Wednesday, April 30, 2008

Summer Gas Tax Ax? Gee, thanks (sigh)..

Ok guys, some of the presidential candidates have an idea--they want to get the government to help you through these tough economic times by sending you a check for $3.68 (that's three dollars and sixty eight cents) each week during the summer. Why? Because times are tough and Every little bit helps, right? Any takers? No? Well, let's put it another way:

You've probably heard talk about a possible suspension of the federal gas tax over the summer, when prices are expected to be at their highest. Don't count on it making a dent in your fuel budget though. Let's take a look at why, using the great equalizer: straight arithmetic.

The federal gas tank is about 18.4 cents per gallon (and amounts to $10 billion deduction form the government's already deficit driven budget, if you care about such things.)




Let's say you have a 20-gallon gas tank, and you fill up once a week.

Saving 18.4 cents for every gallon you put in your car, you get (20 x $0.184) = $3.68

Over the 14 weeks from Memorial Day to Labor Day, we get (3.68 x 14) = $51.52.




People make a similar everyday decision when they drive 5 to 10 miles out of their way to save 5 cents on their fuel consumption, losing all the savings on the way (and probably costing more, especially if you don't fill the tank from empty once you do). So, over the entire summer, after spending over $1000 in fuel, you'll save $50, enough to fill your tank…a little over halfway one time, if we assume gas prices are at say, 3.75 on average for Regular Octane (87). If average fuel rises above this, you'll still only save $51.52 for the whole summer! $4 gas? You save fifty bucks over 14 weeks. $5 gas? fifty bucks back over 14 weeks.


What's worse, the idea that gas drops 18 cents will only drive up demand because people will "think" they're getting ahead—people will drive more and use more fuel, and prices will go even higher, all for fifty bucks...and more upset consumers. Suspending the tax may help make candidates for higher office look as if they care, but it either shows a lack of understanding of economics (which is unacceptable) or simply pandering for votes (which is expected).


So what should we do? I think we have to be honest that relative to the world we have always paid a lower price for fuel. I know, it sucks to hear that, but with other countries asking for more gas from the same people we get it from, and they are willing to pay more for it than we do, our demand for lower gas prices will be a lower priority in the eyes of the Oil Keepers. So, in the short term, we consumers should work to:


Drive Slower (which saves fuel).

Combine Trips by Planning ahead of all the places you need to go and find the best way to get there while conserving less fuel. Or Carpool, if you can.

Consider asking your employer if you can work from home once a week, if you have a job where you can work from home.

Use mass transit where it's effective, even if it may be a little uncomfortable.

In the long term,

Encourage your government officials to invest in sensible energy policies. By considering alternative energy sources that can replace the need for oil-based products, or seeking more efficient ways to heat and power your home, you can lower your energy bill, which can offset the increase in fuel costs.

What are some of your ideas and feelings on the possible gas tax rebate? Good Idea?


Friday, April 25, 2008

Feds: Rebates Checks Are Coming Next Week



If you filed your taxes electronically and received your tax refund via direct deposit, the government will be sending your stimulus money as early as next week, ahead of schedule. This is probably one of the few instances in American History where you'll hear "government," "sending your money," and "ahead of schedule" in the same instance, so they must really think we're in a pickle economically. The Economic Stimulus package checks will be sent to you via direct deposit if you filed for a refund using direct deposit.



Here is the schedule for the payments, based on Social Security number:





Those who sign up to receive a 2007 tax refund via direct deposit will receive checks first.
According to the Internal Revenue Service, direct deposit payments will be made the week of April 28 to recipients whose Social Security numbers end in 00-20.

Direct deposit payments will be made May 2 to people whose numbers end in 21-75.

The final round of direct deposit payments will be made May 9 to people whose numbers end in 76-99.





…and for you paper people out there, you will receive a paper check:





[Paper] Checks will be mailed May 16 to those whose numbers end in 00-09. A second round of checks will be mailed May 23 to those whose numbers end in 10-18.

A May 30 mailing will be made to people whose numbers end in 19-25.

Mailings will be made June 6 to those whose numbers end in 26-38; June 13 to numbers 39-51; June 20 to numbers 52-63; June 27 to numbers 64-75; July 4 to numbers 76-87; and July 11 to those whose numbers end in 88-99





Source: http://www.wkyc.com/news/news_article.aspx?storyid=85299



Well, the big question now becomes: What will you do with yours? Spend? Pay off debt, or save? (And yes, I know this money is most like borrowed, will run up deficits, and will most likely be funneled to foreign countries, most likley China and Japan). Me, I probably plan to split mine among all three options, being that it's money I never counted on having in the first place. $200 will probably go to savings, $200 to finish off a small credit card debt, and $200 to defer the high cost of to airline purchases I'll be making for the summer. (Or a Wii-- it depends on things).



