Tax Tips Giveaway 2011

The folks at H&R Block have provided me with 5 online codes, each of which can be redeemed for H&R Block At Home Premium Federal Online Tax Preparation (a $50 value), to give away to lucky blog readers.  H&R Block At Home was formerly known as TaxCut. This giveaway is  for an (Tax Year 2010) online version of H&R Block At Home. While federal tax preparation is included in the prize, state returns are not included ($34.95 extra cost). For the purposes of preparing federal tax returns, this online software  should be adequate for nearly all taxpayers to complete their own taxes.  Although the software includes free federal e-file, you may have to pay  extra if you want to also efile a state return.

I have decided to hold a random drawing each week (awarding one code per week) for 5 weeks for the software codes. The first drawing will be on January 14, 2011 and continue weekly until February 11, 2011. In order to enter:

1) Any reader can post a comment below describing your best tax or money saving tip.
2) For an additional entry, web site owners can link to this post, to let other know about this contest.
3) Lastly, my fellow bloggers can add PFStock to your blogroll (must be  accessible from blog's main page) for one more entry in the drawing.

You can enter up to three times using the the form below:



If the entry form doesn't show up click here to go to the entry form directly.

Note that this drawing is for an online version of the H&R Block At Home Software that requires Internet access. If you do not feel comfortable with using the Internet to prepare your taxes, I would suggest purchasing H&R Block At Home 2010 on CD-ROM. Unfortunately, I don't have any CD-ROM versions of the software to give away but it is available in many stores such as Amazon.com.

The drawing is limited to US residents. Visit H&R Block for details about the online software. Winner will be randomly picked from among the qualified entries received by  February 11. Winners will receive an online key code by Email to access the H&R Block website. The "key code" works like a gift certificate and is used on the payment screen before your taxes can be filed. In order to prepare taxes online with H&R Block, you will be required to create an account on their website. Good luck to everyone who enters!

DC

This promotion is held in conjunction with pfstock.blogspot.com.
Note: H&R Block At Home provides tax preparation software. It is up to the individual winners to determine the suitability of this software for their tax situation. PF Stock does not provide tax advice or technical assistance. Contact H&R Block Customer Support for help with their tax preparation software. Opinions expressed here are those of PF Stock.

Guest Post: The Art of War Applied to Personal Finance

Sun Tzu’s "The Art of War" has been referred to by military generals the world over for hundreds of years in order for them to plan and execute successful strategies in the face of the unpredictability that is battle. However, "The Art of War" can be successfully applied to non-military situations which are still equally treacherous, such as personal finance.

Approaching your personal finances with some of the principles from Sun Tzu’s work can help you wrestle back control over money and debts, understand how best to use your financial products and plan for stable financial future.

If you only know yourself, but not your opponent, you may win or may lose.
If you know neither yourself nor your enemy, you will always endanger yourself.

If you know both yourself and your enemy, you can win a hundred battles without a single loss.

One of the most recognisable passages from "The Art of War" you can apply its message to your personal finances in a number of ways. First you will need to make sure you know your opponent and in the case of your personal finances the one standing in the way of your victory, the one who wants you to fail is the inherent weakness in your life or your attitude which always trips up your best laid financial plans. Identify your weaknesses and once you know and accept them you will be able to conquer them, whether it is the mountain of impulse buying, the pointy temptation of a sale, or the seemingly unguarded savings balance which beckons you to attack, only to be trapped by the inevitable zero balance.

Secondly, you need to know yourself and where your weaknesses are your enemy, your strengths are who you truly are and want to be. If you see yourself as an organised person buy coloured notebooks and pens, or set up spreadsheets to track your budgets and spending. If you are motivated by goals and checklists set savings targets for all of your goals and reward yourself when you reach them.

Now, knowing both your enemy and yourself you can use your strengths to defeat your weaknesses. For example, use your organisational strengths to calculate exactly how much money you will need each time you leave the house and take only that amount.

One hundred victories in one hundred battles is not the most skilful. Seizing the enemy without fighting is the most skilful.

It is much easier to maintain financial security than to try and claw it back. Therefore avoid getting into debt in the first place by making a working budget and sticking to it. When you know how much you have to spend you can avoid spending on credit and you can also start a regular savings plan. It is also much easier to save regularly over the long term without conflict, rather than strike up a battle to furiously save at the last minute for a goal.

All warfare is based on deception.

Never will those who wage war tire of deception.

It is important to think of your financial institution as one who is waging war on you – they are not simply lending you money to buy a house or paying interest on your savings out of kindness, they are doing so to turn a profit. Your financial institution makes their money from fees and interest and making sure that you remain unaware of how fees and interest are applied so they reap the maximum charges.

Therefore, make sure you read the fine print on all of your financial products because you may find you don’t have the number of free transactions on your everyday account which you thought you did, and you may find that it is the compounding interest being charged on previous interest and fees which is making your credit card balance so hard to conquer.

Whoever is first in the field and awaits the coming of the enemy, will be fresh for the fight; whoever is second in the field and has to hasten to the battle, will arrive exhausted.

Another important reminder to be organised and prepared from the beginning because when you know the contents of your budget at all times, when you know your current account balances you can plan your spending and be ready and waiting to ward off an attack by your enemies – your weaknesses.

Also make sure you plan your spending, for example pay your bills in advance several days before they are due so you know the money arrives on time, you’re not rushed and you don’t forget.

Move not unless you see an advantage; use not your troops unless there is something to be gained; fight not unless the position is critical.
If it is to your advantage to make a forward move, make a forward move; if not, stay where you are.

Remember that you are making changes which are right for you and it is not about the products other people use or suggest. This means you shouldn’t just have a credit card for the rewards and you don’t need to pay extra for an offset mortgage if you can’t keep your savings balance topped up.

Also don’t make changes to your personal finances unless they are to your advantage. You may not have to change everything about your finances and some things can stay the way they are.

Indirect tactics, efficiently applied, are inexhaustible as heaven and earth... There are not more than five musical notes, yet the combinations of these five give rise to more melodies than probably can ever be heard. There are not more than three primary colours... There are not more than five tastes...

There are five essentials for victory:

He will win who knows when to fight and when not to fight.
He will win who knows how to handle both superior and inferior forces.
He will win whose army is animated by the same spirit throughout all ranks.
He will win who, prepared himself, waits to take the enemy unprepared.
He will win who has military capacity and is not interfered with by the sovereign

While many of these five principles are in the same vein as others already applied here, it is important that you fight with the same spirit throughout your ranks – uninterrupted for personal finance victory.

This means you need to apply these principles to all aspects of your life because your entire life is affected by money and the state of your finances. If you are in a relationship make sure you maintain control over joint and individual finances, always knowing that you are both working towards the same financial goals.

About the Author:
Alban is a personal finance writer at Home Loan Finder, a home loan comparison website.

How Does My Income Compare?

Have you wondered how your income compares with that of your neighbors? This is the classic case of keeping up with the Joneses. Curiosity definitely gets the best of people -- wanting to assess how one is doing compared to others, especially those in their own neighborhood.

I recently came across an article from Slate that focuses on income inequality. It is interesting reading in itself, but what really caught my eye was a box that asks you to enter you zip code and income. It then comes up with data for the average income for your zipcode, and the median income for your state.

I snagged that box which uses Java Script code, and posted it below. I will note that the data for state median income comes from the U.S. Census Bureau. The comparison data by zip code comes from a website called IncomeTaxList. Personally, I would take the comparison information with a grain of salt. We live near the edge of a zip code where literally crossing a street into the next zip code would result in a difference of over $25,000 in income. What do readers think of this tool, and the data that it presents?

Some additional reading:
Annual Income and Net Worth
Annual Income Survey
How much do you make?

Where do I stand?

