Tax Carnival

... My tax advisor is the Wall Street Journal, blogs, Kiplinger and other magazines.

But where do you find all the personal finance blogs discussing tax issues? Just wait till the
Tax Carnival comes to town.

Technorati: Tax IRS

Tax Advise

Consult with your lawyer. Consult with your tax consultant. Consult with your insurance broker. So often, the radio experts or brokerage advisers punt the ball. I have no lawyer, no insurance broker and no tax consultant, although consulting with a CPA is becoming more likely. My tax advisor is the Wall Street Journal, blogs, Kiplinger and other magazines. Here's a short list of gathered tax advise.

General tax Advise:

1. Do not purchase mutual funds near the end of the year. Around the end of each year, many funds distribute capital gains to investors. Consider waiting until after the date to qualify for the payout to invest in that fund.
   
2. Donate stock to charities, as opposed to selling and taking the capital gains tax. It is a double whammy: a) you do not have to pay the capital gain tax b) you get to deduct the contribution.
3. Be green - get green: energy tax incentives
   
4. Visit your doctors and dentists in October. This allows you plan better your health care expenses, and thus your health case spending account contributions for the next year.
   

Alternative Minimum Tax (AMT) related tax advise:

1. Do not prepay state and local taxes if you suspect you are subject to AMT.
2. Invest in AMT-free funds, which invest between 80-100% in municipals bonds and money-market instruments whose income isn't subject to the AMT.
3. Defer income to next year.
   

Retirement related tax advise:

1. If you've previously shunned IRAs, the best move you can make between now and 2010 is to invest as much as possible in a Traditional IRA. Then, in just over three years, you'll have a nice sum you can convert to a Roth IRA, because of changes in the tax law. This past spring, Congress passed a new law that will make it possible for everyone -- regardless of income -- to convert their IRAs into a Roth IRA beginning in 2010. (see Suze Orman column)
2. Avoid ADR (American depositary receipt) in your IRA as they are subject to foreign tax which you can not recoup.

More to come.

Technorati: Tax IRS

Pinger and Free International Calls!

I've been experimenting with Pinger the last month. It is a service which allows you to record a message from your phone, to be sent as an mp3.


This is great when you know somebody is in a meeting. Or when you have only a couple of minutes to spare and you don't want to be locked in a long conversation. Think of it like recording memo's.

I discovered the service via TechnCrunch. There is also a short description in a recent technology article from David Pogue in the Wall Street Journal:

FREE ‘PINGS’ Pinger is a new way to reach someone: a method that combines the immediacy of a text message with the personality of voice mail. (You can sign up at Pinger.com.) You call one of Pinger’s access numbers, say the name of the person you’re calling, and then speak a message.

Suppose you’ve just pinged your sister. She receives a text message to let her know. With one keystroke, she can hear your message — and with another, send a voice reply. There’s no waiting to roll over to voice mail, no listening to instructions, no outbound greetings.

But there is something even more interesting in his article: FREE INTERNATIONAL CALLS. That's right! (I haven't tried this yet, until tomorrow that is.)

You can now call any of 50 countries from the United States, free. Talk as long as you like. You pay only for a call to the access number in Iowa, which is 712-858-8883; if you use your cellphone on nights or weekends, even that’s a free call.

There’s no contract, no ads, nothing to sign up for. At the prompt, press 1 for English. Then punch in 011, the country code and the phone number. The call rings through immediately.

Fine print: In some countries, you can reach only landlines, not cellphones. And in part because FuturePhone’s lines have been flooded, its success at placing calls is not, ahem, 100 percent.

But it’s hard to argue with “free,” which, according to the company, it will be until at least 2010.

PG&E: Heat Storm Credit

Fall has been very mild in Northern California. Yesterday the temperature was still 76F/25C. We barely had to turn on the heater in the morning. Our electricity and gas bills have been low. The Oct 15-Nov 15 bill was a grand total of $39. Something struck me as odd on the statement: the bill included a Heat Storm Bill credit of $4.35. PG&E 's website has more details:

PG&E is giving customers a credit. As we all know, California experienced unusually high temperatures in late July 2006. Higher temperatures led to higher energy usage and that, unfortunately, led to higher energy bills. Because of this unprecedented situation and because of our broader commitment to serving our customers, we’re taking unprecedented action. We are retroactively lowering your July bill. In October all residential customers will see a 15 percent credit based on their electric energy usage in July.

