Costco will no longer enforce its “satisfaction guarantee” on consumer electronics. You now have only 90 days to return a product.

According to BusinessWeek,

In general, Costco allows its customers an unlimited grace period to return purchases for a full refund. The only exception was a six-month deadline after the date of purchase for returning desktop computers. That unlimited timeframe still applies to Costco merchandise other than consumer electronics. Electronics goods purchased before the new 90-day policy goes into effect can be returned at any time.

Good! Whenever you abuse something, it goes away. It was just a matter of time before they scrapped their policy. Good thing they didn’t wait until they went out of business! I like Costco and shop there a lot. I just picked up a 24 pack of awesome “Fat Tire Beer” from there!

I’ve been searching for life insurance for the past few months. But FREE insurance is even better! Unfortunately, I don’t qualify, but for those that do, there are some great programs out there. Here’s some info. If anyone is interested in more info, send me an email and I’ll hook you up with the insurance agent.

Who is Eligible?

Seniors aged 70 to 80 (in some cases 68 up to 85) who meet ALL the following:

* Minimum net worth of at least $1,500,000 – (includes residence and all assets)
* In good or reasonably good health (no terminal illnesses)
* Currently uninsured or vastly underinsured in relation to net worth

How Does it Work?

If the insured qualifies, then usually this program funds the premiums for the first two years of a life insurance policy based on insured’s net worth. Should the insured pass away during the first two years the insured’s beneficiaries are entitled to the full face amount of the policy less premiums paid out and interest. There are never any fees or costs to the insured in any way at any time.

Example (insured passes away 18 months into the policy on a 2M policy. Heirs receive 2M less premiums and interest estimated at ~$200,000 leaving heirs with $1,800,000.)

After two years the insured has the option to continue paying the premiums and repay the loan (usually only done if the insured becomes terminally ill and it makes economic sense to the heirs). Or, the policy is sold on the secondary market by the lender(s). In most cases it is sold for above and beyond the premiums and interest already paid. In this case, the profits are split 50/50 with the insured and lender(s). Insured’s profit is expected at anywhere of 1-5% of the face policy.

The collateral for the loan is solely the insurance policy and is completely NON-recourse to the insured. Should the policy later be unable to be sold the insured is under NO obligation to repay any premiums or fees and the lender(s) take the loss.

Why does this work?

This program works as a win-win for the insured and the insured’s heirs as a result of several factors. After two years these policies are able to be sold on the secondary life settlement market for at least what the premiums paid out are for the following reason(s):

Premiums on life policies are currently very low due to high competition among insurance companies and the fact that many policies lapse or insured(s) fail to pay the premiums and the insurance company keeps all the previously paid premiums. Because of this high lapse rate and competition, the premiums are kept low. This may end soon and premiums will rise and this program will end, giving reason to lock in this program now!

Insurance companies are risk adverse and need to balance out their portfolios (meaning a Company may need 75 year olds and be willing to offer preferred rates to 75year-old’s to balance out their portfolios of non-75 year-old’s) companies are willing to offer preferred or standard rates to someone that really should not receive this preferential rate. The investors on the secondary market will pay top dollar for a policy written on someone in this scenario.

Many seniors over 70 develop illnesses after two years and/or their health deteriorates over time. These policies become more valuable to the life settlement market which means it can be sold at a profit!

I left my previous company last March and therefore stopped contributing to the 401k. I was planning to roll it over into a rollover-IRA but didn’t get around to it. Luckily I did check in a few times to make sure the asset allocation was ok and I’m glad I did.

From April 1st 2006 until Feb 20th 2007 it returned 16.66%. And for the year 2006 it returned a stellar 21.4%. Now if I could keep this up, I’d be in the running with Warren Buffett 😉

Of course my regular brokerage account hasn’t done nearly as well, basically because I buy individual stocks and not mutual funds, because I think I’m so damn smart!! (Actually it was those stupid WCI puts that ruined the performance) Anyway, as soon as August rolls around (thats the 1 year anniversary of the new account) I’ll post how that account did. Right now its not worth even mentioning!

My Roth IRA which I opened in September is up 11.66%. My previous Roth which I opened in 2002 and funded with $4,000 has a balance of $1.99. Its been like that for about 4 years and I don’t have the heart to transfer it to TDAmeritrade or close it. Don’t even know if I can close it.

Anyway, I’ll be funding the wife’s 2006 Roth at Bank of America. I just got an email that if you maintain a $25,000 balance they’ll give you 30 free trades per month which is pretty sweet. Don’t know if they have the same breadth of products as TDAmeritrade but they can’t be too bad.

Incidentally I found out that TDAmeritrade had taken out some of my dividends from last month and reapplied them the next day. When I inquired why, I found it was because the fools didn’t know what the Canadian Loonie to US Dollar conversion rate was and mistakenly gave me $0.002 cents per US Dollar. That didn’t even make a 1 cent difference which leads me to wonder where all those rounding errors go??? Is there some programmer (like in ‘Office Space’ or ‘Superman III’) who’s getting fat off these?

