November 30, 2012

Best of Blogs for November 30th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

PlanetMoney shares Household Debt In America, In 3 Graphs
they also point out that No, Switching To Dollar Coins Would Not Save The Government Money
I was skeptical about that statement at first.   $1 coins were supposed to be cheaper to make in the long run since they last longer.  But that benefiit as appearntly recently disappeared since the dollar bill production was improved and now bills last longer.  Still the government would benefit financially from $1 coins only due to putting out more coins than dollars and some resulting savings on the governments interest debt.  Its complicated.



I found this interesting article on How to Price Your Home For Sale – Critical Information!
by Amanda Duffy a Realtor in Georgia.   Theres a Youtube video.  

Apex continues the rental series at FMF with Real Estate 101: The Lease

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$650 in Dell Gift Cards for $450 Net

If you're thinking of a computer purchase from Dell here's one way to use your Amex card and Twitter to get $200 off..     Amex and Dell have a deal right now where you can get a $150 credit on your Amex if you spend $599 or more at Dell.com using your Amex card.   Theres also a 10% off coupon code you can use.


1. Synch your Amex card with the Dell deal via twitter and tweet the hashtag #AmexDellOffer following their instructions
2.   Buy a $500, $100 and $50 gift card and then apply the coupon code  VJ7$295NPV28MN to get 10% off the $500 card for a total cost of $600. 
3. You should get a $150 credit from Amex. 
4. Consolidate your gift cards online into one card if desired.

In the end you bought $650 of gift cards for $600 and got $150 back so the net cost is $450.   You can then turn around and use the $650 of gift cards to buy whatever you want at Dell.    Buying gift cards allows you to get $50 extra off via the coupon code. 

I saw this at Fatwallet and they have more details and discussion in the forum there.

I have not done this myself.   If you do it then I'd recommend you read up on all the details to make sure you're doing it right and not missing any details.
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November 28, 2012

Black Friday Violence is Statistically Likely

It seems like its developed into an annual tradition on Black Friday that we get to see some video footage of a violent stampede at Walmart during Black Friday.   The incidents of fighting or stampedes or other violence around Black Friday are held up as evidence for why Black Friday is bad.   There are articles like Black Friday Fights: Violence Plagues 2012 Shopping Day, Videos Surface Online   When such violence occurs the annual shopping day is blamed as the cause of the violence.   But in the larger picture one or two violent incidents during Black Friday are really not that bad, in fact I'd say if thats all that happened then its actually pretty good.   Let me explain...

According to the FBI crime report "In 2011, there were an estimated 751,131 aggravated assaults in the nation."   That means that on an average day in the US there were 2,057 assaults.  

The National Retail Federation reports that about 88 million people went shopping in stores or online on Black Friday.   They don't clearly break apart who shops in stores versus online, but it seems at about half or more the people shop in stores.   Lets estimate then that 40 million people are in the stores.   Thats about 12% or so of the US population.    If they only spent 1 hour in the store at least then thats about 6% of their waking hours spent shopping.

Based on the daily average of 2,057 assaults and a guesstimate of about 40 million people spending an hour in stores on Black Friday then if assaults are proportional to time across the population I'd expect we'd see about 15 assaults among Black Friday shoppers just based on statistical averages.   I'm sure people spend more than 1 hour shopping though so it would likely be higher.

I bet you that ever day in the country we have 10 times as many people assaulted in our nations bars and taverns.   But thats not news.  Yet one punch thrown in a Black Friday brawl is sure to be highlighted in the 11 o'clock news all around the country.   

Large groups of people in crowded conditions can be a risk factor for increased rates of violence.  Assaults at sporting venues are common place.   Anaheim stadium was bragging that it is safe and they only had 15 simple assaults last year during Angels games.   Attendance at Angles games for a season is about 3 million. (less than 10% of the Black Friday shoppers)  Sports stadiums can be a particularly bad place for violence particularly if you add alcohol which is often sold in stadiums.   But its not just drunk sports fans, any large group of people can see violence.   I can even find many instances of assault in churches. 

Get enough people together in crowds and unfortunately some amount of violence is almost inevitable.   Its unfortunate but it happens, whether its the shopping mall, your local bar, a rock concert or a mega church.  But none of its unusual to Black Friday.

Don't be afraid of Black Friday violence.    You're probably more likely to get punched at a baseball game.

