From the monthly archives:
In response to my latest balance sheet, Wacko asked a question:
Any pointers on how to calculate an automobile’s depreciation? Obviously I can look at Kelley Blue Book, but I do not know the monthly depreciation.
Also, I was wondering if anyone knew of an accurate way to determine the value of one’s home. I want to be able to balance the current value of my home with the loan on it.
What is the true value of an asset? [click to continue…]
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Word must be getting around the office that I’m up on the current personal finance issues in the world. A coworker who I don’t normally work with came to me to ask my opinion the other day. She’s saving for her wedding, seven months from now. The soon-to-be bride, who received some money earmarked for the wedding, had heard about ING Direct and wanted my opinion.
I steered her away. Even though I keep a lot of my savings at ING Direct, I generally don’t recommend them anymore. They have great customer service to be sure, but there are better places to stash cash, offering better short term returns. I suggested two safe options. Obviously, with such a short time frame, the stock market was out.
For savings, I suggested HSBC Direct, which is currently offering a 5.05% annual percentage yield. To compare, ING Direct just increased their APY from 4.4% to 4.5%. HSBC Direct has been easy enough for me to deal with. The log-in security issues are a bit annoying, but this seems to be a trend spreading throughout all online financial accounts. Although I did not tell her this — this site is supposedly anonymous so I don’t bring attention — I maintain a list of online savings account interest rates.
I also suggested 6-month CDs. The highest APY offered on 6 month CDs, according to BankRate.com, is 5.51%. That’s significantly higher than HSBC Direct, but early withdrawals can draw penalties. I would have to know more about her financial situation to determine if she has enough emergency cash to allow her to tie up the funds for six months.
Maybe I’ll get invited to the wedding.
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Scott from the MoneyBloggerPodcast has posted a new interview with Sharon Harvey Rosenberg, the Frugal Duchess. They have a great discussion about product markups and the discount ruse. Is a 60% discount really a great deal when the original markup could be 1,000%?
Thanks to Scott for another great interview and to Sharon for making it interesting. Watch out — she has plans!
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It was actually two weeks ago that I posed the question about the “biggest weakness” question that we’ve all experienced in some form in job interviews. Some great responses followed, and one was randomly selected to win my copy of The Smartest Investment Book You’ll Ever Read, which I reviewed earlier this month. Here’s a few selected anecdotes provided by readers:
Kira said:
When I interviewed for my current job, I thought everything went really well – we seemed to all hit it off and they seemed impressed by my qualifications. Right off the bat, everyone assumed I was a whiz with computers and math (somewhat yes, completely no) – my supervisor told me recently that they assumed I had those qualifications, though we didn’t talk about them at any length in the interview, because I wore white socks with black shoes and therefore I must be a geek.
Jeremy was asked the dreaded question:
I ended up saying one of my biggest weaknesses was the fact that I have trouble delegating work. I can have a hard time letting go of control over every aspect of a project, thus I end up doing a lot of mundane tasks that eat up time that could be better spent doing more appropriate tasks.
The winner of the giveaway, samerwriter, was on the other side of the conference room table:
We’re always told to ask this question (or similar “behavioral” questions) when we interview potential employees. I don’t like them, for the reasons you mentioned. You really wind up testing someone’s interview skills rather than their job skills. Other examples of this type of question are “Give me an example of a time when you failed.” But what you’re looking for, and you don’t need to be a psychologist for this, is someone who recognizes that they aren’t perfect.
Here are the rest of the comments.
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Here is what I’ve been looking for: specific reasons for my lack of wealth at the age of 30, stemming from my childhood. Count on Money Magazine to let me know how I am not worth all I could be (and to have another quality list, like yesterday’s 8 smart year-end moves). Here are gifts you can give your kids that may help them “get rich,” or at least think intelligently about money management.
* Teens: Match whatever your working teen puts in his or her Roth IRA. Start with Vanguard or TIAA-Cref.
* Young readers: Alexander, Who Used to Be Rich Last Sunday, by Judith Viorst.
* Young gamers: Payday, a fun board game that teaches money management.
