Happy New Years.
I'm taking today and tomorrow off from posting.
December 31, 2012
December 30, 2012
Over two years ago I wrote an article discussing average teacher pay versus median household incomes per state. That post seemed to generate some interest and discussion. Some of the discussion was criticism based on the apples to oranges comparison between average pay and median household income.
I thought I'd both update the numbers and add some more information.
I got teacher pay from the Teacher Portal site and they got the numbers from National Education Association (nea.org), National Center for Education Statistics (nces.ed.gov), 2011
The average wage numbers are from the May 2011 state cross industry estimates at the BLS site.
The per capita and median income are off of Wikipedia for 2010 which cites the Census.
The point of this data is to put teacher pay in relation to general income levels per state. Teacher pay varies considerably from state to state. Income levels in general also vary considerably from state to state. I'm just putting one column of numbers (teacher pay) along side another set of numbers showing state level averages and medians.
Here are the number...
First I'll start with just the average teacher pay versus average annual wages for all occupations per state:
|teacher pay||average wages|
Teachers earn above average wages in every state except Virginia. Now of course you do have to realize that average pay at the state level includes a lot of people working unskilled jobs with low educational requirements. This is not an apples to apples comparison, its more of an apples to fruits comparison. I think a better comparison would be to look at teacher pay versus the average wages for all people with college educations. However I can't easily find those numbers. Also note that this doesn't look at the value of benefits for a job and teachers have higher benefit levels than most jobs through their pensions and highly funded healthcare.
Now we'll compare teacher pay versus per capita pay and median income levels:
|per capita||median household||median family|
There are four columns of numbers there for each state. First is the average pay for teachers. This is an average figure and includes all teachers of varying experience levels. It may be skewed one way or another if teachers in a given state have high or low average experience on the job.
Per capita income is the amount of wages averaged over a population so that includes people who don't work. Median household income includes all households so its a mix of single people, single unmarried parents, retired couples and married couples with multiple children. Family income only includes families and does not include single people.
None of these are perfect benchmarks for teacher pay versus other occupations nor does this say anything at all about whether or not teacher pay levels are 'fair' or the like. I'm not saying teachers make too much nor too little. We're just looking at the variation in pay for teachers from state to state and putting that into comparison with general wages per state.
December 28, 2012
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
DoughRoller discusses What is the Saver’s Tax Credit?
This is a little discussed income tax credit available to a lot of people to help boost their retirement savings.
MyMoneyBlog tells about how you can Backup Your Music Library For Free Into Google’s Cloud Service
PlanetMoney tells us how Argentine Navy Defeats Hedge Fund and little while back they explained Why Legos Are So Expensive — And So Popular
FMF asks Should Americans Be Forced to Save for Retirement?
Wendy Little writes for mortgage blogs. If you're considering changing your mortgage, read more about what a reverse mortgage is.
A reverse mortgage is a way for seniors 62 and older to borrow money from the equity of their home. The loan is good for as long as you own your home, and the value of your home will repay it to the lender whenever you permanently move out, for whatever reason. If you're not planning to leave your home to your children, or if you want reliable income for you in your retirement years that social security can't provide, you might find that a reverse mortgage is the right option for you. There are many reasons to consider the risks - you are, after all, signing over your home - but the benefit of tax-free loan money, independent of credit history checks or monthly payments, can be a lifesaver for seniors in these difficult economic times.
1. The AdvantagesWith a reverse mortgage, you choose how you receive your money. You can opt for monthly payments or a line of credit, which enables you to get lump sums whenever you need them, or a combination of methods. The older you are, the greater the amount you are likely to be approved for, and if your home is nearly or completely paid for, you can avoid greater fees. Also, the loan is good for as long as you live in your home, no matter what. Lenders cannot force you to sell, even if the amount of the loan has exceeded your home's value. And if you sell for less than the price of the loan? The Bureau of Housing and Urban Development, the Federal agency that regulates reverse mortgages, is required to pay the difference for you. Nobody has a legal right to lay claim to any of your other assets.
2. The RisksOne big risk is a decrease in eligibility for government benefits such as Medicaid because of your increased income - although Medicare is not income-based, so it isn't affected. Reverse mortgages can also be expensive to set up and involve higher loan fees, which is a trade-off for the money you receive being tax-free and readily available. It's also a big disadvantage if you want to leave your home to children or other heirs. You still can, but there will be much less equity, and they might have to look into refinancing or selling themselves.
