April 30, 2013

FREE book : Trailersteading: Voluntary Simplicity In A Mobile Home

Free book on Amazon... Trailersteading: Voluntary Simplicity In A Mobile Home (Modern Simplicity)

 I'm not sure how long it will be free and it is likely a short term deal.   Looks like the normal price is only $1.99 so if its not free it will be cheap.   I'm reading through it now and its an interesting read and interesting topic.

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

The Corvette Affordability Index

Not too long ago I was watching Motor Week on PBS.   They reviewed a new 2013 Camaro 1LE model.   The new Camaro is an example of what I'd consider a revival of the quintessential American Muscle Car.     The cost of the model is $37,035.   That seemed quite reasonable for a car with 426 horses that will go 0 to 60 in just 4.5s.  Thats a lot faster than the original muscle cars of the 60's and 70's.

I wondered to myself: if todays muscle cars are more or less affordable than the originals?    I remembered that the old cars in the 60's and 70's usually sold for "a few thousand dollars".   For example, the 1970 Plymouth Cuda had a base price of $3,400.   But how does that compare to wages back then versus the $37,035 cost of that new Camaro and todays wages.   Was it more or less easy to buy an American sports car with a typical income?

I thought it would be interesting to look at the base price of a muscle car and compare it to median wages and see how affordable such a car would be over time compared to typical incomes.    The Chevy Corvette has been in production continuously since 1953.     I can use the Corvette then as an example of an American sports car and see how its prices compare to wages over a long period.

The Corvette Affordability Index (CAI) is the base price of a Corvette Coupe as a percentage of median household income.

Here is the Corvette Affordability Index from 1967 to 2011 :



The CAI has been in the 100-110% range for around 30 years now dating back to the 1980's.   Before that back in the 60's and 70's it was closer to 75% level.  
To create the index I used the base MSRP of a Corvette coupe.   Note theres a break at 1983, as they didn't list the price for that year.  I got the numbers out of the CorvetteForum website.   A user posted the numbers there and cited 'Corvette Sports Car Superstar, by the auto editors of Consumer Guide.' as the source for most of the figures.   Here are the base prices for Corvettes going all the way back to 1953:


Now lets compare that to new vehicle price index from the BLS.    I previously talked about the new car price index from the BLS in an older article.

The long term price trend of Corvettes is similar pattern to the new price index from the CPI.


One last graphic shows the MSRP of Corvettes adjusted for 2011 dollars :




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April 29, 2013

The Recession Didn't Really Cause Everyone to Move Into Their Parents Basements

One of the news stories that I've seen about the Great Recession is that more young people age 18+ have moved back into their parents homes.      Such as this Washington Post article Census: Everybody’s moving into their parents’ basements
 There are generally more people living with their parents than say 10 years ago.   But the upward trend was started before the recession and there wasn't a huge spike after the recession.   Also the percent of young people age 18-24 who now live with their parents is actually still lower than the rate it was back through the 1980's and 1990s.   



Here's an interesting chart from the Census showing this:



I got that out of a Census report.    Notice that the upward trend was starting back around 2005 which was well before the recession.  The purple bit just after the recession increased at about the same slope as before hand.   The numbers are pretty high as you can see but this is a combination of things including a large number of adults who are still in college and reside at their parents homes officially. 

Now if you look at that same report and go back to the first page you'll see that Figure 1 shows the % of people aged 25-34 who are living with their parents.   That group has increased since the Great Recession and is higher now than in previous decades.  


For that age group the numbers are in fact up and now higher than previous.   However the % isn't too substantial.  Its not as if 70% or 50% or any high amount of adults age 25-34 are living in their parents homes.    It hasn't even broken the 20% level.

Now those numbers are from 2011 at the latest but Census figures do tend to lag some and those are the most recent that I can find.  I doubt that the trend has increased significantly since 2011.

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April 28, 2013

Get an Associates Degree for $1696.50

Have you heard of the American Opportunity Tax Credit?   Its a tax credit for college that pays up to $2500 refund.    Your local community college is usually one of the cheapest ways to go to college.   The AOTC will often cover most of the cost of tuition at a community college. 

If you combine the American Opportunity Tax Credit and a reasonably priced local community college you can get a great bargain on a college education.

According to the College Board The average cost of a community college is $3,131 per year for tuition and fees.    The AOTC will cover 100% of the first $2000 of that and 25% of the next $2000.   If your costs are $3131 then they'll pay 100% of the first $2000 and then 25% of the next $1,131 or $282.75 for a total of $2282.75.   That means your cost per year after the AOTC is $848.25.   You can get a 2 year Associates degree for a total cost of $1,696.50.

That would be the best case scenario if you got the full refund, but there are limits.

Now the AOTC is only 40% refundable so that means you have to have tax liability to begin with. To explain this further, if you don't work and don't have any income then you have no tax liability.  Sometimes credits are not refundable so that means they won't give you money if you didn't have a tax bill to begin with.  The AOTC is 40% refundable so you can actually get a tax credit even if you have no tax bill, but only up to 40% of the credit amount.    If you didn't work you'd only get 40% of the $2282 or about $912.    If you worked a part time job for $15 then you'd make enough to get the full credit.   The details will vary based on your exact income level.