Bank Of America is going to start giving out credit cards to illegal immigrants who don’t have social security numbers.

Apparently there will be some checks in place to make sure they’re not financing terrorists. The applicants must maintain a bank account for 6 months and pay an upfront fee.

What I’d like to know is how on earth can they open bank accounts without a social security number?

According to the Mortgage Lender Implode-o-Meter Website, 21 of the top 25 sub-prime lenders have closed their doors or gone out of business since december 2006.

According to various sources, 25% of all borrowers last year were sub-prime and another 25% were speculators(or atleast people who can afford a 2nd home, investors and some speculators). Assuming minimum overlap between the 2 groups, that means only 50% of the loans last year went to homeowners who could actually afford them! Okay, thats a bit of a stretch but no wonder the sub-prime lenders are doing poorly.

WAMU was smart to sell its sub-prime portfolio to a french pension fund and HSBC who paid $8 billion for a sub-prime lending company and is now putting aside another $9 billion for bad loans wasn’t.

Circuit City, the No. 2 electronics retailer behind Best Buy, is closing 69 stores in the U.S. and Canada. The company quoted gross margin pressure from lower prices on flat-panel TVs as a large reason for its troubles. The closings represent nearly 5% of Circuit City’s stores. The company will not announce which stores it is shuttering, but keep your eyes open. The targeted stores will close on Monday and reopen Wednesday for a major clearance sale.

Guess there’s no return policy on these items!

Last week I attended a cashflow game meeting through Meetup.com. It was lots of fun and I meet a few retired people who had made a ton of money through their real estate investments, even though they had ordinary jobs. One was a carpenter and the other was a programmer.

Both of them bought at the bottom of a cycle and held on to their properties for 2 decades. The result was that they became millionaires and eventually were able to live off the income their assets produced. Both of them retired several years before they hit 65, although they still found profitable ways to stay busy.

If you haven’t seen Meetup.com check it out now. Its a great networking site. You don’t know what you’re missing.

I’m finally back in the States after a 6 week trip to India, Thailand, Indonesia, Cambodia and Singapore. It was long and expensive (even more so since it was mostly leave without pay) but it was worth it. Its good to remind yourself why we work so hard during the rest of the year. Here’s a picture of a bottle of BinTang Beer I enjoyed at Tanalot, Bali. It was quite a good pilsner (if you like that sort of thing).

 

Tons of stuff to do in the remaining 11 months of this year. I just got my tax refund for ’05 so I guess the first order of action is to file an extension for ’06!

Also need to work on beefing up my passive income. My goal to reach $5,000/mo in passive income to achieve financial independance. I’m still very far from that goal. Private trust deeds have proven to be pretty good in the past so I’ll pursue that avenue. Prosper is also coming along well. I have $1,500 lent out over 28 loans with an average rate of 18.24% and so far I have had any defaults. I’ll probably put more money into it. However its very very time consuming. You spend 2 hours and lend out $200 and then 4 days later you find you were outbid and you need to restart the process. (Or someone outbid you and is willing to lend to a person with lousy credit at 12%. No thanks, I’m not competing with that)

I also want to invest in a commercial property and a buy a piece of land somewhere. Taking of land, here’s an interesting tidbit.

Collectively, the nation’s ten largest landowners own 10.6 million acres (worth more than 5.5 billion dollars), or one out of every 217 acres in the country.

* Robert E. (Ted) Turner -1,800,000 acres in Colo., Fla., Ga., Kans., Nebr., N.M., Mont., Okla., S.C., S.D.
* Colvin Irving -1,600,000 acres in Me.
* Archie (Red) Emmerson- 1,500,000 acres in Calif.
* Henry Singleton family-1,200,000 acres in Calif., N.M.
* David Pingree heirs- 960,000 acres in Me
* Richard King family heirs- 900,000 acres in Fla., Tex.
* William Reed family- 770,000 acres in Calif., Ore., Wash.
* Allyn Ford-750,000 acres in Calif., Ore.
* Howell Lykes family- 640,000 acres in Fla., Tex.
* Dolph Briscoe Jr.- 560,000 acres in Tex.

Interesting point of view, so I thought I’d share.

“How is it that GM trucks (made in Canada) and Ford trucks (made in Mexico) can be equated with ‘American manufacturing’ while (presumably) Toyota and Nissan trucks (both made in USA) are ‘imports’? The only imported trucks of major brands are Fords, GMC, Chev, & Dodge. If one wishes to support American manufacturing, one need only buy a truck with a Japanese brand name.” – Dave Burge

I’m still on vacation, but I wanted to wish everyone a happy and prosperous new year.

I visited Bali, Thailand, Cambodia and ushered in the new year in Singapore. I’ll write a bit more about my travels shortly but that’ll be in a week or so after I get back to the Southern California.

So far I think Bali and Thailand are good places to invest in vacation rental properties. But more on that later!