October 31, 2014

A very Spooky Best of Blog posts for October 31st

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 shares a 529 College Savings Plans: State-by-State Tax Benefit Comparison

PlanetMoney has some interesting plots covering the 70's to today showing Who Studies What? Men, Women And College Majors   I've looked at similar topics here and here.

Oops. sorry, I forgot to make it spooky.


October 30, 2014

Estimating Rental Investment Returns per Major Metropolitain Areas

The kind of return you can get from a rental property varies a lot based on the local real estate market.   I figured I could use average rents and median home values to give a crude estimate of the approximate rental returns for a given area.  This isn't precise though since the median home will have different characteristics than the average rental.   The home is likely to be larger and have more amenities, etc than a average rental.   But for my purposes of giving a rough gauge of the returns for a rental market, I think it is good enough.

To give a single data point on how the table below might compare to actual property values and rents I decided to look at Vegas.  I pulled up Zillow and searched for houses in Las Vegas from $100-$125k and found a house for $105k with 3 bed/3bath.  Zillow estimates the rent would be $1020.    I then checked Craigslist and searched for 3 bed rentals under $1200 and found a couple houses with 3 beds for $1000 and $1100.    These figures compare to the median home values of $124k and average rent of $957 in the table.  Also of course what I'm looking at on Zillow and Craigslist is in 2014 versus the data below in the tables being from 2011. 

The table below lists the median home values in $1000, monthly rental costs and then the return rate calculated based on simply 12 months of rent / median house costs.   All the figures below are from 2011 as thats the latest I found all the data available.

Metro Home Rent Return
Atlanta-Sandy Springs-Marietta, GA 98.6 914 11.1%
Austin-Round Rock, TX 193.1 930 5.8%
Baltimore-Towson, MD 230.0 1073 5.6%
Birmingham-Hoover, AL 139.8 753 6.5%
Boston-Cambridge-Quincy, MA-NH 346.2 1163 4.0%
Buffalo-Niagara Falls, NY 119.2 682 6.9%
Charlotte-Gastonia-Concord, NC-SC 148.9 820 6.6%
Chicago-Naperville-Joliet, IL 176.5 928 6.3%
Cincinnati-Middletown, OH-KY-IN 122.3 711 7.0%
Cleveland-Elyria-Mentor, OH 105.1 712 8.1%
Columbus, OH 123.9 776 7.5%
Dallas-Fort Worth-Arlington, TX 148.9 863 7.0%
Denver-Aurora, CO 231.4 920 4.8%
Detroit-Warren-Livonia, MI 53.8 805 18.0%
Hartford-West Hartford-East Hartford, CT 227.6 962 5.1%
Houston-Baytown-Sugar Land, TX 155.7 849 6.5%
Indianapolis, IN 123.9 764 7.4%
Jacksonville, FL 123.6 940 9.1%
Kansas City, MO-KS 133.2 798 7.2%
Las Vegas-Paradise, NV 124.7 957 9.2%
Los Angeles-Long Beach-Santa Ana, CA  307.7 1214 4.7%
Louisville, KY-IN 130.4 696 6.4%
Memphis, TN-MS-AR 112.3 805 8.6%
Miami-Fort Lauderdale-Miami Beach, FL 181.1 1078 7.1%
Milwaukee-Waukesha-West Allis, WI 185.2 785 5.1%
Minneapolis-St. Paul-Bloomington, MN-WI 154.7 858 6.7%
Nashville-Davidson--Murfreesboro, TN 151.9 800 6.3%
New Orleans-Metairie-Kenner, LA 153.0 886 6.9%
New York-Northern New Jersey-Long Island, NY-NJ-PA 378.7 1187 3.8%
Oklahoma City, OK 141.6 731 6.2%
Orlando, FL 124.9 970 9.3%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 210.1 957 5.5%
Phoenix-Mesa-Scottsdale, AZ 115.5 893 9.3%
Portland-Vancouver-Beaverton, OR-WA 219.5 906 5.0%
Providence-New Bedford-Fall River, RI-MA 217.2 849 4.7%
Raleigh-Cary, NC 185.2 828 5.4%
Richmond, VA 187.1 925 5.9%
Riverside-San Bernardino-Ontario, CA 172.3 1076 7.5%
Sacramento--Arden-Arcade--Roseville, CA 166.1 1004 7.3%
Saint Louis, MO-IL 121.8 776 7.6%
Salt Lake City, UT  182.2 859 5.7%
San Antonio, TX 152.5 907 7.1%
San Diego-Carlsbad-San Marcos, CA  370.3 1237 4.0%
San Francisco-Oakland-Fremont, CA  483.4 1345 3.3%
San Jose-Sunnyvale-Santa Clara, CA 570.0 1460 3.1%
Seattle-Tacoma-Bellevue, WA 285.0 1037 4.4%
Tampa-St. Petersburg-Clearwater, FL 127.8 906 8.5%
Virginia Beach-Norfolk-Newport News, VA-NC 182.9 1053 6.9%
Washington-Arlington-Alexandria, DC-VA-MD-WV 325.4 1391 5.1%