3. Tips and AdviceThe most important thing to do when you are considering getting a reverse mortgage is to get counseling from a professional who can explain to you the benefits, risks, and realities. In fact, most lenders will require you receive at least some counseling before you agree to the loan - reputable banks and credit unions don't want to take advantage of seniors who could be overwhelmed with the details. If you're going to talk to a financial planner, make sure you find one that is fee-only and not making a commission, so you can get objective advice on how to best secure your financial future. Most seniors who own their home and need a foolproof plan for retirement income find that the advantages of a reverse mortgage outweigh the risks, but it's best to know what you're getting into.
Having a secure and comfortable lifestyle in your retirement years is important. You've worked for most of your life, and now you want to be able to enjoy your retirement without constantly having to worry about how to pay for food or medical care. A reverse mortgage is a compromise for seniors who have equity in their home, but it can be a great option for those who can't afford to put off financial security any longer.
Photo By 401(K) 2012
December 27, 2012
RiteAid is giving out 25 free 4"x6" photo prints on their website if you use the promo code EPRINT.
You can order the prints online and pick them up free in the store.
Its probably a limited time offer but I am not sure when it expires.
I saw this one on Slickdeals
December 21, 2012
This is a guest post from Sisily West who writes for insurance blogs. If you live in Utah, check out cheap Utah car insurance quotes, and if you're in Delaware, compare Delaware auto insurance rates.
We all want to save money on auto insurance. While you’ll read that comparing quotes online is a great way to save, not everyone wants to deal with the hassle of spending hours online trying to get a better rate on their auto insurance. At times, a better option is to look for alternatives to those extras that you’re paying for. Removing the extras from your policy’s coverage is often an easy way to save a few bucks a month.
1.Health InsuranceIf you have medical payments added to your auto insurance policy, take a look at your health insurance coverage. If you have medical insurance, opting in for medical payment coverage through your auto insurance company isn’t necessary. In many cases, medical payment coverage can cost you close to $20 per month and, if your medical insurance pays for your treatment, your coverage won’t kick in. If you don’t have medical insurance, keep this coverage. If you do have health insurance, kick this coverage off of your auto insurance policy.
2.Auto Club MembershipAre you paying for roadside assistance on your auto insurance policy? If you are, consider joining an auto club like AAA instead. A membership to AAA costs about $5 a month, or $60 a year. While that’s about all you’ll spend for this coverage through your auto insurance company, AAA offers many more benefits that make spending the money on an auto club membership a better deal. AAA offers member discounts, tour book guides, access to travel agencies and much more. Your $60 a year will get you much more through an auto club than you’ll receive through your insurance company.
3.Savings AccountInstead of spending the money for rental reimbursement, consider putting $10 a week into a savings account, especially if you’ve never had an accident. You’ll be able to put away $40 a month, or enough for about two days of the use of a rental car. At the end of the year, you’ll have close to $500 saved. If you haven’t been in an accident, keep $100 and use $400 for holiday gifts or something for yourself. You would never be able to do this if you were giving your insurance company your money.
4.Alternate TransportationIf you have access to an alternate form of transportation should your car become disabled in an accident, you can drop your rental coverage altogether and skip the savings account. If you have a second or third vehicle in your family or access to public transportation, you won’t have to worry about getting back and forth to work if you’re in an accident. While it may be a minor inconvenience, relying on someone else to do the driving for a week or two can save you money on your auto insurance.
5.Your Own MoneyCash is always an alternative to any bills that you’re paying. If you have a healthy savings account built up, you can often forego all of the extras that you’re paying for when it comes to your auto insurance policy. When you consider that you’ll spend less than $200 for towing service, about $25 a day for an economy car rental and probably have money to pay your health insurance deductibles, you can reasonably drop the extras.
You don’t have to switch auto insurance companies if you simply look for alternatives to the money that you’re spending. While you won’t save hundreds of dollars a month, these claims are often unrealistic anyway; discovering alternatives for those extras will allow you to treat your family to a nice dinner or keep your gas tank filled, both of which are better ways to spend your money.
December 20, 2012
When you think about filing income taxes you generally think about the 1040 form. Thats the 'long form'. There are also two shorter versions the 1040A and the very simplistic 1040EZ. A large percent of the population doesn't do the 1040 form. I got the numbers from the IRS 2010 tax stats.
With 142.8 million filers in 2010 the breakdown is as follows:
I was actually surprised that more people don't file 1040EZ. For a lot of people taxes amount to a W2 for income and their standard deduction and exemption.
December 18, 2012
Last week Retire By 40 questioned Are Organic Foods Worth The Premium? While organic foods are still only around 4% of total food sales, a growing number of people buy organic.
But a side topic of that discussion is : what IS the actual premium cost for organic? Or to put it another way: how much more expensive is organic food? I thought I'd answer that question with a example of various organic food prices compared to the typical non-organic options.