There is also an upper income limit on the credit so you can't make too much or you won't qualify.  The limit is $80,000 for single people or $160,000 for families.
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April 26, 2013

Best of Blogs for Week of April 26th

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 tells us How Not to Spend $235,000+ to Raise a Child
and they talk about How Long Does It Take to Improve Your Credit


MyMoneyBlog is chronicling a challenge to eat for $1.50 a day with
Live Below The Line Challenge $1.50/day – What to Eat?
and Live Below The Line Challenge: Sample $1.50/Day Menu

Bargaineering again explains How Do Tax Brackets Work?

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April 25, 2013

Our Asset Mix as of April 2013


Here is our total asset mix as of April 2013:

(click for full size)


Nothing worrying there as far as I'm concerned.   We have about 60% of our assets in real estate between our home and our rentals but I think that's fine as real estate is a pretty stable investment (occasional bubble pops aside).    We're also leveraged on our real estate assets about 50%.  


My retirement accounts are invested as follows:
(click for full size)


The retirement is mixed between an employer cash value retirement account that my company manages, a 401k fund that I currently have 100% in a target date fund and my Roth IRA investments that I manage.   The large chunk in 'other' is a concern for me as I am not sure what that stuff is.   I believe my employers retirement account uses stuff like hedge funds and convertible bonds or stuff like that but it may also include commodities.   In any case I have no control over how my employer manages the fund and their performance is OK so it doesn't really matter.    Note I don't include my wifes IRA & 401k here (didn't feel it worth it to ask her).


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April 24, 2013

How to Make a cent or ¢ Symbol

I like to use the cent symbol or '¢' when talking about money.    Doing the $ symbol is easy on a standard keyboard but there is no ¢ key.

Some programs like Microsoft Word have a menu option or other function built in that let you insert symbols of various kinds so you can do it that way.   But generally when you're typing things on the Internet in a browser there isn't an easy way to insert symbols.

You can make a ¢ symbol by using an alt key combination.

This is how to make the cent  ( ¢ ) symbol :

Hold the ALT key and while holding down ALT type the numbers 0162.  

You can use this method to make many other symbols as well.    This website at PSU has a list of alt key codes for various symbols.

A couple other handy currency symbols are : 
British pound = 0163 = £
Euro symbol  = 0128 = €

To make those just use the same method of holding down ALT key while typing the key number.   So ALT-0163 makes £ and ALT-0128 makes €.

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April 23, 2013

Unemployment by Occupation and Gender as of Feb. 2013

The BLS tracks unemployment by occupational group and by gender in table A-30


Here is a reproduction of the entire table for all occupations with just the February 2013 data:


total men women
Total, 16 years and over 8.1 8.5 7.6
Management, professional, and related occupations 3.8 3.8 3.9
Management, business, and financial operations occupations 3.9 3.6 4.2
Management occupations 4 3.6 4.5
Business and financial operations occupations 3.7 3.7 3.6
Professional and related occupations 3.8 3.9 3.7
Computer and mathematical occupations 3.5 3.5 3.6
Architecture and engineering occupations 3.8 3.4 6.3
Life, physical, and social science occupations 4 4.8 3
Community and social service occupations 3.5 1.9 4.4
Legal occupations 3.1 1.7 4.3
Education, training, and library occupations 3.8 3.7 3.9
Arts, design, entertainment, sports, and media occupations 7.8 9.2 6.2
Healthcare practitioner and technical occupations 2.5 2.6 2.5
Service occupations 9.8 10.3 9.5
Healthcare support occupations 7.3 5.7 7.5
Protective service occupations 4.1 4.2 4
Food preparation and serving related occupations 11 12.3 9.9
Building and grounds cleaning and maintenance occupations 13.3 13.6 12.9
Personal care and service occupations 9.2 8.5 9.4
Sales and office occupations 7.9 7.7 8.1
Sales and related occupations 8.2 6.4 10.1
Office and administrative support occupations 7.6 9.4 7
Natural resources, construction, and maintenance occupations 12.2 12 16
Farming, fishing, and forestry occupations 16.1 14.6 21
Construction and extraction occupations 15.8 15.6 21
Installation, maintenance, and repair occupations 6 5.9 7.3
Production, transportation, and material moving occupations 10 9.7 11
Production occupations 9.1 8.4 10.7
Transportation and material moving occupations 10.9 10.7 11.7



As you can see the unemployment varies from job to job quite a bit and further it varies between men and women as well.

The occupations with the lowest unemployment was the healthcare professionals at just 2.5%.

The highest unemployment was in farming, fishing and forestry at 16.1% total.

Overall women have lower unemployment than men.   Women are at 7.6% and men at 8.5%.   Thats nearly a full point difference.    A lot of that is based on occupation of course and within a given occupation the differences are often lower especially for the largest occupations.