Enter your zip code and income to find out where you fall on the curve.

Zipcode: Income:


How you compare:
Average income in zipcode:
Median income in state:
Median income in country: $52,059
Percentile in country:

Sources: American Community Survey (State and National Data), IncomeTaxList (Zip code data).

NOTE: All information you enter is private and will not be recorded or stored in any way.

PFS

$45 Giveaway from CSN Stores

Fellow PF blogger, Seattle Simplicity, is giving away a $45 gift certificate redeemable at CSN Stores. To enter the drawing, you have to post a comment to her article: $45 Giveaway From CSN Stores. Also, you can link to that post, or add her blog to your blogroll for additional entries. The deadline for this contest appears to be December 10, 2010.

Trade Triangle: Frontier Communications (FTR)

A few months ago, I wrote a post about how Verizon Communications (NYSE: VZ) shareholders received shares in Frontier Communications (NYSE: FTR) as the result of a spinoff from Verizon. My post described how to calculate the cost basis of an investment after a spin-off for tax purposes. Having been "given" this stock from Verizon, I wanted to do an analysis of whether I should continue to hold onto the FTR stock that I now have. I use a website called INO.com (pronounced "I know") to do this analysis.

A portion of that website called MarketClub uses something called Trade Triangle analysis, which is a technical analysis tool. I used it to analyze the recent price movements of Frontier Communications (NYSE: FTR). The results of the trade triangle analysis are shown below.

This analysis shows that Frontier is now in a strong uptrend, and that this is an ideal time to buy or hold the stock. MarketClub's Smart Scan analysis calls this situation a "Trade Triangle" with a +100 being the highest possible score. This kind of technical analysis is great for trend traders who like the "red-light, green-light" simplicity of investing. So, based on this information I concluded that I should hold onto my shares of FTR for the time being. It is a fact that Frontier Communications has been in a general uptrend since I received the spinoff shares from Verizon (VZ).

Note that Trade Triangles are strictly a technical analysis tool. I don't use the MarketClub analysis to tell me what to buy. I rely more on fundamental characteristics like Earnings Per Share (EPS) and PE ratios to decide on which stock to buy. But, I use MarketClub to tell me when to buy.

Another comment that I have is that MarketClub does not require you to download and install any software. This is good because you can access your subscription from pretty much any computer. The downside is that your access speed will be limited by your Internet connection. In other words, MarketClub is not the fastest analysis tool that I've ever seen. But, it is pretty good considering that the software runs on their servers and not your computer.

You can subscribe to MarketClub for $150 per quarter or $449 for a year. You will have complete access to many of the investment tools available on INO.com. There is a 30-day risk-free trial period in which you can try them out. They will ask for a credit card when you sign up, but you have the right to cancel within the first 30 days and get all of your money back. So, what do you have to lose?



Another free tool that I utilize to help me keep on top of my portfolio is called Trend Analysis. Trend Analysis is a daily email analysis tool that gives me insight into exactly what my portfolio is doing. For investors who are following many stock symbols, MarketClub sends a daily Email for every symbol in your portfolio.

The links above takes you to a screen where you can get your first stock (future or option) symbol analyzed at no cost to you. After you sign up, you can easily add more symbols to get a daily update, which I find very helpful.

PFS

Disclaimer: This material is for general information only. It is not intended as an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.

Guest Post: Asking For A Lower APR Is Worth The Risk, If You Have Decent Credit

As nearly all credit card holders have found out, credit card interest rates have been spiraling upwards over the past few years.

A lower interest rate on a credit card has the potential to save hundreds of dollars a year, depending on the current credit card balance.

With a credit card balance of $10,000, charged 25 percent annually, for example, that balance will cost north of $2,800 in interest annually, due to monthly compounding. If you could get the interest rate lowered from 25 percent to 15 percent, annual savings would be around $1,200.

Is there a risk to asking for a lower rate?
When you call the card company to request lower rates, the call may trigger an account review. If you are getting a better rate than you should, this could end up blowing up in your face. This is why it’s important to understand how your rates compare to national averages.

Who should ask for a lower rate?
If your credit history is in decent shape, and if you are paying over the national average, it is certainly worth a shot.

In 2008, the average percentage rate (APR) was roughly 11.4 percent compared to 14.9 percent this year, according to Bankrate.com. Today almost 75 percent of all households have a credit card, with close to half, (46.2 percent), carrying a credit balance. If you have good credit and your APR is higher than about 12-13%, your chances are great.

Also, if you are nearing the end of a 0% introductory APR window, we’d note that many of our users have had success extending their 0% introductory period simply by calling and asking.

Step 1: Do your homework
The first step to reducing your credit card rates is to understand how your history and debt look to a creditor, as well as how they perceive competitors’ rates. Write down your current rate, your competitor rate, and how many years you have been with the company. If you have stellar payment history, remember to note that as well.

Also, don’t forget to consider promotional periods as an alternative too. There are now plenty of cards with 0 percent balance transfer offers of up to 21 months. That works out to an effective interest rate of less than about 3% over the first 2 years, even including the balance transfer fee.

Step 2: Point out your great history, point out lower competitive rates, and make threats to leave

The second step is to call the company and tell them you want a lower rate. This step could be done quite easily as it just takes getting the right information in your hands and the right person on the telephone. The key to lowering your rate is to plead your case and your alternatives.

Be persistent and to remember that the credit card business is fiercely competitive. Use an online low apr credit card or balance transfer credit card search tool for a list of hundreds of competitive rates, and use this information as fodder for negotiation.

While your issuer may not match the competitor's rate, it may still agree to significantly lower your rate. Even so, negotiating a lower rate with a credit card company may not prove easy for everyone.

If customer service does not agree to lower your APR, threaten to cancel your card. The threat is worth making, because you don’t have to go through with the cancellation – you can bluff.Then you will be transferred to a customer retention department that has more latitude to give you concessions.

About the Author:
This is a guest post written by Barbara Gengler for the website NerdWallet. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Changes to FSA Plans

It is that time of year again when companies hold their annual open enrollment. This is when employees have the opportunity to change medical or dental plans, and to opt into making contributions to a flexible spending account (FSA). In general, a flexible spending account allows one to deposit pre-tax dollars into the account to pay for medical expenses, or to pay for dependent care. (Note that these are two different types of accounts.) The ability to use pre-tax money to pay for expenses is a good benefit that can save you money.

For the coming year (2011), there is an important change to FSA plans. Specifically, the rules have changed for the purchase of over-the-counter (OTC) medicines and drugs (such as OTC allergy medicines, pain relievers, antacids, cough medicine, etc.). This change is due to the federal health care reform law, the Patient Protection and Affordable Care Act of 2010 (PPACA). (This was a part of President Obama's health care reform plan.)

Previously, all of these OTC purchases were covered by flex spending accounts. However, I've been informed that starting in 2011 these OTC drugs and medicines will not be reimbursed through an FSA unless they are prescribed by a medical practitioner to treat a specific medical condition. So, the bottom line is if you plan to purchase these OTC items through a flexible spending plan, you'd better have a prescription first.

One other thing to keep in mind when contributing to an FSA is that most flex spending accounts operate on a "use it or lose it" basis. This means that any balance you have in the account at the end of the calendar year is forfeited to your employer. This is something that I would rather not do, since I never want to leave any money on the table.

Warning:
In the current economy, I also want to warn my readers of one more potential hazard with FSAs. Having been downsized twice in the last decade, I can tell you that the "use it or lose it" provision also applies if you are terminated without cause (i.e., laid off). Any money that you have left in your FSA plan when you are terminated will be kept by your former employer. This may seem totally unfair, but that has been my real life experience.

