Got my latest bill for the card I use regularly. It came on Monday, Nov 26 and is due on Monday, Dec 3. First, during this time of year I don’t know if the six days (I could only get a check out next day, as I get my mail after I get home from work) would be enough time to get the check received and credited on time.
I jumped onto my bank’s online system and saw that even though they pay these electronically, no paper check mailed, the earliest I could get the payment authorized was Dec 3. That’s great, but the credit card shows a time due of noon. My bank guarantees payment by 5 pm.
Now, the happy ending for me is that I’m neurotic enough to have had my eye on the credit card activity, and set up the payment right after the close of the cycle on Nov 13. I took a moment to call the credit card company and asked why a bill dated Nov 13 took 13 days to get to me. They had no idea, just offered that this time of year the mail runs slow. I asked what they’d have done if I mailed the check and they got it a week late due to the mail, and of course she offered me the late fee ($39) and interest (a lot, it was a big bill).
So, here’s my advice: watch for the bills. Note the dates the statement’s cycle ends, so you don’t get caught with a bill that you’ll pay late or need to overnight a check. If you use online banking, consider a recurring payment of an amount you know will be higher than the minimum payment. You’ll still be hit with interest if the bill isn’t paid in full, but you’ll avoid a late fee and potential black marks on your credit report.
JOE
I’ve always found gift cards a bit odd. Don’t get me wrong, I like gifts and never turn them down. But it seems to me a gift card is the giver’s way of saying, “I wanted to give you a gift, but either don’t know what you want or am too lazy to go buy an actual gift.” Worse, there are amounts you may have a tough time spending in full, say $25 at Best Buy, where you’ll likely have to dip into your pocket to buy two CDs you may have found on sale elsewhere, or just bought the two good songs a la carte on iTunes. To make matters worse, the non-store specific cards carry an ‘activation fee’ that runs as high as $5.95, this for the honor or giving them your money.
Now, I run into an article on CNNMoney that confirms my other thoughts on this topic, 27 percent of recipients never use the card they got. Forget about the cards that have a monthly fee and eventual expiration, over 1/4 of the cards given get lost, forgotten, or just put aside as they are to a store that one doesn’t frequent. My 9 year old likes the gift card, it feels like a grown-up thing to use, like a credit card. But I can do without them altogether. You want to give me a gift but don’t know what to get me? Send a check to the New England Shelter For Homeless Vets in my honor. You’ll get a tax deduction and I’ll feel better knowing the money went to help those in need.
(1/2 update - There are Consumer Protection Laws which apply to gift cards and impact the fees charged as well as expiration times, these laws vary by state.)
JOE
I think Andrew Tobias said it best on his blog this Thanksgiving Day;
“As I’ve said so often in this space, almost all of us live better than the kings of England, czars of Russia, pharaohs of Egypt ever did. We have magic carpets with seats that recline; we have jesters, bards, gladiators and orchestras on instant call (with volume control and a pause button). We have cell phones, antibiotics, zippers — Velcro, even — Novocain and aspirin.
We . . .
have . . .
air-conditioning. ”
I am thankful for these things and for that which can’t be counted or measured, the love of my family and friends. Have a wonderful Thanksgiving Day.
JOE
My earlier post, “Do I Need Insurance?” discussed the one example of the person for whom life insurance may not be needed. For the rest of us, married, with children, we may need insurance well beyond the time the kids leave for school.
Let’s first take a step back and start with the initial need. You get married, both of you are working. Now’s the time to buy that first term policy for both of you. An amount to cover approximately 10 years’ salary should be close to the right number. If either spouse dies young, it would ease the burden by being able to pay off the mortgage and have college covered for the kids.
Let’s now move ahead 20 years. Kids are out of the house, maybe finishing up school or completely off on their own. You may still need insurance. If you’ve saved and invested well, between the 401(k), IRA, and the value of you home, you may have well over $2 million dollars in your estate. While the estate tax for 2007-8 doesn’t apply until your assets exceed $2 million (and in 2009, $3.5 million), unless congress changes the law, the estate tax exemption will drop back to $1 million in 2011, after a brief repeal for one year only. Also, while life insurance is tax free to the recipient, if you own your own policy, as most people do, the proceeds are considered part of your estate. You read that right. If you die with $1 million in 401(k), IRA, etc. and have a $500K policy, after 2011, $500K is subject to estate taxes. Of course you may leave an unlimited sum to your spouse, but that only makes her estate larger for when she passes as well. Early planning can help reduce or eliminate what may be a very large tax bill. Death and taxes, both unavoidable, but estate taxes can be reduced or eliminated. I’ll revisit this topic in a feature article on my main site in an upcoming monthly feature.