Here's a sample of prices for regular foods versus organic food in several categories:
|Black Bean - can||0.07||0.09||29%|
|1% milk gallon||0.03||0.06||100%|
|Eggs AA dozen||2.09||4.49||115%|
|Angel hair pasta||0.08||0.39||388%|
|Chicken breast, lb||0.37||0.56||51%|
The prices are the cost per ounce except for eggs which is the cost for a dozen. I simply grabbed some prices from Safeway. Unfortunately Safeway didn't list the produce so I don't have prices for fruits or vegetables. This is just a sample of prices and only meant as an example. Of course these prices will change over time and vary from store to store.
As you can see in the table the premium for the organic foods varies based on the kind of food. Some organic options are only ~30% more while others are 3-4 times as expensive.
It may make a little more sense to look at a grocery bag full of food. If you went to the grocery store with the above list and bought everything in typical quantities then you'd spend a total of $24.30 for the regular foods and $44.06 on the organic versions. Thats an 81% total premium for the organic grocery list.
December 16, 2012
Recently IBM announced that they would switch to making their 401k matching contributions on an annual basis. That saves them some money and probably helps retain some people to the end of the year. According to a news report on the topic only 9% of employers make 401k matches on an annual basis. My employer is one of those companies as our retirement contribution is made annually. Its not a 401k match but instead a contribution to a separate retirement account
In the WSJ article Benefits Leader Reins In 401(k)s they have a graphic from Aon Hewitt showing the distribution of employer 401k matches. I'm reproducing that graph here :
|Source : Aon Hewitt, WSJ|
As you can see the vast majority of employers simply make the matches along with your regular paycheck. However a minority of employers like IBM and my company make matches at different periods.
December 14, 2012
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
Apex continues the rental series at FMF with Real Estate 101: Taxes
Bargaineering says you should Never Buy Expensive HDMI Cables [SCIENCE!]
which is a point I made about 3 years ago when I said Don't Over Pay for HDMI Cables
PlanetMoney updates their article U.S. Jobs Lost (And Gained!), In Two Graphs
they also loon at a couple housing cost metrics with Are Houses Cheap Right Now?
FMF is running a FMF $25k Red Kettle Challenge
for The Salvation Army
RetireBy40 asks Are Organic Foods Worth The Premium?
This is a guest post written by Don Elfrink, Owner of AutoMatStore
Even if you opted for the most luxurious model on the dealer’s lot, chances are good that there are still a few things that you can add to make it even more comfortable, enjoyable, sporty or fun to drive. The world of automotive accessories has exploded in recent years – you’ll find everything from aftermarket air intakes to wing spoilers, audio units and navigation systems. However, while the world of accessories is incredibly diverse, there are some common steps you need to take in order to ensure that you’re actually getting the most bang for your buck. What should you know?
Determine Exactly What You Want
The first thing you need to do is determine exactly what type of accessory you want. For instance, if you want to add a sporty look to your coupe, performance wheels might do the trick. On the other hand, a new spoiler can be a good option too. Research the best ways to achieve your goals with an accessory installation. For example, a good spoiler does more than just make your ride look good – it provides additional down force on the back end, keeping your car more stable at higher speeds. Big brake kits look great, but they provide superior stopping power for those with a need for speed. The accessories you buy should directly offer not only better aesthetics, but improvements in performance, safety or enjoyment.
Once you’ve determined exactly what kind of accessories you want, it’s time to start your search. There are hundreds of different accessory manufacturers out there, from OEM accessories to aftermarket manufacturers. They’re far from being all the same, too. Research each company and product to make sure that you’re getting good value, superior performance and good longevity. One of the better options during this stage is actually to find out what other customers have to say about the product and its quality. Find several different manufacturers that offer the accessory you want, then move on to the next step.
Now that you’ve found several manufacturers offering what seems to be quality accessories, it’s time to take things a step further. You’ll need to compare each accessory and manufacturer to determine which is best for your needs. Some of the key comparison items should be:
• Construction materials and method
• Warranty provided
• Return/exchange policy
• Cost of shipping vs. picking it up
• Installation needs (DIY or professional only)
• Customer feedback/reviews
Use the information you find to choose accessories that offer the best mixture of durability, reliability, quality and price. Essentially, you want to find something that will stand the test of time, yet not cost you a fortune, but price shouldn’t be your sole guiding concern here. Often, you’ll find that “super cheap” means inferior.
