Posted January 14, 2010 at 7:27 am
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From Bobby Casey
Managing Director
Global Wealth Protection
Yesterday I went to the local mall here in Tartu, Estonia to buy some dress clothes. I am not what you would call a ‘suit kinda guy’. But I am going to an investment conference in Zurich in a couple of weeks and thought the usual jeans and a t-shirt may be a bit too casual.
When I was at the mall, I left my sweatshirt at the store so here I am back at the mall. I am sitting at a small café having a late lunch watching the ice skaters in the center. Today must be training for the budding Olympic hopefuls because it is all 8-13 year old girls along with a few coaches. It is amazing what these little girls can do on ice.
Whenever I am at the malls in different countries, I enjoy looking around at what the locals spend money one. In this mall of about 50 stores, there are 5 electronic stores and another 6 that sell mobile phones and accessories. There are also shoe stores, clothing stores, luggage, jewelry, several food establishments, and a really nice bookstore. Anytime I am at a mall, my thoughts go to consumption and taxation.
Lately I have been contemplating a major flaw in the US tax system.
We provide incentives for consumption and restrict production through our tax system. Right now in the US if you put your money in a savings account you will earn less than 1% annually, not exactly a motivator to save. And you can get a 30 year fixed mortgage on your house for 5% interest.
With money that cheap, that is a pretty good motivator to borrow. We also have the highest corporate tax rate in the world and one of the highest personal progressive tax rates. Companies are even taxed on dividends paid, and the investor is taxed again when he receives dividends!!! We are taxing production and incentivizing consumption.
Continue Reading…
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Posted January 12, 2010 at 6:12 am
by Karen De Coster:
Roger Lowenstein has written one of the best articles I have read on the topic: walking away from your house. The prominent author and journalist published a January 7, 2010 article in the New York Times with the headline, “Walk Away From Your Mortgage!”
Lowenstein acknowledges that it may be financially careless for homeowners who are upside down on their mortgage to keep paying it in order to hang onto a fantasy of ownership and avoid the shame of default.
In this article, Lowenstein’s subject is the borrower who can afford to pay the mortgage but considers opting out for reasons of financial benefit and survival. This is referred to as a strategic default.
Lowenstein’s thesis is exactly what I have been preaching to family, friends, and acquaintances for some time now. Many Americans are, by nature, very meticulous about paying off their debts and honoring contracts.
Nevertheless, when they are stuck with a home that is worth far less than what they owe, the home becomes a noose around their neck, a pecuniary black hole, and a drag on household cash flow. It becomes what I call exorbitant rent.
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Posted January 11, 2010 at 11:39 am
by the Monevator:
( A new U.K. Blogger I follow )
First caveat: I’ve never made regular use of a financial adviser, and I haven’t surveyed the field.
Second caveat: I’m not an adviser, either (please read my disclaimer).
So yes, I’m sure there is a good financial adviser somewhere in the UK. He’s probably being chased across the plains of Dartmoor as we speak, pursued by his slobbering peers who want to suck out his brains for suggesting in 1982 that his client didn’t really need an endowment mortgage.
Maybe it’s not even the fault of the advisers that
they’re evil bloodsuckers.
Perhaps they start out off as basically good guys who want to help others, like nurses or firemen, and it’s the structure of their industry – where most get paid by companies for hooking up clients with their products, not for improving their finances – that turns them into morally bankrupt predators on the weak.
Whatever the case, 18-year olds should be given a silver bullet on leaving school in case they encounter one.
Alternatively, the simple phrase ‘
How much do you make from selling me this?’ should be taught to send them squirming back into their holes.
Read Full Article…
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Posted January 9, 2010 at 8:22 am
From Jay Peters:
The Credit Bible
With historically low rates, many homeowners are watching closely for the right time to refinance their mortgages. Those with good credit may well recall being showered with praise by a mortgage broker during the initial purchase for that solid credit score.
That was then. This is now.
A few years ago, a score of
620 or higher was good enough. That increased to
680 in early 2008. Then it jumped to
720 in April last year and
740 in August, says Rodney Anderson, senior managing partner of Plano, Texas-based Rodney Anderson Lending Services.
In the past, any score of 700 or higher would get a double thumbs-up from credit experts. Now, rate adjustments begin kicking in at 740, with every 20-point drop adding another adjustment.
In other words, many people who were taking pride in their credit habits either must pay significantly higher or try to make quick changes to nudge their scores upward.