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PFS

Update on Verizon Frontier Spin Off

A few months ago, I wrote a post about how Verizon Communications (NYSE: VZ) shareholders received shares in Frontier Communications (NYSE: FTR) as the result of a spinoff from Verizon. My post described how to calculate the cost basis of an investment after a spin-off. As I mentioned in my post, I had a few question about the spin off and contacted Verizon investor relations about these questions.

Verizon's investor relations website provided a document that explains most of the mechanics of the spin off. One of the items that I had a question about is how that document arrived at the "opening trade" price of Verizon (VZ) on July 2, 2010 (date of the spin off). They listed the value as $27.05 per share of Verizon. I checked a couple of data sources (i.e., Google and Yahoo Finance) that list the opening price as $27.17 on July 2. However, I also subscribe to a third-party data service that lists the opening price as $27.05, which was the same value used in Verizon's calculations. So, I asked Verizon to explain the reason for this discrepancy.

Verizon's response was that the $27.05 price is the "NYSE open" as compared to the "consolidated open." Well, I'm still not 100% clear on this issue. But I gather that the $27.17 price is the "consolidated open" price. Can anybody shed additional light on this topic?

One of the commentators on my original post asked about previous spinoffs from Verizon. I responded that my post only covered the most recent spin-off of Frontier from Verizon. As you may know, Verizon has had a long history of spin-offs and mergers: the original divestiture of AT&T to form Bell Atlantic, the merger with GTE, the spin-offs of Idearc, FairPoint, and finally Frontier. And, I didn't even mention NYNEX, Contel, and MCI... All this data gives me a headache. So for more information about previous mergers and spin-offs involving Verizon Communications you can look here:

http://investor.verizon.com/shareowner/cost_basis_worksheet.aspx

Lastly, I mentioned that a small portion of the Frontier cost basis may be paid out as "cash in lieu" (CIL) of fractional shares. For me this worked out to only $0.06 (6 cents) of cash-in-lieu. Theoretically this amount is considered income, and from the IRS standpoint tax needs to be paid on it. This transaction should be accounted for in the cost basis of the Frontier shares: The tax basis for Frontier is decreased by the amount of CIL received. I personally use Microsoft Money, financial management software, to track my investments. In the program, this transaction is allocated as a "Return of Capital"  for Frontier of $0.06. I am not certain how to enter the equivalent transaction in Quicken, but I would guess that a similar entry can be made.

So, is everything as clear as mud now?

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PFS

Guest Post: Reduce Your Debt By Settlement

If you negotiate with your creditor then you can reduce a partial amount of the outstanding balance. Settlement companies are at the service of the debtors to reduce debts and make the payment plan affordable. At least 40 to 60 percent of the total debt is reduced.

Before you plan to file bankruptcy find out whether you can settle your debt or not. As filing bankruptcy not only hampers the credit score but also ruin your financial career. Therefore it would be advisable to try other alternative other than bankruptcy in order to reduce your debt. As the impact of filing bankruptcy remains on your credit report for 10 years, within these years you might face difficulty to acquire loan.

It would take 1 to 2 years for the entire process of debt settlement and for you to get out of the trap of debt. On your behalf the debt settlement companies would contact the creditors in order to negotiate your debt. After you are being represented by them the creditors usually do not contact you. As the creditors can see a fine ray of hope to get back their money after debt settlement so the creditor harassment is at a halt.

Debt settlement works:
You have to sign a legal paper with the debt settlement company that is known as the "Limited Power of Attorney". A contact needs to be signed by you and make a monthly payment that would be deposited into the "Settlement Account". This money would be distributed among the creditors by the settlement company. Once the payment has been made the clients can unburden themselves from the torment of debt. In this way you can get rid of debt without ruining your credit history.

Advantages and disadvantages of this program:
What are the advantages of debt settlement program?
1.As a part of your debt is wiped out after settling it so debt settlement is considered to be an effective process. In this way you can fix your monthly budget and the repayment plan would also become convenient for your pocket.
2. If you enroll with a debt settlement program then the interest rates along with the penalty charges on the outstanding balance would be negotiated by the debt settlement company. They make monthly payments affordable for the debtors.
3. After the enrollment with the debt settlement program the over limit fee would be eliminated.
4. Debt Settlement Company is a preferable option to eradicate the burden of creditor harassment and threatening phone calls. In order to achieve a debt free life you need to enroll with a debt settlement program.

What are the disadvantages of the debt settlement program?
1. Your credit report would be hampered if you enroll with a debt relief program. Before you enroll with this program you have to be a defaulter in order to reduce and get rid of debt. If you fail to repay on time in case of credit card debt then that might have a negative effect on your credit score.
2. As the balance is settled by negotiation so it is considered under taxable income.
3. You need to follow a disciplined payment plan if you miss any one payment then the settlement plan would not work.
You can boost your credit score once you have paid your account in full. You can secure your financial future by unshackling yourself from the torture of debt.

Author bio:
This is a guest post by Kevin Craig who is a financial writer. He has helped lots of debt burdened people with free counseling and advices on many finance related topics. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Disclaimer: The information provided here is not meant as tax or debt settlement advice. I encourages readers to consult with an attorney or financial adviser if they have specific questions about debt settlement.

Which Financial Account Management Website Do You Use?

For a while, I've had a poll in the sidebar of my blog that asks the question: Which financial account management website do you use? Readers are asked to vote among financial aggregation sites such as Wesabe, Mint, and Yodlee. After I started the poll, I wrote a post that Wesabe was shutdown at the end of July 2010.

Nevertheless, here are the results so far:
Wesabe: 4%
Mint: 20%
Yodlee: 76%
Other: 0%
None: 12%

The percentages don't add up to 100% because readers are allowed to select more than one website when they vote. If you haven't voted yet, please see the poll in the sidebar.

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PFS

How Payday Loans Work

Payday loans fill an important void that is not served by traditional banks. In a perfect world, everyone would be on top of his or her finances, and there wouldn't be a need for payday lenders. But in reality, most of us have gotten behind on bills at some point.

QuickQuid is a United Kingdom lender that offers cash advances based on using your next paycheck as collateral. A payday loan is something to consider if you find yourself in a short-term bind and in need of money. For example, if you have been shopping for one too many "bargains", and can't make your credit card payment, a payday loan may help you out. Applying for a payday loan is simple, and takes only a few minutes to complete. Most payday loans are quickly approved.

QuickQuid has a FAQ that explains how to apply for a loan. A bank account and a steady job are the requirements to apply. The actual terms for bad credit loans are governed by the Consumer Credit Act of 1974 and other applicable UK laws. QuickQuid assigns borrowers to one of three credit tiers: excellent, good or average. This is based on various factors including, but not limited to, your credit history, employment history and loan repayment history.

Based on this rating, a finance charge of £10 to £14.75 per £50 borrowed will be assessed. For example, suppose that you have excellent credit and borrow £250 from the payday lender. The lender will transfer this money to your bank account, and expects you to pay this amount plus a fee of £50 on a £250 loan (£300 in total) when you receive your next paycheck.

I advise borrowers to read QuickQuid's disclosure of finance charges before applying for a loan. The effective annual percentage rate (APR) on the loan can be several hundred percent, depending on the situation. If used correctly, a payday loan can help tide you over to the next payday.

This post is sponsored by QuickQuid.

Guest Post: How Can Bankruptcy Affect Your Professional Career?

Have you recently filed for bankruptcy? Then it might create impediment in the path while you are in search of new jobs. The prospective employer might ask you whether you have filed for bankruptcy or not. You need to reveal the information to your employer even if it has been years back since you have filed bankruptcy. If you choose to keep you lips sealed regarding your filing then you might be terminated on your secret being revealed. This article would help you to show how filing bankruptcy can take a toll on your professional career.

