Now that I have a new job, my wife and I will be moving to Texas soon. We own the house where we live now, so we had to make a decision: do we try to sell or rent our home?

Ultimately, we’re deciding to rent our current house. We live in an area of the [...]]]>

Now that I have a new job, my wife and I will be moving to Texas soon. We own the house where we live now, so we had to make a decision: do we try to sell or rent our home?

Ultimately, we’re deciding to rent our current house. We live in an area of the Midwest that has not yet seen crashing and burning home prices, but we still did not want to throw away any fledgling equity that we have built in our three years of home ownership. Plus, we live in a major university town, our home is in a decent neighborhood, and is within easy walking distance of a grocery store. It’s also right on the bus route for the university.

With these combined factors, it seems foolish NOT to at least try our hand at renting our little abode. I’ve never owned any rental property before, so this will be a valuable learning experience for me. Every potential rental home is different, so in no way does one person’s set of choices fit all situations, but here are a few issues to consider if you are thinking about renting your home or acquiring an investment property.

Location

This is perhaps the most important factor and also the hardest to discuss because of the individual and unique aspects involved. Ultimately, you need to ask yourself, does the location of my home make it an ideal (or even suitable) rental property?

The location of the property has a major influence not only in how fast it will take to rent the house, but also in the stability of the tenants it might attract. For instance, a single-family residence in an affluent suburb will likely have a lower turnover rate than a duplex in a condensed neighborhood near a university. That said, there are good and bad tenants no matter the location.

In our case, we’re in a great location for a rental: university town, near a grocery store, and on the bus route. We may find a single family who wants to rent from us for years to come, or we may find groups of students who live there for a year and then move on. Though we’d prefer the first, we’re okay with either situation.

Property Management

The next issue to consider is whether or not you want to hire a property manager or deal with the tenants and the upkeep of the property yourself. Opting to handle it yourself entails:

• Finding and screening tenants
• Chasing the rent each month
• Dealing with landscaping and repairs
• Handling unexpected complaints and emergency issues

If you’d rather let someone else deal with these issues, then hiring a property manager is for you. For a monthly fee (usually 6-10% of the rent), a property manager will deal with all the potential headaches and send you a check each month. If your property requires lawn care, this is something else that a property manager can set up for you.

For us, the decision was easy. Since we’ll be nearly a thousand miles away from our investment property, we’re opting to find a good property manager. If we were planning to live in the near vicinity, the decision would be much more difficult.

Home Warranty

Another decision to consider is whether or not to purchase a home warranty for your investment property. The purpose of a home warranty is to save you dealing with an unexpected and costly repair, such as a furnace or A/C unit dying. A typical home warranty costs around $35-40 per month, and there’s a service fee (usually around $50) each time a contractor is sent to the house.

What you get in return is coverage for the electrical, plumbing, and heat systems, plus most of the appliances in the house. If the furnace dies or the plumbing implodes, at most you will pay is the service fee instead of shelling out hundreds or thousands for the repair.

We haven’t fully decided yet, but will likely opt for a home warranty package.

Insurance

I know that insurance is far from the most interesting subject to discuss, but it’s another required issue to consider. When your home shifts from a primary residence to an investment property, the insurance will likely go up. Frankly, this is tantamount to highway robbery, because not only will your insurance company charge you a higher rate for the same house because it’s now an investment property, they would also love the chance to sell renter’s insurance to your tenant. It’s pure profit for them, leeching off both sides.

However, you still have one advantage: the ability to shop the competition. The last thing you should do is just call up your current insurance company, report that your primary residence is turning into an investment property, and accept whatever new rate they charge you. Call them and ask for a quote, then tell them that you’re planning to call all their competitors. If you get a lower quote from a competitor, call your current company and ask them to beat it.

I find insurance a necessary evil, and I have absolutely no loyalty to my current company. If given a lower rate, I will not hesitate to switch all of my policies to a competitor.

Cost

And this brings us to the final element – cost. In the end, is it worth it to rent your home versus selling it outright? Especially if you opt to hire a property manager, purchase a home warranty, and pay for lawn care, can you make enough in rent each month to cover these fees plus the mortgage, insurance, and property taxes?

If you can, then renting your home is a great idea. Even if you end up taking a small loss each month, it may still be manageable provided you have enough other income to offset the small loss. There’s always the possibility of raising the rent a little after a year or two to negate the prior loss.

In our case, we’re just hoping to break even, thus allowing our investment property to pay for itself. We’re not trying to make big bucks right now – just having someone else pay the mortgage and build equity for us is a wonderful feeling.

