But – Are the speculators to blame?
One thing that may stand out for you as you continue to track expenses is how much you spend at the supermarket. In a 2005 survey, the third quintile (those whose incomes were higher than the lower 40%, but below the top 60%) had a net income of $41,557. Of this number, $5295 was spent on food, $548 on household supplies, and $472 on personal care products, totaling $6315. This is just over 15% of net income, quite a chunk. Your numbers may reflect a similar percentage or vary a bit. Here’s the exercise for this week: Start to list the price you are paying for all grocery type items. You can do this in a notebook or on a spreadsheet. This exercise taught me a major lesson, the cost of items can vary by more than a factor of 2, more so when combining a doubled coupon with a sale. As you pay attention to this it won’t take long to find that most supermarkets are on about a 6 week cycle running sales on most items. I’ve read PF (personal finance) bloggers who feel their large freezers were an investment that paid for itself overtime, and I feel the same. Whether you are single or feeding a family of six, when chicken breasts go on sale for $1.79 vs the usual $2.99, it’s time to put 6 (or more) pounds in the freezer, and the $7 savings in your pocket. One hint, make sure you mark the date on the freezer bag, and be sure to use it in a reasonable time. Back next week with more on this idea.
Joe
It’s not taxes, per se, that bother me. It’s the tax code. And it’s the absurd bits and pieces they keep adding to it. The latest piece to come from our beloved IRS is a proposed law that would tax the personal use portion of calls made on an employer provided cell phone. Consider what’s gained and what’s lost by such a provision. The time it will take to comply. First, let’s look at the three methods the employer may use to determine personal use.
1) Minimum Personal Use Method – An employee can show proof they have their own phone used for personal calls.
2) Safe Harbor Substantiation Method – 25% of usage is deemed to be personal.
3) Statistical Sampling Method – The employer would sample the bill and use that percentage to determine the total personal use.
All well and good, I suppose, but here’s the absurdity – as rates have dropped and unlimited use plans are below $80, we are looking at a safe harbor provision of about $20 per month or $240 per year. This is not the tax collected but the amount an employee would have to pay tax on. So about $60 if they are in the 25% bracket. All this paperwork and tracking to potentially collect as little as $60 per yr? It will likely cost the employer more than this just to implement and maintain a tracking system for this. This was made public on pages 13-15 of IRS Bulletin Number 2009-23, and the public is invited to comment via snail mail or email.
Note to IRS, this may be low hanging fruit, but there are bigger fish to catch. Unreported income from an underground economy, over $100 billion, by some estimates.
(Update – Note, The WSJ broke this story on June 12, WSJ: IRS Targets Employer-Provided Cell Phones, I beat them to press by two full business days.)
Joe
Our President offered the Muslim world an olive branch in a speech he gave in Cairo last week. Here, I offer a Wordle of the text of that speech, I continue to be fascinated by this image, which is created by analyzing a text document and adjusting the size of a given word for how many times it appears in that text. The only adjustment I made was to delete the word applause from the transcript I downloaded. (Note, A right click will let you view the image full size) Enjoy.
A few of my fellow bloggers’ posts worth a read:
First, from Adam of Man vs Debt, comes a post “What Are You Willing To Consistently Pay More For?” A week or so ago, Adam asked this question of his Twitter followers. (Note, I am on Twitter, tweeting as JoeTaxpayerBlog as my name was already taken by someone else.) He took these answers, and offers his own views on the many situations in his own life as well. My tweet to him was for a local movie theater, for others, the answers ranged from good beer to comfortable travel.
J.D. of Get Rich Slowly had a guest post Why I love the Roth IRA. The post was well written and covers much of what you need to know, even thought it reached a different conclusion than my post of last July, Loving That Roth?
I also like Miel and James’ of Dual Income No Kids post Credit Scores Should be Reengineered. I’ve written many posts regarding credit and FICO scores and remarked how the calculations don’t always reflect risk as I see it. M&J go though each of these criteria and describe the current system’s flaws. Nice piece.
Five Cent Nickel offers How to Pay Off Your Mortgage Early. With rates as low as they are, I’m not sure sure early payoff appeals to me, but if were looking to pay off early, FCN gives a good overview to the different ways to make it so.
On a closing note – I continue to field some questions posted at Moolanomy Answers, so come on over with your question and see if we can help you.
Hope you are enjoying the weekend.
Joe