Individuals who have filed for consumer debt protection they have proved themselves financially unreliable so many business houses avoid employing bankrupts. When individuals are indebted due to joblessness they desperately look for jobs. And bankrupts are in dire need of jobs due to financial crisis. When the debtors file under chapter 7 bankruptcy their debts are discharged by the U.S Bankruptcy Court but the potential employers make it an issue to turn them down.

A legal solution through consumer debt protection is provided for debtors who are unable to manage their financial obligations. Unless the employers reconsider their stance of disappointing the bankrupts seeking for a job the situation won’t improve.

A challenging process to find job after bankruptcy:
The job seekers need to have clean credit records, no past criminal record, and negative drug tests as it would be verified by the future employers. As it would ensure them that they are hiring someone responsible for their organization.

But if your credit report displays Chapter 7 or 13 proceeding then you might not be considered eligible for the job. If you file under chapter 7 or 13 bankruptcy then it remains on your credit report for 7 to 10 years. Their financial record is ruined and that makes thing difficult while applying for a job.

If you inform the employers about your distressful situation and about the tarnished financial record before they unravel the secret. Then it might give a positive impress and they might reconsider to hire you. It might be purely based on past work performance, experience, and professional qualifications while ignoring your filing.

Law prohibits Discrimination:
U.S. Bankruptcy Code under Section 525 forbids discrimination against anyone exclusively on the basis of filing bankruptcy. The employers have the right to screen the individual if they plan to hire them. If the individuals are associated with the financial, government, high security sector then this would be a legitimate concern for the employer. If the employees go through financial doldrums then they might get in the trap of a fraud, bribery, robbery in order to come out of such financial disaster. This kind of act might hamper the interest and reputation of the company.

The future employer can reject you by showing other reasons but the reason might be on the basis of bankruptcy. But after getting the job if they terminate you on the grounds of bankruptcy then you have a right to file a case against them.

By the Fair Credit Reporting Act under Sections 604, 606, and 615 a few set of guidelines needs to be followed by the employers while evaluating your credit reports.

1. If your credit is being reviewed for job evaluation then the employers have to inform you through a letter.
2. A “pre-adverse action disclosure” should be sent by the future employer if he figures out any discrepancies on your credit report. It helps you to correct the inaccurate information on your credit reports.
3. The employer must give you an “adverse action notice” before terminating you from the service, if he traces some unpleasant information on your credit report. The contact information of the credit reporting agency providing the report should be there on the notice. If you find any inaccuracy on the report then contact the agency to solve the disparity. And demand an additional free report within 60 days from them.

A bankruptcy attorney can help you with his proficient knowledge on such cases. If you smartly deal with things then it won’t be difficult to acquire a job even after filing bankruptcy.

About the Author:
This is a guest post by Kevin Craig who is a financial writer. He has helped lots of debt burdened people with free counseling and advices on many finance related topics. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Disclaimer: The information provided here is not meant as tax or bankruptcy advice. I encourages readers to consult with a bankruptcy attorney or financial adviser if they have specific questions about bankruptcy.

Guest Post: 4 Ways To Avoid Debt Relief Scam

It is not difficult for the customer to trace a fraud debt relief agency. You need to be conscious of the warning signals that these scam companies often try to hide. You can secure your financial future by avoiding getting into the trap of Scam Company.

1. If you have found a debt relief agency from the internet then try to be careful about its reliability. Often the debt relief companies are fraud that advertises their company in order to help people to come out from the trap of debt. If you are looking for debt relief agency then ask help from someone trustworthy who can suggest you a dependable debt relief agency. It is crucial to verify the history of a debt relief company. Make sure that that the debt relief company is accredited by Better Business Bureau. It is a pro consumer protection right that is labeled with the authentic debt relief agency.
   
2. Ensure that the upfront amount in not excessive compared to the other debt relief company. Make sure that you compare the rates of all the debt relief companies and then choose that is more affordable for your pocket. If you find that your debt relief companies asking for more upfront fee then demand a break up of the fee. And if they fail to produce then avoid enrolling with debt Relief Company.
   
3. The first thing that you should need to discuss with your debt relief agency is about settling the interest rate and negotiating on the past due as well as on the over limit account balances. It is essential to keep a check on the creditors in order to ensure whether the negotiation terms are being followed or not. At times the credit card companies agree on the negotiated amount but at the end of the month that might slip out from their mind. So it would a duty of the debt relief officers to keep a vigil on the creditor to see whether they hold on to the bargain till the end or not.
   
4. Most debt relief alternatives for instance pay day loan outlet should be avoided even if they are in severe financial catastrophe. You might get influenced by the commercial on the televisions in this way you get trapped in a company associated with fraud. With their false promises they might attract many borrowers who are in dire need of help in order to get rid of debt.

The interest rates are too high on payday loan and the borrowers who think of settling their debt with the payday loan cannot come out from the vicious cycle of debt. It would be better to take help from your family members than getting into the maze of these scam ventures.

About the Author
This is a guest post by Kevin Craig who is a financial writer. He has helped lots of debt burdened people with free counseling and advices on many finance related topics. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Guest Post: Is Investing In Annuities A Smart Idea?

The world economy is yet to recover from the overwhelming effect of the recent financial meltdown. Consequently, everyone but the most sophisticated investors is apprehensive about venturing into the wildly fluctuating and volatile financial market. Under the circumstance, annuities have become important due to the safety they offer to common people. However, annuities can be a tricky proposition and are certainly not for everyone. Let’s discuss in detail.

What are annuities?
Annuities are basically income generated from capital investment. If you buy an annuity then you either need to pay a lump sum or make a series of payments to the insurance company. In return the company agrees to make periodic payments beginning immediately or at some future date. Annuities can be of various types like fixed, variable, immediate, deferred etc.

Why should you consider annuities?

• Most annuities are lifetime contracts which mean you would receive paychecks as long as you live. This will give you peace of mind because you need not fear that you will outlive your income.
  
• Inflation can have a devastating effect on your finances. Fixed annuities protect you from inflation. The money you receive will keep up with the cost of living. This assurance of safety comes for a price though. Either your starting payments will be low or the initial investment cost will be higher.
  
• One of the best features of annuities is principal protection. It is guaranteed that you or your successor will get back at least the amount of money which you invested in the annuity. To ensure this it is obligatory for the companies to keep cash reserves. Many states have a guarantee fund of $100,000 in case the company becomes insolvent.
  
• IRS code 403(b) states that if you are an employee of an educational institution, non-profit institution or self employed minister then you can use your wage to contribute to supplemental retirement accounts called tax deferred annuities. Most annuities are tax deferred in nature. This means that you don’t have to pay taxes when you invest in a tax-deferred annuity. You will
  be charged only when you start receiving payments from it.
  
• Annuities are virtually life insurance policies. So you can nominate beneficiaries. Also, probate can be avoided when beneficiaries are declared.
  

What are the disadvantages of annuities?

• Annuities trap your money for a long period of time without offering any choice of withdrawal. Forcible early withdrawal will result in a 10% penalty being charged by the IRS. So if you are a young man then deferred annuities might not be the best investment option for you.
  
• The safety offered by the annuities comes at the price of low returns. Annuities are surely not the right choice for you if you are dreaming to become rich quite quickly. By investing your money in fixed annuities you forgo the opportunity to earn more by investing in assets that fluctuate in value. This is where bonds and mutual funds have an advantage over annuities.
  
• Many financial experts opine that annuities are not flexible as investment vehicles. If you have some extra money to invest then you have to purchase a separate annuity. It cannot be added to the existing annuity.
  
• Annuities are extremely intricate things and it is very important for you to understand them really well. Otherwise, you might end up purchasing the wrong annuity which will not at all serve the intended purpose.
  