How about you?

Thursday, April 17, 2008

Thursday Double-Dip

Hi Readers,

Today there are two articles I'd like to highlight for your enlightenment and reading pleasure. (By the way, If you haven't guessed, I'm still in the process of deciding what font to use. Sometimes it's to big, other times, too small. I'll find a delicate balance soon to stay easy on your eyes. ) OK, to the stories:

First, we have a good one from CNN Money which talks about ways to enhance your 401(k) offerings at your job. Believe it or not, you can have some impact on how it's set up, no matter if you are a senior manager , the entry-level analyst, or secretary. It's your future, so consider some of the options mentioned in the article. One of the more intriguing ideas I read was on the Roth 401(k):


Unlike a regular 401(k), the Roth version - permanently greenlighted by Congress in 2006 - lets you make contributions only after the money is taxed. But withdrawals are tax-free. If you'll be in a higher bracket in retirement, a Roth 401(k) can be a better deal.


Overall, it's a good read, but some of it seems somewhat suspect to me, like one that mentions choosing a re-balancing service that will buy and sell stocks and bonds for you in your 401(k) quarterly. I think that's far too many times to trade considering the fees you'd rack up. And then, what if you under-perform the market? You'd still have to pay them a certain amount of your balance.

For those of you who've been making it through the "recession" we're going through, congrats! However, if you think you may be a part of a workforce reduction (I prefer the term FIRED, but I guess that's not euphemistic enough), then consider reading this article from the NY Post on a graceful way to exit the stage (and set yourself up for the your next performance at your future job). And even if you feel safe, it won't hurt to give it a read.

Thursday, April 10, 2008

Should We Allow Retirement Funds to be Used for Real Estate Investing?


No.

That’s it, no….


Oh, still around? Let’s talk about why. But first, some background. John Crudele, a columnist for the New York Post, penned

this article —in it, he talked about how the two major political parties are not facing reality, blasé blasé..you’ve heard the drill. To note, he says:


…my belief that the only stimulus package we can afford right now is one that allows people to spend their own money.

He was on the right path. It’s good point. Then, he goes wildly off course as to what this entails:

In other words, what we need is a simple law change that will permit Americans to use their own retirement money - without being killed by taxes - for such things as buying real estate.

What? Use their retirement money to buy real estate? But you can already do that you say. Yes, but with limits. It’s used to purchase your first home, and it’s limited to $10,000. Some employers require you to roll over the money to an IRA (and you have to pay it back). But there is a reason that the government makes it very difficult to pull money out of 401(k) and IRA plans—they are made for retirement purposes. Hence, the name.

Imagine for a moment that after running up student loan debt, credit card debt, and then home-equity loan debt, Americans start tapping into their last basket of (usually) forced savings—the 401(k) or IRA plan. What happens if we as a country haven’t learned from our lesson and begin buying homes way above our means because the “attractive” intro rates? You end up in a very bad position. You end up with millions of Americans (with the help of the doom-and-gloom media) playing on the emotions of everyone to bail us out of our problems (again). Only this time, it would cost a whole lot more because we would put a lot more stress on an already-fragile Social Security and Medicare program. Basically we’d further the citizen’s dependence on the government to survive. And that’s not a good thing.

Sunday, April 06, 2008

Stock Market Game Final Results and Hot Links for the Week!

The table shows our final results from our year-long stock market game.

These are our closing Stock Market Game Results. Starting with 10,000 this is how we turned out. So if you kept 10,000 under a mattress last year, you may have made out pretty good. And if you invested in a Treasury bond or ING account, you made off with 10,300 since this time last year. Thanks to all who played, and if you’re down for another game or would like to play this year (for those who missed us last year), let me know.




As for what’s up around the personal finance blogosphere:

Free Money Finance tells you how to make sure your church is properly managing money.

Five Cent Nickel talks about timing the stock market, even in this unstable time.

CNN Money has an expert explore foreign CDs as investments.

And The Motley Fool tells you how to stretch your employee benefits (with some nice worksheets).

So take a look and get some knowledge!