JOE
If you have any dependents, or debts that someone has cosigned on your behalf, you should consider a term policy. I believe that “no dependents, no need for life insurance” is valid for most people. One exception that may apply (I’m not fully convinced) is when the individual is likely to have the need for insurance at some point in the future, e.g. they have a strong chance of getting married and wanting children. It’s easier to buy insurance at a younger age and there’s always the chance that one becomes uninsurable just at the point when the need arises. I believe that there’s a much greater need for disability insurance. The numbers show far more people become disabled before retirement age than dying. Something to consider.
JOE
For most of us, that’s not going to happen. Reading “Fooled by Randomness” taught me about survivorship bias and in the case of those late night TV ads pushing everything from day trading to get rich quick real estate schemes, that lesson rings true. Can you make money in real estate? Of course you can. And for every 1000 people who take whatever course is being sold, there are certainly those few who managed to turn a profit and maybe even begin a new career. But most of the money being made is by those selling those courses. For the rest of us, it’s a matter of slow, steady, savings for retirement and avoiding the 10 reasons you are not rich. Sorry, there’s no magic secret I can offer to riches, just some common sense, and patience.
JOE
I’d like to offer words from Laurence D. Fitzmaurice President and CEO of the New England Shelter for Homeless Veterans:
“Again we have the opportunity to reflect on things that we can be thankful for even if we have experienced otherwise troubling circumstances.
Veterans’ Day also gives us a time to pause and be thankful for all veterans past, present and future, in war and in peace, those who are part of the fabric of keeping secure what we sometimes take for granted.”
I’ve referred to charitable giving in some of my posts, and this is one charity that’s always been at the top of my list. If you are looking to add a new charity to your giving list, or a worthwhile charity as a new donor, please consider this shelter for homeless vets.
JOE
A homeowner owes $200,000 and for whatever reason, finds he can no longer pay the mortgage. The bank accepts the deed in lieu of foreclosure and sells the house for $150,000. The homeowner breathes a sigh of relief to be out, but in January receives a 1099. He now has taxable income for the amount of money he cannot afford to pay the bank. Surely the tax on $50,000 is a better deal than the whole $50,000, but for the guy who couldn’t come up with the $1500 mortgage payment each month, where is he supposed to find the $12,500 (I’m assuming a 25% tax bracket) to pay the tax due?
Congress is considering legislation that would change the law that taxes the loan amount which goes unpaid, but that’s not likely to happen overnight.
Enjoy the weekend,
JOE
I started to compile a list of links to articles regarding the Subprime Meltdown, and recently added an article by Davis Einhorn titled “Einhorn on Credit” (note this is a PDF that will open in a reader or offer to be saved). While I agree with much of his view, I feel it important to offer the one comment I disagreed with. “Securitization is a mediocre idea” he offers. Now, he then goes on to say he feels that re-securitization of already securitized assets into a CDO is a bad idea, which I tend to agree with.
Securitization, while it can evolve into something so convoluted as to be incomprehensible, can be, at its simplest, an important process in our economy. Going way back to “It’s a Wonderful Life“, Frank Capra’s 1946 Christmas Film, it’s clear that George Bailey’s issues are a result of the bank he runs not being able to sell off any of their mortgage holdings. In those days, a bank lent out money for mortgages, and should too many people suddenly decide to make a withdrawal, chaos (and a run on the bank) would ensue.
Read the Einhorn story, and let’s continue to follow the subprime story. This, too, shall pass.
JOE
I was going though a series of articles I saved and found “10 Reasons You are Not Rich” which appeared on TheStreet.com back in March of this year. A couple things attracted me to this article, first to save a copy and now that I see it again, to share it with you. First, it’s tough for me to read any author and find myself agreeing 100%, so this is one of those rare moments. Next, there are so many articles that talk about some specifics, retirement, asset allocation, stock picking, etc. Here, we have one that warns of behaviors that can get in the way of all that other good advice.
The article offers 10 things to think about, don’t confuse this with believing that if you follow any one of these, you are on the road to success. It’s more a matter of reading and understanding how some of these reasons may be holding you back. The thought occurs to me, if the author wished, he could turn each of his ten reasons into a chapter of a book, and launch a new title in what has become a pretty popular genre.
JOE