Let me repeat the PR-machine-at-work "Because of this unprecedented situation and because of our broader commitment to serving our customers, we’re taking unprecedented action."

When a big corporation is handing out cash, count your chickens!

Technorati: PG&E Electricity Environment Personal Finance

Here's my password

Young and Broke had a nice post about My Grocery deals. Since I was about to post about our grocery shopping, my interest peaked. I checked out the recommended website : MyGroceryDeals and signed up.

What's up with websites who claim to take your privacy serious and supposed to be secure websites?

Dear Visitor to our wonderful website/Valued internet user -
We take your privacy serious ... blah blah blah.
We are a secure website ... blah blah blah.

So why do you send me my password in clear text when I changed it to a more secure one? To add insult to injury, the useful part of the website, requires you to install software to merely print a coupon.

The Coupon Printer contains security features needed to provide you with coupons you can use in a store. It does not install any third-party software, nor does it collect any personal information.

MyGroceryDeals is a great idea, but a poor implementation. No thank you!

Invest in what you buy

Recently (August 12th), I read an article in Barron's about Whole Food markets. WFMI had reported good earnings the previous quarter, which were however below the high (inflated) expectations of some analytics. As a result the stock had been oversold. The article discussed how Whole Food markets was a great company, with innovative ideas to increase sales/sq ft, with quality products and a high level of customer satisfaction. In other words, a great company to invest in. The low stock price made it a great buy.

I was ready to invest, but realized that the Barron's effect [1] might kick in Monday morning. Indeed, Monday it jumped +7.5%, Tuesday, +5% and the stock quickly became no longer undervalued.

The bigger story here is to look for investments among the quality products your buy. It is much harder to hope for great earnings from companies selling poor quality products. Instead, if you focus on companies you love because of their great quality, or good customer services, you already have a shortlist of companies to investigate and find a few undervalued ones.

I decided to create a short list of my best price quality buys:

• Honda Civic
• Apple powerbook and ipod
• Shoes: Mephisto, DocMarten's, Salomon
  
• Patagonia
  
• Tenson jackets
• All Clad cookware
• Weber BBQ
• Canon Powershot S110
• Andersen Windows
• Sennheiser headphones

And a short list of stores and service companies for their great customer service and quality offering:

• Amazon
• B&H Photo Video
  
• Google
• Whole Foods
• Trader Joes
  

Financial Records

Fidelity recently had an interesting piece (both in podcast form, as in the On Track flyer) about financial records to keep and for how long. Some of the key points:

• Keep tax records (W2 forms, canceled checks for deductible items, 1099 forms etc) for 7 years. (Three years for regular audits, but it's better to be on the save side.)
• Keep investment records until you sell the security, plus seven years.
  
• Keep retirement records forever.
• Keep home improvement records until you sell your house, plus seven years
• Keep bank statements seven years (to support your tax records)
• Keep personal bills until you have proof of payment

A few weeks ago, I finished my paperwork clean up into nice Ikea hard carton boxes. I sorted them per year and fit about 2 years worth of paper trail in one Ikea box. My record keeping is pretty much on par with what Fidelity has been recommending.

In addition, I keep electronic copies of my statements and bils on a external hard drive and on a CD-RW.

[List] Consumer related websites

I find myself keeping track of a great number of lists. Many different to-do lists (work, money, garden, home improvements, etc, trip lists, bookmarks, addressbook, etc. I recently started moving many of them onto "the network". That way, I can access them from anywhere and any computer. I put my lists either in Google Notebook, or Google Docs & Spreadsheet. My bookmarks, I moved to del.icio.us (I created a money tag and personal finance tag). Here is a short list of interesting consumer related websites I recently added to my bookmarks.

• www.consumerReports.org
• www.consumersUnion.org
• www.consumerWebWatch.org
• www.eco-Labels.org
• www.EscapeCellHell.org
• www.FinancialPrivacyNow.org
• www.GreenerChoices.org
• www.HealthyKidsProject.org
• www.HearUsNow.org
• www.safeCarsForKids.org
• www.Checkbook.org
  
• www.bestbuydrugs.org
  

Extra !! Extra !! Newspapers and magazine for free!!