The markets with the 10 best returns :

Metro Home Rent Return
Detroit-Warren-Livonia, MI 53.8 805 18.0%
Atlanta-Sandy Springs-Marietta, GA 98.6 914 11.1%
Orlando, FL 124.9 970 9.3%
Phoenix-Mesa-Scottsdale, AZ 115.5 893 9.3%
Las Vegas-Paradise, NV 124.7 957 9.2%
Jacksonville, FL 123.6 940 9.1%
Memphis, TN-MS-AR 112.3 805 8.6%
Tampa-St. Petersburg-Clearwater, FL 127.8 906 8.5%
Cleveland-Elyria-Mentor, OH 105.1 712 8.1%
Saint Louis, MO-IL 121.8 776 7.6%

And the 10 worst:

Metro Home Rent Return
San Jose-Sunnyvale-Santa Clara, CA 570.0 1460 3.1%
San Francisco-Oakland-Fremont, CA  483.4 1345 3.3%
New York-Northern New Jersey-Long Island, NY-NJ-PA 378.7 1187 3.8%
San Diego-Carlsbad-San Marcos, CA  370.3 1237 4.0%
Boston-Cambridge-Quincy, MA-NH 346.2 1163 4.0%
Seattle-Tacoma-Bellevue, WA 285.0 1037 4.4%
Providence-New Bedford-Fall River, RI-MA 217.2 849 4.7%
Los Angeles-Long Beach-Santa Ana, CA  307.7 1214 4.7%
Denver-Aurora, CO 231.4 920 4.8%
Portland-Vancouver-Beaverton, OR-WA 219.5 906 5.0%

I was going to add in the property tax rates and figure the return after accounting for average property taxes.  However I can't account for the impact of homestead exemptions so that would make that calculation kind of worthless. 

This does not account for the expenses which vary as well.  
Sources of information :
Rent  rates from the Census
Median home prices from the Realtor association


October 28, 2014

List of Merchants for 5-20% Cashback Bonus at Shop Discover - October 2014

I previously posted a List of Merchants for 5-20% Cashback Bonus at Shop Discover early in this year, but the list has changed a little with merchants being added or removed.   This list is current as of October 24th:

5% cash back 

7 For All Mankind Kohl's.com
A Pea In The Pod Lancome
Abt.com Lands' End
Ace Hardware LeapFrog
AdvanceAutoParts Lenovo
Aeropostale Levi's
Ann Taylor LivingSocial
Apple Store LLBean
Athleta LOFT
Atlantis and More Bahamas Resorts Lord & Taylor
Avalon Waterways Lumber Liquidators
Avon Luxury Link
Backcountry.com Macy's
Banana Republic Madewell
Bass Pro Shops Marriott
Beauty.com Mattel
Bed Bath & Beyond Microsoft Store
Best Buy MooseJaw
Beyond the Rack Motherhood
Bloomingdale's Neiman Marcus
Bluefly Neiman Marcus Last Call
Bobbi Brown New York & Company
buybuy Baby Nordstrom
Carnival Cruises Norwegian Cruise Line
Carson's Oceania
CB2 Office Depot
Celebrity Cruises OfficeMax
Chadwick's Old Navy
Chefs Catalog Omaha Steaks
Chico's Orbitz
Clinique Origins
Coach Overstock.com
Cost Plus World Market Palace Resorts
Crate&Barrel Panasonic
Darphin Paper Source
Dell Consumer PCRush.com
Dell Small Business Perry Ellis
Destination Maternity Piperlime
Dillard's Princess Cruises
Dockers QVC
Dollar Rent A Car Rakuten Shopping.com
Drugstore.com Ralph Lauren
Eastbay Regent
Enterprise Royal Caribbean
Estee Lauder Saks Off 5th
Expedia Samsung
Express Sears
Fairmont Sephora
Forever 21 Smashbox
GameStop Sony
GAP Sports Authority
Globus Staples
Godiva Starbucks
Gordons Tauck
Groupon The Body Shop
Guess The Children’s Place
Guitar Center The Container Store
Hammacher Schlemmer The Land of Nod
Hanes The Limited
Hanna Andersson Things Remembered
Harbor Freight Tools Thrifty.com
Hard Rock Resorts TigerDirect.com
Harry & David Timberland
Holland America Tory Burch
Home Decorator's Toshiba
homedepot.com Travelocity
Hotels.com Tumi
Hotwire UGG
HP Home Ulta
HSN Universal Studios Resort
J.Crew Vera Bradley
J.Crew Factory Viking River Cruises
J.Jill Vistaprint
jcpenney Walgreens
Jos. A. Bank Walmart
Kiehl's White House Black Market
Kmart Zales

10% cash back

1800CONTACTS Lobster Gram
AllPosters.com Lucky Brand Jeans
Art.com MLB.com
Blair.com OnlineShoes
Brookstone petco.com
Columbia PUMA
Fandango RedEnvelope
Finish Line Rosetta Stone
Foot Locker SaksFifthAvenue
Gaiam Shari’s Berries
GNC Live Well Sharper Image
Golfsmith Shoes.com
GourmetGiftBaskets.com The North Face
Jewelry.com Under Armour

15% cash back

Fannie May Candies
The Popcorn Factory
Vision Direct
Wine Enthusiast

20% cash back

H&R Block


October 26, 2014

Average Real Cost of Gas Spent Per Mile 1994 to 2010

Gas has gone up a lot in the past 10 years.   But at the same time  cars have become more efficient and due to general inflation costs have gone up in general.   If adjusting for inflation then what is the trend in spending on gasoline per mile driven given these 3 variables?   Well glad you asked, here's a chart :

The figures are in 2010 real dollars.

And in table format :

real gas /mile
1994  $   0.056
1995  $   0.058
1996  $   0.061
1997  $   0.059
1998  $   0.050
1999  $   0.054
2000  $   0.068
2001  $   0.062
2002  $   0.058
2003  $   0.064
2004  $   0.074
2005  $   0.085
2006  $   0.094
2007  $   0.096
2008  $   0.106
2009  $   0.073
2010  $   0.084

 I got the data from :
Average auto fuel economy in MPG from the DoT Bureau of Transportation Statistics Table 4-23: Average Fuel Efficiency of U.S. Light Duty Vehicle
Average gasoline prices from the EIA
Inflation data is from the CPI report Table 24

October 24, 2014

Best of Blogs for Week of October 24th

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

Its a few weeks old now but I really liked Mike Rowe's essay on following your passion.