Lets look closer at the differences in unemployment between the sexes.   Here is the difference between unemployment for men minus the rate for women :


Total, 16 years and over(1) 0.9

Management, professional, and related occupations -0.1
Management, business, and financial operations occupations -0.6
Management occupations -0.9
Business and financial operations occupations 0.1
Professional and related occupations 0.2
Computer and mathematical occupations -0.1
Architecture and engineering occupations -2.9
Life, physical, and social science occupations 1.8
Community and social service occupations -2.5
Legal occupations -2.6
Education, training, and library occupations -0.2
Arts, design, entertainment, sports, and media occupations 3
Healthcare practitioner and technical occupations 0.1
Service occupations 0.8
Healthcare support occupations -1.8
Protective service occupations 0.2
Food preparation and serving related occupations 2.4
Building and grounds cleaning and maintenance occupations 0.7
Personal care and service occupations -0.9
Sales and office occupations -0.4
Sales and related occupations -3.7
Office and administrative support occupations 2.4
Natural resources, construction, and maintenance occupations -4
Farming, fishing, and forestry occupations -6.4
Construction and extraction occupations -5.4
Installation, maintenance, and repair occupations -1.4
Production, transportation, and material moving occupations -1.3
Production occupations -2.3
Transportation and material moving occupations -1

The biggest difference is in the farming, fishing & forestry occupations with a difference of 6.4% with men at 14.6% and women at 21%.      The largest gap favoring women is in arts, design, entertainment, etc where they are ahead by 3% with women at 6.2% and men at 9.2%.    But its notable that both of those occupational groups account for about 1.5% and 2% of all jobs respectively.   These are not large fields and its easier to have a larger gap between genders with fewer people especially if one gender has very low representation in the occupation.

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April 22, 2013

Gasoline Prices are Down 9.5% in the past 12 Months

As I write this the national average price for a gallon of gas is $3.51.   Twelve months ago the price was $3.88.    Thats a drop of -9.5%.

You can see the 12 month chart at Gasbuddy's site.

I just wanted to point this out because we usually only notice when gas prices go up.   But then after prices go down again there aren't drastic news headlines about it.   Prices go up and its news and theres op-ed pieces forecasting $5 gas.   But when the price drops down again its not news and nobody is forecasting  $1 gas.

If you look at the past 9 years of data from Gasbuddy you can see the price of gas has been a real roller coaster ride.


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April 21, 2013

Maximizing Amazon Subscribe and Save with 15% Discount on 5 or More Items

Would you like to save money and get free stuff?   

Recently I noticed that Amazon Subscribe and Save shipments can get 15% off if you have 5 items in a month.   Further Amazon Mom members already get 5% so combined you can get 20% off total.

In a situation where you're buying a decent amount on Subscribe and Save it can make good sense to buy more items to make sure you hit the 5 item threshold and qualify for the 15 or 20% discount.    That 15-20% discount can even pay for the additional items AND even save you money in the process.  

To maximize this and get the full 20% rate it helps to be an Amazon Mom member, but the principal works the same if you're not in Amazon Mom and only get 15%.

The simple example of the idea is if you have 4 items ready to ship worth a total of $50.  If you add a 5th item that costs $2.50 then you'll get an extra 15% discount on the $50 order.  The 15% discount off $50 will save you $7.50 which is worth more than the extra $2.50 you spend on that 5th item.


Tactic #1 - adding cheap items to get 20% off your whole order

Lets say you currently have 3 items in your subscribe & save delivery scheduled for May :

Cat food = $10.97
 Friskies Cat Food 5.5-Ounce Cans x24
  Heartburn medicine =  $22.69
Prilosec OTC 42 Count

Cheeze-Its  = $11.25
Cheez-It Crackers 1.5 ounce x 36

Thats a total cost of $44.91.   If you could cut 15% off that you'd save $6.73

If you found 2 items that were under $6.73 then you'd be getting those items for free.  For example you could add : 
 bag of chips  = $2.85
Simply7 Jalapeno Lentil Chips 4 Ounce bag
walnuts = $2.92
Diamond Shelled Walnuts, 6-Ounce

 After adding those 2 items you'll get 20% off the entire order and it will now cost about $42.68.

You'll save a couple dollars and get a free bag of chips and some walnuts thrown in.

When you find the cheap items to pad your item count to five items I'd look for something you'd actually want and use rather than a throw away item.   Maybe you don't like lentil chips and walnuts so shop around for other items in the $3-4 price range. 

Additional cheap items to consider to pad your shipment:
Maxell 723807 LR03 2BP AAA Cell 2 Pack Carded Battery = $1.69 ( $1.44 with 20% off)
Colgate Classic Soft Full Head Toothbrush - 1 ea Colors May Vary = $2.44 ($2.07)
Playtex Handsaver Gloves, Large = $2.61 ($2.22)
Leon's Pantry Soft Dried, Apples and Cinnamon, 6 Ounce = $3.06 ($2.60 at 20% off)

Palmolive Bath Bar Soap, 3.2 oz.. Bars, 3-Count = $3.29 ($2.80)
Pop-Secret Homestyle Popcorn, 10-Count = $4.98 ( $4.23)
Ivory Original 16-Count: Bath Size Bars (4 Oz), 64 Ounce = $4.99 ( 4.24)

Tactic #2 - Adding more items for 20% savings all around

Instead of finding filler items just to get the discount, you could also find stuff you really want to buy and get them for a steep discount after considering the overall 20% savings.    Assuming I'm not necessarily interested in lentil chips and walnuts.

Rice krispy treats = $11.84
Rice Krispies Treats 40 ct variety pack
and
Raisin Bran = $7.95
Raisin Bran Crunch, 3 x 18.2 oz. boxes

Now my original total of $44.91 would be $54.48.   I could look at that like getting the rice krispies and raisin bran for $9.57 instead of $19.79 or basically 50% off.

Tactic #3 - Stocking up while you get the 20% off

Lets take another look at the shopping cart for tactic #1.    You buy your cat friskies cat food and they eat a can every day.   That 24 pack will last you less than a month so you have subscribe and save setup to send you 1 per month.    You've used tactic #1 to get up to 5 items and you're now saving 20% for your next shipment.  However you look forward to the next month and theres now only 1 item in that shipment scheduled which is next months delivery of cat food.   

