If you have aftertax 401k funds or can make additional aftertax contributions, you may be interested in a new IRS rule. As of September 2014, the IRS has made it easier to fund your Roth IRA through a backdoor. Find more details at this Link to Forbes article.
Will you take advantage of this change in IRS rules? Do you currently fund a Roth through the traditional IRA backdoor?
News Flash! If you have a pre-existing condition that precludes you from getting insurance from a private insurer, you are eligible to become part of the Texas Health Insurance Pool. The pool provides affordable health insurance to those who are denied coverage. And it's not some fly by night insurance outfit, it's with BlueCross and BlueShield. How is it that this little program has been kept a secret from POTUS and his cadre of Dems who keep claiming that it's impossible to get insurance with a pre-existing condition? The state of Texas has been providing this safety net since 1998! What? you don't live in Texas? Well, just come visit, after 30 days you can have insurance. Seriously, check it out. How on earth did I discover this? It certainly is not widely known and there is no advertising in any media that I have ever seen. I learned about the pool through a friend who was diagnosed with cancer. He didn't have insurance because he would rather spend his money on a $300,000 house and a boat, a deer lease and a new Ford 4x4, etc ad nauseum. Consequently, he thought he had no choice, but to pay for ala cart cancer treatments which BTW are at a substantial discount when paid for with cash. Because of his limited available funds, he had to make choices as to which treatments were the most cost effective. Eventually, after several treatments, his doctor mentioned that he could be eligible and should apply for the health insurance pool. My friend survived the cancer and the pool has saved him a fortune, plus he kept all his toys. So, it begs the question, why even buy health insurance when such a pool exists? Why not save your money or spend it on 4x4 trucks, and just wait until you actually might need insurance then apply for the health pool safety net? Think of all the neat stuff you could have with the cash saved from not paying insurance premiums! Sure, that would be abusing the system, and it is predictable that the corrupting forces of socialism will continue to be a deleterious drag on human character, even in the overly proud state of Texas.
By now, we have all heard plenty of reasons why people are against and/or for an increase in government's role in healthcare. But the reason that resonates most is the effect on the individual. This article gets to the core of the issue concerning the deleterious effects of excessive government on human character.
Leave it to a private businessman to offer some stimulus that makes sense. It seems obvious now, but who else but a true capitalist would come up with a great way to encourage new business?
Does it seem odd to anyone that our government is so interested in discouraging saving? How can anyone argue that savings is not the very essence of our personal security. Our savings are the primary foundation we have to fall back on in tough times, to get us through ordeals such as what we are now facing, and of course, to build a better life. Yet, our dear leaders, have little interest in encouraging savings.
Why is saving no longer in the interest of the public good? Simply put, the economy has been depending on consumer “overspending” for years with the government injecting stimulus at every downturn. It is a false economy. The consumer has been driving this engine and this dependency is not a healthy underpinning for any free market.
It hasn’t always been that way. At one time, a very long time ago, saving was encouraged. Saving and then investing money into one’s private business or even into the stock of other businesses helped to fund the building of products and drove job creation. When
This didn’t happen overnight. It took years to change laws and eliminate sound lending policies to free up the credit to fuel this monster, to keep consumption growing. It has been a case of growth at all costs. Leverage yourself to the hilt, take out more credit, just keep the engine going a little longer.
Obviously, we are desperate for change, but it has now become apparent that there will be no change in economic policy. This administration plans to keep on kicking the can down the road. In fact, the “can” is doubling and tripling in size. It is and has been easier to keep kicking, rather than to actually stand up and lead; to make the tough, unpopular decisions. Eventually, all of this will settle out, this farce can only continue for so long. Propping up unsound businesses will not work. There was a day when a business did not make a profit, it got squeezed out. It was economic survival of the fittest and this natural process produced the strongest and most competent businesses. Evidently, there are many who think they can change this law of nature, but we all know that nature can not be fooled.