MyMoneyBlog has a report on their Prosper vs. LendingClub Investor Experiment: 2 Year Update

BusinessInsider has a graphic showing The Most Expensive College Dorms In Every State

The Simple Dollar says If I Can Suggest One Financial Move to Anyone, It’s This 
tl;dr version : save for retirement

Moneybox says It Seems No One Is Rich or Happy: I Looked

October 21, 2014

Is a Natural Gas Fueled Car a Good Idea?

In a recent article T.Boone Pickens said we should use natural gas cars more.   I agree in general.   Natural gas is more abundant and cheaper here in the USA than oil.   It doesn't require refining and is pumped straight to most homes.  Natural gas burns cleaner than gasoline too.

Apparently the only natural gas car out there is the Honda Civic GX.   They cost $25-30k which is about the same as a Civic Hybrid.     However the natural gas car should save you around $200-500 a year in fuel if you drive 15,000 miles a year.    There is also apparently a Ford F-150 truck option for CNG/LNG but thats a new option and I don't see as much on it.  They do say that tanks would cost $6000 to $9000 which I think would mostly make that kill that as far as cost effectiveness.

There are some state level tax incentives as well.  Apparently 20 states have some sort of incentive.   You can find it your state has incentives hereOklahoma gives 10% of vehicle cost up to $1500.   Texas rebates $2500.   Pennsylvania has a $1000 rebate.   I'm not sure about the details on the tax credits or rebates so you'd want to research that on your own.

How much you save with natural gas will vary though based on the cost of natural gas in your area.  The average price of natural gas nationally  is about $1 per therm for residential rates..   The natural gas equivalent to a gallon is about 1.14 therms.   So on average the cost is $1.14 for natural gas equivalent to a gallon of gasoline.      Natural gas prices vary across the nation.    The EIA tracks natural gas price data by state.  Its over $4 per therm in Hawaii and under $0.80 per therm in Colorado.

Prices at public fueling stations seem to be more than home prices.  Public stations tend to range around $1.50 to $2.50 a gallon.   A map of prices is here.

Honda does not recommend home refueling according to the  Civic GX owners manual.    "Due to the wide variation of natural gas quality for home use, Honda does not recommend the use of home refueling at this time"    I don't know if home refueling hardware does a good job of ensuring the gas is filtered properly or not.   If you did fuel at home you'd have to buy the refueling hardware and have it installed.  That can be as much as $6000 total bill.

Public CNG stations are limited.   This is a major draw back to natural gas cars and a key reason we don't see more of them.  But that makes ita  chicken-vs-egg situation.   There aren't enough refueling stations to drive demand for cars but lack of cars doesn't give incentive to open more refueling stations.   The Honda GX has only about 8 gasoline gallon fuel capacity and  mileage of 27 city/ 38 highway, so you can only drive around 200-300 miles.   
There is a map on the EIA site.   I captured their map below.

Source : EIA

Note the light red sites are private so only the dark red locations are of use to the general public.
Theres large sections of the nation with no refueling locations at all.  Looks like South Dakota doesn't have a single refueling station.   You'd have a hard time driving from Seattle to anywhere else I'd imagine given the lack of public stations outside the Puget Sound.   But refueling at your home exclusively would probably work just fine for most people.    A 200 mile local driving range is more than enough for anything but longer distance day trips.

Overall I like the idea of natural gas fueled cars and they can make sense.  Its cheaper to operate than a gas based car and some states have tax rebates to boot.    If you're looking at a Honda Civic or similar size car then the natural gas based Civic GX might be worth a look.  But I'd definitely make sure the finances make sense.  If you have to buy a home fueling station then that extra cost can make CNG car more expensive overall even with cheaper home natural gas.


October 19, 2014

Do You Have to Pay Taxes on Life Insurance?