There are quite a few ways to go about purchasing the accessories you need. For instance, you can order what you want from your local auto parts store in most cases, if they don’t have it in stock currently. However, ordering through an online supplier might be the better option, particularly if you want to save some money without sacrificing quality. Many online resellers offer lower prices than what traditional retailers can offer, and they can throw in free shipping as an added bonus. Make sure you know what the shipping timeframe will be and what the shipping method will be (UPS, FedEx, etc.).
When it comes to installation of your accessories, you have two routes you can take. If you know what you’re doing and have the right tools, you can install it yourself (in most instances). However, some accessories will require professional installation. Make sure the installation is done right if you want that new accessory to last, whether it’s a new head unit, new wheels, a spoiler or a cold air intake.
December 13, 2012
Most senior citizens, aged 65 or older, have relatively low household incomes. Median household income for people over 65 years is just $33,118 compared to a median of $50,054 for the entire population.
I got 2011 data from the Census Current Population Survey Table HINC-02. Age of Householder--Households, by Total Money Income in 2011, Type of Household, Race and Hispanic Origin of Householder
The census data breaks it down into chunks of $5,000 up to $200,000. But I'll show it in fewer chunks to simplify.
Here it is broken in a couple charts :
50% of senior households have income between $5,000 and $30,000.
18% of seniors make under $15,000 a year.
11% of senior households have incomes of $100,000 or more.
At the top, 2% of seniors take in $200,000 or more.
December 12, 2012
Several personal finance blogs are currently having contests to win $2,500. The list of blogs with links are below. To enter the contests you have to sign up for the blogs email feed and fill out a short survey.
- Wealth Pilgrim $2,500 cash giveaway
- DoughRoller.net $2,500 cash giveaway
- CashMoneyLife.com $2,500 cash giveaway
- CompareCards.com $2,500 cash giveaway
- PTMoney.com $2,500 cash giveaway
- My Money Blog $2,500 cash giveaway
Some good blogs there I regularly read #2 and #6 myself.
December 10, 2012
Couple articles from MyMoneyBlog have ways to get some free airline miles :
1000 Free United Airlines Miles from Bckstgr.com
You have to sign up for Bckstgr then link to Facebook, Twitter and Foursquare to get all 1000. If you don't want to link to services then you can get 400 miles for simply signing up.
500 Free American Airlines Miles
Just like them on Facebook and do a survey.
December 7, 2012
When a homeowner fails to keep up with mortgage repayments, a lis pendens will be served. Those less familiar with real estate terminology should know that lis pendens, sometimes termed ‘pre-foreclosures’, represent the first step in the foreclosure process. They come in the form of legal notices filed in order to alert other concerned parties that foreclosure might be pending. While this is bad luck for the home owner in question, for others it is an investment opportunity. When a house is in the lis pendens process, it is possible to buy it for a dramatically reduced asking price. Therefore, under the right circumstances it can make for a great investment.
How do I find lis pendens in my local area online?
The best way to find properties subject to a lis pendens in your local area is to get online and find websites that specialize in doing the work for you. You will have all the information you need at your fingertips, including up-to-date lis pendens locations. Not only are these sites updated regularly, but you can receive an email whenever a potential lis pendens investment becomes available in your area or to the specifications that you set.
A fee is usually charged for these services, which will include access to millions of properties, trained staff on hand to advise, and even information on neighborhoods, schools and amenities. You will also have instant access to details of each property itself, including the all-important address, the number of bedrooms, the price, and often photographs of the building.
Onsite, you will have a number of search criteria to choose from including the type of property, the location, a price range, or any combination of such factors, making it very easy for you to find the property you want. While online, you can also find sites that allow you to access your county’s tax and property records. It is also advisable to visit the website of your local county recorder, who may allow a search of current lis pendens properties.
How do I find lis pendens offline?
If you prefer to do the leg work yourself and work offline, finding lis pendens is a little more complicated, tough still doable for the vigilant bargain hunter. The best place to start is to subscribe to a local legal newspaper, as they print all new lis pendens filed at the recorder’s office on a regular basis. Reading such publications will also help you familiarize yourself with all the legal jargon associated with this type of project, which can get confusing at times.
Alternatively you can visit the recorder’s office yourself and gain access to information on the property. You can get information such as who gave the loan, the home owner’s name, interest rates on the property, and how much the loan was initially for. The information will also contain a record number, which will help you gain access to other files of interest such as tax assessment records. This will contain the address and contact details of the home owner, allowing you to approach him or her direct to make further inquiries.
December 6, 2012
The other day someone on The Simple Dollar asked about cash donations to churches and Trent pointed out that most people do not itemize their deductions. I'm not sure if thats common knowledge or not but most people do NOT itemize their taxes. Whats that mean? It means that they do not get any tax benefit from deductions like home mortgage interest, property taxes, charity deductions, medical expenses or the other misc. items that you can deduct as itemized deductions. When we file our taxes we take either the standard deduction or the itemized deduction depending on which one is higher. So if someone takes the standard deduction then they either don't have any itemized deductions to claim or they add up to less than the standard deduction.