May deliveries :
1 x Friskies for $9.24, Prilosec, Cheeze-its, Simply7 chips and Diamond Walnuts = 20% discount rate
June deliveries :
 1 x Friskies for $10.97
July deliveries :
1 x Friskies for $10.97
etc.

 You could instead increase your May delivery of Friskies to 3 packs and get all 3 at the $9.24 price.  If you stock up now at the 20% off price you'll save the extra 15% over the regular 5% for the June and July purchases.

To do this you can change your order frequency from 1 item every 1 month to 3 items every 3 months.    That will give you 3 items delivered in May that will last you for May, June and July.   Then after the fact for the August shipment you will probably want to change it back to 1 item every 1 month.


When does it work?

These tactics worth better in some situations than others.    If you've got 4 items in your order then its pretty easy to add 1 more item to get the 20% and profit.   But if you've only got 1-2 items then its a lot harder to get it to work.

This won't work well if you aren't already spending a fair amount.   With few items you will often need to spend around $50 to $75 or more to hit the point that saving the extra 15% is worth it.   The more items you have in your order then the more sense it makes.   If adding just 1 item will get you to 5 total then that can make sense with as little as $25 total cost.

Rough guideline formula to decide if its worth it:

If (5 - number of items in cart) x $2.50 >  ( cost of items in cart * 0.15) then its worth pursuing

For example say you've got 2 items in your cart that currently add up to $45.   That formula gives us
(5 - 2) x $2.5 = $7.50 versus ($45 x .15) = $6.75
In that case its not quite worth padding the cart to get the discount.   The discount on your current $45 is only going to get you $6.75 but you need 3 items to pad your cart and finding 3 different items for $6.75 its difficult.

I'm just using some semi-randomly chosen products on Amazon to illustrate examples of how this can work.   I don't know if any of the items I picked have good prices to begin with and you might get them cheaper.   These are just for example sake.

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April 19, 2013

Best of Blogs for Week of April 19th

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

MyMoneyBlog talks about Vanguard Total Stock Market Index Fund Review: What’s Inside (VTSMX, VTSAX, VTI)

Doughroller explains How to Calculate and Pay Quarterly Self-Employment Taxes
and  Making the Most of Dependent Care Benefits

Barry Ritholtz shares the 12 Rules of Goldbuggery
and  A Year-To-Date Look At The World that compares stock market performance by region
and this Economy: Top 500 Influencers which has an interactive site showing connections between the top 500 and rating their 'mojo'. Not sure I believe their relative rankings at all but its a nifty widget.


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April 18, 2013

Responses to NPRs Story on Disability

I wrote an article Disability is the New Welfare reflecting the apparent conclusion of the NPR  piece on disability from Planet Money Unfit For Work.

I had a reader named Joan email me about the topic and I shared her thoughts with A Readers Perspective on Disability

Well now several other folks have chimed in on the topic as well.    Planet Money pointed to some responses and gave other links to additional information on the topic Former Social Security Commissioners and Others Respond to Our Disability Story

First lets look at the : 
An Open Letter from Former Commissioners of the Social Security Administration

One key bit they say:

"It is true that DI has grown significantly in the past 30 years. The growth that we’ve seen was predicted by actuaries as early as 1994 and is mostly the result of two factors: baby boomers entering their high- disability years, and women entering the workforce in large numbers in the 1970s and 1980s so that more are now "insured" for DI based on their own prior contributions. The increase in the number of children receiving SSI benefits in the past decade is similarly explained by larger economic factors, namely the increase in the number of poor and low-income children. More than 1 in 5 U.S. children live in poverty today and some 44 percent live in low-income households. Since SSI is a means-tested program, more poor and low-income children mean more children with disabilities are financially eligible for benefits. Importantly, the share of low-income children who receive SSI benefits has remained constant at less than four percent."
In other words:   Most of the increase in disability is purely due to demographic changes.

There is also a response from the  Consortium for Citizens with Disabilities (CCD)

"Unfit" for NPR--Let's Get the Facts Straight on Disability Social Security Disability Programs Are a Vital Lifeline for People with Severe Disabilities

They didn't seem to care for the NPR article much at all.

They say: "Unfortunately Ms. Joffe Walt’s reporting fails to tell the whole story and perpetuates dangerous myths about the Social Security disability programs and the people they help."

The CCD response makes a lot of points.

One data point they give is that :
"Many are terminally ill: 1 in 5 male SSDI beneficiaries and 1 in 7 female SSDI beneficiaries die within 5 years of receiving benefits.  "

That hardly paints a picture of a bunch of "free loaders".

"Just 1.6 percent of U.S. children receive SSI fewer than 1 in 4 U.S. children with disabilities.
Contrary to what Ms. Joffe Walt suggests,doing poorly in school is not a basis for SSI eligibility."

And as far as people shifting from TANF to disability, they point out : "The decline in TANF enrollment from 1996 to 2011 is more than 20 times the magnitude of the increase in SSI child enrollment during that period."

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Bitcoin Bubble Burst

Bitcoins are a virtual currency based on computer algorithms.   Recently their exchange rate for US dollars hit a high of $266 per bitcoin on April 9th.   But just a month ago in mid March the rate was under $50 at around $47-48.   As I write this today their value is now worth $87. 