• Annuities can be costlier than other similar investment options owing to the fact that they are insurance products sold by insurance companies.
  

Annuities are often effective as a supplemental retirement program. They can be a quite reliable investment option for old people. However, they have some serious drawbacks and are not very suitable for young investors. So keep in mind the above points and consult a financial advisor before you try your luck with annuities.

About the Author
This guest post was written by "David Brown". If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Disclaimer: The information provided here is not meant as tax or investment advice. I encourages readers to consult with a tax or financial adviser if they have specific questions about investing or annuities.

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I am not sure how long they are going to offer the exact trading strategy and formulas for filtering trades that they use to achieve those outstanding results as they do not want to disturb the harmony of these two portfolios. If you want this valuable information on two cutting edge portfolios, plus Adam’s eBook "RIGHT ON THE MONEY," you need to act now.

Disclaimer: I am an affiliate and member of INO.com. Although I have been able to make money using their MarketClub product, no guarantees can be made. All investments involve risks, so please consider your objectives wisely before investing.

PFS

Guest Post: 5 Smart Tips to Stick to Your Personal Budget

We human beings have never been too comfortable with the concept of budget. Living within restrained finances surely doesn't look like a very lucrative proposition to us. However, we must grudgingly admit that budget can play an instrumental role in helping us to maintain financial stability. Budgeting is a great vehicle to avoid scary things like debt. But remember that sticking to your budget is far more difficult than making a budget. Here are some tips that will help you to follow your budget:

1. Motivation plays a big role when it comes to sticking to a budget. If you don't know why you are on a budget or you don't have enough motivation then you are bound to deviate from your budget sooner than you imagine. It will help if you write down your reasons for being in a budget. Are you trying to pay off your debt? Is budget your tool to build a secure future? Have a glance at what you have written whenever you are tempted to spend more. Remember the consequences if you don't follow the budget. Surely you will get the much needed fuel.
   
2. Stay away from credit cards. Remember that there is no such thing as responsible use of credit cards. It will be virtually impossible to stay within the budget with credit cards beckoning you to spend what you don't have. Moreover, the interests and fees charged do not help you at all. You might consider keeping credit cards in places which will not remind you about them easily. However, use of credit card may be inevitable at times. In that case you should plan the expenses in advance. That would stop you to buy impulsively which can certainly result in unwise spending.
   
3. Budgeting does not mean that you need to live a miserable life. If out keep out expenses like watching movies, picnics, dates etc. then your life will be no more than a rudimentary existence. Sooner or later you will drop your budget and will be back to your normal life. Your target should be to eliminate regular expenses like eating out on a daily basis etc. Remember that budgeting without fun is not a practical thing because you won't be able to live up to it.
   
4. Make sure that you are not the only person in your family who is on a budget. It will make no sense if you are saving money with your life but your family members are spending with ease. This way you are fighting a losing battle. Budgeting should be a coordinated effort. Discuss with every single family member about his or her responsibility. Only a joint effort of the whole family can make your budget a grand success.
   
5. Make it a point to keep regular tabs. If you don't check in regularly then you won't realize you are off the track until it's too late. It is very difficult to come back once you are derailed. So make sure that you check your position at least twice a week.
   

It is very important to stick to your budget as it will keep your finances under control. But at times following the budget seems quite difficult. So remember the above points when you start living on a budget.

About the Author This guest post was written by "Jack Reed". He writes on various financial topics with a special focus on bankruptcy. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.

Crude Oil Video

I've recently been able to embed videos into my blog thanks to the folks at INO.com (pronounced "I know"). The first video is about crude oil. If you came here looking for a live feed of crude oil gushing into the Gulf of Mexico, then you're out of luck. I am referring to technical price analysis of the crude oil market. You can view this video without leaving PFStock.

This short video talks about the move-up in crude oil prices this past week. The presenter, Adam Hewison, shares two conflicting indicators, and identifies which one he thinks will prevail. I think you'll find this video technically interesting as well as educational.

For more trading ideas, visit the Trader's Blog

When I viewed the video, I noticed that it appears a bit grainy unless you view it in full-screen mode. The embedded video also seems to slow down the loading of blog pages slightly. So, I'll try not to publish more than one video at a time. Please Email me, or leave a comment if you have any difficulty viewing the video.

Disclaimer: I am an affiliate and member of INO.com. Although I have been able to make money using their MarketClub product, no guarantees can be made. All investments involve risks, so please consider your objectives wisely before investing.

PFS

Free Year of Amazon Prime for Students

Amazon.com just launched Amazon Student. One of the benefits offered is a free year of Amazon Prime that gives you FREE Two-Day shipping with no minimum order requirement. For example, if you purchase an item for $10, you don’t have to buy $15 more just to get free shipping. An Amazon Prime membership normally costs $79 per year.

Personally, I'm not able to take advantage of this offer because it requires an .edu Email address. I don't have one anymore, and I haven't had one for a long time.

Anyway, if you are interested this deal, here is how to get a FREE year of Amazon Prime:

1. Sign up for Amazon Student and sign into your Amazon account.
   
2. Enter your .edu email address, state, school, academic level and major.
   
3. Confirm your email address.
   
4. Get your free 1 year subscription to Amazon Prime.
   

Actually, one thing that I just thought of while writing this post is that although I don't have an "edu" Email address, I remember that some college alumni associations offer Email forwarding services. I once received a note from my college alumni association that would allow me to get an account that forward e-mail from their alumni Email server. I wonder if that would work with Amazon. Has anybody tried to do something like that?

Anyway, I've digressed... If you are currently an Amazon Prime members. You can get a refund the remaining months left on your current Amazon Prime subscription, if you qualify for this offer and sign up for Amazon Student.

Note that when you sign up, you will get student deals emailed to you. If you don’t want to receive these Emails, then you have to give up the free Amazon Prime membership.

Lastly Amazon.com also sent me a link to their latest Back-to-School Savings deals.

Need money now? Get payday loans from www.60MinutePayday.co.uk today!

PFS

My Coke Rewards Codes

Do you know what this is: B4WFFML 5RFRJVH? If you answered that it is a My Coke Rewards Code, then you probably got that from the title of this post. But more specifically, it is a new unredeemed (as of 4/10/12) 14-digit My Coke Rewards Code. For months, I have been hiding My Coke Rewards codes in various posts at PFStock.com. I am not sure if anyone has noticed because nobody has asked me what these seemingly random letters and numbers are, or what they are doing in my blog.

The codes can be redeemed at My Coke Rewards for various prizes. I have decided not to use these codes myself, so I have been hiding them in my blog. Any reader who finds one is free to use an unredeemed code. Please post a comment here (or send me an Email message) letting me know which code you've used, so that I will know to hide more codes. This works like an Easter egg hunt for readers to find codes.

Unfortunately, not everybody leaves a comment when they use a code, and you may find a code that is no longer valid. In this case, please let me know that the code is already RNBM (Redeemed Not By Me), and I will erase the old code and hide a new one somewhere else on my blog.

Lastly, I've hidden some unredeemed codes on links that go outside of this blog. So, leave no LINK unclicked! Happy hunting!

PFS

Frontier Communications (FTR): A New Stock?

When I last updated my E*TRADE stock portfolio in Microsoft Money, I was surprised to find that a new stock had been added to my portfolio. I was now the owner of 48 shares of Frontier Communications (NYSE: FTR) that I didn't purchase. E*TRADE is not in the habit of giving away free stock, so I figured that there must be another reason. I turns out that this stock is due to the spin off on July 2, 2010 of Frontier shares from Verizon Communications (NYSE: VZ) which I own.