Having a good life insurance policy is important if you've got dependents that will require support in case you pass.    I've got a pretty sizable life insurance policy myself and my wife has a policy as well.   I don't know if I've ever really researched if you have to pay taxes on a life insurance payment in the case of the death of the insured person.   I think I just assume that it was tax free.   But better to make sure than be caught unaware with a giant unexpected tax bill.

According to the IRS topic : Taxable or Non-Taxable Income? they say:

"Life insurance proceeds, which were paid to you because of the insured person’s death, are generally not taxable unless the policy was turned over to you for a price."

So that settles it.   Life insurance  payments to beneficiaries are not taxed.   Good, thats what I thought.

On the other hand if you cashed out a life insurance policy then you may owe taxes on gains.  The IRS says " If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy."    Thats basically since the insurance functioned as an investment for you.


October 17, 2014

Best of Blogs for Week of October 17th

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 tells How College Students Battled Textbook Publishers To A Draw, In 3 Graphs

They also have a neat graphic showing The Most Popular Jobs For The Rich, Middle Class And Poor

DoughRoller discusses Should You Use a Roth IRA as an Emergency Fund?


October 10, 2014

Best of Blogs for Week of October 10th

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

Barry Ritholtz asks How Low Can Gold Go?
and followed up with response to reaction  Gold Brings Out the Cranks
and he also had this on gold : NDR: 1980s Gold Pattern Suggests $660/oz

also of note from Barry : After 30,000 posts, Big Picture blogger has figured a few things out


October 7, 2014

Most Commented Articles on Free By 50

I think that the number of comments an article draws is one way to measure how interesting an article is.   Below I list the articles that I've written that have had the most commentary.

History of new car costs and average inflation

Historical price of silver

 Step by Step guide to Get Your Free Annual Credit Report

Washing Dishes is Cheaper than Buying Paper Plates

Costco Fuel Temperature Class Action Lawsuit : What does it mean?

Yet Another Example of Bad Cash Value Life Insurance Performance

If you Can't get A's & B's in High School Then Don't Go to College
 This one seemed to upset some people who were mediocre high school students..

Is UPS Driver a Good Job?
 There have been several UPS drivers/employees commenting to share their personal experiences.

Teacher Pay vs Median Incomes by State
Some people thought I had an agenda on this one, but I didn't.

Living on a Cruise Ship : Is it Practical?

Surviving on Minimum Wage? : An Example Budget
Of course this draws the immediate 'its not possible' responses from people living in NYC or S.F.

High School GPA versus College Success
For some reason this attracted people to say they were different.

Suze Orman Smacks Down Dave Ramsey
I'd like to see those 2 in a bare knuckle fight.   They could charge $50 for PPV.

How Many Ads Are We Exposed to Daily??

Should You Sell a House at a Loss or Rent it Out?

Car Depreciation Over Time

Everybody Isn't Moving to Texas... Kinda

I don't get a lot of comments on my articles usually.   A post with a dozen comments is unusual for me.  I think part of it is how poorly designed this blog software is, it makes it hard to even see where the comment link is.   I haven't found a way to fix that other than migrating to entirely new software which is not a task I feel like tackling.


October 6, 2014

50% off first Subscribe & Save for Prime Members at Amazon

If you are an Amazon Prime member then you can get 50% off your first product purchase through Subscribe and Save.   

For details check out the Amazon page

This would be a good way to save a fair amount on a bulk order of paper towels, a case of baby diapers or toilet paper .    Theres several items like that on S&S that can normally run $20-50 and 50% of that is a good deal.

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

October 5, 2014

What Percent of College Students Work While in College?

I almost always had a part time job during college and I think most people I knew worked in college as well.   I remember one guy in the dorms who didn't work at all and his parents were paying for his college and giving him an allowance of some sort.   At least one other guy was an athlete on scholarship and he didn't have a job.  In fact I'm not even sure scholarship athletes are allowed to have jobs while on campus but thats beside the point.   One guy had a part time type job as a street musician of all things.   I don't think his roommate worked.    But overall most people I recall seemed to work. 

