Things Landlords Won't Tell You

I ran across a SmartMoney article via Yahoo titled 5 Things Your Landlord Won't Tell You

Here are their 5 things:

1. "This building is in foreclosure"

2. "You should complain more." 

3. "There's more to negotiate than the rent."

4. "Your neighbor is not my problem."

5. "You may have more rights than I do."

As a landlord myself here are my thoughts on each:

1. Yes they may not tell you that.  I think it would be unethical for them to do so but it happens.   My properties are not in foreclosure or anywhere close to it so this does not apply to me.   The vast majority of rentals are not in foreclosure so this really applies to a very small % of people.  For the people it applies to it is a serious problem but there are recent new laws to help tenants.

2. My first reaction to this was that it is an asinine thing to say.  It seems like telling someone "I'd like you to waste my time and give me a headache."   But there is actually some truth to it.   As a landlord I would actually like tenants to complain more in certain situations.  If theres anything that can cause damage to the property then I want to know sooner rather than later.   If a tenant or other neighbor is breaking the lease terms then I'd like to know that too. If your facet is leaking then tell me.  If there are very funny chemical smells coming from the other apartment then please tell me.  If the neighbor is parking on my lawn then please tell me.

3. This one is true but I won't tell a tenant that explicitly unless they want to haggle on rent.   I mean why would I tell people that they're free to negotiate?   That just opens the door to them negotiating stuff they wouldn't otherwise.   I'm open to negotiation but I'm not going to give you a written invitation to do it.

4. This one is half true.   Sometimes I can't do a darn thing about your neighbors.   Just like I can't do much about my own neighbors.   As a landlord I don't have some sort of dictator authority to make everyone do whatever I want.  I have to obey laws and follow the rules of the lease.    If you suspect a neighbor has a dog and you hear it barking, I can't simply kick them out.  I have to prove that dog is there in violation of the terms of the lease.  Sometimes thats easier said than done.   On the other hand bad neighbors and bad tenants are always a problem for a landlord.  

5. Tenants may have a lot of rights in some places and very few in others.   It varies by state and city. You need to learn your own rights.

How to Calculate Net Worth

Every month I track and post updates on my net worth.   I don't think I've ever written anything in detail on how I track net worth or how it can be figured.

What is Net Worth?

Your net worth is the total value of your property and money.   Say you could 'cash in' everything right now and walk away with a check.   Your net worth is the amount of money you'd get for that pretend check.

Simply put the formula for net worth is :

Net worth =   Sum of Assets - Sum of Debts

So to figure your net worth you have to account for all your assets and liabilities and you have to know what they are all worth currently.


Add up Your Assets

Adding up your assets is a process of inventorying everything you own, determining the value of the assets and then adding them up.

Your assets will include anything of value that you own such as : your home, other real estate, businesses, cash, stock funds, retirement accounts, bonds, personal property, cars and 'other'.   For some of your assets the value is obvious.   $100 in a checking account is worth $100.   However for other assets you may not have an easy or accurate estimate of the value.   For those I would do the best you can to estimate the value.   For real estate you can use a site like Zillow.    For cars you can use Edmonds to estimate value.  Most of your personal property you wouldn't want to figure values for if they are household items.   If you have a collection of significant value then you may want to add those.    Other items that you might count as assets would include things like debts owed to you from others or paycheck or other compensation that you're due to receive but haven't yet.  If you own a business or have a stake in a private business then that may be difficult to put a value on.   Finding an accurate value for a small business is an entirely different topic, so here I'll just say that you should estimate the value to the best of your ability by including the assets such as inventory and property values owned by the business.

Add up your Debts (Liabilities)

Adding your debts should be easier than your assets and simply takes summing the outstanding balance on any debts you owe.

Your liabilities will include any debts you owe people.    Mortgages on real estate, student loans, car loans, credit card loans, personal loans, business loans, IOU to your uncle Bob, etc.

Your liabilities should be stated in your loan documents.   Your mortgage statement will have a principal balance which tells you how much you owe on the mortgage.   To find your liabilities you can simply look at the monthly statement for each account to find the outstanding balance.

Figuring the Net worth

Once you have summed up all your assets and liabilities its a simple matter to calculate the net worth total.  Subtract the debts from the Assets.

Deciding What to Include

Some people decide not to track certain things in their net worth.   What you track exactly is up to you.  Figuring a net worth is for your own information so how you do it is up to you.   You may or may not want to include things like your car or your home.   

Lets Look at an Example


Bob Smith is 25 years old and single.  He graduated college a couple years ago and bought a house.

Bob's assets:   His home, retirement account at work, 2007 Honda Civic with dent in fender, checking account, savings account, Roth IRA, US savings bonds Nanna gave him when he was 8 years old.
Valuing the assets:

Home :  Bob goes to Zillow and looks up his address.  The Zestimate price from Zillow says his house is worth $185,000.
Car : Bob goes to Edumonds and uses their used car appraiser to look up his Honda.   Edmunds says that if he sells his Civic as a private party it should fetch $13,702.  However he knows that dent would cost him $800 to fix so he counts the car as worth $12,902.
Retirement, Checking, savings account, Roth IRA, Savings bond:  These items are easy to value.  Just look up the current balance in the account.   Bob has $23,105 in his 401k at work, $8083 in his Roth IRA, $10,605 in his cash accounts and that savings bond is now worth $1,146.
Bob's Assets:

House : $185,000
Car : $13,702
401k: $23,105
Roth IRA : $8,083
Cash : $10,605
Savings bond : $1,146

Total assets : $241,641

Bob's debts include a mortgage on his home, student loans and a car loan.    Bob's mortgage balance is at $179,286 his student loans total $23,000 and he owes $4,000 on his car loan.
Bob's Debts :
Mortgage : $179,286
Student Loan : $23,000
Car loan : $4000

Total debts : $206,286

Net worth = total assets - total debts =  241641 - 206286 = Bob's total net worth =  $35,355

Activism by Gifting

Have you ever gotten a gift from someone that is clearly something they really appreciate or value and are giving the gift to you to share their values with you?    I'm thinking of something like "we donated $50 to the [charity] in your name" where the charity is some cause that the giver appreciates but you've never even heard of.    Or gifts where the gift is educational about a topic that the giver really values.  An uncle who is an accountant may give his niece a book about accounting.   Another example is someone who supports a cause and then gives gifts that are about their cause.   If your friend is really into environmentalism and being green and then they give you gifts that are green in nature like reusable water bottles with filters.

These gifts are for the giver and not the person receiving the gift.


Such 'activism by gifting' is about sharing (pushing ) your views on your friends and relatives.

I personally don't like this kind of gift at all.   Gifts are supposed to be about something that the recipient wants and appreciates.  

 I'm not saying its bad to give money to charity or give educational gifts or gifts that reflect a cause.   In fact those can be great gifts.   But the charity, educational topic or cause must be one that the gift recipient highly values instead of one that the gift giver values.

One clue that a gift is your own activism is if you have to explain to the recipient what the gift is and why it is a good thing.   The recipient should appreciate and value the gift when they receive it and a gift should not require you to tell them why its good.   Thats a clear sign the gift is not something the recipient really values.   THis may not apply to all gifts, cause sometimes you give someone a 'thing' that is new item or new invention that they may not be familiar with so if you have to explain what the 'thing' is for then thats not necessarily bad.   For example a gift of a new kind of wine bottle opener may require an explanation but that might be a great gift for a wine lover.    On the other hand a gift of a cow given to an impoverished village in the third world may require explanation and if the recipient is confused why this giving someone else a cow is a good thing then thats not a great gift.   I think giving a cow is a nice idea by the way, so if you want to give a cow in my name then go right ahead.

Heres some examples of when I think is good or bad activism giving:

Good : Giving a charity donation to a pet shelter in the name of someone who is a huge pet lover.
BAD: Giving a charity donation to your favorite art museum in the name of someone who does not appreciate art because you want to share your enthusiasm for art with them.

Good:  A book on accounting given to a high school student who is planning on going into accounting as a career and has been decided on it for some time and talks about it a lot.
Bad:  A book on accounting given to a high school student who is undecided on their future career but might go into music as a profession because you want to give them a subtle shove in the direction of what you think is a right career direction.

Good : Reusable water bottle filter for your hippie cousin who is always talking about the environment and lecturing everyone on reducing waste.
Bad : Reusable water bottle filter for your cousin who drinks a lot of bottled water because you want them to stop being so wasteful.

Gifts are about the person who is getting the gift.    Trying to push your values and interests on someone is not a very considerate gift.   Don't use a gift as an opportunity to impose your tastes and values on people.   A better  gift is one that reflects the tastes and values of the recipient.

History of Estate Tax Rates

The article Estate Taxes an Historical Perspective  from the Heritage foundation has a brief history of estate taxes.  The document Estate Taxes : Ninety Years and Counting from the IRS has lost of information as well.  

Estate taxes date back to the 700 B.C in Egypt.   The first estate tax in the USA was passed in 1797.   It was in the form of a stamp tax on wills.   That one only lasted a few years before it was repealed.   Later in the 1800's there were estate taxes imposed temporarily to fund wars.   In 1916 the modern version of the estate tax was started.   Since then it has been changed and revised numerous times to get to where it is today.

As of today in 2010 the estate tax is repealed for this year.   The exact nature of the estate tax in 2011 and later is currently being debated.   Below I look at the history of the estate tax from 2009 and before.

Here is a graph showing the top estate tax rate from 1916 to 2009  

As you can see the top rate rose from 1916 to 1940's.   From 1941 to 1976 the top rate was 77%.   Since the 1970's the top rate has been dropping.   Note that this is the TOP rate and did not apply to the entire estate.   

There is an exemption for the estate tax and estates do not owe any tax on amounts below the exemption.  The Exemption has gone up over the years.  Here is a graph showing the value of the exemption from 1967 onward:

As you can see the exemption has been going up.  But of course $100,000 in 1967 was different than $100,000 today due to inflation.   SO to see a better idea of how that exemption translates I figured it would be good idea to plot the ratio of the exemption / personal income.   Heres a graph of the exemption / personal income:

During the 1980's and 1990's the exemption was mostly flat around $600,000 to $675,000 so inflation eroded it.  But then in the 2000's the exemption grew drastically to far outpace inflation or wage growth.    In 1976 the exemption was 11 times the average personal income.   The $2M exemption in 2008 was about 74 times average personal income and the $3.5M exemption in 2009 was over 130 times personal income.

Another way to look at the estate tax is the percent of estates that actually end up paying the tax.   The IRS publication has that data in a graph form in Figure F on page 8.   I reproduced it here:

Source: IRS.gov

You can see that the % of adult deaths resulting in an estate tax bill peaked around 7% in the 1970's but then dropped down under 2% by 2004.