That's right. I am not talking about reading your newspaper or magazines on the internet for free. No, no, nothing but the real thing: real colorful weeklies, oily newspapers or perfumed fashion magazines. I am currently subscribed to a handful of them, all for free. Not a penny out of my pocket. Well, I paid with airmiles currency. Normally, I do consider airmiles as any other currency, but since I had a few thousand expiring Delta Skymiles, I either used them for something good, or lose them. Through the Delta Skymiles, Magazines for miles, you can subscribe to many magazines. Take a look on their website. Renewal offers are also quite reasonable. Magazines have you rather as a subscriber at bottom prices, than not at all. They don't make their money with subscriptions, but with advertisement. And the advertisement fee is correlated to the number of (paying or non-paying) subscribers. For that reason, Forbes, kept sending me free magazines for years!

Be aware: It is common to forget about which magazines or newspapers you ordered. And you don't really know when they are supposed to start. Finding the contact info is often difficult. So let me share you two numbers for the Delta Magazines for Miles program:

• Awards Processing Center - 1-(800)-586-7046
• Magazine Customer Service, 1-(800)-961-870

Time to go and read my paper newspaper!

Will the real maestro please stand up?

Get Rich Slowly posed the question What is the best personal finance book you’ve ever read? The truth is that I read few personal finance books. I have a copy of David Bach's Smart Couples finish rich. I mostly enjoyed the (auto)biographies, such as Losing my virginity (Richard Branson) or Greenspan, the man behind the money. Recently, I came across a great set of interviews by Charlie Rose with Warren Buffett and Bill Gates, following Buffet's $31Billion gift to the Bill and Melinda Gates foundation : Charlie Rose - Warren Buffett: The Man - Part One in a Three Part Series (Part 2 and 3 can also be found at video.google.com).

Life Insurance for geeks

When we bought our little house, we invited also a bunch of spam mail looking to lure us into a 1% ARM (ha!) or trying to sells us mortage protection insurance. Little did we know about mortgage protection insurance. My dad mentioned that, at home in Belgium, the bank obliges you to take out mortgage protection insurance, prior to agreeing to loan you money.

A year after we moved in, we started looking into mortgage protection insurance. It became quickly clear that this is a form of life insurance in a sheep skin. For one, the death benefit often decreases over time (as your mortgage decreases). When you compare with a regular life insurance, the rates are quiet similar and your death benefit does not decrease.

I remember having read several articles at the time about the different types of life insurance. I took away that simple term life insurance is the best value. We shopped around with several big companies for 30 year term life insurance: AAA, AIG, Farmers, Metlife, Prudential, State Farm, NY Life, All State, and Forresters. For $500K, prices varied between $100-$150/month premium for both my wife and I. We were close to going with AAA or Forresters, until a friend of ours mentioned the IEEE insurance program. The Institute of Electrical and Electronics Engineers (IEEE) is a non-profit organization for geeks. They organize conferences, publish several publications, create engineering standards, etc. IEEE has over 350,000 members. This gives them great cloud when offering benefits such as term life insurance.

I do have life term insurance through my employer, but since my employment is at will, things can change rather quickly. As an engineer, so long as I pay my IEEE dues ($156/year), I'll am eligible for life insurance. And with that many members, they aren't going away anytime soon. Life insurance is offered through NY Life and came out to be about $250/year. Per year! That is big difference for in essence a better term life insurance. For example: until 65 years of age the death benefit remained the same ($500K) and then decreases gradually until the age of 100. Your spouse can participate as well, even if he/she is not an IEEE member.

If you are an engineer, or know of organizations for your profession, do check out if they offer life insurance of health care benefits. You can save a bundle.

Technorati:Life Insurance IEEE insurance Personal FinanceX

Opening day

Since moving away from Quicken several months ago, I have been on the look out for personal finance spreadsheet tips and tricks. How do YOU keep track of your personal finances? In my search, I've come across several interesting personal finance blogs. Some discuss the basics on investing, others have frugality tips, others show detailed snapshots of their personal finances. I also learned about a the Carnivals phenomenon: the Carnival of Frugality, the Carnival of Investing, etc.

Since I find myself posting commentary on many blogs entries, and I keep numerous personal finance spreadsheets myself, I decided to create my own personal finance blog. I care a lot about the best price quality ratio when I spend my money, so finding a title was easy. Welcome to Ratio(Price, Quality)!