Here is a chart of the past 60 days :

Data source : http://bitcoincharts.com/,
This chart is licensed under a
Creative Commons Attribution-ShareAlike 3.0 Unported License.


If that isn't a bubble bursting then I don't know what is.   It was a quick one too.   In just 3 weeks the value shot up over +400% and then a week later it had plummeted -67%.


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April 16, 2013

Stop Worrying About Cyprus

Last month the nation of Cyprus decided to seize money out of bank accounts.   Then they changed their mind and didn't do it.   This resulted in people getting scared in the USA.   The gather thinking goes along the lines of "if it can happen in Cyprus then could it happen here?"    And then people get upset and scared and worry that the politicians in Washington are going to decide to steal money out of their bank accounts to pay the national debt, or whatever other things they allege might happen.

Then there was news that Cyprus would have to sell their gold reserves to pay their debts and the price of gold dropped as a result.   Apparently people are worried that other nations now also might dump their gold reserves.   I'm not sure why anyone would jump to that conclusion at all, but apparently thats the word and gold prices dropped.  Never mind that Cyprus gold reserves are only about €400 million.

Are you worried about Cyprus?    Don't be.

First of all let me as a couple questions:   Do you know where Cyprus is on a map?   I'd wager a lot of us don't.   I suppose that doesn't matter really, we don't need to know anything about world geography to be paranoid about taxes or financial Armageddon.

OK, so lets try this tactic.   Do you know anything about the economy of Cyprus?   Do you know how large Cyprus is?   Do you know why Cyprus has economic problems?    I would have to say that I don't know much at all about Cyprus.   Chances are pretty good that the vast majority of Americans don't know much of anything about Cyprus.

This cat lives in Cyprus,
It doesn't seem too worried**

Lets run on over to Wikipeda and learn about Cyprus together shall we?

See Wikipedia's entry for Cyprus
I'm just going to skim that page... Interesting they were settled in the 2nd century BC by the Mycenean Greeks.    Cyprus got its independence from U.K. in 1960.   Its a relatively new nation.   Turkey invaded Cyprus in 1974 after a coup d'├ętat by Greek aligned Cypriots.      Its the 3rd most populous island in the Mediterranean.  AH HA!   Its in the Mediterranean!   Major religion is Greek Orthodoxy    The population in 2011 was just over 1 million people and the GDP was about $24 billion.

Now we can say we know something about Cyprus.  Should we still panic?

Cyprus Euro coin, still worth €1 *
Lets look at the Economy of Cyprus
Unemployment is 14% as of Feb 2013.    GDP growth is -3% for Q4 2012
Public debt is about €15 Billion which is around 84% of GDP.   Budget deficit of €1.1 B or 6% of GDP.    They aren't doing all that well in any of those measures but theres worse nations out there.  Several other countries have worse debt levels as measured by GDP.

What we really need to look at is the 2012-2013 Cypriot Financial Crisis.
That entry starts out saying :
"The 2012–2013 Cypriot financial crisis is a major economic crisis in the Republic of Cyprus that involves the exposure of Cypriot banks to the Greek Debt Crisis,..."

AH HA!    Cyprus lent too much money to Greece!     Theres the problem.   I'm sure you know Greece has financial problems.   Cyprus is close to Greece and has a lot of ties to Greece including financial ties.   Cyprus banks had lent Greece money.   Then Greece bond holders were forced to take a 50% cut and Cyprus banks couldn't stand that.   That paired with Cyprus' own struggling economy has put a lot of pressure on the Cyprus economy and government budget.   Then because of all that Cyprus bonds were downgraded.       Last month Moody's downgraded them to junk bond level.   Then the government of Cyprus cracked a plan to raid peoples bank accounts.  Oh, by the way it also notes that 50% of the money in Cyprus bank accounts is from Russians.

In the end Cyprus got a €10 B bailout from the EU-IMF.

Now we know whats going on in Cyprus.   How much should you care?

First let me put things in perspective by illustrating the size of Cyprus economy versus the USA:



Can you see that little red sliver representing the $24B Cyprus GDP?   Hard to really see it when placed next to the US economy since ours is 500 times as large.

How about we change the scale and compare Cyprus to a the GDP of a few individual states:



Well now thats better you can actually see that Cyprus is smaller than even small economies like Wyoming.  In fact Cyprus GDP is smaller than any single US state.

How about GDP of individual US cities?



We all know that Detroit is suffering.   Are you worried about that?    Detroits economy is 8 times as large as Cyprus.   The economy of Tulsa is bigger than Cyprus.  


Speaking of cities, did you know the city of Stockton California is bankrupt?    I'm going to assume that Stockton has a larger GDP than Cyprus.   You may or may not know that Stockton declared bankruptcy.  I don't recall the Stockton bankruptcy getting 1/10th the news coverage of the Cyprus bailout and the bank seizure that didn't actually happen.   But then I don't know maybe I wasn't paying a whole lot of attention.

 In summary:   Cyprus which is a small nation in the Mediterranean with an economy smaller than Tulsa, OK got a €10 B bailout from Europe and didn't seize money from their citizens bank accounts.    No, you shouldn't worry about that.

*Photo of coin by IK's World Trip
** Cat photo by Glen Bowman
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April 15, 2013

Entertainment Coupon books are $10.40 today

In honor of tax day the Entertainment coupon books are on sale for $10.40 today only.

Yes they are still alive. Not long ago they went into bankruptcy  but shortly after they announced they are still alive and operating and being bought.

