JoeTaxpayer

A CyberMonday Deal

JOE — Mon, 01 Dec 2008 13:02:30 +0000

As you know, this past Friday was Black Friday, and today is Cyber Monday, when the big online shopping deals start to sprout.

So, in keeping in the spirit, I offer this link to a great magazine deal. In one of my posts regarding how to find the extra money to save or pay down credit cards, I suggested that one of the first steps is to look at one’s magazine purchases. It’s easy to drop $10 each week without paying too much attention. One magazine offered is Entertainment Weekly. $3 per week in the supermarket, $10 for a year on this deal. If you only buy it once a month, that’s still $36, and you’ll still save $26 over the course of a year. This deal is scheduled to end on December 11.

Joe

Beam Me Up, Scotty

JOE — Sat, 29 Nov 2008 13:02:02 +0000

As a lifelong Trek fan, I couldn’t pass this one up.

January 20th can’t come soon enough.

Joe

Future Gas Pains

JOE — Fri, 28 Nov 2008 13:02:33 +0000

As I passed a few gas stations this week and saw $1.89 regular, less than half the cost just a couple months back, and after the initial sense of relief that a tank will less than $30 and not nearly $60, I can’t help but wonder of the longer term impact of this dramatic fall in prices.
One of the unintended consequences of this drop is that the talk of finding alternative energy sources has dropped from being a huge issue early in the recent election campaign to a topic barely discussed. There was also talk during the campaigning of creating ‘green’ jobs based on these alternative energy sources. I understand that there’s a delicate balance, that, at least in the short term, the high gasoline prices was doing far more harm than any future good that would come of it. I just hope we don’t become complacent and assume these low prices will continue indefinitely.
Joe

Money Merge Account Analysis Pt 12

JOE — Thu, 27 Nov 2008 12:02:02 +0000

It seems appropriate that I’ve reserved Thursdays to discuss the Money Merge Account and Thanksgiving is celebrated on Thursday. I know, I’m a bit predictable. Here it comes. MMA is a turkey. Happy Turkey Day.

I believe the Turkey is saying “the factorial math will save you a bundle, you can’t do this one your own!”.
Joe

Two Posts, revisted

JOE — Wed, 26 Nov 2008 13:02:53 +0000

First, my United States of Innumeracy post in which I discussed a viral email making the rounds which claimed the bailout was equal to $250K or so per person. Coincidently, a couple weeks later, Forbes publisher, Rick Karlgaard, published “Math Boneheads, Pt II”, in which he expressed similar sentiment, only he was a bit more aggressive suggesting that the difference between the illiterate and innumerate is that “most innumerates have no idea they they are math boneheads.” I’m with you, Rich.

Next was my post “Send Fuld to Jail” in which I suggested that Sarbanes-Oxley be used to confiscate Fuld’s gains among others. Forbes, in the same issue I cite above, offers the same suggestion, only they felt that applying this regulation against former CEOs of failed banks was a longshot. Can’t say I didn’t try.

Joe
(Happy Turkey Day tomorrow.)

Gas below $2

JOE — Mon, 24 Nov 2008 13:02:29 +0000

The talk of deflation, a general decrease in prices, is now becoming more common. Wasn’t it just a few months back that we were worrying about inflation and its cousin stagflation? But, I think the new fears are a bit unfounded. Inflation is not simply defined as ‘rising prices’ but as ‘too many dollars chasing too few goods.’ In the case of deflation, it’s just the opposite, too little demand, and not enough cash to buy the goods offered. I think the mini-bubble we saw in gas prices rippled through the economy and added cost to everything, from food, to any goods tat contained a transportation component in their cost. Now that oil has dropped to a somewhat more reasonable level, gas following, that cost is being pulled out of all goods, thus the short term drop in both the Producer Price Index (PPI) and Consumer Price Index (CPI). Deflation? I doubt it.
Joe

Sympathy for the Devil

JOE — Sat, 22 Nov 2008 13:02:03 +0000

Enjoy the weekend,
Joe

Two more years of IRA donations

JOE — Fri, 21 Nov 2008 13:02:06 +0000

In 2006 and 2007, there was a tax law allowing someone over 70-1/2 to make a donation from their IRA, even if this was part of their RMD. This had a very narrow audience of interest, one would have to find herself a combination of 70-1/2 or older, therefore taking IRA RMDs, making donations worth the effort to do the extra paperwork, and not an itemizer. The benefit for this situation is that the donor is making the donation directly from IRA to charity, and therefore avoids the tax due on that portion of her distribution.

Given the limited discussion of this topic, I expected it to expire as 2007 closed, and not get revisited. I was mistaken, the Emergency Economic Stabilization Act of 2008 renewed this law for both 2008 and 2009.

Joe

Money Merge Account Analysis Pt 11

JOE — Thu, 20 Nov 2008 12:02:54 +0000

When I was discussing Mortgage interest, I received a few emails asking to to spell out a bit more clearly how regular mortgages calculate interest vs how home equity lines of credit (HELOCs) calculate. Fair enough.

One disclaimer; before you act on my explanation here, confirm with your bank that your mortgage is as I describe. I share here my understanding and experience, but it’s certainly possible that your bank follows different rules.

A standard fixed mortgage with a due date of the first of each month will often have a grace period allowing payments up to the 10th or even the 15th of the month with no late fee and no extra interest accrued to the account. On a monthly payment of $1200, this extra 15 days float is worth about $36 assuming a 6% mortgage. You see, it’s money available 15 days per month or half the time, so half of $72 is $36. Not a huge sum, but if your bank has a grace period this generous, you can save a bit by taking advantage. Just as the bank may have a grace period, they will not offer you any savings by paying a week, two weeks, or even a full month early unless you specifically note the extra funds are to go to principal. In that case the next regular payment is still due on the upcoming first of the month.

A HELOC, on the other hand, charges interest to your account based on average daily balance. I know of no bank that will lend you money from the 1st to the 29th but if your balance is $0 on the 30th will charge you no interest. That suggestion is absurd, and repeated by people who are either very confused, or those trying to perpetuate a lie. Just because someone in the mortgage business believes he “borrowed the bank’s money interest free” doesn’t make it so. In fact, it undermines his credibility as well as the agent who uses such nonsense as “proof” and a testimonial. To be clear, whatever the rate is on your HELOC is multiplied by your balance at each day’s end and accumulated over the course of the month. If you borrow money on the 1st and pay it in full on the 3rd, that’s 2 days interest. If you run a small balance, this may just amount to pennies, but you are still being charged this interest each day.

MMA agents will confuse you with this even more easily than they confused this mortgage broker. They will suggest that there’s some magic to the the way HELOCs calculate interest vs how the standard mortgage calculates. There may very well be a few dollars savings to be captured, but that’s nothing compared to the $1000 you are prompted to pay each month from your own money. Don’t be confused into believing the software creates this savings. In fact, when you ask an agent to run an analysis using as little discretionary income as possible, you’ll find they offer you numbers that easily show the lack of value of this software. I’ll discuss their analysis further in a couple weeks.

Joe

I did not forget to post today.

JOE — Wed, 19 Nov 2008 13:02:17 +0000

My server was down and I had not set anything up in advance. By the time today came, I’ve been editing and finishing the next few day’s topics. So today turned into a ‘gone fishing’ day, which I will keep to a minimum. To those who tried to log in most of last night, my apologies. All in all, I’ve ben satisfied with the hosting company I use.

Joe