Apr 16

I’d always thought, and advised others, that to retire, one should have their mortgage paid in full. And that was always my own plan. But, anyone who knows finance knows that you can’t plan on an exact stock market return, you can’t plan on your own health being excellent, nor your marriage outlasting your mortgage. In our case, these things actually all are going pretty well, thank-you. What changed was our income which I posted about a few months back. While we were working, we saved, over 20% per year on average. We topped off the 401(k)s and IRAs, and put aside money for our daughter’s college tuition. In hindsight, we could have saved a bit less, and aggressively paid off the mortgage, and I know there are people who are in the Dave Ramsey “debt is evil” camp who will agree, but I have no regrets. I’m a numbers guy and as rates fell, I was a serial refinancer. We entered our retirement phase with a fresh 15 year 3.5% mortgage.

When we lost our jobs, the balance was $265K, and I did the math to see what it would have taken to have no loan on that day. Our average interest rate was 6.0% over the prior 15 years. An extra $935 per month for that time and we’d have no loan. Keep in mind, the market was interesting during that 15 year stretch from 1998-2012. A 3 year slo-mo crash with a cumulative 38% market loss. A 2008 loss of 37%. The compound growth during this stretch was 4.4%. But didn’t I just say my average loan rate was 6%? Yes. The difference was going into our retirement accounts. Not the matched portion, although that would certain tip the numbers in my favor. Just the regular pretax savings. And even with that disparity between my mortgage rate and the low market return, the 401(k) had $349K extra vs our $265K mortgage. What’s interesting to note here is that the money went into our retirement account at a marginal 28% tax bracket most years. But now, the withdrawals are at 15%. At a current rate of 3.5%, the mortgage payment is $1966, and if you do the math, it takes $2313 from the 401(k) to make this payment.

Two years have since passed, and the market in 2013 and 14 was very rewarding. A gain of over 50%. We ended 2014 with the mortgage at $233K and the calculated 401(k) extra funds at $453K. The interest deduction wasn’t part of my math, although it helps my numbers a bit. Instead of the whole payment being subject to the 15%, the first $8,000 is interest and, with some good planning, keeps us from hitting the 25% bracket.. No one should keep a mortgage “for the deduction” of course, paying a dollar to save 25 cents makes no sense. From where I sit, it simply means my 3.5% mortgage is actually 2.6%.

The fact that we hit our number while taking the mortgage payment into account, and not counting on social security which is still quite a few years away, is what lets me really sleep at night. Right now, I can’t say whether the mortgage will be paid off before we decide to move. Either way is fine by me. Paid off, our number drops, freeing up our savings for other endeavors.  A move would drop our cost of living, as we’re currently in one of the higher expense parts of the country.

The bottom line? 2 crashes over a 15 year span and the results are still in my favor. The key thing was that the difference was put into savings, not just absorbed into the spending portion of our budget. No regrets.

written by Joe \\ tags: , , ,

Mar 30

A message from my friend, Stephanie –

Hello JoeTaxpayer readers! I’m Stephanie, and I blog over at Graduated Learning.  For the past few years, Joe has been incredibly generous by donating to the Walk for Hunger, providing challenge funds toward my fundraising efforts.  It’s been great having that extra push to get family and friends to donate to this very worthy cause.  I’m excited that he’s offered up a challenge for my 4th year doing the Walk!

So, here’s some quick information about the Walk for Hunger:
The Walk for Hunger is an annual fundraising event run by Project Bread.  It’s a 20-mile walk starting and ending in Boston where thousands of people come together to raise money to help feed our hungry neighbors with nutritious food!
And here’s the scoop on Joe’s challenge for this year:
When my fundraising efforts reach $1000, Joe will contribute $500.  And when we’ve raised $2000, Joe will add in another $500!  So grateful for his generosity!
You can check out my progress and donate at my fundraising page!
Any amount you contribute helps support this great cause.  Thanks so much for your help!
Note from Joe – as I wrote last year “Joe and Stephanie each have nearly 3000 twitter followers, and hundreds of Facebook and LinkedIn friends. Only one in 10 needs to donate $10 to help raise over $5000 this year. What’s great is that you don’t need to sit and write a check, you can go to the site and make a donation with a credit card. Every bit counts and will help to Feed the People!” Steph raised over $3300 last year, a great number for a single walker. This year I hope we can help her to hit $5000. Did I mention? Every bit counts!

written by Joe \\ tags: , ,

Feb 14

Many of us look forward to a tax refund each year, using our tax payments as a small savings plan. If you’re waiting on that refund but need to raise a bit of cash more quickly, today’s article is for you.

Situations often arise, and rather than taking a loan, you can make money legitimately in a few hours to a few days. If the idea of selling plasma strikes a nerve you can’t handle, here are five ways to get money in a hurry.

  1. Offer to be a Sitter

Sitting is an excellent way to get fast cash. It’s a quick job to do, and you are paid immediately. If you need money in an account, this is another great option as many people are signed up for PayPal of which friends and family can transfer money to your account. Sitting, however, is not just limited to watching someone’s kids. You can:

  • House sit
  • Pet sit
  • Sit for an elderly parent 

If you are in a jam and there are no family or friends who need your assistance, sign up for sites such as mindmyhouse.com, dogvacay.com, or sittercity.com.

  1. Recycle Your Old Phones

If you’re like many people, you change up your phone every year or two. You throw the old ones in the back of your desk or closet and forget all about them. Even though technology is always changing to make our lives better; there are still some people who prefer older phones for the convenience or the cheaper price tag. You can sell your old phone to a pawn shop or turn it in to some carriers for a small chunk of change. Ask your family and friends if they have one they no longer use and take them in for bulk pricing.