Unfortunately I don't see them on Ebates any longer so it doesn't appear you can get an Ebates discount though.   

I heard about this on Fatwallet

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

We're Getting a Nearly $6000 Tax Refund.

Its tax day if you haven't heard.

My wife and I actually got our taxes filed a couple weeks ago.   The result this year is that we're getting back a little short of $6,000 altogether.   Close to $5000 from the IRS and about $1000 from the state.


As I said we filed a couple weeks ago so it was the end of March.  Thats not as bad as some years, a couple years ago we filed on the eve of the 15th.   We have been kinda slow to do our taxes in recent years for a couple reasons.   First of all my Dad and I own a couple properties 50/50 which are located in the city he lives and he manages those properties.  That means that I have to wait for my Dad to get all his numbers figured and give us the information.   My Dad isn't really slow or fast about doing his taxes but he usually gets them done in March at least.  In any case we have to wait for him and then schedule our taxes after that.    Second reason we take a while is simply that it takes a while to organize all our information.   Lastly we have to give the information all to the CPA and then wait for him to actually fill out the forms for us and naturally he's got a pretty big backlog this time of year.   So anyway, thats why we are usually in April before we're done.  

Some of that $6000 refund is bad news actually.   A sizable chunk of our return is due to rental expenses.   And in fact this year we exceeded the passive income limit due to our total income and we couldn't claim all our rental losses against my ordinary income.   We had about $9000 extra in losses that we have to carryover to a future year.

Unfortunately in 2012 we had some pretty major expenses at our rentals.    Some of it wasn't anything out of the ordinary or anything that annoyed me.   We chose to cut down a couple trees on one property and that cost $1000.   I won't have to cut those trees down again and I won't have to pay for pruning and I won't have to worry about the tree roots ruining the foundation or getting into the pipes, so that was a good idea.     Some of the costs were basic routine repairs and maintenance like some plumbing fixes, replace a broken light switch, etc.   On the other hand we had some other costs that weren't routine.  We had to replace carpet after one tenant left and that carpet was only 2-3 years old.   Those same tenants also did a lot of misc. damage that was far above their deposit.   All of that came out of pocket and was not an expense that you ought to expect with a normal tenant.   We also had a broken pipe in that property that caused a lot of damage.

If we had a big fat profit from our rentals then we'd have to pay the IRS but due to our losses we are getting some cash back.   I'd much rather have profits than losses.

Most of the return is not due to the impact of rentals though.  Its a mix of various things.   I actually showed a bit of a loss on my company stock transactions even though they profited us.   We had charity deductions.  

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April 14, 2013

CPI-W versus Chained CPI-U from 1999 to 2012

In recent news there is a proposal to use 'chained CPI' for the COLA adjustments for Social Security.   I'm not going to comment on the politics of that idea since I prefer to avoid political debates here.   However I do think its useful to see the progressive difference between Chained CPI-U or C-CPI-U versus CPI-W over time.    I'll also throw in CPI-U for comparison, hey why not.  C-CPI-U is relatively new and they only have numbers back to 1999.

I pulled the data from the BLS CPI site.   I used the multi-page table to get the figures.   I'm only looking at the December index value to simplify it.   I also normalized them all to start at basis of 100.0 in 1999.   Here is the annual December Index for each index from Dec. 1999 to Dec. 2012:

(click for full size)


The total increase for the 13 year periods are :



total CAGR
CPI-U 36.9% 2.45%
CPI-W 37.5% 2.48%
C-CPI-U 31.9% 2.15%

CAGR is the compound annual growth rate.   Annually the difference isn't huge but it adds up to a few % difference over a decade.

Put this into perspective, say someones monthly social security check starts at $1000.   If it goes up 2.48% with CPI-W then the next year the check will be $1,024.80.    If we use C-CPI-U instead then it will go up 2.15% and they'd get $1,021.50.    Thats a monthly difference of $3.30 for a single year.    Now over time that marginal difference would add up.   Starting with $1000 in 1999 you'd end up with $1,375 from CPI-W and only $1,319 from C-CPI-U or a $52 difference per month cumulative over 13 years.

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April 12, 2013

Best of Blogs for Week of April 12th

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

MyMoneyBlog discusses Paying Cash For Cars: Edmunds.com $3,500 Debt-Free Car Project

DQYDJ asks How Do You Compare to Other Americans in Tobacco and Alcohol Spending?

PlanetMoney gives us Two Centuries Of Energy In America, In Four Graphs 
(spoiler : we used a lot more wood in the 19th century)

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April 11, 2013

Another Somewhat Misleading and Fairly Useless List of Jobs that pay $100,000 Without College

It seems that once or twice a year we see an article that lists jobs that pay $100,000 for someone without a college degree.   Or some similar variation on that topic.

The latest such article I found the other day titled 5 $100k Jobs That Don't Require a Bachelors Degree

Here are the jobs they list :
1. Executive Pastry Chef
2. Master Plumber
3. Licensed Massage Therapist
4. Air Traffic Controller
5. Court Reporter

Sounds like a good list.   All of those jobs can be had without bachelors degree and at least the top 10% in the field make $100,000 or more.

Here's my objections to each job and why I think such a list is fairly misleading and almost useless.