* Teen gamers: The Sims 2: Open for Business Expansion Pack, in which you can run your own virtual business.
* All kids up to 18: Contribution to a 529 plan. Savingforcollege.com is a good resource for these tax-deferred education savings plans.
The good thing about these gifts is they stand the test of time. You don’t have to worry about buying into the right fad or getting the latest and greatest toy. Those gifts will soon be fogotten about, but the above gifts will last for a long time and have a positive effect.
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Here are four more smart year-end money moves, according to Money Magazine. I only conditionally agreed with the first four, so let’s see how the magazine did with the remaining tips.
5. Set your sights clearly. They suggest deciding well in advance the destiny of any year-end bonuses. This will prevent splurging to some extent. In my company, we don’t receive our bonuses until February or March. The delay prevents me from using the money for holiday gifts. In the past, my bonus has gone to pay for regular expenses at my regular income’s shortcoming, but that probably won’t be the case this year.
6. Make some adjustments. Consult an accountant who can help you speed up or slow down tax payments or self employment income, or adjust your withholding for next year so you won’t have to later. Speaking of adjustments, it might also be a good time to take a look at your investment asset allocation. If one part of your investments performed very well or poorly, your allocation may be out of whack with your goals.
7. Play catch-up. The maximum 401(k) contribution for most people in 2007 is $15,500. I won’t hit that mark without a significant raise, but for people like us, Money suggests increasing contributions by a percentage point. I plan to hold my contribution steady at 12% of my income.
8. Have the talk. “In your life, there’s probably a difficult financial conversation that you’ve been meaning to have with a family member but haven’t gotten around to. Maybe it’s talking with your parents about their retirement finances or discussing long-term financial goals with your spouse.” Money believes the holidays are a good time to have this talk. I talked with my mom about her retirement over Thanksgiving, and that’s a topic for another day.
In general, these are good reminders from Money Magazine. A few tweaks here and there would help the set of tips apply to my life.
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The marketing gods have dubbed the Monday after Thanksgiving “Cyber Monday” due to the increased online sales with typical e-commerce retailers like Amazon.com as people stumble or roll back to their offices. Rather than getting back to business, they’re not in the mood for work and would rather shop online, possibly looking for deals.
Rick Aristotle Munarriz from The Motley Fool says Cyber Monday is a joke. There weren’t any deals for virtual-only stores to be found. It’s the standard brick-and-mortar stores that are latching onto the Cyber Monday hype. Wal-Mart is one example. CNN reported on a week-long sale to “celebrate” Cyber Monday.
How much did you spend on gifts online today, and where did you spend the money? Were there any deals to be found? Or is Cyber Monday just a poor marketing excuse and a myth? (More credit card transactions were posted a week after Cyber Monday last year.)
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Money Magazine suggests eight money moves people should consider for the end of the year. Here are some thoughts.
1. Take your losses. Money suggests selling poor-performing stock to offset ordinary income for tax purposes. In my opinion, this depends on the stock. If the future does look bleak, go for it, but if there is some reason to believe there is a comeback around the corner, hold on. (Efficient market theory suggests that any widely-known “comeback” is already represented in the stock’s price, so this may not work for you.)
2. Buy some aspirin. If you have any money left over in your flexible spending plan, particularly if yours is of the use-it-or-lose-it variety, stock up on eligible pharmaceutical items you know you’ll use before they expire, like aspirin. Your deadline for using the funds may extend into next year, so the push may not be as urgent — check your company’s policy.
3. Be generous. Give money to your favorite charity or non-profit organization, and you can reduce your tax liability. I would like to think that isn’t the only reason people support causes, but it does help. Money suggests setting the money aside in a Charitable Gift Fund to get the tax deduction now while postponing the distribution to a later date, when the donor has had time to determine where it should be sent.
4. Get IRA smart. Anyone 70 1/2 or older must start taking the required minimum distribution from IRAs. If the minimum isn’t met, there is a significant penalty. Alternatively, you can donate your distribution to charity and avoid withdrawal taxes.
Part 2 will summarize the second half of Money Magazine’s year-end money moves.
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