JoeTaxpayer

Congress passed a two month extension of the payroll tax reduction. The withholding rate will continue to be 4.2% instead of the normal 6.2% through February 29, unless, of course, extended further.

Some terrific writing this week. A few posts that really left me thinking long after I read them.

Jason at Frugal Dad tell us Why I Stopped Contributing to My 401k.   What I am not certain after reading this article is whether Jason’s company offered matching.  Since his first rule for investing after killing all debt is to contribute to the 401(k) up to the match, I suspect not. I’m a big believer in the match. The first 5% of my income that I deposit to my 401(k) is matched dollar for dollar.  I’d be hard pressed to find a reason to walk away from that.

At Frugal Families, the question Are Warehouse Clubs Worth It? A Breakdown of Fees Versus Savings.  I am a big Costco fan and for me, the $50 is easily recouped in a visit or two.  I may discuss this more in a post of my own, but for now let me just say this – no matter how good the per oz price of the mustard looks, don’t buy that gallon container. Unless you run a restaurant or cafeteria. This may have been my only #costcofail in all the years I’ve shopped there.

My friend J. Money hosted a guest post by The Debt Princess, Jessica Streit titled Side Hustle Series: I’m a Sample Passer-Outer.  This actually looks like a fun gig, no heavy lifting, just heat food up and offer it to passersby. The image in the article happens to be from a Costco store, but not sure that’s where Jessica worked. Either way, a good way to make some pocket money.

Hank Coleman wrote Five Ways to Cut the Cost of Your Coffee Addiction.  When I read these, I’m reminded how $5 seems like nothing, but multiply it by a couple who both frequent Starbucks, and you can easily approach $4000 a year in coffee bills. Hank’s home brew estimate of 32 cent cups is still higher than mine. I shoot for $3 per pound coffee. Even though the pot says 12 cups, it’s really 4 big mugs, and my math works out to 20 cups per pound or 15 cents per cup. Half of Hank’s estimate but a whopping 1/30 the cost of the Lattes, not to mention the gas it takes to get to the coffee shop.

Canadian Finance Blog has declared Christmas is Cancelled.   Is guest poster Nelson a Scrooge? Hardly. He would actually like to get back to true meaning of Christmas, and remove the commercialism.  Nice sentiment.

Len Penzo shared 10 Old Wives’ Tales Masquerading As Financial Rules of Thumb. People will believe anything they hear and there’s a lot of incorrect info out there. My favorite?  When planning for retirement, assume annual stock market returns of 8 percent.  With the last decade returning close to zero, relying on 8% (or for that matter the insanely optimistic 12% repeated by Dave Ramsey) will likely lead to a financial catastrophe down the road. A person planning to retire in a few years should plan for 4.5% says Len and I think I’m in agreement.

And last, 401k Manifestoâ„¢ – The New Standard is a 31 page PDF that discusses what the industry needs to do to improve the 401(k) account. The author Neil Plein is Vice President of Invest n Retire, LLC, a Portland, Ore. Based 401(k) record keeper specializing in offering ETFs to defined contribution plans through its patented technology for managing tax-deferred retirement accounts (patent US 8,060,428).   Disclaimer – this is a product his company offers. I am not promoting anything here, and wasn’t asked to refer to his article, the reference is for informational purposes.  The content was a worthy read and I agreed with most of his goals and implementation.

Sticking with the Christmas theme, the Salvation Army kettle and bell ringers are ubiquitous this time of year. Time to make sure I have change to drop off. POTUS can use a bigger bell.

When I mentioned The Financial Buff’s Behavioral Economics Explanation for Sensitivity on Service Fees a couple weeks back, I didn’t think an example of this would come to my attention so quickly. But first, a quick recap of TFB’s article. His discussion focused on how people reacted to the $5/mo debit card fee  that Bank of America was about to inflict charge on its victims customers.  This was the first example, baggage fees, another. Today, here’s mine.

This is a ticket (redacted to eliminate my info) to an upcoming concert. The ticket price is $125, which I guess is within reason, good baseball tickets cost this much and there’s 90 chances to see the local team play at home. Yanni, or any performer is pretty limited in how often you can see them play live. But the thing I found irksome was the ticketing fee, $18.50. There’s a transaction cost the credit card processor charges, and I get a 2% rebate each month, so there’s $2.50, it’s the balance of $16 to process this transaction that I object to. The agent has little overhead to handle this ticket, in fact they print nothing and mail nothing out. It was all done electronically.  Here’s the crazy thing – If the tickets showed a price of $150 with a $1 mailing fee or free to print yourself, I’d have been happy and thought this a great deal. It’s only when the fee is broken out and I see I’ve paid $37 to process two tickets that I feel ripped off. Not enough to avoid the transaction of course, but just enough to write about it. Last I saw Yanni live was over 20 years ago, before I was married, and he gave a great concert, looking forward to seeing him again. But I won’t be buying popcorn there.