“What used to be great is now only good,” says mortgage broker Todd Huettner, president of Denver-based Huettner Capital. Refinancing that would have worked a year ago might well not make sense, he adds.
Read the rest of the story here…
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To learn more, go to the
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inside your Wealth Vault member’s area…
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Posted January 8, 2010 at 12:47 pm
From Wisebread.com:
The Home Affordable Modification Program (HAMP) rolled out last year currently has over 700,000 people in trial modifications and a little over 30,000 in “permanent” modifications.
The program has been plagued with consumer complaints of lost paperwork and denials.
Here are some reasons why many consumers are better off skipping this program all together.
Read Full Article…
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Posted January 5, 2010 at 2:04 pm
by Jason Kephart:
1. “Like it or not, you may need help with your taxes.”
When Cindy Hockenberry and her husband sent in a tax-penalty payment in 2007, they knew there was a chance their math might not jibe with the IRS’s. When that turned out to be true and the amount was much higher than expected, they decided to dispute it. Fortunately for them, Hockenberry’s a pro. As tax research coordinator at the National Association of Tax Professionals, she spotted a glitch in the IRS’s calculation; after visiting the local IRS office, the agency admitted its mistake and lowered the penalty. “There’s no way the average taxpayer would have noticed,” she says.
As recently as 2000, less than half of all taxpayers were using a preparer. Today 80 percent use software or a tax pro, “because they’re scared of making a mistake,” says Nina Olson, the National Taxpayer Advocate. “That’s a sign the system’s too complex.” A pro may not be necessary for basic returns that include just a W-2 and, say, mortgage interest; in those cases, TurboTax will do. However, if you’ve made a lot of market moves or run a side business, consider a preparer. (You can find one at www.natptax.com; expect to pay $150 to $200 per return.)
2. “You don’t have to be rich to get audited.”
The IRS’s job is to enforce the tax laws enacted by Congress and to collect what’s due. Its primary weapon? The audit, whose use has more than doubled since 2000, to surpass 1 percent of all returns, according to the Transactional Records Access Clearinghouse, a Syracuse University data-research organization. The increase can be attributed to the rising number of so-called correspondence audits — those done through the mail asking for specific information rather than, say, investigating your whole return, says Susan Long, codirector of the organization. “It’s more efficient.”
One way to get the IRS’s audit sensors tingling is to claim deductions much higher than are typical for your income level. We’d share them with you, but the IRS keeps that information under wraps. What’s more clear: Big charitable donations have been getting a much closer look, says Bob Meighan, VP of TurboTax. “It’s been an area of abuse for a while,” he says. To protect yourself, get a receipt for any donation you plan on deducting. And keep those receipts for seven years — unless it suspects you of outright fraud, that’s how far back the IRS will go with an audit.
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Posted December 28, 2009 at 3:17 pm
by Sheyna Steiner
If you want to be rich, you need to stop acting like you have money in the bank and start living beneath your means. That’s the message in the most recent book from Thomas J. Stanley, author of “The Millionaire Mind” and the “The Millionaire Next Door.”
Bankrate asked Stanley to explain what’s fueling America’s hyper-consumptive ways and unquenchable thirst for top-shelf brand vodka — among other indulgences.
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Posted December 23, 2009 at 2:50 pm
By Laura Saunders
Time to Review Your Taxes — Before It’s Too Late
Year-end tax planning always makes sense, but this year it’s especially vital.
Convulsions in the markets and the economy have shifted the ground beneath many taxpayers, and next year may bring major tax changes as lawmakers confront the record deficit.
Bottom line: review your taxes before it’s too late. “Too often, I can’t do anything for people who come to me in February,” says Douglas Stives, an accountant with Curchin Group in Red Bank, N.J.
Here are areas especially relevant now…
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Posted December 19, 2009 at 5:27 pm
By Sheyna Steiner, Bankrate.com |
During the heady days of the mid-2000s, consumers were seduced by easy credit and pay-later promises. But not everyone jumped on the credit bandwagon. People who weren’t old enough to get credit, lived in another country or just didn’t need any credit may have missed the easy-lending parade.
Post-meltdown, establishing a credit history may be a little bit tougher for people with thin credit files. But you can get credit by taking some shortcuts.
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Posted December 11, 2009 at 9:24 am
By Philip Brewer:
Frugality sites are full of advice for cutting your expenses right away. Everybody’s got a list of unnecessary expenses, an exhortation not to buy stuff you don’t need, and some ideas for how you can get the things you do need more cheaply.
Living cheaply for the long term is different. Call it “
strategic frugality.”
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