Now, here’s a gadget that I would really like to try out: the iPosture. “The iPosture is an intuitive electronic device designed to improve posture. Just over one inch in diameter, the iPosture automatically senses when the body slouches, and it alerts the user with brief vibrations to correct it.“ I have no doubt that it’s just as tough as this reviewer says it is. He actually had sore muscles from just a few hours of use. Of course, as with any new habit, good or bad, it typically takes 3-4 weeks for good posture to become natural. Like most people, I would like to improve my posture. I remind myself several times during the day, particularly when at my computer keyboard, to straighten up, throw my shoulders back, etc. So, I have decent posture for a few minutes and then before I know it, I find myself drawn in closer to the PC and scrunched over the keyboard once again.
It has never been more obvious than now, that we live in a society of haves and have nots. The nominee for Secretary of the US Treasury did not pay taxes for several years and when he got caught in an audit, he paid only the back taxes that the auditors found, not all of the taxes that he knew about. On top of that, he was not fined, no penalty. If you don’t think we have a double standard between public figures and regular, non celebrity-type citizens try that and see how you are treated in the federal pen. But that is not the end of this guys sordid tale. The WSJ points out a few more “goofs” of this supposed genius: “Other tax issues also surfaced during the vetting, including the fact Mr. Geithner used his child's time at overnight camps in 2001, 2004 and 2005 to calculate dependent-care tax deductions. Sleepaway camps don't qualify. Amended tax returns that Mr. Geithner filed recently include $4,334 in additional taxes, and $1,232 in interest for infractions, such as an early-withdrawal penalty from a retirement plan, an improper small-business deduction, a charitable-contribution deduction for ineligible items, and the expensing of utility costs that went for personal use. The other cloud for Mr. Geithner involved an immigrant housekeeper whose work-authorization papers expired during her tenure working for Mr. Geithner. “ It takes some real audacity to try to deduct your kids summer camp. Sure some accountant could have prepared his paperwork for him, but once again try that excuse with your tax filings. You and you alone are responsible for what goes on your tax forms. The other real kicker for me is the fact that this financial whiz took an early withdrawal from his retirement plan and lied about it to the IRS. That action calls into question not only his honesty, but his money management skills. After all this is no run of the mill, inconsequential nominee, this guy is going to oversee the IRS!!! And all of our tax dollars in His defense is simply that all of this was an “honest mistake”. The guy can’t manage his own personal finances let alone oversee the finances of the country. This is the change that we have been promised?? This is considered acceptable behavior by BHO?? What would be unacceptable?
Forever the contrarian, it seems. While others are opting for cash only transactions to avoid credit card balances, I am doing just the opposite. I have streamlined my wallet to include only my ID, one credit card, an ATM/Debit card and a couple of insurance information cards. I have a few reasons for making this change: And of course, some of the cons might be: I decided to put the new system to test this past week while on a three day business trip. At first, it seemed a little strange to use a card to pay for a 2 dollar and 17 cent item. However, the cashier didn’t hesitate at all when I handed over a credit card. The best part is that the deal is cleaner and much faster, since a signature is not required on transactions less than $25 and some vendors accept even larger amounts. It all went smoothly, except for a couple of instances. In one case, I stopped at a kiosk for a newspaper and coffee in an airport. Payment was on the honor principle! The kiosk had a container with a slot and a sign “please pay with correct change”. Since I was so impressed with the fact that anybody would use an honor system in a large city airport, I just had to participate. By throwing a couple of bucks in the pot, I wanted to show the vendor and the world that there is some hope for the future of humankind! That’s right, some folks will pay for services simply because it’s the right thing to do, not because it’s the law. Fortunately, I didn’t do this cashless experiment cold turkey. I had three dollar bills and a twenty – just in case. The next cash only situation occurred at my hotel. The hotel offered complimentary breakfast buffet and it was so good and the waitress so friendly that I wanted to leave a tip. I could have asked to have a tip placed on my room bill, but who knows if the waitress would have received that? Leaving cash on the table was the best way to make sure she got the tip. From this trial, I can see that I still need to stash a few bucks for tips, especially when I travel. So, my wallet may not be as thin as I would like, but then again, I just found another way to eliminate my ATM/debit card by turning my drivers license into a debit card!
