I know I mentioned that I would write more about the AAMRQ stock case if there was a huge surprise. And there was a huge surprise when the Department of Justice filed an antitrust lawsuit against AMR Corporation and US Airways Group, but this happened when I was entangled with a few life issues, so I had to skip.
Not to say that I am much less busy now, but I thought this case deserves another mention. Caution: math abound
I don’t have much time to comment much on this merger right now, so I will just go ahead and post what I consider to be the final AAMRQ conversion formula:
AAMRQ stakeholders officially receive 544.4 million AAL shares. Each AAL share is worth an LCC share. Using the approximate number of AAMRQ shares outstanding 335.5 million, and the approximate debt of $8 billion, the share conversion formula is:
I wrote in “Personal Finance 201: Credit scores” about how FICO scores are almost the only credit scores that matter. Most large financial institutions such as Bank of America, American Express, Discover Financial Services, and Citigroup, rely on FICO scores for creditworthiness measurement. Knowing your FICO scores is helpful in timing your credit application; a few points difference in credit scores can translate to thousands of dollars of payment on your mortgage.
Based on the table above, the difference between the first category and second category of credit scores translates to a difference between a 4.236% and a 4.014% on 30-year mortgage loan. For a $300k mortgage loan, the difference in payments is approximately $39 per month, which comes out to be around $460 per annum, or $14,000 over the duration of 30 years.
In a previous post: Credit Card vs Debit Card, I explained the basic differences between credit cards and debit cards. Unless you have trouble controlling spending, credit cards are a much better choice for your regular method of payment. If my previous post didn’t twist your arms, I’m offering you more reasons to favor credit cards over debit cards (and cash, of course!)
- Credit cards help build credit
- Credit cards give you better fraud protection
- Credit cards give you the ability to dispute charges previously paid for
- Credit cards cover warranty extension
- Credit cards offer 60-day return on most merchandise
- Credit cards cover rental car insurance
- Credit cards cover travel insurance
- Credit cards cover luggage delay reimbursement
- (Some) Credit cards provide free concierge service
- (Some) Credit cards offer rewards on purchases
What do you think? Are you convinced that you should buy everything with a credit card now? Let me know if you’re still looking for justification…
Usual warning: none of these reasons applies if you can’t control your spending.
Richard (Hiep Tran)
Many young folks, especially those that haven’t been in the US that long, conflate debit cards with credit cards. Debit cards have almost nothing in common with credit cards despite their similar physical appearances.
Unlike Visa and Mastercard which only process but not issue credit cards, and like Discover, American Express also issues credit cards. The origin of American Express is also very distinguished from those of the competitors. They started out as a domestic express mail service back when the US Post Office did not yet deliver packages. They made a lot of money, and very quickly established the American Express brand as a premium service provider. Later on, American Express gradually transformed itself into a financial services company while skillfully retaining and enhancing the brand nationwide and worldwide.
Last night I went to see a performance by Strictly Seattle, a summer dance program that gathers Seattle dancers and choreographers for 3 weeks of intensive rehearsals that culminate in a weekend of performances. It was breath-taking. The dancers were very skilled and expressive. In one of the dances, each dancer’s lower body seemed pinned to the dance floor while the upper body performed very intricate movements without hindrance, as if it had a mind on its own. Imagine a tree where the trunk and root are planted to the soil while the leaves vibrate with each sweep of the wind. That’s what the dance felt like to me.
And I was sitting next to a young man who turns out to be one of the dancers’ boyfriend. Being somewhat of an insider, he gave me some insight about how the dancers packed all the complicated choreography into 3 weeks of rehearsals. As a greenhorn to dance performance, I was intrigued. He also works in a building half a block away from my office building. It’s a small world indeed.
Many of you who are reading my blog are in your 20’s. We are young, and we need to have fun. Someone told me a dollar spent today is worth 100 dollars spent 20 years later. I am all for wisely managing financial resources, but there are things we should spend the money on because they make our lives better. Ultimately money is just a tool to obtain happiness. There is no point in having a lot of money without being happy. I invest part of my income, and I save money on certain purchases just because I want to spend that money on something else, such as the dance performance I went to last night.
The show was very inspiring. I know I will not be a professional dancer ever, but I think that I can be successful and inspire people as well. I’ve had challenging moments in my life recently, but events like this one keep me motivated. For $20, it was well worth it in my book.
I went to bed last night feeling satisfied, and started today with an inspired spirit. Thank you, Velocity Dance Center in Seattle, for putting together such an awesome show. And thank you, my readers, for allowing me to share with you my stories and to help you along your financial journey. You make me feel appreciated and special.
Have a great weekend!
Richard (Hiep Tran)
2 months ago, I posted an article explaining the driving force behind the stock price movement of AMR Corporation, the mother company of American Airlines, since the American Airlines – US Airways merger was announced in February, 2013.
In light of the merger getting closer and closer and more detail being released, I wanted to write a quick follow-up on that popular post. Read more…
Back in January I shared with you my personal experience with Bank of America throughout my credit journey: http://hiepsfinance.com/2013/01/30/bank-of-america-is-awesome/ . To sum it up, Bank of America has done all the good things for me: gave me a secured card with cashback rewards, unsecured it and eliminated the annual fee a year later, and then raised the credit limit six-fold! 2 days ago I took another step further and asked them to lower my APR of 20.24% typical of secured cards but a little high for a non-secured card.
The representative looked at my profile to see if my account would be eligible for a lower APR. Sure enough, she came back with a new interest rate of 11.99%, the lowest in my current credit card portfolio by a wide margin!
Let me clarify why I asked for a lower APR. I didn’t ask for an APR lowering because I planned to carry a balance; I wanted a low APR in case of emergency when I may have to make a large purchase without sufficient cash. If I had a house struck down by lightning for example, I’d need some cash flow available immediately to start rebuilding, and if I had just paid a large medical bill I probably wouldn’t have the cash at my disposal right away. In that kind of scenario, the BofA card with a relatively reasonable APR would come in handy.
I may give BofA another call in a few months to see if they can bring the APR down to below 10% – that would be the last thing I need from Bank of America for this incredible Cash Rewards card.
I am a loyal customer of Bank of America, at least for their credit card and banking products. If you are still looking for a bank to get your first credit card from, seriously consider BofA.
Hope you have a great weekend!
Richard (Hiep Tran)