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November 26, 2012

FREE - Christmas MP3s from Amazon

Amazon has a few free Christmas MP3s :

Follow the link : Free Must-Have Christmas Masterpieces

 Songs include Jingle Bells, Nutcracker Suite - Waltz of the flowers, Gloria in Excelsis deo and Silent Night, Holy Night.

No catch, just free music.   Probably expires soon.


I saw this one on Fatwallet

 -- This article may contain referral links which pay this site a commission for purchases made at the sites.

Entertainment books for $12.50 after Ebates

Right now Entertainment.com coupon books are on sale for $25 with free shipping.    Plus you can get 50% cashback via Ebates

The $25 price for Entertainment coupon books  expires 11/29.   The 50% cashback from Ebates may expire after today.  I'm not sure but that 50% rate may be a Cyber Monday special rate.

Make sure to check out the Entertainment website to make sure the coupons are really a good deal for your area and your shopping needs.  A lot of the coupons are buy-one-get-one-free type offers for restaurants I'm not interested in, but there can be some great deals mixed in.

Or you can wait until the summer and they'll run sales to drop down the price to $5 to $10.    I pointed this out before and then in 2012 the prices dropped steadily down to as low as 2 for $8.25
HOWEVER, one gotcha with waiting till the summer is that some coupons expire earlier.  It may be worth your while to pay $12.50 today.

To get the cash back you need to be signed up with Ebates.  Then simply go to Ebates to get the referral to the the store before you do your shopping.  I also get a referral bonus if you use my links to sign up with Ebates.

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This article may contain referral links which pay this site a commission for purchases made at the sites.

November 23, 2012

Best of Blogs for Week of November 23rd

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week.

edit : Oops... I was out after Thanksgiving and this mostly empty draft post got published by mistake.  -- Jim
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November 22, 2012

November 21, 2012

Harvard is Cheaper than University of California Davis (for many)

You'll often see people discussing the high cost of college and while doing so people seem to quote the most expensive colleges.   There are a lot of private schools that cost over $50,000 total for tuition, fees, room and board.    But thats just the sticker price.    When looking at colleges its important to look at the financial aid availability as well and take that into consideration.

Most students get financial aid at most schools.    Some schools have a lot more financial aid money available than others.    You should also look at the amount of aid that comes in the form of grants versus how much is in student loans.   Loans don't really reduce your cost they just help you finance the education.   You pay that money back in the end.    Its not really a great deal if a school facilitates you borrowing a lot of money to give to them.  Now this is not to say that I think student loans are a rotten deal, in fact I think they are often a good tool when used in moderation.  However when you're comparing school costs I'd focus on the free money.


To get a better sense of the true cost of  a university I'd instead look at the net cost by figuring :

Net cost = Total cost - average grant aid

So lets say you happen to live in Georgia and you're comparing Harvard with U.C. Davis.   I doubt many Georgia residents make this comparison but I picked Harvard since its representative of an expensive elite private school and I picked U.C. Davis since its just a 'typical' public university.  

Cost of attendance for Harvard is $54,496.

Lets look at the financial aid stats for Harvard from the College Prowler site

81% of students got average aid of $32,850
11% of students had loans of $4,656 average

For all Harvard students that amounts to $26,608 of aid which includes $512 in loan money.

On average Harvard students get $26,096 in free aid money.

The net amount out of pocket for Harvard students on average is $28,400

Cost of attendance for UC Davis is $54,077 for out of state students.

Financial aid stats for UC Davis

77% of students get aid averaging $12,574
47% of students had loans average of $5,259

Average total aid per student was $9,681 and $2,471 of that was loans, so net free aid per student was $7,210.

Net amount out of pocket for an out of state student with average aid amount would be $46,867


You might have figured that this is a contrived example cause I'm looking at the out of state cost for UC Davis which is a lot more than the resident tuition rate.   The out of pocket average cost for CA residents is $23,989.   Thats cheaper than Harvard, however its probably not much cheaper than most people would have guessed.    But I'm trying to make a point here and this example illustrates it.

Bottom Line:   Don't look at just the sticker price on colleges, make sure to also figure in the amount of financial aid grants available to students to find the real costs.



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November 20, 2012

FREE- 8x10 photo print at Walgreens

Currently theres a promo deal to get a free 8x10 single photo print at Walgreens.  (not valid for collage)



Order a print online and use free promo code FREE2THANK and then select in store pickup to avoid shipping.   Deal expires November 24th.   