This past year has been brutal for equities across the board. In times like these, when nearly everything is tanking, I can’t help but notice the miniscule portion of my portfolio in US savings bonds that is leading the way with positive returns. I never thought I would see the day. I have been purchasing savings bonds over the last 20 years mainly to keep my employer off my back. Every year, the company recruits employees to canvass the masses and urge all to participate through payroll deduction. I have been one of those canvassers and I can attest that convincing engineers of the financial benefits of bonds has always been a hard sell, so instead the canvassers tout patriotism! Love
To track my bond holdings, I use a Savings Bond Wizard tool and it is currently reporting that many of my EE bonds purchased 10, 15 and even 20 years ago are yielding a whopping 5.6 %. I’m thrilled! A snapshot example of the wizard screen is shown below. For those of you holding savings bonds, the wizard software, available for download at the TreasuryDirect website, is an easy way to keep track of this newly, exciting asset class. Once you have entered the serial number of each bond, the wizard will track it, provide accrual and maturity dates, automatically update to the latest rates and yields and provide the current dollar value of the bonds all free of charge.
This past year was a great time to be holding bonds, but what about previous years? For some very interesting data check out this graph provided by The Savings Bond Advisor comparing the value of equal monthly investments in series I savings bond and the Vanguard Index 500. The differences between the two over the last year are pretty dramatic, but the data also shows that savings bonds have been in the running over the last several years. Hmmm, an investment paradigm shift may have finally arrived for at least one engineer.
Every year I set several goals that are typically related in some way to sports or athletic endeavors. This year I have expanded that to include some other areas that need improvement. Here are four of my goals:
#1 Goal
More bonds in my portfolio! I always have trouble adding bonds, it just seems to go against my grain. For many years I have steered away from bonds and their boring returns with the argument that I was diversified in various equities, commodities and real estate. That false sense of security worked for a long time. It seemed that things balanced out because when one asset class was down another was booming. That didn’t hold true for the bust of 2008 where equities across the board took steep losses with few exceptions. The losses have gotten my attention and convinced me to reduce my overall risk. I will not sell any assets, but will re-direct a large portion of new money into bonds.
#2 Goal
Exceed my 2008 walking/hiking mileage. Last year, I strolled along for just over 3 million steps or 1500 miles. 1.27 million of those steps were with my dog, Brownie Boy. Dogs can be great motivators – how can anybody say no to a walk when the little guy is so excited about going?
#3 Goal
Read More. I don’t care what the topic, just read. I read twenty books last year ranging from personal finance to mysteries with romantic undercurrents. I am giving myself free rein to read anything that interests me because reading something is better than not.
#4 Goal
Take off on an Adventure. I want to live life with no regrets and one way to help make sure that happens is to do something every now and then that is frightening! Okay, that may be a little over the top. My aim is to do something that forces me to stretch in some way. One of the possibilities for this year is a sea kayak trip, camping and fishing for 8 days along the coast.
Check out this interesting website: Typealyzer.com. The site attempts to determine the blog authors personality using a psychological text analysis. Here are some examples:
Bailing out the big 3 automakers is nothing more than kicking the can down the road and that road is headed over a cliff.
Argentina’s government has announced their intention to expropriate $30 billion held by Argentine citizens in private pension funds (similar to 401(k) retirement savings accounts). The money is needed to refinance old bad debts so that they can borrow yet more money to keep the country afloat. The announcement rocked investor confidence in Argentina and sent the Buenos Aires stock market plunging. More details can be found here.
Just when you thought the situation with your 401(k) account couldn't get any worse, our new democrat-controlled government is preparing a plan to nationalize your personal, private 401k retirement account!
TD Ameritrade sent me another “exclusive” offer for a Sharp AQUOS Blu-ray Disc player in exchange for a deposit of $50,000 into my TD Ameritrade account. For another $50,000, I can get one year of 3 DVDs at a time from Netflix.
