2005 Tax Refunds Already Here
02/24/2006 19:30
Just ten days ago, I wrote on here to say that my wife and I had wrapped up our 2005 taxes, courtesy of using TurboTax online. This morning, I had the pleasant surprise of logging into my Wells Fargo account online and seeing I had quite a bit more cash than when I'd gone to bed the night before. That's always good. The reason for it was that both our tax refunds from the state and federal levels were deposited automatically, getting me the money that was rightly ours in the first place back a lot more quickly. Now, with it not even being March, we can close the door on our 2005 finances.Of course... that depends on whether our good friends at the IRS opt to open up the discussion at any point in the future. After all, it's their right to do so, but I say, bring it on. We're ready.
Every year, especially as the date moves closer to April 15th, you hear the inevitable belly-aching and gnashing of teeth over the stress of taxes, getting the forms right, making sure your deductions are in order. But I've never quite understood why. It's a right of passage. It's a challenge. There's some nostalgia involved - especially as I go through every single stock trade from the previous year. (I owned that? What was I thinking?) And there's definitely some self-satisfaction to finishing the task well ahead of time and with a minimum of fuss. I almost would beg for the sticker that says "I paid my taxes", the same way you get one that says "I voted", if you're one of the 38% of us who do that every couple of years or so.
At least today, I feel like we're financially secure. But almost all of the refund already has to be spent on bills that were outstanding, and simply catches us up. But today, I have cash - let's see if I can hold onto that feeling.
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Keep The Change: Is America that Stupid?
02/22/2006 00:10
I first heard one of Bank of America's promotions for their new "Keep the Change" campaign while on a business trip last Spring in Arizona. The idea sounded preposterous - the bank would help you save money by taking the difference between your debits and the nearest whole dollar and depositing it into your savings account - theoretically helping you create a nest egg for the future. Somehow, they expect that we have no financial planning abilities, and that the nickels and dimes they transfer from one account to another will make us all rich some day, something we couldn't have achieved on our own, through stocks and bonds, real estate, or common sense.Now, the commercials are getting more air time. This evening, during Winter Olympics coverage on NBC, an ad featured a young boy doing the math in his head while his mother paid for groceries. He gleefully spouted off 87 cents if she had been charged $4.13. Oh, what a bright young man, and how lucky we are for Bank of America to come to his family's aid and prepare for his inevitably illustrious college career! Ridiculous. If his parents have to rely on Bank of America to guard their piggy bank, it's not likely that little Johnny is going to make it to a community college, let alone a reputable four-year university.
The "Keep the Change" campaign effectively gives Bank of America the right to overcharge you not just on a small number of your purchases, but EVERY purchase. It guarantees that you will always pay more than the cost of goods. It gives Bank of America the right to take even more money from their clients and invest it as they choose to make even more money for the bank. And what is the likelihood that this campaign will even be around when it's Johnny's turn to brave the SATs? Marketing programs come and go, and with silly exceptions like Free Checking, most don't have much staying power. And what if Bank of America merges or gets swallowed up in some future unforeseen acquisition. Will the program continue?
Bank of America has always annoyed me. They're the IBM or GM of banking. Huge, but not offering anything positively differentiated from the competition. I've used Wells Fargo for the better part of a decade, and I can't remember the last time I stepped into their branches. My online banking does everything, and it doesn't ask me if I want to "keep the change" or get fries with that.
2005 Taxes In the Bag
02/14/2006 20:39
I'm hoping that the only reason I'd ever seek out the help of a tax professional is that through some stroke of fortune, I'd become so wealthy that it'd take an army of accountants to keep my finances straight. Ever since I made enough money to have to file taxes, I've taken the easy way - using Tele-file while in college, and filing online the last 5 years or so, using TurboTax, initially via Yahoo! and now through the TurboTax site. Using TurboTax online is a snap, as each step guides you along, supposing you have your paperwork handy on the side, and it fills in your data and math as you go. A running total in the top left of the screen lets you know if you owe Uncle Sam a check, or if he owes you one.Best of all, it imports all your previous year data if you've used the site before. That makes it simple - as you don't have to re-enter your contact and background information, and can mentally gauge how you did in contrast to the previous year, for income, deductions and taxes.
Yesterday, we wrapped up the 2005 filing, and all we have to do is store our records in the event of a future audit, or watch the bank account to be sure their direct deposit goes through. Very simple, and there's no reason I want Uncle Sam to hold onto my money for any longer than absolutely possible, so getting done in February is great.
Exxon: Record Earnings of $10 Billion
01/30/2006 19:21
Rising gas prices affect all of us, drivers or non-drivers alike, and in the last few years, we've seen the average price per gallon rise from below $1.50 a gallon in 2002 to nearly double that in 2005, and about $2.50 plus a gallon today. Just this morning, I filled up for $2.57 at Chevron - a fairly average price for the Bay Area.We've been led to believe that the meteoric price increases are due to several factors - cleaner gas initiatives, Middle East regional strife, scarcity of oil wells in North America, refineries under repair, the War on Iraq, and Hurricane Katrina. But simple economics tells us that there are really two ways that price increases can be sustained in a large economy - the first being that the cost of goods is increasing at the supplier level, which forces them to raise costs in turn to sustain gross margins, or second, that a scarcity of suppliers, through monopoly, collude to uniformly raise costs.