I usually don't get too excited about spin offs because they require me to re-calculate the tax basis of the stock shares that I own. In this case, I need to find the cost basis for both the Verizon and Frontier shares that I now own. Also when I finally sell the stock, I will be charged two sets of commissions -- one for Verizon (VZ) and another one for Frontier (FTR). Thankfully, I was able to find a tax-basis document on the Verizon investor relations website that can help with the tax basis calculations.

The gist of the document is that an owner of Verizon shares prior to the spinoff would allocate 93.7989% of the cost basis to Verizon shares. And 6.2011% of the cost basis would be allocated to shares of Frontier. There is also a small portion of the cost basis that may be paid out as "cash in lieu" (CIL) of fractional shares. If you received case in lieu, you would subtract that amount from the portion that is allocated to Frontier.

Using my own case as an example, I own 200 shares of Verizon. My original cost basis for the 200 shares of Verizon was $6705.00 (including commissions). This works out to $33.53 per share. So after the spinoff, 93.7989% of that amount or $6289.22 is attributed to the 200 shares of Verizon that I own (the new cost basis is $31.45 per share). The portion that is allocated to the 48 shares of Frontier is 6.2011% or $415.78. However, I did receive $0.06 (6 cents) of cash-in-lieu, so I would decrease my Frontier basis by that amount. My cost basis works out to $8.66 per share of Frontier. I have updated these values in MS Money, and will use these as the basis for whenever I decide to sell my shares.

Note that I did notice a few minor errors in the document provided by Verizon investor relations. I plan to contact them about these errors. But for the most part, these errors would not affect your calculations. So, is this explanation as clear as mud?

See Also: Trade Triangle: Frontier Communications (FTR)

NOTE: For more information about the Frontier spin off see also: Update on Verizon Frontier Spin Off

UPDATE: I did contact Verizon investor relations about errors in their document. I have an early version that had some calculation errors and several typos. After Verizon received my message, they updated the PDF document on their website, giving it a new name: "VZ-FTR Cost Basis_V3.pdf". Presumably this is "version 3" of the document. I have updated the links in my post to link to the most current Verizon document.

For reference, I am also including a link to the older cost-basis document without a "V3" in the name. If you examine the second page of this document, you will find that the text refers to an incorrect cost-basis for Frontier of $7.501. Another typo in the second paragraph of the example is that it ends with the term "Frontier sock." This should read as "Frontier stock."

Disclaimer: The example provided here is for illustrative purposes only. I am not providing tax advice, and I encourages readers to consult with a tax adviser if they have specific questions about cost basis calculation.

PFS

Wesabe to Shutdown

A while ago, I put up a poll on the sidebar of PFStock.com that asks readers "Which financial account management website do you use?" Readers are asked to vote among financial aggregation sites such as Wesabe, Mint, and Yodlee. After not receiving any votes for Wesabe, I wrote a post asking if anybody uses Wesabe? I didn't know anybody who actually did use Wesabe at the time. But again, I didn't get any affirmative responses.

Now, I have been informed that Wesabe would be discontinued by the end of July. Here is a message that was posted on the Wesabe website (I have kept the original links intact).

Dear Wesabeans,

I am deeply unhappy to have to announce that Wesabe will be discontinuing our Accounts tab, and all of the related personal finance tools we offer, as of July 31st, 2010. The Groups tab, which hosts discussions on personal finance topics, will remain online indefinitely. A FAQ about this shutdown is available.

You will be able to download all of your data from now until July 31st by visiting our export page. After that date, we will delete all data and all credentials we hold for security and privacy reasons. If you prefer, you may delete your membership immediately or at any time before July 31st.

We are planning to offer additional tools for export and use of your data. Future blog posts will go into more detail as we have it ready.

In recent months Wesabe has been operating on a shoestring budget, with support from some of the developers and operations people who made up our core team. While the site has remained online and we continue to hear from people who find it helpful, we have not been able to provide the support people need to use it for something so central as financial management. I've felt especially terrible that some members have a good initial experience but then hit a problem, often after investing many hours, and aren't able to get help with it. That's obviously a bad experience, and not what we want to offer. Also, because Wesabe stores such highly sensitive data, continuing to operate the service with shoestring operations and security staff is not acceptable, and we do not want to continue accepting new accounts if we cannot guarantee the security level we believe our service requires.

Wesabe Groups is easier to host on a low-cost basis, and one of our customers has agreed to fund its continued service. I have always been amazed by how fantastic the conversations in Groups are -- supportive, constructive, and unique. While many or all of the features of our Accounts tab are now available on other sites, our competitors have either dismissed the value of community, or have not been able to create a community as rich as Wesabe Groups, so I'm very happy we are able to keep that part of the service going.

I have had a wonderful time working on Wesabe and have been gratified by the many messages we get from members telling us how helpful it has been. The past five years have been an amazing ride. Of course I wish things had turned out differently and I would not have needed to write this post, but I've enjoyed my job for these years more than anything before it. The people we worked with, the people who supported us, the reward of helping even some people have better financial lives, all of that is irreplaceable. Thanks to everyone who has made Wesabe possible.

We will answer as many questions as possible about the planned shutdown in this Groups thread and update the FAQ as needed.

Marc Hedlund, CEO, Wesabe

I guess that this pretty much spells the end of Wesabe as a financial management site. What will Wesabe users do? Can anybody compare Wesabe versus Mint? Or Wesabe vs. Yodlee? Do readers have any other opinions?

PFS

Is Amazon Losing It?

A few days ago, I received an Email predicting that Amazon.com (Nasdaq: AMZN) will experience a substantial pull back from its recent high. The Email links to the following video (below).

If you have any trouble with the video, you can Click here to view it.

Do any of my readers own Amazon.com stock, or have opinion on how it will do?

PFS

Does Anybody Use Wesabe?

An article in SmartMoney inspired me to construct the poll "Which financial account management website do you use?" in the sidebar of my blog. Here is a link to the original article at SmartMoney.com: Which Financial Planning Web Site Is Best For You?

The article mentions a website called Wesabe.com, and lists it first among the three sites listed. QuickenOnline.com and Mint.com were the other two sites that they listed. As a history lesson, Quicken bought Mint, and if you try to access Quicken Online, you will end up on the Mint web site. So, the article really only mentions two financial websites.

Anyway, I have had the financial account management website poll up on my blog sidebar for a while now, and so far nobody has responded that they use Wesabe to manage their finances. So, my question to my readers is "Does anybody use Wesabe?" Anybody at all? If so, I would like like to hear what the benefits are.

Personally, I use Yodlee to track my finances, and so do the majority of PFStock.com readers. I usually find very good insights presented in SmartMoney but in this case I find their advice dubious as they didn't even mention Yodlee in their article.

PFS

Bing Cashback Program Will Be Discontinued

Do you use Bing Cashback? I have been using this feature to earn cash back on some of my online purchases. This was a Microsoft service that paid shoppers to search for and purchase items through their Bing search engineg. Microsoft has just announced that they are discontinuing the program. Does anybody have an opinion on this?

Here is the text of the message that they just sent me:

Dear valued cashback customer:

We are writing to notify you that the Bing cashback program will be discontinued, and the last day to earn cash back on your Bing Shopping purchases will be July 30, 2010.

Until July 30, 2010 9:00 pm PST, it's business as usual so continue to take advantage of great offers from your favorite merchants. You can redeem all of your earned cashback savings consistent with the cashback terms and conditions and access the Bing cashback customer support system through July 30, 2011. We encourage you to redeem your cashback savings and to further support redemption, we are waiving the $5 minimum payout effective July 31, 2010. To assist with prompt delivery of your cashback earnings, please visit http://cashbackaccount.bing.com to ensure your account information is current. For more details and answers to your questions, please visit our frequently asked questions page.

Thank you very much for being a loyal cashback user. We remain committed to delivering great value to our customers, and we are currently working on an exciting new program which you will hear more about from us later this summer.

