credit reports, you may want to sign up at https://www.optoutprescreen.com/ to opt out of pre-approved credit offers.

Buying money to make money

The U.S. Mint is offering a wonderful program, where they offer sets of 250 $1 coins for $250, charged to a credit card, with free shipping. I just bought the maximum-currently-available of $2500 worth (2 sets of $250 for each of 5 presidents) with my cash-back credit card. I intend to deposit it all (maybe all except $25-$50 in coins to spend) in my bank as soon as it comes in. Between (1) the cash back on the item, (2) having the money in my checking account for roughly a month earning 4% interest, and (3) hitting the threshold for the much higher cash back tier a few months earlier, I expect to make north of $100 on the deal, for very little work.

Plus, it seems like a fun thing to try doing.

Going infinite on gift cards

Shaw’s, among many other retailers, is offering a promotion where one can buy a $330 gift card at a cost of $300, or a multiple of those numbers, any number of times, the theory being that government economic stimulus payments are often in multiples of $300, and they’d rather you spend it at their store.

I suspect that their POS system would allow one to pay for a gift card using another gift card. Gift card is a method of payment, and the cashier likely doesn’t even see what kind of card you’re swiping to make payment. (They just enter in a $330 gift card activation with a $30 store discount.)

So, I think that it would be easy for one to buy a $330 card for $300, and then on one’s next trip (or right away if one thinks one can pass it by the customer service rep.), use $300 from that gift card to get another $330 card, meaning that you now have a $30 card and a $330 card, for $360 in total gift cards for a purchase of $300. This process should be repeatable as often as you think you can do it without them throwing you out of the store, leaving you with n $30 cards and 1 $330 card, all from an initial $300 expense.

Not only that, but since in Massachusetts the law says they must refund the balance of a gift card in cash if it’s at least 90% used, you should be able to convert all those $30 cards back into cash, more than covering your initial $300 expense.

Is there a flaw in my logic? Is their computer, customer service rep., or manager likely to notice? Is this doable, legal, moral, and/or ethical?

Interesting Lottery Deal

So, the Massachusetts State Lottery tried an interesting new product over the last couple months, which was more of a raffle format than the format the lottery usually uses. Tickets cost $20 and were available over the past couple months, and the winning ticket numbers will be chosen tomorrow. There’s a $20 million prize, as well as ten $1 million prizes and forty (40) $250,000 prizes. They were planning on selling 4 million tickets. However, they’ve only sold 32% of that amount so far, and are still planning on giving out the same prize distribution.

I think that means that the expected value of a ticket purchase is actually positive, or pretty close. It’s almost tempting me to buy one. I may run some numbers later this evening.

My bank is encouraging interesting spending habits

So, my bank this week launched a new checking account product, where as long as you (1) get e-statements, (2) get a direct deposit or withdrawal at least once a month, and (3) use your debit card at least 10 times in a month, you get a phenomenal 6% APY on the checking account. (If you don’t meet the requirements, you get a reasonable-nowadays 0.5% APY for that month.) The first two requirements I already meet, of course. Meeting that last one will require some effort, because currently I use my credit card for all my day-to-day purchases (and several automatic recurring bills) due to its nice cash back program. However, being able to have my main savings in my main checking account simplies my finance tracking, and I think if I use the debit card on small purchases and the credit card on large purchases I’ll end up earning more than I am now, if only slightly.

The really interesting thing to me, though, is that it purely counts the number of transactions, without paying any attention to the dollar amount. Thus it encourages me to do tricks like pump my gas a third of a tank at a time, stopping the pump and then restarting it by swiping my card each time, to artificially bump up my transaction count. In theory I could just meet my quota by pumping a dollar’s worth of gas 10 times, and then using my credit card like I always have been.

Inefficiency as a feature

I have a Prime Money Market account at Vanguard, which is where I keep my emergency fund as well as money that I’m accumulating throughout the month for large monthly expenses such as my mortgage. It pays a pretty good interest rate, and is handy for automatically funding my Roth IRA there as well.

So when I need to transfer money from the money market account to my bank for something like my mortgage, I really have two options:

  1. Do an electronic ACH transfer. This has my money leave my money market account at the end of the business day and arrive in my bank account two business days later. In-between, the money is somewhere in the ACH system and not earning interest in either account.
  2. Write out a check, and physically bring it to my bank. The money gets credited to my bank account immediately, and there’s a delay before the check clears my money market account. In-between, the money is in both accounts earning interest. The money market account has no fees whatsoever for checks, and even the checks themselves are free.

So, if I write a check, I can get it to my bank a bit later, plus it earns interest in my money market account for a few more days than if I were to do an electronic transfer. The interest earned from being able to wait a couple days before doing anything plus the time for the check to clear, on an amount of money the size of my mortgage payment, can easily exceed a dollar and can hit over two, especially if there’s a weekend involved.

Now, I really like living in an electronic era, where my money is purely just numbers in a computer somewhere. Yet, I find myself writing checks, purely because its inefficiency causes more interest to accumulate. I’m not sure if mailing a check to the bank costs more or less than my gas and time stopping at the bank on my way home from work, but either way it’s less than the interest earned by using a check.