I found the deal on Slickdeals
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November 18, 2012

Average Effective Income Tax Rate by Age Group

I saw an article on Yahoo recently where the author claimed that Uncle Sam was "taking 15 to 25 percent of the average retiree's income".   I knew that wasn't the case.   The author probably meant the marginal tax rates but the way they worded that it sounds like they think effective tax rates are 15-25%.    Thats certainly not the case.
 
So what are the effective tax rates for seniors?   What about other age groups?

Well I had to figure the numbers based on # of filers and their total incomes and total taxes paid per age group.

TaxFoundation has a page which gives all the data for 2009, they just got it off the IRS site.

Effective Income tax Rate per age group for 2009 : 

All returns 12%
   Under 18 8%
   18 under 26 5%
   26 under 35 9%
   35 under 45 12%
   45 under 55 14%
   55 under 65 15%
   65 and over 13%

This includes all filers in each age group.   Some people didn't have to file and its looking at the Adjusted Gross Income.

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November 16, 2012

Best of Blogs for Week of November 16th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week.

fivecentnickel points out you can now Get Amazon Prime on a Monthly Basis

Vanguard tells us about The 'noise' to avoid: A lesson from the muni non-crisis

Apex continues the series on rentals with Real Estate 101: Managing The Property

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November 14, 2012

Suze Orman is WRONG about 401k loan Double Taxation

In a recent episode of her show Suze Orman doubled down on her claim that 401k loans are subject to double taxation.  She said that many people had written to her to tell her she is wrong but she arrogantly brushed it off and declared that she's right and everyone else is wrong.   In her stubborn refusal to admit any wrong Suze even condescendingly assumes that anyone arguing against her is just trying to rationalize their own use of 401k loans.  

I'm here to tell you that  Suze is wrong about this pure and simple.   I do not have a 401k loan nor do I plan to take out a 401k loan.

You are not subject to additional taxes and your tax bill does not increase as the result of a 401k loan.

You are not subject to additional taxes and your tax bill does not increase as the result of a 401k loan.

I said that twice cause its important.

There are various explanations on the web about why Suze is wrong and there is no double taxation.  

Note : I'm not saying 401k loans are a good idea in general.  Usually you should avoid taking a 401k loan.    The point I'm making is simply that the 401k loan does not amount to double taxation.  


I think the best way to illustrate how there really isn't any double taxation is to compare the actual taxes paid on a 401k with and without a loan.   If you have double taxation from the 401k  loan then your taxes should be higher right?   It isn't.

Lets look at 2 scenarios:

4% loan rate and 8% investment growth

Let it sit -
I have $25000 in my 401k today.   I do nothing at all and let that money sit in my 401k for the next 25 years.  With annual compound growth of 8% the balance will grow to $171,211.   In 25 years lets say that my marginal tax rate is 20%.   I pay taxes of $34,242.

Take a loan-
 I have $25,000 in my 401k.  I decide to take out a loan for $10,000.   I pay 4% interest and pay back the principal in 1 year.  The other $15,000 sits in the 401k and makes 8% interest for that year.  At the end of the year I've got $15000 x 108% + $10,000 x 104% = $26,600.   After 24 more years of 8% compound annual growth my balance is now $168,675.   In 25 years my marginal rate is 20% so I pay taxes of $33,735.

If I let my money sit it grows at 8% and I end up with $171,211 and a tax bill of $34,242.   If I take out a loan my money grows slightly slower and I lose compound growth after that so I only get $168,675 and a tax bill of $33,735.   In this fairly realistic example I actually end up paying lower taxes in the end due to the 401k loan, simply because borrowing away from my retirement under cuts its growth.

4% loan rate and 4% investment growth

Lets look at another example and assume that the money grows at 4% so its equal to the 401k loan rate.

Lets say I've got $20,000 in my 401k and I'm 55 years old.   I let it sit and it grows at 4% a year.  In 10 years I retire and I've got $29,604.

Instead lets say I take out a $10,000 loan and pay it off at the 4% rate.   At the end of 1 year I pay off the whole loan and then end up with $20,800.   Then after 9 more years I have the same $29,604 balance.  

In both of these cases my actual tax bill is going to be the exact same amount since the 401k balance is exactly the same and will be subject to the same tax.

