Helping you make the most of your money.
May 15th, 2008
Since there was a credit card mentioned in this story, I am going to call it finance related.
Ralph Hardy, a 13 year old from Newark, Texas confessed to ordering an extra credit card from his father’s existing credit card company, and took his friends on a $30,000 spending spree, culminating in playing “Halo” on an Xbox with a couple of hookers in a Texas motel.
May 13th, 2008
One of the highlights of my week is seeing a new episode of “This American Life” pop into my podcasts folder in iTunes. For those of you not familiar with the show, it is a one hour radio program produced by Chicago Public Radio and hosted by Ira Glass.
This weeks show “The Giant Pool of Money” should hold special interest for readers of this blog. It is a wonderful explanation of the housing crisis, going step by step how it developed, and who were the players, from the borrowers to the ultimates purchasers of the mortgages.
If you are looking for more “This American Life” content after listening, you can check out this list of staff favorites.
May 4th, 2008
RealtyTrac has released their March, 2008 “US Foreclosure Market Report”. It reveals that foreclosures were up 5% from the previous month, and 57% from March 2007!
The report also shows that one out every 538 US households is now in foreclosure. Additionally, foreclosures are highest in Nevada, Florida, and California.
Click here to read the report.
April 22nd, 2008
If you are reading this blog, you are probably a financially savvy person. Therefore, you already know the benefits of having an emergency fund set aside for unforeseen financial emergencies.
Many financial experts, including Dave Ramsey recommend that you set aside money in an easily accessible account of, at least, three to six months of expenses. You should probably increase this amount if your income may be irregular (i.e. You earn a large percentage of your income from commissions, or you, or your spouse, is self-employed).
That’s very sound advice, that I think everyone should follow. But, if you have steady employment and believe you can set aside your emergency funds at a slow, but steady pace, there’s something else you need to consider: Does your employer have an emergency fund?
The items I am going to list below will vary greatly by the size and industry of your employer, but I think they are all very important in making sure you have a strong personal finance plan.
Here are some questions to consider:
If you answered yes to any one of these questions, you need to find out - in a non-pushy way - whether management has set aside an "emergency fund" for the company. You can consider a company to be similar to a person in that cash comes in, and goes out, every month. You know that when times are good, it’s easy to spend the windfalls, but being prudent you set aside a portion of your income for the times aren’t so good. Similarly, a prudent management would realize that good economic climates should be used to stockpile some capital in order to survive, or even thrive, in economic downturns.
If your company’s management is spending like business will never have bad periods, you should consider cutting back on non-essential spending in order to aggressively build your emergency fund. As Warren Buffett says: "The time to build Arks is before it starts raining."
In summary, building an emergency fund is an essential piece of any smart personal finance plan. If you are employed by a company, it is essential for to understand where it stands financially, in order for you to have confidence that you are prepared regardless of which way the economic winds are blowing.
April 20th, 2008
I’m about to start back to school for a graduate program that will have me traveling about 400 miles - round trip - per week. Since my daily work commute is about two miles, I haven’t really felt the higher gasoline prices as much as others that have to fill up on a regular basis.
How much is this going to cost? Although, I haven’t checked my mileage in a while, I think 22 miles per gallon is a conservative estimate. 400/22 = 18.18 400 miles divided by 22 miles per gallon, means I will need to purchase an additional 18 gallons of gasoline per week. At $3.50 per gallon, that will cost an additional $63 per week, or $252 per month. Ouch!
Luckily, I should be able to cut that in half, because I have a friend attending the same program, with whom I will be able to carpool. That will save me $126 per month! This figure does not include wear and tear on my car.
It’s easy to see the benefits of carpooling, but what about the downside? I have been friends with my car pooling partner for over ten years, so I think we will get along fine for the three years we will be making the commute. However, there may be other people that live in the area joining the carpool. How am I going to get along with them? Are there some rules that can ride share work?
Here’s what I’m thinking so far:
April 19th, 2008
I have read a lot about the subprime mortgage crisis, and found most of the explanations a little hard to get my head around.
A friend e-mailed me a link to a presentation (hosted on Google Apps), that I feel, does the best job of explaining the whole subprime mess.
Warning: The presentation does contain adult language, so if you are offended by four letter words in a comedic context, this might not be for you.
April 17th, 2008
Here is a great little tip for those worried about Identity theft. Leave a little room after your signature and write "See ID", on the white strip on the back of your credit/debit card. If the person taking your card does their job correctly, this little extra step may stop a thief from illegally using your card.
I say "if they do their job correctly" because both Visa and Mastercard require that the signature on a receipt match the signature on the card. When performing this comparison the merchant should notice the request for additional identification. You may even try writing the "See ID" in a different color ink, to draw extra attention
While researching this piece, I found a lot of conflicting information on wether or not the card has to be signed. Several sites recommended writing "Check ID" on the back of the card and nothing else. This makes sense to me, since by signing you are giving a thief a handwriting sample to use in forging your name. However, I think the evidence is pretty clear on this subject: you are required to sign the card. Not only is the wording "Not Valid Unless Signed" - or something similar - on the back of all cards, I found this information on Visa’s risk management site:
Dealing with unsigned cards
If the signature panel is left blank…
- Request a signature. Ask the cardholder to sign the card and provide current government identification, such as a driver’s license or passport (if local law permits).