In the near future, I’ll be shopping for a property manager, a home warranty, and insurance. Stay tuned!

Too Many Accounts

Before I begin extolling the virtues of KeePass, allow me to explain why I think a password [...]]]> In a previous article, I described a few ways to make sure your spouse knows your financial passwords and other login information. Since writing that article, I have started exploring another password management tool – KeePass.

Too Many Accounts

Before I begin extolling the virtues of KeePass, allow me to explain why I think a password manager is worthwhile. After I wrote the previous article, an irate reader seemed hell-bent on pounding into my head that ALL my ideas were dumb and that people only need pencil and paper to manage all financial account information. Give me a break.

Sure, pencil and paper is fine if you only have one bank account, one credit card, and one investment account, but once you expand much beyond this basic foundation, the information that you must remember becomes increasingly unwieldy. Also, there’s also a great risk of losing the paper, forgetting to update it, or destruction by flood, fire, or rabid gophers.

I can only speak based on personal experience, but between my wife and myself, I manage about ten bank accounts, at least a dozen credit cards, two retirement accounts, and a multitude of other random accounts (utilities, affiliates, e-mail, shopping, etc). That is A LOT of information, and don’t like to use the same username/password combination twice. While I consider myself a competently-intelligent fellow, I welcome the assistance of a password manager in recalling all of the usernames, passwords, and security questions.

Why KeePass Rocks

Since I started using KeePass a couple months ago, I’ve fallen headfirst in love with it. First of all, KeePass is completely open-source and FREE. It’s easy to use. It’s secure. It’s portable. Best of all, you can use it interchangeably on Windows, Mac OS X, and Linux. Heck, you can even use it on your Blackberry or Windows Mobile device!

Over the past few weeks I have been migrating my doubly-encrypted master password document over to KeePass, and I am enjoying the added convenience and versatility that it has given me.

Basic Setup

To start using KeePass, you must first create a new database in which to store your entries. From the File menu, click New, and a New Password Database window will spawn.

At this point, you need to set a Master Password that will allow you to gain access to ALL your other passwords. It is truly one password to rule them all, and in the database bind them!

Needless to say, create a strong password using numbers, capital letters, and special characters. Don’t use something dumb, like the word ketchup.

Once you have set your master password, it’s time to add some entries. The main interface of KeePass separates passwords Groups on the left and Entries on the right. Here’s a screenshot from my computer:

By right-clicking on either side, you can create groups (or sub-groups) and entries. For instance, let’s add a sample entry. Right-click in the space on the right and choose Add Entry… A new window will spawn like the one shown here.

Fill in the necessary information, including the password (press Shift + Home to clear the password field), and then press OK when done. Congratulations, you now have a new entry. But what can we DO with it? This is the exciting part.

Basic KeePass Usage

The features of KeePass are what make it infinitesimally cooler than a piece of paper or a text document. Here are some examples.

Right-click on the entry that you created and feast your eyes on the possibilities. With a simple keystroke, you can open the URL that you provided. Don’t feel like typing the password when logging into an online banking session? No problem. With another keystroke, KeePass will temporarily copy your password to the clipboard, allowing you to paste it into the appropriate web site. Worried that someone will come along behind you and try to paste again to discover your password? Have no fear, KeePass securely shreds that information immediately after the first paste. Cool!

Don’t like keystrokes? No problem! KeePass features excellent drag-and-drop support. From the main interface, you can simply click-and-drag the username and password fields to the appropriate place on the website, and KeePass will fill them in appropriately! Here is a screenshot, courtesy of keepass.info.

You can even drag the URL field to your browser window and it will automatically open the appropriate URL. Neat!

The drag-and-drop options (plus the keystroke ability) provide added security against keyloggers. I’ll be spending several weeks in Europe this summer and I have an inherent distrust of public Internet cafes. Who knows if someone has surreptitiously installed some software to record every keystroke pressed on the keyboard? To work around this potential problem, I’ll just run KeePass from a USB flash drive at all Internet cafes, leaving no trace behind me. Call me paranoid, but I’ve been a victim of identify theft before, and I don’t ever want to go through that again.

Oh yeah, one more thing: KeePass also includes a password generator. I’ve started using it to generate passwords for certain sites that I do not trust very much (such as eBay).

Storing the Database

Since the database KeePass uses to store your account information is completely encrypted, you can simply e-mail the file to yourself for safekeeping. I keep the database stored on my personal computer, plus in a couple different places online. A bomb could fall on my house while I’m away and I would still have all my critical account information!

For added security, you can stuff the database file into an archive using software such as Winrar, 7-zip, or IZArc, just like I described in the previous article.

