When I post my financial reports each month, they reflect only a small piece of who I am as a person. My bank account balances are only a small part of my life although they are center stage on Consumerism Commentary. I try to avoid labels for this reason; when I reach a net worth of a million dollars, I will be hesitant to call myself a “millionaire,” a label that would describe only a small part of me.
Even when looking at my finances in whole, net worth is a small piece. You cannot forget about your net income, a number which will tell you more about your financial well being than your net worth. That is, if your net income is positive every month and your net worth is negative, you’re in better financial shape than if your net worth is positive and your net income is negative.
You can take your net worth, income, and cash flow and still have an incomplete picture of your financial wellbeing. That’s because these figures all neglect to include human capital, your ability to earn income in the future, and focus solely on financial capital, your assets.
The New York Times recently shared an article about using human capital to hedge your financial capital. If you have strong human capital, you can afford to take fewer risks with your financial capital, but if your human capital is weaker, you may need to take more financial risks to get to the same place.
The strength of human capital can be judged by the stability of your job and your ability to find work regardless of the economy. Can your skills be marketed across a variety of industries? If you are a mortgage broker, your immediate job security is tied to the real estate industry. That could be a dangerous sign for your human capital. But if you are a financial analyst, you might be able to find a job in any economy in any industry (not just finance).
If you are close to retirement, your human capital will be low. You may not be willing to spend several years training for a new job or career. Young people have a human capital advantage; time is on their side.
This measurement of human capital may be even more important and tell a more complete story about your ability to thrive financially than your financial capital. How would you characterize your human capital?
At the beginning of March, the banking arm of Sallie Mae, a publicly-traded corporation whose main business is student loans, began offering high-yield savings accounts. As I’ve mentioned before, “high-yield” is currently a joke; just a few years ago, you could deposit cash in high-yield savings accounts and count on slightly beating inflation.
It is likely your money in a savings account will lose purchasing power until rates increase again. Even then, with the proliferation of online savings accounts, the marketplace might look much different than the last time rates here high.
I’m not normally a fan of chasing high interest rates; the time and effort generally don’t outweigh minor gains in after-tax income. I suggest finding a bank that offers consistently high interest rates and sticking with them until you have a problem with the bank or could earn at least a hundred dollars more by moving your money.
Because I review banking products, I have many active savings accounts. With Sallie Mae, I am adding one more. Like Discover Bank, opening my account at Sallie Mae Bank was very easy.
Opening a Sallie Mae Bank Savings Account
Consumerism Commentary is currently giving away five “extreme finance” packages containing Quicken of your choice, TurboTax of your choice, and QuickBooks of your choice. Click here to find out how to enter.
I never thought I’d put an exclamation mark on a sentence about credit card statements, much less be sincerely excited about it, but here we are. You have to pick your battles in life, and clearly-displayed information is one of mine. Educating people about credit card danger is another. Today, I feel like I’ve won a battle, or at least helped.
In addition to the rest of the recent changes to U.S. credit cards, any statement made after Feb. 22 will be including some information about your interest rate, penalties, minimum payments and the like. By law, this information has to be clear and obvious.
On my most recent statement, it looks like the picture below, front and center on the first page. The part that makes me unexpectedly giddy is outlined in red.
If I make only the minimum payment, it will take 11 years to bring the balance to zero. This is obvious to people who had the right education, or who made an extra effort to calculate it for themselves, but now it will be obvious to millions more.
Will it help everybody? No, not everyone looks at their statements, and some of those who do see it won’t let it sink in, or be able to change their behavior right away. But I know that if I had this information on my statements starting around age twenty, I would not have gotten into as big a mess as I did.
Frankly, I was hoping for graphs, or more bold text, but this will do for a start.
Thanks to the team at Intuit, Consumerism Commentary has “extreme finance” packages to give to our readers. This is a complete package that covers personal finance management, tax filing, and even business accounting. Five of these packages are available. Although the company balked at my initial idea of giving away free tax filing for life, I’m happy to say we were able to come up with something just as extraordinary.
This has the possibility of being a popular giveaway, so I am offering Consumerism Commentary readers a number of ways to qualify. But first, here is what is included in the “extreme finance” package, worth up to more than $300 each.
If you win, you will be able to select your choice of tax software, personal finance management software, and business accounting software.
The winner will choose one of the following options for filing taxes:
I’d like to point out that in addition to the above software, Intuit provides these free options. For filing your taxes, you may qualify for the TurboTax Online Federal Free Edition and for managing your personal finances, you may be satisfied with Mint.