This morning, Exxon reported a quarterly profit of $10.7 billion. On the year, the company's profit (not revenue, mind you) was more than $36 billion dollars, bigger than the economies of 125 of the 184 countries ranked by the World Bank, and a world record for any company in history - period. Does this tell you that the company is simply keeping profit margins in line with rising costs, as mentioned above, or is something rotten in Denmark?
If you believe the company's spin, they'll say that the record revenues will "fuel" investment in the future, and that this is good for all, but do you buy it, and if not, what do you think should be done? Is this just capitalism, and we should be happy that the market has worked?
Related Links:
Exxon profits shoot up 42pc to world record of $36bn
Exxon Profits Up, Valdez Anger Lingers
Exxon profits lead to PR blitz
Location, Location, Location
01/22/2006 11:39
It's no secret that the San Francisco Bay Area is one of the most expensive locations to live in the country, if not the world. I am agape at the "bargains" available in the rest of the country - where it's not uncommon to see billboards advertising homes in the "Low $80s to $100s" and beyond. Given it costs you more than $350,000 to get a 1 BR/1BA condo here, the difference is enough to make one consider other options. After all, with high speed Internet being a great equalizer on telecommuting and communication, and relatively cheap airfare available, then what difference does it really make whether one lives in Alameda or Albequerque, Mountain View or Montana?Every month or so, we get notices telling us what prices homes and condos in our area have sold for, what the owners were asking, and what they received. On a back of the napkin calculation, one could easily guesstimate we could get more than $450k for our 2 BR/2 BA condo - provided we replace the carpets and hide all notice that a dog has been one of the primary residents.
Putting that in perspective, here's what a comparable amount of money will get you in other areas of the country:
Denver, Colorado: 4 BD, 3 BA, 2,700 sq ft $350,000
Billings, Montana: 5 BD, 3.5 BA, 3,000 sq ft $320,000
Kansas City, Missouri 5 BD, 5 BA, 1.4 acres $350,000
Atlanta, Georgia 4 BD, 3 BA, 2 story $350,000
Nashville, Tennessee 5 BD, 3.5 BA, 3,200 sq ft $350,000
Provo, Utah 5 BD, 6 BA, 4,800 sq ft $350,000
So, in theory, you're telling me I can trade up to a 5 bedroom, 6 bathroom, 4,800 square foot home with central air conditioning and a lake view, and LOWER my mortgage payments, and all I have to do is move to the Beehive State? Where do I sign up?
Stock Market Bloodbath
01/20/2006 23:30
Sometimes, you think you're on a roll, and then after a few bad days, not only have you lost all of the money you made, but you're in the red - even on blue chip stocks you thought made sense. Heck, today's stock market tumble was so bad, even my 401k lost more than a thousand dollars all on its own. Google was down $36 a share in one day. Yikes!It's enough to make me want to record this loss on last year's results to help with taxes this year. I don't know how well Uncle Sam is going to treat us come April 15th, but we could sure use the money.
Out of AAPL too
01/10/2006 18:40
E-Trade is telling me I have a lot more cash now than how I started the day. Following up on my note this morning on exiting Salesforce.com (CRM), I saw the mid-day spike in Apple (AAPL) take the shares up to record heights, above the $80 level. While I'm unlikely to be out of AAPL for long, as it's a habit that's hard to break, it made sense to take profits above $81, and we did. So we're out. We'll see over time if that was a smart move or not, but I can't argue with making money.Taking Profits
01/10/2006 07:14
On Saturday, a relative and I got into a discussion around the stock market. I told him that I'd had some good success in 2005 (as many did) by following the fundamentals - buying low and selling high. I only invest in those companies who I believe aren't fully valued, or have unique services. In 2005, I got lucky with Apple, Google, Baidu, Rackable, Transmeta and other tech stocks. That happens to be a market I know. But I also know when to get out.Saturday, he kept telling me that profits only mattered after you sold a stock, not in a one-day bump. Of course they do! But I already knew that. Just this morning, after holding Salesforce.com (CRM) for only a week, I sold it for a 10-15% profit. Now I have cash in the account again and can decide where to go next. That's how the market works. Just don't tell me my cash doesn't do any good if it's not invested.
Follow The Money
01/09/2006 23:02
They say it's never too early to invest in your future, and that with every year you put off saving money, or deferring income into your 401k, you lose precious opportunities down the road. With that in mind, I've been putting what I can afford into the 401k offered by work, and trying to be smart through diversification, I split up the allotments to a few funds which Fidelity, our provider, claimed to be the most consistent.But mutual funds are made up of a collection of individual stocks. The highest growth funds are dominated by technology and healthcare stocks (Google, Apple and the like) - which I'm fine with. But this weekend, I looked at the breakdown of the "Fidelity Equity-Income II Fund", which is a middle of the road performer... doesn't go up a lot, doesn't go down a lot, and increases bit by bit over the year.
Guess what were some of the stocks in the fund's Top Ten holdings?
* Exxon Mobil
* Walmart
* Halliburton
* Microsoft
* News Corp (Owner of Fox News, enough said)
The top ten stocks make up 23% of the portfolio, and these are five of the top ten, but yikes! What is this? The crooks and liars fund? I'm out! So I went into the online records and moved all the money in that fund to a different one. I'll have no part in making those companies feel financially secure.
I guess it's one small step toward feeling socially responsible. But don't expect my change to "rock the markets" per se. I don't own a controlling share of any of these companies.