Lately, I’ve been thinking about a piece by Andrew Tobias, in which he discusses the rate of return on tuna fish. In later retakes of the idea, he uses wine instead, a bit more elegant, I guess. Here’s the idea; when looking at sales, consider the return on your money when deciding how much to buy. In Andrew’s wine example, he keeps the math simple, suggesting that if the wine seller offered a 10% discount on a case (of 12) and you drank one bottle per month, that your rate of return was about 23%/yr tax free. How’s that? Start with paying 90% of an item’s original cost. That 10% discount, when you achieve the full value upon consumption, is worth the full 100% and 100/90 is 11.1, call it 11%. Now, in this example, the wine isn’t all consumed at year end but evenly over time, on average in six months. 11% in 6 months compounds to a 23% annualized return. This concept should give you an idea about how to approach items that don’t go on sale very often. If you combine the supermarket cycle (6 weeks from what I observe) with this math, you’ll find your return even higher. Once you get in the habit of buying the sale items in larger quantity, you’ll find you’re making fewer emergency trip to the supermarket, saving time as well as gas. No running out of TP, soap, toothpaste, etc.
Joe
Last week, I broke the news that the IRS was considering enforcing the laws allowing them to collect tax on personal use of cell phones provided by one’s employer. Today, a Statement was issued by IRS Commissioner Doug Shulman:
This month, the Internal Revenue Service asked for comments on ways to simplify compliance with rules related to employer-provided cellular telephones. The current law, which has been on the books for many years, is burdensome, poorly understood by taxpayers, and difficult for the IRS to administer consistently. Some have incorrectly implied that the IRS is “cracking down” on employee use of employer-provided cell phones. To the contrary, the IRS is attempting to simplify the rules and eliminate uncertainty for businesses and individuals.
Although some of the proposed changes would add clarity, the current law will inevitably leave widespread confusion among employees and businesses. Therefore, Secretary Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cell phones provided by employers. The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete.
A victory for the little guy, I suppose. And for our cell phone providing employers.
Joe
Yesterday, I launched the Carnival Of Top PF Posts #7 (Have you voted yet?) in which I offered my choices for the top six posts of the 50 submitted to the carnival. Here, I’d like to share a number of the posts that didn’t make the top six, both to offer these bloggers a bit of press and to show you how tough it is to judge these carnivals, as there are great writers out there. Enjoy.
Joe
Deposit Accounts presents Don’t Forget to Plan for Windfall Money posted at Deposit Accounts.
Peter presents Don’t Fall Into The Trap Of Not Budgeting When Things Are Going Well posted at Bible Money Matters, saying, “Budgeting only when things are not going well is a big mistake. Budget even when things are going well and you’ll be successful.”
Tyler Tervooren presents My Journey to Become a Green Investor – Part 4: The Final Decision posted at Frugally Green, saying, “This is the final installment of my journey to become a green investor. After copious research, I have finally selected the best fit for me, explain my decision making process and reflect on the month of research done to allow myself the peace of mind in selecting an investment that I won’t need to fret about.”
Money Smarts presents Save Money With Zero Percent Balance Transfers posted at Money Smarts, saying, “Zero percent balance credit cards can save you interest and money.”
Brad Chaffee presents An Inconvenient Myth: The Marketing Effect posted at Enemy of Debt, saying, “Thank you!”
DebtLite presents 64 Thought Provoking Quotes on the Meaning of Money posted at School Loans.
FMF presents The Most Useful Thing Students Can Do to Prepare for the Job Market posted at Free Money Finance, saying, “This post details the one thing students need to do to prepare themselves for the job market and gives examples of how to do it.”
Craig Ford presents Poor Man Wins Lottery Will it Help or Hurt Him? posted at Money Help For Christians, saying, “Take critical look at our assumption that money is the solution to all our problems. Reveals that money does not solve all our problems.”
Tushar Mathur presents When It Pays To Use Cash For Purchases posted at Everything Finance, saying, “For years there have been many consumers who have charged through life (pun intended) putting any and all expenses on their trusty credit card. Roughly half of those consumers managed their accounts responsibly and benefited from the many perks associated with using their credit card and paying the balance in full each month. The other half….well many of those people are dealing with the fall out from the economy and struggling with high levels of debt.”
PT presents 5 Ways to Save for College posted at Prime Time Money, saying, “Thanks for your consideration!”
Jeff – StretchyDollar presents Developing Patience With Your Financial Progress posted at StretchyDollar, saying, “Thanks for considering my post!”
d. ninja presents The best financial moves I’ve ever made. posted at Punch Debt In The Face.
Debt Freedom Fighter presents 5 Effective Tactics for Dealing With Debt posted at Discover Debt Freedom!.
Savings Toolbox presents Saving Strategies to Put More Money In Your Pocket posted at Savings Toolbox.
I am honored to present this week’s Carnival of top PF (Personal Finance) posts. If I may say, “Wow!” There were 50 submissions, with only a handful of unrelated or spam, and only a couple that were too old to qualify. I must say that the choice to narrow down to the six finalists was tough, and as I got down to the final 10, it only got tougher. I hope that one day my writing will improve to the point where I’d make the final ten, even with me as the judge. A year and a half blogging and I have a lot to learn. Please take a look at these six finalists, reading their posts, and vote for the one you’d name the top PF post of the week. Good luck to all!
Joe
First, Five Cent Nickel posted More Thoughts on Paying Off Your Mortgage Early in which he offered five pros and five cons to early payoff. I think this issue is a very personal one and early payoff should be treated for most people as “Are you willing to invest, long term in a fixed, taxable, instrument that yields (your mortgage rate?)” Clearly, one should pay off 6% loans when they still owe 18% credit card debt. Nor should they drain their emergency funds to do so. Last, matched 401(k) money should still be deposited. After that, it’s your choice.
Kevin at No Debt Plan asks Prioritize Your Retirement Savings: 401k or IRA? I asked the same question a while back in my post titled 401(k) vs IRA deathmatch. My conclusion was the expenses within the 401(k) become a potential deciding factor, and low or high expenses can make it a no-brainer one way or the other.
Just discovered My Retirement Blog’s post “No COLA Adjustment for Social Security in 2010.” I think this forecast is pretty accurate and will hurt those who won’t see their Social Security payments go up even a bit. Societies are judged by how they treat their weakest members, in this case the elderly. Tough times ahead.
Free Money Finance offers a peek at Amish Financial Principles, which brings frugal to a whole new level. But I guess we can learn from such examples, by picking what to emulate and what to reject.
On two personal notes, Pants In a Can author is now a proud father, (congratulations), and Baker of Man vs Debt has moved with his family to the land down under (where beer does flow and men chunder.) Pre-move, the Bakers offer us a look at the stuff they packed, which gave me the urge to start cleaning up, and get rid of a lot of my own stuff. His post How Much Crap Do We Really Need?: A List Of Our Possessions can make you stop and think.
Have you read any really interesting blog posts you’d like to pass along? Drop me a note.
Joe
Update – I am this week’s host for The Carnival of Top Personal Financial Posts, if you are a PF blogger and wish to join, please submit before 7PM tonight. Good luck to all.