  1. Sell Your Old Stuff

This is possibly the easiest way to make quick money. Take a look around your home and sell hot ticket items. Start with the items you don’t want or haven’t used in a while. Items that sell best include:

  • CD’s
  • Games
  • Movies
  • Old textbooks
  • Gift cards
  • Old coupons

Look outside of the normal sites such as eBay and Craigslist to sell these on also. Start, of course, with your peers and see if they’d be willing to take them off your hands. Other than that, you can sell items on Amazon, Facebook, Preloved, MusicMagpie, GiftCardGranny, and CoupRecoup.

  1. Get a Smaller Loan

Smaller loans are often considered quick loans and you can usually get the funds the next day. Granted you will pay slightly higher interests rates for these types of services but when you are in a money pinch and have limit option these will help. Just be sure to pay off the loan as soon as possible to avoid paying to much in interest fees.

  1. Negotiate Your Bill’s

If you have an enormous amount of bills to pay, try cutting back on paying a few this month. Start by paying only the minimal amount necessary on a bill rather than sending in extra. Next, call your creditors and explain the situation to them. They may be willing to move your payment date without your incurring a penalty, leaving you with enough time to get things situated.

The above five strategies should help you get money in a hurry, legitimately. You could also find yourself making a steady stream of income on the side.

written by Joe

Dec 13

A  post aimed at my friends across the pond –

I don’t know if you’ve noticed, but there is currently a huge push on Financial Spread Betting (FSB). Just about everywhere you look, it seems, there is a bright and shiny offer to take the plunge and enjoy the thrills, spills and rewards of riding the market. Don’t tell me you haven’t noticed.

Now, there is plenty to be said about FSB, but no-one seems to be saying anything very much about this all-too visible marketing trend. So let’s do just that; exactly what is going on with FSB right now?


by kenteegardin

Clearly the main players are competing for clients – those of each other as well as new market entrants – but that only moves the question up a level: why are they competing quite so competitively right now?

The evidence of that heightened competitive marketing is there for all to see – not only in the form of banner ads all over the financial press, but in terms of some eye-catching introductory offers – for example, in the UK, Tradefair are offering a 10 per cent top-up to new accounts up to the value of £1,000 plus a referral scheme that values new referrals at £50 a time.

That one example neatly sums up an unresolved issue when it comes to the FSB industry as a whole. Anyone prepared to commit £10,000 to an account that trades in open ended exposures is going to count as a big hitter. Not many of us are going to be willing or able to put that sort of money down, irrespective of that £1,000 boost. But conversely, no one trading at that sort of level is going to go out of their way for a mere £50.

It points to an industry that has reached the limits of its natural market – professional traders and industry insiders looking to play on the periphery of their working lives – and is now plateauing. Indeed, the first nine months of 2013 actually saw an 8% contraction in the overall industry in the UK.

The market-trading conclusion is that recent market stabilisation is bad news for FSB providers as it has reduced the short-term market volatility which is their stock-in trade. The more substantive benefits of holding dividend-paying stock is offered as a reason for traders turning away from FSB as an investment vehicle.

The marketing assessment, in contrast, is that there is only a limited constituency of punters who would rather gamble on relatively complex financial indices rather than more traditional, recreational gambling outlets – especially sport and casino-based bets. Notably, the gambling industry as a whole continues to see a near universal healthy growth.

Neither reading of the situation is good news for FSB providers.

There is an inevitable irony in the FSB industry figures running counter to the prevailing trend. However, it is hard to escape the conclusion that all the current noise surrounding FSB is not so much the heralding of a brave new world of investment, so much as the noisy hunger pangs of an industry that has run out of new clients. FSB will be an interesting area to keep tabs on in the months ahead – but maybe not for the reasons those involved might hope.

written by Joe \\ tags: ,

Nov 18

Remember New Coke?

Remember Qwikster?

My Spidey senses tell me that Intuit’s TurboTax product is about to have its own moment of marketing mishap. Now. As a tax nerd, I don’t put my TurboTax on the shelf after I file my return. I open it regularly to plan my year. Since one of my goals is to avoid paying more tax than I have to, I use it to plan my stock sales, Roth conversion, if any, and forecast my tax bill well in advance of April 15th. It’s been a ritual of mine to buy the new tax year software the weekend it’s out, usually the weekend after Thanksgiving. This year, as I started to look to see a product release date, I found that the versions offered had their contents revised.


(Right-click to open in new screen)

You can see, the Deluxe version no longer handles any stock transactions, i.e. Schedule D, or any rental property details, Schedule E. Last, with part time blogging income, I need to file a Schedule C, which is now a Home and Business offering.

Here’s my concern – people are creatures of habit. When was the last time you “read the fine print”? We buy what we’ve bought and rarely catch the changes until it’s too late. Unfortunately, in this case, it with be a painful process, realizing your return wont have the forms you’re expecting and you need to upgrade the software (hopefully that option will be available, to pay the difference and move on) or buy the right one for your needs. The 2014 version was just released, and Amazon reviews are already running negative, 8 reviews so far with 7 showing One Star.

I’ve been a user of TurboTax since filing my first return in 1985. We’re having our 30th anniversary with this next purchase. For the last decade, I’ve taken advantage of the ability to produce multiple returns, using my copy to print returns for my daughter, mother-in-law, sister and sister-in-law. I’m not going to quibble over a change that I read about and can adjust to. But I’ll sit back and watch how the reviewers are already having their say and see how my friends at TurboTax respond.

Update (11/22) – The reviews on Amazon continue to mount –


The one star reviews are all focused on the price increase. Unfortunate, I hope TurboTax jumps on this to stop the potential loss of customers.

written by Joe \\ tags: , ,