Author: Darwin

Aside from today’s latest Fed tinkering by enacting QE3 at the expense of savers and potentially throwing further fuel onto the inflationary fires down the road (yay for all you readers holding gold today though!), you can rest assured that by the end of the year, we will see further changes to the current FICA tax limits and rates.  The FICA income cap itself is set automatically by the so-called government inflation measures (although many politicians are calling for an increase to that cap to soak the rich more), but from a rate standpoint, we’re currently enjoying a so-called “payroll tax holiday” which may be further mutated as a result of political pandering come election season.  Since the FICA tax rate and the cap have a direct impact on most working Americans, it’s definitely worth keeping an eye on.

Find out what’s in store for Next Year’s FICA Limits and Rates.

I don’t do individual stock reviews and such these days since I’ve taken more of a passive/low-fee approach over the years compared to active stock-picking (hence my other site ETF Base which is focused solely on ETF investing and strategies). Anyway, what I set out to do years ago was to pick a basket of high yielding stocks for my self-directed Roth IRA account and keep reinvesting the dividends in the same account in a tax-free manner. As it turns out, the account has beaten the return of the S&P500 over the past 7 years and I have the detailed evidence to back it up. When someone beats an index over a prior month period or even a prior year period because they picked Apple stock or whatever, that’s not much of an achievement and can often be attributed purely to luck (random variability actually; I don’t believe in good or bad luck). But with the approach I took with high yielders in various sectors, it appears to have won out over a slow moving US market this decade.

Read on for self-directed IRA returns, holdings and strategy.

Alas, the dreaded call to Comcast to once again renegotiate my monthly bill came around.  See, every 6 months, I basically call them up, claim I’m going to quit and go to Verizon FIOS and see how much I can have my monthly bill reduced.  What happens each time is that we play some cat and mouse, bluff a bit and then ultimately, they knock a portion of the charges off my bill by offering me various “promotions” which reduce the face value of the bill.  Then, 6 months later, these promotions expire and my bill shoots up and I have to call them again and repeat the cycle.  I figured by sharing my experience and talking points, it might save you a few bucks or even provide some ammo to use with other carriers from cell phone service to waste collection.  Same theory applies – competition is good for the customer.

This week, my call went like this:

See how to negotiate a better bill from any utility supplier.

Do you know the annoying, pushy people that try to jump ahead of you in the doctor’s office when you’re there for a real reason? like a health issue? Yeah, those people. In between buying lunch for the doctors and schmoozing the receptionists, apparently, a few sales reps found time to conjure up a lawsuit that they should be entitled to overtime from their employers for all their hard work.

Well, the verdict from the Supreme Court with a 5-4 vote is finally in and they are NOT entitled to overtime. According to the suit, a couple sales reps felt entitled to overtime and filed a class-action lawsuit based on the following:

 

“Their jobs required them to meet with doctors in their offices, but also to attend conventions, dinners, even golf outings.”

 

No, this is not a joke.  Seriously.

White collar professionals wanted overtime to play golf.  Here are my thoughts as someone in the industry who knows many pharma sales reps, other industry sales reps and someone as having held a prior white collar overtime eligible job.

First off, cry me a river…

…Continue Reading Why Overtime for Pharma Sales Reps is Ridiculous

With the 10 Year Treasury yield crashing through 2% and hovering around 1.5% for weeks now, it’s an optimal time to exploit the lowest rates we’ve seen EVER.  However, there are so many dozens of different options to choose from ranging to terms to rates to closing fees, it’s tough to do an apples to apples comparison of what the best refinance option is for you.  Here are some of the criteria that were important to me and why I avoided some of the common refinance structures:

No-Cost – Personally, I’ve been hesitant to part with thousands of dollars in closing costs even if the payoff seems to be there since I like to keep a cash buffer in my emergency fund and put my cash to work elsewhere.  For this reason, I’ve been continually monitoring No-Cost Refi Deals (make sure to read this to understand the difference between no-fee and no-cost so you don’t get burned), so I could have the best of both worlds – no cash out of pocket at closing AND a more favorable mortgage structure…

…Weigh in on The Perfect Refi Terms for You

A news item caught my eye recently.  Yet again, employees are suing their own company (JP Morgan) for allowing them to buy company stock in their 401(k) plan while allegedly hiding known financial risks.  This lawsuit is just plain silly, a by-product of the litigious nation we live in.  Aside from the fact that their lawsuit has no merit (they really thought they should realize the upside benefit of equities investing with no downside risk???), there are several reasons why employees should simply NOT invest any of their 401(k) funds in their employer’s stock:

Continue Reading Why Investing in Your Own Company’s Stock is a Horrible Idea

Boy, that’s the fastest $2800 I ever spent!