1. Executive Pastry Chef.   - first of all, what is an "Executive" pastry chef?   I know what a pastry chef is but I'm not sure what makes you an Executive Pastry Chef.   The problem with this job is the competition.   You may think if you go to culinary school you can go become an Executive Pastry Chef and end up making 6 figures sooner or later.   Unfortunately you have to rise up to the ranks of chefs.   There are over 2,000,000 cooks in the country and those are all in the same field and you need to be better than them to be a chef.    There are only 100,000 or so chefs and head cooks in the nation and the top 10% of them only make about $74,000.    So to hit the Executive level it seems you would need to climb up to the top tier of the top tier of the profession.   You have to be better than probably 99% of the field of over 2 million people.

2. Master Plumber - This one is not bad really.   Yes a highly skilled plumber can make $100,000.   However the problem is : whats a master plumber? Usually the title master is used in a construction trade to apply to someone who is a level above the journeyman level.   Not all states have these designations and the titles vary from state to state.    In New York the license requires 7 years experience under a master plumber.   Plus you usually have to take a test to pass the license.   This ones actually pretty feasible but you do have to work several years in the trade, pass a test and then also make more than 90% of your peers who do so.  Again this puts you in the top 1% probably.   Furthermore usually plumbers making high salaries are either in expensive cities with strong unions or actually running their own business.

3. Licensed Massage Therapist - Honestly, I just doubt this is a profession where top 10% makes 6 figures.    From the BLS site the top 10% of massage therapists make just $70,000 level.    The BLS site says that most states require you to have a license.   I don't see how the top 10% makes 100k here. 

4. Air Traffic Controller - Yes they can make 6 figures.   Its very hard to get that job.    You have to be under 33 years old, pass medical and psych exams, pass an aptitude test, pass interviewing and then get selected and THEN you have to take training that a lot of people don't get through.   Then you start to make normal wages paying $30,000 to $50,000 range and maybe someday you can work your way up to making 6 figures.   If you can do all that then its probably a good career as long as you can handle the stress of knowing that if you screw up 100's of people will die.

5. Court Reporter - Yes they can maybe make 6 figures.   Very very very few people can transcribe fast enough to do this and make that kind of money.   Can you transcribe 225 words a minute?   Probably not.

While these are all probably good career paths, I don't think that making $100,000 a  year at them is typical or normal at all and in some cases its ridiculously hard to get to that level.

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April 10, 2013

Which Debt Should You Pay off First?

I recently saw someone asking what debts they should tackle first.   When you are deciding which order to pay off debts you should generally pay off the highest interest rate debts first.   But not all debts are created equally even if the interest is the same.    Some debts are worse to carry due to their nature and there are other concerns than just the interest rate.

Below I  list what I think are the priority order of debts you should repay in general.  I start listing the worst kinds of debts and then move on to the lower priority debts.   This is not meant to be any kind of hard fast rule or anything since every situation is different in various ways.   This list of debt priority is more a generalization and there will be exceptions.

Here are what I think are the priorities for repaying debts :

Worst kinds of debts :
Loan sharks -  This item is mostly tongue in cheek as I would hope you don't borrow money money from the type of people who would break your knee caps.   But in case you do owe money to any criminal types its a good idea to pay that back and not borrow from them again.
Court judgements or fines - Any time a court tells you to do something its in your best interest to do what they said.  We don't have debtors prisons in the US but courts still have a lot of power to punish you for not obeying them, even if its dealing with with just paying parking ticket or a debt judgement.

Payday loans - Payday loans, car title loans or any other short term debt will generally have the worst interest rate terms. 
Pawn shops - While they may be a bit cheaper interest than payday loans the pawn shop loans generally carry collateral and you can lose your property if you don't repay within the terms of the loan.
IRS Tax debts - The worst thing about tax debts to the government is the power that the government has to collect the money.   If you do owe the government taxes then you should work with them to setup repayment terms.    The IRS isn't the worst lender out there and their terms are often better than you'd think. 

State or local tax debts -   State or local governments are pretty similar to IRS debts in general.  You want to get that paid off so the government doesn't punish you.   I don't know how generous the terms are for state/local levels and they may vary drastically.
Buying stock on margin -

Debts to friends and family (maybe) - I list this one because sometimes borrowing money from friends and family can lead to very uncomfortable situations and strain the relationship.   You should do your best to pay back relatives and friends as soon as possible.   Even debts with fair terms between relatives that trust one another can end up harming the relationship if you fail to pay back the loans.   The amount of interest often doesn't impact this situation as much, its more the fact that you owe them money  and they are worried about getting it back.   But this situation varies based on the friends or relatives.  Some relatives and friends don't worry as much if they know they can trust you.  For example if your rich uncle loans you some money to go to college then they may not worry much if you don't pay them off right away.  But even there its not good to abuse the situation and you should make payments as required.  If you do borrow from people you know then make sure to sign a promissory note and pay them interest, that will help the situation.
401k loans -   I am not a hater of 401k loans, however they have disadvantages.  The key problem with a 401k loan is that usually if you lose your job you have to pay back the balance immediately.   If you can't do that they cash your 401k out and pay it off for you which then incurs taxes and a 10% penalty.  This is a real risk with a 401k loan and you should pay them down to avoid that happening. 

Higher interest debts: (over 7%) 
High Interest Credit cards - Typical credit card interest is in the 15-30% ballpark.   That is among the most expensive debt you can carry.   If you can't pay off a credit card then you may be able to do a balance transfer to get a good promotional rate on another card.