I found data at the Dept. of Education in their Digest of Education Statistics :
 Table 503.20. Percentage of college students 16 to 24 years old who were employed, by attendance status, hours worked per week, and control and level of institution: Selected years, October 1970 through 2012

As of 2012 : 41% of full time students are employed and 72% of part time students work.

The rates are very similar for 4 year public, 4 year private and 2 year public schools as follows :

4 year public 41.0% 77.6%
4 year private 40.4% 84.4%
2 year public 41.2% 66.1%

Here's the history over time for all students :

As you can see in the past 10 years theres been a fair drop in the % of students working.   I'm guessing thats a result of the recent recession and the employment environment, but thats just me speculating.


October 3, 2014

Best of Blogs for Week of October 3rd

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

Retireby40 asks Do You Benchmark Your Net Worth?

 DoughRoller discussed The Complete Guide to Cash Back Credit Cards
and answered What Should You Do With Your 401k When You Leave Your Job

MyMoneyBlog discusses Feel Like You’re Always Eating Out? You’re Not Alone.

A piece on Yahoo finance covers The math behind McDonald's Monopoly sweepstakes shows the only properties that really matter

October 2, 2014

How Fast is a Mortgage Normally Paid Down?

We've got a couple mortgages that we only recently got within the past few years.    The mortgages are both 30 year notes and so I'll still owe on them when I'm in my 60's and past retirement age.   I was curious how much I'd owe on the mortgages so I used the calculator at Mortgagecalculator.org to generate amortization tables.   

One might assume that when you're 15 years into a 30 year mortgage that you'd have it half paid down.  But thats not now it works.   Mortgages payments are mostly interest at the start and little principal is paid initially.   Then as the principal gradually wears down over the years when you get to the end of the original term the opposite is true and most of your payments are principal and (relatively) little interest is paid.

You can see the data below but roughly speaking, for a 4% loan you've paid down just 10% in the first 6 years, 20% in 10 years, 1/3 is paid off by 15 year point and 50% is paid off in 20 years then by the 24th year you've paid down 2/3.

I'm measuring the amounts in the % of original loan that is still owed.    So in the 1st year you still owe nearly all of the loan so its 99-100% (rounded).     I'm assuming the normal amortization repayment rate here and if you paid extra principal into the loan at any point that would accelerate the repayment and change the curve.

The 30 year mortgage pay off rates are shown in graphic form :

Here's a table for a 30 year mortgage at varying interest rates :

Year 4% 5% 6% 7% 8%
1 99% 100% 100% 100% 100%
2 98% 98% 98% 99% 99%
3 96% 96% 97% 98% 98%
4 94% 95% 96% 96% 97%
5 92% 93% 94% 95% 96%
6 90% 91% 93% 94% 95%
7 88% 89% 91% 92% 93%
8 85% 87% 89% 91% 92%
9 83% 85% 87% 89% 91%
10 80% 83% 85% 87% 89%
11 78% 81% 83% 85% 87%
12 75% 78% 81% 83% 85%
13 72% 75% 78% 81% 83%
14 70% 73% 76% 78% 81%
15 67% 70% 73% 76% 79%
16 63% 67% 70% 73% 76%
17 60% 64% 67% 70% 73%
18 57% 60% 64% 67% 70%
19 53% 57% 60% 64% 67%
20 50% 53% 57% 60% 63%
21 46% 49% 53% 56% 59%
22 42% 45% 49% 52% 55%
23 38% 41% 44% 47% 50%
24 33% 36% 39% 42% 45%
25 29% 32% 34% 37% 40%
26 24% 27% 29% 32% 34%
27 20% 22% 24% 26% 28%
28 14% 16% 18% 19% 21%
29 9% 10% 11% 13% 14%
30 4% 4% 5% 5% 6%
31 0% 0% 0% 0% 0%


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