Why is Suze wrong?

Apparently Suze is just playing a stupid shell game with your dollars.   She claims that since you repay your 401k loan with after tax dollars and then have to pay tax on the 401k after you withdrawal the money that this amounts to double taxation.    But theres a couple big flaws with this logic.  
#1 you have to pay income tax on your income whether or not you have a 401k loan so that money is already taxed no matter.   401k loans don't cause income taxes.
#2 she appears to ignore or at least doesn't mention the loan withdrawal you receive from the 401k.  when you take out a loan you are handed money which has no taxes on it.   So if I borrow $10,000 then immediately turn around and repay that $10,000 then its all untaxed money.   The only out of pocket money here is the interest you pay.  

I'm not the first to write about this and I probably won't be the last as long as Suze stubbornly obstinately sticks to her claim.

Heres at least two other people pointing out how she's wrong: 

The financial buff wrote :  401k Loan Double Taxation Myth
MyMoneyBlog covers it with Double Taxation and the Real Reasons 401(k) Loans Are Bad
and Better Example Against Double-Taxation Of 401(k) Loans




Plus of course the numerous people who apparently wasted their time to send her emails to point out she's wrong.  


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November 13, 2012

Example $100 / month Grocery Budget for One

In a comment on an old post Surviving on Minimum Wage? : An Example Budget a reader Nightvid challenged me to come up with a $100 / month food budget.    A while ago I did an  Example $5 / day Grocery Budget for One  but that was $150/month.    $100 a month is a bit more of a challenge.   But its still feasible :



Here is an example weekly food shopping list that comes out to $100/month:

1.5 gallon of milk
1 box cereal
1 loaf bread
2 cheese
7 bananas
3 frozen dinner
1 12oz pasta
1 mac n cheese
1 ramen
1 hot dogs
1 hot dog buns
0.5 peanut butter
6 eggs

Total cost is = $98.56 / week

You can throw in another buck or two to buy some condiments once in a while.


This comes out to 2503 calories, 15.1% protein

The example list is heavy on pastas and pretty light on fruits, veges.  Someone could adjust to suit.   You'd want to mix things up as well as I'm sure people don't want to eat the same stuff every week.   I'm sure you can find fault with this shopping list, it isn't necessarily that healthy and I'm sure some people will object to the food choices.   The idea isn't to get the perfect menu, but just to show an example shopping budget for a relatively low cost diet.

The prices are just off Safeway retail prices.  I didn't shop around.  No coupons used.  I used generic store brands across the board.   If you shop around or use coupons or shop for sales you can undoubtedly get cheaper prices on average with some effort.

I'm not saying that you should want to limit your grocery spending to $100/month.  But if money is tight then you could do so.

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November 11, 2012

Visualizing the "Fiscal Cliff"

An actual cliff.
So we're hearing a lot in the news lately about the so called "fiscal cliff" that the USA is driving towards with the pedal* to the metal.   So what is this "fiscal cliff" all about?    Simply put its the tax changes that are due to take effect in 2013 if congress doesn't act.   The Bush tax cuts will end, the temporary reduction in payroll taxes of 2% of income will end, ATM patches will end (yet again) and some other changes will come as well.   Some of the impact will be in increased taxes and some will be in decreased spending.

How bad is this 'cliff'?    Is the USA going to grind to a halt as our nation plummets down an abyss and then bursts into a fireball when it hits the ground?   Thats how going over a cliff works right?

The Camber of Commerce site has what they call 'A visual Breakdown' of the Fiscal Cliff.   Not exactly the visual I was wanting, but its a start.  They list the different tax and spending changes that are set for 2013.    I count up $384B in tax increases.

How does that amount compare to the federal tax revenue over previous years?

Here is the cliff as I'd visualize it :



This cliff looks more like a weak speed bump to me.

Now I am only looking at the revenue side.  There is also some impact to spending side.   But I think thats even much less dramatic.  Cutting spending from expected $3.7 trillion to a mere $3.6 trillion doesn't seem like much of a big deal.


Photo By Elsie esq.

* edit, fixed a spelling error.  I knew that 'petal to the metal' didn't look right.
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November 9, 2012

Best of Blogs for Week of November 9th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week.