In order to win this giveaway, readers can accumulate points. Each point represents one chance to win one of five of these “extreme finance” packages. The maximum number of points is 20. In other words, if you follow each of the suggestions, you will be 20 times more likely to win than someone who just leaves a comment below. Here is what you can to in order to increase your points:
Follow @flexo on Twitter and let me know that you have in a comment below (one point)
Retweet the giveaway on Twitter: “Pls RT! Awesome TurboTax/Quicken giveaway from @flexo! http://bit.ly/aH8vnR” and let me know that you have in a comment below (two points)
If you have a blog or other website, link to this article (three points)
If another reader mentions in their comment that you referred them to the contest, you will receive up to seven matched points as the referrer
Of course, if you already subscribe to the RSS feed, if you already follow @flexo on Twitter, or if you are already a fan on Facebook, let us know in the comments. You do not need to re-do these actions in order to receive points.
When you comment, don’t forget to let us know what additional actions you have taken to ensure you’re awarded all your points. Also, if someone referred you to the contest, let us know who referred you so the referrer can receive their matched points.
This giveaway will remain open until Friday, March 12, 11:59 PM Eastern Time. Your comment must be posted and all actions must be complete by that time in order to be awarded your points. You will need a mailing address in the United States and must be at least 18 years old to qualify.
Now for some fine print. Intuit is providing this software directly to Consumerism Commentary readers. The software is being provided independently of the recent review of TurboTax Online and any other software reviews posted on Consumerism Commentary. Consumerism Commentary is an authorized affiliate of Intuit.
Last year was the first year I abandoned my own tax return preparation, deferring to a professional to do the dirty work. I’m glad I did; he suggested I restructure my business retroactively, resulting in a savings of about $15,000. I still haven’t seen most of this; the IRS is still processing my amended 2008 return.
As you could probably guess, my taxes are more complicated than most people’s. For many years, I was able to take care of my tax filing using online software. Prior to using TurboTax Online, I completed the forms by hand and sent the paper forms through the mail. At the time, I had one W-2 and one or two 1099-INTs to worry about — no Schedule C, no deductions, nothing remotely interesting.
Unfortunately, I made a miscalculations the last year I filed by hand. the IRS caught the error and corrected my return, and I was required to pay more money at a time I was not fully prepared to do so. I decided I would trust a software program to calculate my taxes in the future. I started with TurboTax Online, alternating occasionally with TaxACT.
This year, TurboTax Online is featuring several new or enhances features.
Tax deductions and credits
The 2009 tax year is interesting. There are about $13,000 worth of credits and deductions available to taxpayers. The company estimates that 95% of all taxpayers will qualify for at least one credit or deduction. Thanks to a government looking to wrest the economy from the throes of recession, there have been two major additions to the list of tax credits for 2009: the Making Work Pay Credit (2009 Economic Stimulus) and the New Home Buyer Tax Credit, The latter is not just for first-time home buyers anymore.
TurboTax has been updated to include even the most recent changes to the tax law. If you answer the software’s questionnaires correctly, TurboTax will let you know what you qualify for.
Improved error-checking
TurboTax now checks for errors as you go along. In most cases the software will provide immediate feedback. In previous years, most error checking would take place in a final step before printing or filing.
Bookmark or flag pages
While TurboTax estimates that most people will complete their tax returns in two sittings, I usually took longer to finish entering my information. Part of the problem is I’d often come across a question for which I didn’t have my answer on hand. For situations like these, TurboTax offers a feature to flag the page. Your flags are like bookmarks. You can give each flag a name and jump right the the correct location next time you log on.
This could be helpful if you don’t have a dependent’s Social Security number at the time you start completing your tax return. Once you come to this question, you could flag the page and continue through the forms. You could complete your entire return if you have the information available, and return at a later time to provide the missing Social Security number and file.
Live help from the TurboTax community
If you have any questions while completing your tax return, you can search for answers provided by other TurboTax users. TurboTax employees monitor these answers, so in most cases, the information you receive will be confirmed to be legitimate. Remember that most people answering these questions are not professionals.
Answers are rated by the community, and some participants are designated “superusers” and “pros.” Pros are tax professionals, verified by TurboTax. These ratings and designations help improve the chances that the information you receive is correct.
TurboTax offers an option to “Ask Tina a Question.” Tina generates automated responses to simple, frequently-asked questions.
Conclusion
These features help to place TurboTax Online among the top software options for filing personal and business taxes online. One additional point I’d like to mention is that the TurboTax team is more accessible than any representatives from any other company I’ve ever done business. You can find the team anytime on Twitter (follow TurboTax, TTaxChels and TurboTaxAshley) to hear the latest about TurboTax or to have your questions answered by someone from Intuit.
Keep reading Consumerism Commentary. In a few hours, we’re going to announce a major giveaway involving TurboTax. This will not be an ordinary giveaway.
J.D. has made the transition from blogger to published author. In this episode, Flexo, Tom Dziubek, and J.D. discuss the financial advice in his new book, Your Money: The Missing Manual. We also discuss the process of publishing J.D.’s first book.