How common is it to take the itemized deductions? In 2009 about 33% of tax filers claimed itemized deductions and the other 66% took the standard deduction.
'09 is the most recent year that IRS has the full data. I looked it up on IRS taxstats and specifically the 2009 figures for publication 1304 table 1.2
The rate that filers itemize deductions is going to be lower for lower income individuals as they are less likely to have high expenses. Higher income people are more likely to itemize since they have a lot more expenses.
I broke down the trend to show how itemized vs standard deduction looks when you consider different income levels and here's a graphic:
Note, to make the graphic more clear I didn't include the approximately 2.5 million tax filers who had negative income levels.
Thats a pretty clear trend. Of course there are always notable exceptions, but by and large the low income people take standard deductions and highest income earners file itemized deductions.
December 4, 2012
Imagine yourself driving a genuine vintage 1960's American muscle car with a big rumbling V8 engine. When you push down the gas pedal you can feel it rumble as the the entire shudders. The growl of the engine sounds like a caged monster. You couldn't possibly need more power than that could you? Now imagine yourself getting beat in a race with a Toyota Sienna minivan. Because that could happen. ( before anyone take me wrong, I'm not saying all minivans today can beat any muscle car from the 60's but a V6 Sienna could beat a 60's era muscle car with one of the smaller V8 engine options.)
|Todays Minivan : Faster than a Muscle car|
I like watching Motorweek on TV and I've been casually shopping around for my next car. I'm struck how talk of performance and horse power has shifted over the years. If a car has under 200 horsepower it seems as if its deemed lacking and going 0 to 60 over 9 seconds is considered poor performance. Yet just 20 or 30 years ago these numbers would be considered good for a performance sports car.
Do we need more horsepower today than we did when I was in high school? I don't think so. In fact I can only recall twice in my life that I really felt I needed more horse power. Once was driving a 1980s Dodge hatchback with a 1.7L Volkswagen engine that put out a whopping 75 horsepower. I was trying to merge on the freeway after stopping on the shoulder and had trouble getting up to speed without getting run over.
That 60's muscle car had plenty of horses and in fact it felt at times like it had too much. Yet todays modern cars are faster with more and more power.
This report from the EPA titled Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 Through 2011 points out that as of 2010 the average horsepower was 214. And here's an illustration from the document of the longer term trends :
As you can see cars have gotten more and more powerful and the performance has gone up at the same pace. Todays supposedly 'sluggish' Toyota Prius would be far faster than the average car of the early 1980's in a 0 to 60 race.
Why do we need more power today? Simply put : we don't. People want more power but in general we do not need it. Sure its fun to drive around in a fast car with a big engine, I'm not denying that, but the idea that we 'need' more power is wrong. Your typical subcompact or hybrid is actually plenty powerful for normal daily driving uses.
Now of course there are exceptions where more power is of real use such as heavy duty trucks for construction or towing a big boat or something like that. But I'm thinking of the typical driver in a family sedan with over 200 horses like the 2013 Hyundai Sonata that boasts 274 horses. Thats about 75% more power than my 2004 Camry, which is simply unnecessary.
Next time you're looking to buy a car don't get stuck in the idea that you 'need' a more powerful car. Todays average cars have more than enough power and in fact the below average cars do too.
Personally I think the 155 hp in my Camry is just fine. How much horse power do you think you need?
Toyota Sienna photo by MSVG
December 2, 2012
I think one common problem between a couple is that they may have quite different financial priorities and may not even realize this. This can easily lead to tension and arguments because you both mistake how important some things are to the other. Its important to have a clear idea of where your partners financial priorities are. Their priorities may differ from your own priorities. You may have an idea that your spouse considers some things more important than you but you may not have a clear idea of exactly how important they consider it. Maybe you get into an argument about whether you should pay down a loan or put some money in the bank. Its helpful to know if your spouse considers paying down debt to be their number one priority or if they think money in the bank should be the first goal.
Here is a simple way to get a clear picture of each others priorities :
1. Each of you take a piece of paper and then write down your top 10 financial priorities in order of most important to least important.
2. After you've each created your lists then swap the lists and compare.
You may be surprised what your spouse considers higher priority. Hopefully you're mostly on the same page as far as priorities but theres likely to be some notable differences. After this exercise you should have a better understanding of your spouses reaction to some spending and saving decisions.
I rarely delve into couples advice but I think this one is particularly useful.