As long as you remember to e-mail the database to yourself after you make any changes, you will always have the latest version of your passwords. Oh, and for those of you who feel more secure with paper copies, KeePass has the ability to easily print a list of ALL your account information by choosing Print from the File menu.

I want to re-iterate that my purpose in writing an article like this is to make people consider how their financial information is stored, and how easy or difficult it would be for other family members to access that information should tragedy strike. KeePass works well for me, but even if you do not care for it, I encourage you to find an option that does.

More information:

KeePass – First Steps

KeePass – Security

KeePass – Downloads

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For February 2008 only, there is a $25 sign-up bonus. If you contact me and ask for a referral when you sign up, I’ll send you an additional $5 bonus.

Please see this post for details.

I can confirm that there is no [...]]]> Just a quick note to say that I still have invitations available for Revolution MoneyExchange.

For February 2008 only, there is a $25 sign-up bonus. If you contact me and ask for a referral when you sign up, I’ll send you an additional $5 bonus.

Please see this post for details.

I can confirm that there is no hard credit inquiry for creating an account. It’s an easy $25-30 bonus.

What is it? Revolution MoneyExchange is a PayPal competitor with a really freakin’ long name! In a nutshell, it’s a service that allows you to send and receive money for FREE (no more PayPal [...]]]> Want to earn a quick $25? Simply sign up for an account with Revolution MoneyExchange. This offer expires on 29 February 2008.

What is it? Revolution MoneyExchange is a PayPal competitor with a really freakin’ long name! In a nutshell, it’s a service that allows you to send and receive money for FREE (no more PayPal fees for receiving money!).

Your account is linked to an existing checking account, and you can push/pull money into via ACH (free). Keep in mind that this is not a savings account, so any money accrued does not earn interest.

What are some possible uses for Revolution MoneyExchange?

• Sell items over the internet (why pay to get paid?)
• Have a roommate or tenant pay rent money monthly
• Send money to kids or family members quickly
• Pay your drug lord what’s due or get your kneecaps busted

Ok, so that last one was (hopefully) a joke, but these are only a few of the possibilities available.

Please note that they require a Social Security Number. I assume they need this to someone from signing up for multiple accounts.

Once you sign up, the $25 bonus will be there waiting. All you have to do is link a checking account to earn access to the bonus. As soon as I created my account, this is what I saw (click thumbnail for larger view):

My offer – earn an extra $5

Revolution MoneyExchange has a referral program. If you contact me and request that I send you a sign-up invitation, you will still receive the $25 bonus, and I will receive $10 more. For everyone who receives an invitation from me and creates a valid account, I will send you $5 (half of my bonus). I just need your e-mail address where I can send the invitation.

It is truly a win-win situation.

I take care of all the bills and other financial matters in my household. My wife is certainly capable of doing so, but is more than happy to let me manage it all due to my great interest in it.

My guess is that this [...]]]>

Update: please also see my handy guide to the KeePass password manager.

I take care of all the bills and other financial matters in my household. My wife is certainly capable of doing so, but is more than happy to let me manage it all due to my great interest in it.

My guess is that this situation is rather common. One member of a household actively pays the bills, manages the checkbook(s), and transfers extra money into some type of savings account, while other family members are more passively involved.

Are you the active manager? I know that it is not the easiest subject to breach, but what if something happens to you? Will your spouse/significant other know when the bills are due and how you typically pay them? Will he/she know how to pull cash from any on-line savings accounts or manage any other investments? Most importantly, will he/she remember the required user-names and passwords?

Even something not so morbid like an unexpected hospital stay can strain your financial system or at least throw it out of whack. In cases like this, there must be a contingency plan – how to easily ensure that your loved one(s) can find the information they need to keep the financial system afloat.

The List

I keep an up-to-date list of all the accounts we have, including their usernames, passwords, and security questions/answers. Many of my accounts have “paperless” statements, so I even specify in the document which e-mail address receives the statement notifications. Of course, I also provide the username and password for that e-mail address! Some may say this is foolish, but trying to remember all of this information, especially in a potential time of grief, is difficult to expect of anyone. Of course, this information is for our eyes only, so how can we best protect it?

Option 1 – A safe-deposit box

One possible option is to keep this written information in a safe-deposit box at a local bank. If you have any accounts there, you may be eligible for a free safe-deposit box. Otherwise, expect to pay a few extra dollars a year for this privilege.

The main benefit of this option is its inherent security – no one is getting in there without proper identification and a key! Just make sure your significant other knows where the key is located. The downside of a safe-deposit box is that any changes you make to the list requires that you go to the bank and physically put a new copy in the box. Just be sure to shred/burn/mutilate any old copies.