While the president-elect talks about yet another bailout/stimulus plan, we learn how Fannie Mae executives have chosen to spend over $6000 of their last $200 Billion of bailout money on a golf outing that included mango towel service and $1700 worth of buffet food and $555 for drinks.
Buyers ran for the exits as declines lead advances 4 to 1. It was the largest percentage drop following a presidential election in 112 years of data (shown below) according to Reuters.com. In fact, we have to go all the way back to 1932, during the depression, to find numbers anywhere close to today's blowout. The Year Dow S&P Nasdaq President elect 2008 -5.05 -5.27 -5.53 Barack Hussein Obama 2004 +1.01 +1.12 +0.98 George W. Bush 2000 -0.41 -1.58 -5.39 No decision: G.W. Bush v Al Gore* 1996 +1.59 +1.46 +1.34 William Clinton 1992 -0.91 -0.67 +0.16 William Clinton 1988 -0.43 -0.66 -0.29 George H. W. Bush 1984 -0.88 -0.73 -0.32 Ronald Reagan 1980 +1.70 +1.77 +1.49 Ronald Reagan 1976 -0.99 -1.14 -1.12 James Carter 1972 -0.11 -0.55 -0.39 Richard Nixon 1968 +0.34 +0.16 --- Richard Nixon 1964 -0.19 -0.05 --- Lyndon Johnson 1960 +0.77 +0.44 --- John Kennedy 1956 -0.85 -1.03 --- Dwight Eisenhower 1952 +0.40 +0.28 --- Dwight Eisenhower 1948 -3.85 -4.15 --- Harry Truman 1944 -0.27 0.00 --- Franklin Roosevelt 1940 -2.39 -3.14 --- Franklin Roosevelt 1936 +2.26 +1.40 --- Franklin Roosevelt 1932 -4.51 -2.67 --- Franklin Roosevelt 1928 +1.20 +1.77 --- Herbert Hoover 1924 +1.17 --- --- Calvin Coolidge 1920 -0.57 --- --- Warren Harding 1916 -0.35 --- --- Woodrow Wilson 1912 +1.83 --- --- Woodrow Wilson 1908 +2.38 --- --- William Taft 1904 +1.30 --- --- Theodore Roosevelt 1900 +3.33 --- --- William McKinley 1896 +4.54 --- --- William McKinley * George W. Bush ultimately was determined the winner of the 2000 election.
As we watch the carnage on Wall Street where investors are cashing out of the market, it appears nothing can stop this train wreck - not an economic stimulus plan (remember that tax rebate?) and now not even a $700 Billion cash infusion.
Why is nothing helping? Where is that quick fix?
Confidence in the markets has been damaged and as the market looks to the future - it doesn't like what it sees ahead: Higher capital gains tax rates, increased regulation and bigger government. In a nutshell - the move to socialism.
This progression has become clearer over the last two weeks as the election polls have been edging towards Barack Hussein Obama. BHO has promised to increase the capital gains tax and significantly grow government (federalizing health care, expanding the IRS, unprecedented increases in foreign aid, etc, etc). In a lame attempt to defend his tax increases, BHO plays the class warfare card by saying that this tax will not affect regular folks since their 401ks are not subject to the capital gains tax upon withdrawal and only the wealthy who own stocks will be punished.
Does BHO really believe that? Let's go back and review econ 101.
By raising the capital gains tax rate, investing in stocks becomes less attractive. This will cause investors to move money out of stocks and into fixed income investments. As they do this the stock market will decline in value which will in turn hurt the overall value of stock investments and mutual funds that BHO's "ordinary folks" have in their 401Ks, IRAs and other retirement funds.
A bailout will not change this; a tax rebate will not change this. Such tactics are nothing more than band-aids. The underlying issue driving the market downward is lack of confidence in tomorrow. Today's market has lost hope in tomorrow's market.
Follow the money. Where did it all go? Mortgage companies made easy cheap loans to people that should not have qualified for any loan because they could never repay them. In turn those folks used the money to buy houses and to hire contractors to build houses, which in turn stimulated the economy. The Gov't supported this - growth at all costs. It was affirmative action for housing - no one could be turned down for a loan.