[00:00] Introduction from Tom Dziubek [00:33] Interview with J.D. Roth – [00:53] J.D.’s background – [02:33]Your Money: The Missing Manual – [04:11] The correlation between wealth and happiness – [06:32] The tyranny of stuff – [10:18] Playing mind games with yourself – [13:36] Asking for help – [14:18] The perfect is the enemy of the good – [16:45] Focusing on small or big spending choices – [18:59] Becoming a published author – [20:01] Getting an agent – [23:20] Marketing the book – [25:07] A second book from J.D? [26:48] End
We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.
I wrote last November about a rollout in my city to upgrade everybody’s power meters to the “smart” kind which should allow the power companies to operate and communicate remotely with our electricity. They should also enable us consumers to have more data about which devices in the house waste the most energy.
It appears that in the first month after some people got upgraded, their electric bills went up much higher than normal, in some cases twice as much as the previous month. I heard reports on the radio of electric bills up to $500 or $1,000.
Oncor, the company who is foisting the new meters on us, has offered a few different explanations and initially denied that there was anything faulty with the meters:
people are using more electricity due to record cold temperatures
the old meters were actually running too slowly, and the new meters are more accurate
75% of the people complaining about higher bills don’t even have the new meters yet
Oncor has tested thousands of meters and hasn’t found a fault in any of them
sometimes when the installer reads the old meter, he/she makes a mistake
Yesterday the Texas Public Utility Commission agreed to hire a third-party tester to see if they can find any problems. The hilarious-but-not-really part about that is:
Eventually, the commission might hike electric delivery rates for all consumers to pay for the program.
So, we’re paying $2.12 per month for eleven years for the new meters, we’re paying higher rates, and we might be paying to find out if the higher rates are fake or not.
Proper customer service rules dictate that if your customers are surprised with bills at a rate twice as high or more, you refund the money and immediately investigate the obvious problem, at your own expense. Other cities with smart meters have seen similar complaints, and I’m anxious to see how this turns out. I don’t have a smart meter yet, though I am helping to foot the bill at $2.12 a month. At the very least, in a truly free market, people would be able to pick a meter style, or pick an energy company that offered a different choice. But for the time being, we’re stuck.
I can’t completely fault companies like Amway, Mary Kay, and Lia Sophia. They know that friendship results in two important qualities: trust and guilt. These two qualities are important to companies because they make the process of selling products much easier. I find it relatively easy to politely decline — and hang up on if necessary — a salesperson who calls me uninvited in order to get me to upgrade my phone service or subscribe to a theater. Although I usually don’t have a problem, it can be more difficult to say no to a friend.
In most cases, people join these multi-level marketing (MLM) programs not because they believe in the product but because there is a system designed to allow them to earn significant amounts of money if they play the game right. If you are an influencer in your social circle, you will be able to convince your friends to sell products and host their own parties increasing your income. “Party” is just a code word for “sales pitch.” You can’t achieve success as a multi-level marketer without burning some relationships.
MLM isn’t the only issue. Everyone knows someone who is a social seller. From my observations, the products involved are almost always low quality, too expensive, or both. For example, someone in my office was trying to sell Girl Scout cookies to co-workers the other day for $4 a box. When asked, she had to explain that $4 was the real price and she was not artificially marking the price up. That’s a difficult sell when another co-worker was offering boxes of Girl Scout cookies for $3.50 a piece a few months ago.
I like these cookies, so I usually buy a box each year. Although I’m driven partly by my enjoyment, I’m also driven by guilt. One box of Girl Scout cookies is as far as I’ll go, however.
Dealing with co-workers trying to sell you products you don’t want is easier that dealing with friends who try the same tactics. When a friend is the seller, pressuring you to come to a party (a code word for sales pitch), you have to be strong.
First, you can consider going to the party. Don’t bring any money and don’t bring your credit cards. If you see something you truly like and is a good deal, it will be available from your friend later.
Politely decline. If you buy from your friend and there is a problem with the product, your friendship could be ruined. If the seller is a co-worker, you could be making your work environment uncomfortable. There are many stories about friends disappearing or not answering calls once they take their money, and the sale could go bad no matter how close you are with your friend.
If sales pressure continues, make it clear you are not interested. Sometimes you have to say more than, “No.” Just explain that you’re not interested in the products and you’d prefer to keep the relationship away from business.
Unfortunately, just by denying a friend, you might lose your connection. That may be the fear that prevents people from saying no more often. Saying no is fine, because a good friend won’t use you for their own financial benefit, and a good friend won’t pressure you into something in which you’re not interested.
How do you deal with friends who want to sell you products?
Vic: Great point! For me, human capital will still depend on your chosen industry – whether you are providing services or goods. When you render services, it’s... on Your Human Capital
I like these cookies, so I usually buy a box each year. Although I’m driven partly by my enjoyment, I’m also driven by guilt. One box of Girl Scout cookies is as far as I’ll go, however.