Paying down PMI on a mortgage - Usually the amount of PMI on a home loan is going to cost you effective interest rates that are in the ballpark of 10%.   That includes the interest on the mortgage itself plus the PMI.   You can figure it yourself by taking the (annual PMI cost ) /  (amount of equity your short of 20%) + mortgage % rate.
Higher interest student loans - Student loans follow you for life.   You can't get rid of them in bankruptcy (with rare exception).    Many student loans carry interest rates of 6.8% which is a relatively high rate but not excessively high.  But some student are higher and can exceed 10%.


Car loans - An auto loan isn't the worst kind of debt and worst case you can sell the car.  But on the other hand you generally don't want to lose your means of transportation.  Auto loans may have higher interest rates as well, and some of the worst ones are over 10%. I've occasionally heard of them hitting the 15-20% level.

Higher interest personal loans & peer-to-peer - You may be able to get a personal loan from a bank or credit union without collateral.   These are often better than credit cards or payday loans and the like, but still often carry fairly high interest.   My credit union offers rates around 8-12%.  In this day thats a very high interest rate.   You can also get personal loans from peer-2-peer lenders like Lending Club or Prosper.  I'd put those in a similar category.

Floating rate or promotional rate debts
Adjustible Rate Mortgages (ARM) - An adjustable rate mortgage may give you a very low current interest rate.   Amerisave says I can refinance my house to a 5 year ARM at just 2%.  Sounds great.  However when interest rates go up in the future that rate will climb.   That loan can go up 2% a year and could hit 7%.  If that happens your monthly payments could nearly double.    Its not easy to pay off a home mortgage for most of us given that this is usually a very large amount of money, but with a mortgage you usually have the option to refinance an ArM into a fixed rate loan.  Even if your house is under water and you owe more than its worth the governments HARP program can help you refinance to a reasonable fixed rate.
Home Equity Line of Credit or HELOC - A home equity line can be had for fairly cheap right now, assuming you can get one.   The rates are currently pretty low since they are tied to indexes like LIBOR or the prime.  For example my credit union offers loans as low as prime + 0.5% and that is about 3.75% right now.  But that credit line is variable and could go as high as 17%.
Temporary low interest promotional rates - You can often make purchases of furniture or other major home items with 0% deals.   These promotional rates carry a big 'gotcha' in their contracts.  If you do not pay off the debts in full before the end of the promotional period then they levy high back interest for the entire term.  Make sure to read the terms of any promotional deal and pay them off within the term to avoid any penalties.


Medium rate debts (5-7%)
Student loan debts - Depending on when you got your loans and the exact terms, it is possible to get student loans with relatively moderate interest rates.  These aren't a extremely high priority but certainly worth paying off to avoid the interest costs.   Plus as mentioned earlier you really can never get out of student loan debts so you should pay them off when you can.

Lower Priority debts

Rental / Business loans -  If you have debts versus collateral that is used for business purposes then that kind of debt is not generally as high a priority as loans against your personal property.   For example a mortgage on a rental is not as high priority as a loan on your own personal residence.   Worst case if you lose the rental you simply lose an investment property, but if you lose your primary residence then you may be homeless.     You should however of course try to pay down or refinance higher rate loans.   Today is a great time to refinance a rental property.   As long as your rental loans are low interest and you're cash flow positive then I see no reason to need to pay them off fast.


Low fixed rate debts (under 5%)

Personally I don't worry much about paying of low interest debt fast.   If you have a fixed loan and the interest is low then this is not a high priority to pay off fast.    If your debts are in the 5% or lower level and are fixed and have no other risks or problems then these should be your lowest priority of debt to repay.   In some cases I would not even worry about paying the debts off faster than the term of the loan.   For example with mortgages down as low as 3% level I see no need to pay those off fast.  Inflation will grow faster than that and in a few years you can probably get over 3% in various safe investments.

Keep in mind like I said above, this is pretty general in nature and theres always exceptions since everyones situation will be unique.
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April 7, 2013

Is Gerber Life College Savings any Good?

I recently saw a TV ad for Gerber Life College Savings.   The commercial was very similar to the Gerber Life Insurance ads that I've seen in the past.  However these new ads were for a college savings plan instead of life insurance.... or at least thats what the TV ads pitched.   In actuality they're just selling a cash value life insurance plan and pitching it for college savings.

I set out to find more information on the plan.  The Gerber site has little detail.  But others have examined it.  


Market Watch doesn't like it.   They wrote This college savings plan flunks the test
In fact they really don't like it, they said : "I will use words like “awful” and “lousy” and “Stupid Investment of the Week.”

But what about people who don't hate cash value insurance?   The Insurance Pro Blog wrote their Gerber College Plan Review on the plan.     The point out a major problem with the plan is that it apparently fails an IRS test and the investment returns lose preferential tax deferral treatment.   Yet they do favor cash value for college savings.  They conclude with "The Gerber College Plan falls well short of what we can accomplish with high quality cash value life insurance products."

The Gerber Life website says : "For example, putting aside $35.42 monthly for 18 years will get you $10,000"   If thats a real example of a real policy then that turns out to be around a 3.1% return and its taxable.    Given today's low rates that isn't awful but its not very good either.   

The Gerber plan also has no special tax benefits that 529 plans do.  Most states offer some form of tax benefit for 529 plans.

Bottom Line :  Avoid it.  Overall the Gerber Life College Savings plan seems to be a pretty poor choice.
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