PlanetMoney points out that Foreclosures Are Falling In States Where It's Easy To Foreclose

PlanetMoney also has Old People Versus Babies, In One Graph
which has a widget that shows the demographic shifts for various countries over 100 years from 1960 projected to 2060

Moneybox says You Should Move to Minneapolis

MyMoneyBlog has a tip for Costco members who have Amex cards : American Express Facebook Promotion – $25 off $100 at Costco, More

Apex continues the rental discussion with Real Estate 101: Keeping Good Tenants




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November 6, 2012

Election Day Freebies

If you didn't notice, today is election day.   Several merchants offer free or discount promotional deals on election day.

You may need to show proof of voting for any of these deals. 

Yahoo has a list of election day promotions and freebies.   Not a lot of good stuff there, but I found one notable:

Uber car service is offering free rides to polling places to vote.    They're in several major cities.

Fatwallet thread has a long list of free stuff from fast food joints :

  • Starbucks will give you a free 12-ounce coffee. They will give the coffee to anyone who asks for it.
  • Krispy Kreme will give you a free star-shaped doughnut decorated with red and blue sprinkles
  • Ben & Jerry's (5pm-8pm) will give you a free scoop of ice cream
  • Chick-fil-A will give you a free chicken sandwich with an "I Voted" sticker
  • Shanes Rib Shack will give you a free Vote America Meal with an "I Voted" sticker
  • Daily Grill will give you a free appetizer with an "I Voted" sticker
  • Eatn Park will give you a free coffee
  • California Tortilla will give you a free taco with an "I Voted" sticker
  • Olive Garden will give you a free dolcini with purchase of any entree and an "I voted" sticker
  • Fox and Hound and Bailey's Sports Grille will give you a free appetizer with any purchase if wearing an "I Voted" sticker


I have not verified any of these, so it would be a good idea to check the individual companies to verify the deal.   Of course all the deals are only good today and some are more limited times.

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Who Gets Bonuses at Work?

I get a profit sharing style bonus at work as well as another bonus based on hitting our company's internal performance goals. You often hear of people getting bonuses at work but most employees do not get any form of bonus.   The BLS has data on nonproduction bonuses   The information is current as of earlier this year.

Forty percent of workers get bonuses of some sort.  Heres how the portion of workers getting bonuses breaks down for various kinds of bonuses:


All nonproduction bonuses 40%
Cash profit-sharing bonus 5%
Employee recognition bonus 4%
End-of-year bonus 9%
Holiday bonus 7%
Payment in lieu of benefits bonus 6%
Longevity bonus 4%
Referral bonus 5%
Other bonus 11%

The sum of the categories adds to more than 40% as some employees get multiple types of bonuses.

Management is most likely to get a bonus and 45% of managers do and only 25% of teachers on the only hand get bonuses.

46% of Full time employees get bonuses while only 23% of part time employees do. 

Only 37% of union employees get bonuses while 40% of non-union employees do.  I suspect that is do to the way the unions and the employers negotiate labor contracts.

Lower income individuals are less likely to get bonuses than people making more money :


Lowest 10% earners 22%
Lowest 25% earners 27%
Second 25 percent 40%
Third 25% earners 46%
Highest 25%  49%
Top 10% 52%

Do you get a bonus?  What type?

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November 2, 2012

Best of Blogs for Week of November 2nd

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week.


fivecentnickel says Organics for the Win: Why I Still Buy Organic Produce

GetRichSlowly discusses how to Bid for savings at an auction

Yahoo carried Meet the Wealthiest person in Each State

Apex continues his series on FMF with Real Estate 101: Finding Good Tenants
 
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November 1, 2012

Federal Taxes by Source 1934 to 2011

Today less than half of the federal tax revenue comes from individual income taxes.   Nearly a third of the revenue is from the payroll taxes for social security and medicare.   The rest is a combination of corporate, excise and other taxes.

I got the historical data from the White House Budget pages.   I pulled the numbers from the 2013 fiscal year budget and only used up to 2011 which is the latest full year of data (not including future estimates).

Here's how the tax revenues look going all the way back to 1934:



I'll also break it into the first few decades :


And the most recent 50 years :


I'll also show it in percentages of the whole :


Now all the numbers above are actual dollar values before looking at inflation or anything.   TO put these figures into perspective of the changing economy, lets look at the tax sources as percentage of GDP :

Putting it in relation to GDP makes the changes of the past 70 years a lot less dramatic.  

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