Sincerely,

Bing cashback team

Is Toddler Toothpaste Useless Junk?

Some readers know that I have a 2-year old daughter, and I will admit that this post is little bit off topic for a personal finance blog. But one thing that I wanted to talk about is toddler toothpaste. These products are sold under such names as Orajel Toddler Training Toothpaste, and Gerber Infant Tooth and Gum Cleanser.

The product claims to be fluoride free and safe to swallow. But, I did my best to switch my daughter over to regular fluoride toothpaste as soon as she turned two years old. I've had issues with toddler toothpaste for a couple of reasons. First of all, toddler toothpaste has no fluoride in it, and this makes me question its usefulness. Toddler toothpastes are not accepted by the American Dental Association (ADA) as being effective in the prevention of cavities. In my view, this makes their intended purpose dubious at best.

About the only real claims that the manufacturers have made is that their product tastes good, and it can be swallowed by your child. Therein lies my problem! My daughter likes the taste, and treats the toothpaste like a food. I've probably gone through a dozen mangled toothbrushes due to my daughter chewing on the toothbrush until the bristles are unrecognizable. Brushing was a constant struggle with my daughter trying to eat the toothbrush, and me trying the extract the brush from her jaws.

After finally switching to a fluoride toothpaste (Kid's Crest), I had to later teach my daughter the exact opposite behavior: not to swallow the toothpaste. Swallowing too much fluoride can cause fluorosis or spots on your child's permanent teeth. Also, it was important to teach her to rinse her teeth thoroughly. This is how the lengthy process of unlearning a behavior went.

In my experience toddler toothpaste has little to no benefits, and in our case only led to struggle, frustration and conflict when brushing my child's teeth. I don't know about other parents, but I would consider such a product to be defective. At this point, if I had it to do over, I would not buy any toddler toothpaste, and just use a toothbrush moistened with water until my child was two years old. Does anybody else share my opinion that toddler toothpastes are useless junk?

PFS

Additional Comments on Yodlee

I was going to write some more of my own comments about Yodlee. It seems that Peter Hazlehurst (Senior Vice President at Yodlee) had left a comment on my previous post about Yodlee, but that comment has since been deleted. Nevertheless, Yodlee's customer service has been mostly responsive to my concerns. They have corrected the problems that I had experienced with my Bank of America and Chase accounts. However, a new problem has cropped up with one of my banks: Discover Bank. My account balance will update, if I manually update Yodlee. But the DiscoverBank balance doesn't update automatically, like all my other accounts. I sent a service request to Yodlee Customer Care a couple of months ago, but the problem has yet to be resolved.

My accounts that were previously unsupported by Yodlee are still unsupported. For example, my 401(k) account at JP Morgan remains unsupported. In my previous post, I mentioned something called Multi-Factor Authentication (MFA) that JP Morgan uses. Some readers are probably not familiar with his technology, so I'll summarize it here. If I try to access my JPMorgan account from a new computer, their website will not recognize me even if I entered the correct username and password. Then their website will prompt me to choose to receive an "Activation Code" via my home phone, text message, or Email message. I then have to enter that code into the website for them to recognize my computer and grant access to my account information. This registration has to be done once for each computer that you use to access your account. It appears that Yodlee doesn't support this JP Morgan account registration system.

However, I also have several Chase bank accounts that use a similar MFA system, and they seem to work fine in Yodlee. Remember that both JP Morgan and Chase are all part of one big company: JPMorgan Chase & Co. (NYSE: JPM). So, I'm thoroughly confused as to why Yoddle would support one but not the other.

Lastly, one reader has asked me how to track stocks on Yodlee that are not held in a brokerage account. For example, one could hold 200 shares of Microsoft (Nasdaq: MSFT) in certificate form. I know that you can setup a manual account on Yodlee where you can put in an estimate of the value of your stocks, but I haven't figured out how to have that updated automatically. Such a feature would also be useful to track the value of gold or silver bullion that one holds in a safety deposit box.

Note: Please also participate in the poll about financial account management websites in the sidebar.

PFS

How Much Have You Saved For Retirement?

If you have been keeping up with the news, you may have read a recent headline that says something to the effect that "43% of Americans have saved less than $10k for retirement". The original source of this headline is the Employee Benefit Research Institute (EBRI). For their study, the institute surveyed 1,153 individuals (902 workers and 251 retirees) age 25 and older in the United States by random phone call.

I have extracted the relevant table from page 16 of the report titled "The 2010 Retirement Confidence Survey".

This figure shows total savings and investment reported by workers (among those who provided a response) and does not include the value of their primary residence or defined benefit plans. Some of the commonly quoted statistics from this report are:

27% of American workers reported having less than $1,000 set aside for retirement.
43% of American workers reported having less than $10,000 set aside for retirement.
54% of American workers reported having less than $25,000 set aside for retirement.

The entire report can be found here.

I thought that this issue of retirement savings would be a good topic for a new poll: "How much have you saved for Retirement?" Please participate by selecting an answer in the sidebar of my blog. I hope to review the results at a future date. As always, anonymous comments are welcome on PFStock.com.

PFS

The Millionaire's Rule of Thumb

In the landmark book, The Millionaire Next Door by Thomas J. Stanley and William D. Danko, the authors present a now well-known formula for one's expected net worth. Unfortunately, it seems that the result of the formula has been repeatedly misinterpreted as a hard limit, where if you are below this number, you are considered "poor", and if you are above it, you're "rich". But, there is not a single break point that divides Prodigious Accumulators of Wealth (PAWs, the "rich") and Under Accumulators of Wealth (UAWs, the "poor"). Instead there is a broad middle range that the authors call Average Accumulators of Wealth (AAW).

Admittedly, the way in which Stanley and Danko presented the formula for expected net worth in their book is perhaps the source of much of this confusion. (See Wealth According to The Millionaire Next Door.) To be a PAW one needs to have at least twice their expected net worth. Instead of repeating the often misinterpreted formula here, I will present a simplified version of what the authors tried to convey in their book.

Take your age, and divide by 5. Multiply the result by your annual income. If your net worth is at least that amount, then you are a PAW (i.e. wealthy).

Suppose that one is 40 years old and has an annual income of $80,000. In this case, 40/5=8. So, to be "rich" at 40, one needs to have 8X their annual income or $640,000 in this example.

But, you are not necessarily a UAW if you have less than $640,000. The converse formula is:

Take your age, and divide by 20. Multiply the result by your annual income. If your net worth is less than that amount, then you are a UAW (i.e. "poor").

Using the same example, 40/20 = 2. So, one is poor at age 40, if their net worth is less than 2X their annual income, or $160,000 in this case.

I think that blog posts that discuss The Millionaire Next Door often illicit responses like: "The formula is flawed," or "This is nonsense." Indeed, broad rules of thumb like this one can have their limitations. I think that the authors only intended this formula to be a rough measure of one's wealth. On the other hand, if you find yourself making excuses as to why you can't achieve at least the lower limit of AAW status, then you are exactly what the authors have profiled as a UAW. My definition of a UAW is one that fits the formula and has a dozen "reasons" why he or she is stuck there.

Another typical reaction to the Millionaire's formula is people who say the formula is nonsensical, and that they will then develop a new and improved formula. Presumably, this new formula will show that they aren't doing so badly after all. In any case, I won't hold my breath for a new and improved breakthrough formula to come out.

Regardless of whether or not you agree with the Millionaire's Rule of Thumb, I think that everyone can strive to do better. Let me offer these words of encouragement: If you are a UAW, you can strive to become an AAW; if you are an AAW, you can strive to become a PAW. I wish you good luck in this endeavor.

Further Reading:
Wealth According to The Millionaire Next Door.
As a Rule of Thumb.