Electricians Charge a Hell of a Lot

We got a few recommendations from friends and neighbors in the area for electricians they’ve used.  We avoided the larger electrician “companies” since the overhead is higher and you don’t know who you’re going to have in your house for 2 days. Of our individual electricians in the area, 3 of them got high marks, so we had all 3 out to give us quotes on the various jobs we were interested in.  Interestingly, as though they were all reading each others’ minds, they all quoted at roughly the same (seemingly expensive!) prices.  When I backed out my assumed costs of lighting, wiring and other materials, I pegged their hourly rates at about $150/hour.  That’s a damn good rate!  With most doctors making $150,000-$250,000/year (not to mention they tend to work a heck of a lot more than 40 hours a week and start off with 6 figures in med school debt), I’ve come to the conclusion that electricians make more than doctors….

Judge for Yourself if Electricians Make More than Doctors

There’s nothing like being an American, right?  I mean, we’re only 5% of the population and enjoy 25% of the world’s GDP (while consuming 25% of the world’s energy of course).  That aside, in general, you don’t see people from around the world flocking to any country but America.  We have a vibrant job market (usually), the best opportunities for startups, education, freedom, and well, all kinds of other good stuff.

So, what would entice someone to renounce their US citizenship?  Cold hard cash.  That’s what one of the initial founders of Facebook has done, foresaking the US for Singapore (even though he’s Brazilian…long story, but it’s clearly a tax thing).  As widely reported in the media in advance of the Facebook IPO, Eduardo Saverin is now a proud citizen of Singapore…

Continue Reading How Much Would it Take For You to Renounce Your Citizenship?

(one more for the annals of, “I know, you guys told me so…”)

A few months ago, I highlighted the college real estate deal I did with a partner whereby I borrowed from my 401(k) to finance a decent-sized deal on 5 houses on a college campus. At the time we bought, we had assurances (and signed leases) that the houses were all booked for the upcoming 2012-13 school year. This was a big selling point, in that we wouldn’t have to jump right in and try to fill the houses for the next year, that the work was largely done for us already.

Fast-forward to March 2012. For most of the houses, the same students that are in the house this year were signed on for next year as well. A few weeks back, a few tenants started highlighting various financial and scholastic issues to the property manager. We then got a formal notification from the house that they want “out”. They said they can’t fill the house next year and don’t intend on renting it next year. Regardless of their reasons and personal situation, we DIDN’T promote the house all year and this late in the year, it’s going to be tough to fill 5 kids in a house.

What the Lawyer Says….

Continue Reading Tenants Breaking a Lease

I thought I’d start up the MBA Monday series again (NPV, Accounting, Investing and all sorts of other goodies) to bring you a really cool calculation you can do in excel that you may not have heard of. It’s called Internal Rate of Return. It’s important because it provides you with an investment return when the inputs aren’t simple to calculate.

 How Internal Rate of Return Works:

A simple hypothetical investment like buying Apple stock at $250 and selling it a year later at $500 is simple. Apple pays no dividend and you doubled your money, so it’s a 100% return (annualized).

• But what if you bought $1000 worth of Apple stock every quarter for the past 3 years and sold it all tomorrow?
• Or what if you bought a high yielding stock that’s been paying dividends monthly?
• Or what about a real estate investment where you take distributions once a year and then sell it 10 years later?

How the heck do you figure out the annualized return then? You can’t do it with a simple pencil and paper. This is where the Internal Rate of Return comes into play.

Learn More About the Internal Rate of Return Calculation in Excel