When Wall Street and Basketball Colide
Enjoy the weekend,
Joe
One small break that slipped into the tax code for 2008 and 2009 is the ability to take a deduction for property tax even if you do not itemize. Specifically, if you file Married Joint return, you may deduct up to $1,000, and if filing Single, $500. This isn’t a huge amount, in the 15% bracket it’s $150 or $75, but I’d not turn my back on free money. This is one of the little publicized changes to the code that can impact you depending on your circumstances.
Also – On MSM Money, I discovered a fun tax quiz. Fun? Well, to each his own. It’s 25 questions and I scored 80%. Take the quiz, let me know how you do.
Joe
Today, let’s look at one particular claim by those pushing the money merge account.
Is it really so complicated? Do I really need to spend time pondering the 720 ways to line these up? (If you don’t know where 720 comes from see this great post on Factorial Math.) Do I need to spend $3500 to figure this out?
Well, that wasn’t too bad, a bit of cut and paste and I lined them up by the rate on each debt. Maybe that’s the correct order. What I don’t know is whether that 7% line of credit is a HELOC loan that ‘s tax deductible, and if so, if the user is able to itemize and take advantage of that deduction. In the 25% bracket, that 7% rate needs to be adjusted to 5.25%. Maybe that’s worth $3500. Wait, MMA doesn’t ask for your tax bracket, and wouldn’t take this simple issue into account anyway. So, again, one of the advantages of MMA is really a nonstarter, trying to create value where there is none. I do have one rhetorical question to ask here. Student loan, ok. Car loan, I understand. These people went on to finance a boat and furniture on payment plans, and then went on to rack up nearly $16,000 in debt on credit cards. Are these same people capable of stopping their spending cold turkey, and putting all their discretionary income toward debt repayment? Maybe they should just start by throwing every extra cent they have toward that credit card debt, and sit at the kitchen table to discuss their budget. Me, instead of fancy bar charts which I admit look pretty, I am a spreadsheet guy.
By lining up one’s debt in this manner you can easily see the impact of a payment on the interest you will pay each year. This can be done on a late model computer you can buy for $250, and a free copy of Open Office. Take another $100, and find a guy who will carve the words “pay your highest interest debts first” into a nice piece of wood to hang in your kitchen. That’s all the motivation you need.
Joe
Available for download from SmartMoney:
The guide is 36 pages, and while it’s not quite a full manual on doing your taxes, it offers some good tidbits that you may not be aware of, so I’d suggest you click on the image, download it and take a peek, 3-1/2 weeks to go till tax day.
Joe