PF Stock

Has Anyone Received Their Tax Refund?

In January, I wrote a post that tries to answer the question: When will I get my 2010 tax refund? My post shows a table of when to expect your tax refund if you E-filed your return. It is now early March, and everybody who filed before February 11, should have already received their refund. So, I want to ask the question, "has anybody received their tax refund yet?"

I estimate that most people have yet to file their 2010 taxes. In my case, I received my last 1099 form just last week, so things are going slowly. But once you do file, you are likely to anxiously check your mail or bank account for your refund. Last year (in 2009), I have heard some anecdotal stories about the Internal Revenue Service taking a lot longer to process refunds, so I'm curious how the IRS is doing this time around.

As always, anonymous comments are welcome on PFStock.

See also: When Will I Get My 2011 Tax Refund?

PFS

Random Thoughts on Early Retirement

I think that many people can admit to fantasies of an early retirement. I know that I have had more than a few daydreams about the subject. Over the years I have found a few really good resources (and many more really bad ones) for seeking advice on early retirement.

But, I think that the best resources are the actual people who have retired early and are willing to share their thoughts. Let me first reiterate what I think are the three common themes among those who have retired early:

1) Living below your means (LBYM).
2) Maintaining a diversified investment portfolio on which to draw from.
3) Using a conservative 4% rule of thumb as a baseline for withdrawing from your retirement savings.

Billy and Akaisha Kaderli are a couple that retired in their late 30s. They claim to live off of $24,000 per year. In my communications with the Kaderlis I have determined that they live in what is commonly known as a mobile home. When asked, many people seem skeptical that they could live off of only $24k a year. And the thought of retiring to live in a mobile home is unappealing to many.

Some might characterize the Kaderlis' lifestyle as living "tightly". But, if you ever have the chance to communicate with either Billy and Akaisha, neither one of them would they say that they are at all uncomfortable with the lifestyle choices that they've made. In fact, they have been enjoying life, spending a lot of their time traveling around the world.

A key point that I want to underscore is that early retirees are often willing to do what most people are not. I think that many people could retire in their 30s or 40s, but they are not willing to make the lifestyle changes required to retire early. By contrast, early retirees are often willing to do what most people are not.

What some people refer to as early retirement is really a form of what is known as "voluntary simplicity". Extreme examples of this voluntary simplicity are turning down the heat to 55F, not drinking milk, and reusing gift wrap. Using this definition, practically anyone could claim "retirement" by reducing their consumption to a very small fraction of their net worth. The real question then is "would you be willing to reduce your consumption to this level?"

Along these same lines of voluntary simplicity is the book Your Money or your Life (YMOYL) written by Joe Dominguez and Vicki Robin. I read YMOYL a while back. While there certainly is a lot of good information in this book, some of the suggestions may be equally unappealing to many people.

The authors of YMOYL encourage the reader to thoroughly evaluate the value of each item they have, and track every last penny that comes into or out of your life. This is an activity that I personally frown upon, as I don't think that people should obsess about the minute details of every financial transaction.

YMOYL also advises investing virtually all of your money in US government bonds. I think that a more diversified investment portfolio of both stocks and bonds is a far more prudent choice. A portfolio made up of purely bonds violates rule #2, above. Also, as a historical note, Joe Dominguez died of cancer at age 58. And, this always left me with an uneasy feeling that the lifestyle he advocated in YMOYL may have contributed to his early demise.

In any case, I don't think that early retirement should be solely about depriving oneself to reach these goals. I will not tell you to give up eating meat, drinking milk, or buying your favorite latte drinks at Starbucks. Regardless, I think that everybody can make small steps that will bring an early retirement closer to reality.

Gold IRA at Lear Capital.

PFS

The 1099 Waiting Game

By now, you should be receiving the last of your 1099 forms from banks and brokerages for tax year 2009. Together with these 1099s and my W-2 form, I have all the data that I need to prepare my tax returns. But, I am now waiting for my CORRECTED 1099 forms arrive. For several years, I have had to re-figure my taxes due to updated numbers on my tax forms.

For investors, the usual suspects are mutual funds (especially foreign funds), Exchange Traded Funds (ETFs), tax-free bonds, and dividend paying stocks. The Internal Revenue Service (IRS) has added two relatively new boxes on the 1099-INT form that report tax exempt interest, and the amount of tax exempt interest that is subject to the Alternative Minimum Tax (AMT). For mutual funds, there are four categories of distributions: long-term capital gains, short-term capital gains, dividends, and non-qualified dividends. Mutual funds sometimes classify their distributions incorrectly and need to re-classify them properly. ETFs will sometimes declare a distribution in December, but not pay you until January. Unfortunately, you need to pay taxes on these funds in your prior year's taxes. Sometimes, foreign mutual funds need to calculate the foreign taxes paid by the fund. This calculation often takes a couple of months for the fund to figure out. Foreign taxes paid can be taken as a credit on your U.S. taxes. And, I've had instances where my brokerage put my tax-free interest in the wrong box, listing it as taxable interest. For dividend paying stocks, I've sometimes seen the dividends characterized incorrectly as non-qualified dividends when they were actually qualified dividends (which have preferential tax treatment).

The corrected 1099 forms are sometimes further corrected. In one case, I didn't get my last 1099 corrected until April! Most brokers inform their clients that corrected 1099 forms will be mailed by mid-February. I can sometimes predict when one of my 1099 forms is incorrect, and expect to receive a correction. Issues with 1099 forms usually resolve themselves, but it often takes the brokerages and banks a while. For people who are expecting a tax refund, deciding when to file can be a hard call. You want to get your refund back quickly, but you wouldn't want to have to file an amended tax return later...

See Also: When Will I Get My Refund?

PFS

Tax Tips Contest

Congratulation to Stephen Grimes, who is the winner of the H&R Block Giveaway Contest. He will be receiving a copy of H&R Block At Home Deluxe (formerly known as TaxCut) which includes tax preparation for both federal and state returns.

His tax tip was to harvest stock losses, saying "I did this a year ago near market bottom, and I will be deducting $3000 per year off my income tax for five years!!"

Here are some of the other tax tips I've received (as well as some of my own).

• File your taxes for free online. Many websites offer free online filing if you meet their criteria.
• Buy a copy of J.K. Lasser's Your Income Tax or the Ernst & Young Tax Guide to help with understanding tax laws and with preparing your taxes. Better yet, check out a copy of either one from your local library for free.
• Contribute the most you can to a 401(k) plan at work.
• Read PFStock and other personal finance blogs. (I think that this contributor has his own personal finance blog.)

The contest is over now, but if you have any other good tax or money saving suggestions that you would like to share, I encourage you to leave a comment below.

If you missed out on the H&R Block At Home giveaway, I do have a couple $10 rebate coupons good through 4/15/10. The rebate is for $10 off of an H&R Block At Home Deluxe or higher purchase from these stores: Amazon.com, Best Buy, Target, Office Depot, Microcenter, Staples, and Fry's Electronics. If you are interested, Email me your mailing address (my Email is shown in the sidebar of my blog). I will cover the postage to send it to you, but this offer is limited to the first two responses that I get since I only have two coupons.

See Also: When Will I Get My Refund?

PFS

The Old PFStock.com

Welcome to the new PFStock.com. Apparently, I am not the first person to use this domain. I want to ask my readers for some help in asking "What was the old PFStock.com?" Below is a screen shot of the old PFStock.com taken from the Internet Archive (The Wayback Machine at archive.org). The screen shot is dated January 15, 2006, and appears to be written in simplified Chinese characters.

My best guess is that it is some sort of stock trading message board, but any insight that I can get would be appreciated. One thing that I noticed, though, is that I don't get much traffic based on the fact that this is an old (used) URL.

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