- Check the signature. Be sure that the cardholder signature on the transaction receipt matches the one on the card and the additional identification.
- Complete the transaction. If the signatures appear reasonably the same and the authorization request is approved, continue the transaction. If the cardholder refuses to sign the card, do not accept the card.
If the card has a "See ID" in place of a signature…
- Request a signature. Ask the cardholder to sign the card and provide current government identification, such as a driver’s license or passport (if local law permits).
- Check the signature. Be sure that the signature on the card matches the one on the transaction receipt and the additional identification.
If the signatures appear reasonably the same and the authorization request is approved, go ahead and complete the transaction.
That’s about as clear as it gets: "Request a signature".
Some of you may be saying: "What’s the big deal? Liability on fraudulent credit card charges is limited in most cases". This is true, but think about all the time it will consume - not to mention the sheer aggravation - to clean up a big fraud. Small precautionary steps can save you big time in the event of identity theft.
Another item to consider: some banks are now offering credit/debit cards that feature your photo. These give you both the convenience of a charge card and photo id in one package.
By using these two hacks, you will greatly reduce the risk that your card will be used for fraudulent transactions should it be lost or stolen.
April 14th, 2008
Times up! Well, almost. If you haven’t even started work on your 2007 tax return, it may be time to consider filing an extension. The good news is that it is fairly simple and will buy you some additional time to get your act together.
The first thing you should know is that by filing an extension, you will get an additional six months to file your return. This means that your filing deadline is moved forward from April 15, 2008 to October 15, 2008.
Very important: Filing an extension gives you extra time to get your tax return to the IRS, it does not give you more time to pay any amounts owed. If you think you owe, send a check for the estimated amount with the extension.
With that little warning out of the way, lets take a quick look at the penalties you could face for not paying on-time. You can be charged 5% per month on any amounts owed, up to a maximum of 25%. If you do not pay taxes you owe when you file an extension, the penalty is 0.5% per month, plus interest. As you can see, even if you don’t have the funds available to pay the taxes you owe, it is still in your best interest to file an extension.
You will file your extension using IRS Form 4868. Here is a link to the IRS publication: Form 4868, Application for Automatic Extension of Time To File U.S. Income Tax Return.
Most tax preparation software can help you complete the form, or you can fill it out by hand and mail it in (it’s short).
Disclaimer: The author of this post is not a tax professional, and the information provided, while believed to be accurate, is for educational purposes only. Everyone’s tax situation is different, please consult a tax professional before acting on any advice on this site.
April 14th, 2008
A short note went out to financial institutions from the Federal Reserve on Friday. It contained details of how, and when, economic stimulus payments will be delivered.
Here are some highlights:
The Department of the Treasury, Financial Management Service (FMS) will begin issuing approximately 130 million Economic Stimulus Payments on behalf of the Internal Revenue Service in early May 2008. The majority of the payments will be issued to eligible taxpayers during an 11-week period starting May 2nd and concluding on July 11th.
Approximately 30 to 45 million of the payments will be made by Direct Deposit to taxpayers who file a 2007 tax return and provide bank account information. Taxpayers who do not provide bank account information on a 2007 tax return will receive payment by paper check.
The majority of Economic Stimulus Payments by Direct Deposit will be completed by May 16, 2008, although payments by Direct Deposit will continue in smaller volumes through the end of calendar year 2008.
So, if you filed your 2007 tax return electronically, you should look for your stimulus rebate to be deposited directly into your checking account.
When will you receive your stimulus rebate? That depends on the last two digits of your social security number. Here is the IRS schedule for transmitting, or mailing, rebates:
| Last two SSN digits: | Payment will be transmitted: |
| 00 through 20 | May 2 |
| 21 through 75 | May 9 |
| 76 through 99 | May 16 |
| Last two SSN digits: | Payments will be mailed by: |
| 00 through 09 | May 16 |
| 10 through 18 | May 23 |
| 19 through 25 | May 30 |
| 26 through 38 | June 6 |
| 39 through 51 | June 13 |
| 52 through 63 | June 20 |
| 64 through 75 | June 27 |
| 76 through 87 | July 4 |
| 88 through 99 | July 11 |
April 11th, 2008
Real Estate site HotPads has an interesting (and frightening) display option that allows you to view heat maps of foreclosures, by neighborhood, in cities throughout the United States.
Here is a screen shot of the Atlanta metropolitan area:
And here is Phoenix:
The red colors indicate a higher foreclosure rate per household, while blue indicates a lower number of foreclosures (you won’t see much blue in the examples above).
Checkout how you neighborhood compares: hotpads.com
Receive Posts by E-mail