Option 2 – A safe in your home

Another option is to put the list in a fire-proof safe somewhere in your home. Replacing any out-dated copies of the list is much easier than the safe-deposit box option, but there is one serious drawback.

A safe inside a home is a main target for thieves, and unless your safe is bolted to the floor, a thief can possibly steal it. If the safe is stolen and cracked, ALL of your financial data is at risk, so you’d better go on a serious password-changing spree!

Option 3 – Bury it

Perhaps a bit unorthodox way to hide the list is to put it in an airtight container and bury it in the backyard. I don’t recommend this option, as the only benefit it provides is security through obscurity. It lacks both the inherent security of a safe and ease of updating. If you choose this method, at least create a nifty pirate treasure map.

Option 4 – The Internet

Yes, that is correct – the Internet is an option. But how, you may ask, is a massive network of computers that connects people from all over the world a safe and secure place to store sensitive information?

It’s an excellent question, and I want to make sure one thing is clear: if you have an inherent mistrust of the Internet and of computers in general, please avoid this option. I do not want anyone blaming me for plastering their passwords in front of millions of people.

That said, not only do I feel like this option is quite safe, it is by far the most convenient of all the ones that I have mentioned. If you have not guessed, it is the option that I use (and have used for over a year now).

There are numerous possibilities on how to do this, but the rough plan is as follows:

Word processor password → Encrypt with archive password → Store in e-mail

Now, let me explain in more detail:

• First, I password-protect the document in the word processor. I use OpenOffice for all my document writing, and putting a password on the file is as easy as checking a box when you save.

• Secondly, I stuff the file into an archive using software such as Winrar, 7-zip, or IZArc. All of these (Windows) programs offer the ability to protect the archive with a password. Choose a different password than the one you chose in the word processor.

I have not found a good program for Mac OS X that provides an easy way to encrypt an archive (not just a disk image). If you know one, please comment below.

Instead of a password-protected archive, you can also try an encryption program such as Axcrypt or jFileCrypt. Both offer fantastic encryption settings. I like using Winrar because I know that I can open the resulting files on either my Mac or my PC.

No matter which programs you choose, create STRONG passwords. A wimpy, four-letter password is prone to being cracked, so beef it up with strange characters, numbers, and capital letters.

Once finished, I e-mail the doubly-encrypted file to my wife. There it sits in her webmail account, hopefully never to be used!

Of course, the catch here is that my wife must know the two passwords for the archive and the word processor, but she knows them well. We’ve even done a couple “dry runs” in which she must get the file open without my intervening. I’m confident that should anything happen to me, she would have full and immediate access to all of our financial information.

What’s your contingency plan? Do you have any tips or suggestions on how to make sure your significant other knows your banking, credit card, and investment information?

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For a [...]]]> Recently I discovered ClearCheckbook, a slick, free way to track finances online. For the past year or so I’ve simply been monitoring my checking account using online banking. While handy, I never knew exactly how much money I had in checking because the transactions always take a few days before they show up.

For a while I remedied this by keeping track of my checkbook entries using a spreadsheet on Google Docs and Spreadsheets. While I liked the online accessibility, my spreadsheet was simply… well… too simple. Other people with Jedi spreadsheet skills could probably put together something slick, but I did not want to waste the time doing this.

Enter ClearCheckbook. This nifty, free site allows you to keep track of most of your financial life. While it handles checking easily, I use it to also keep track of my three high-yield savings accounts plus one of my credit cards. Keep in mind that ClearCheckbook is a standalone service – it does NOT log in to each of your accounts and automatically update balances. For this reason I use it for my more liquid accounts (checking and savings) and not my mutual funds, since the latter change daily.

With my old spreadsheet I simply monitored my checking account, but with ClearCheckbook it’s more satisfying to see a movement of funds from checking to savings appear as a transfer instead of a withdrawal. This way my total balance stays the same and doesn’t look quite as depressing.

Some other features: update your account using a cellphone with SMS or AIM capabilities. I don’t have a cell phone, but this sounds really handy! Just like in Quicken, you can create various types of reports as well. Speaking of Quicken, you can also import or export files in various formats, including QIF and CSV. Perhaps my most oft-used feature is the Mac OS X Dashboard “widget”, which allows me to see my totals at the push of a button.

By the way, that’s not my account in the picture, so don’t jump to any conclusions just yet.

See more features and screenshots at their site. I’m happy to use ClearCheckbook for its simplicity, convenience, and online accessibility. Best of all, it’s free.