Online Calculators
Figuring out how much to save for retirement (or anything else, for that matter!) can be confusing, especially when you try to calculate how much interest will add to the final amount and how much inflation might decrease the buying power of your hard-earned and saved dollars. One source of help are the online calculators that take some of the head-scratching out of the process. Try this one at Pacific Life. Hint: look at the page first, maybe print it out, because you’ll probably have to gather some data on you and your spouse (if applicable) before you can actually use the service.
Another useful tool is found at the Wachovia Bank site. This one calculates how taxes and inflation affect your savings. It even gives you a depressing graphical representation of the results and offers some starting figures for you to play with before you decide to get serious with your own money.
Finally, try out the Northwestern Mutual Financial Network’s Longevity Game (you’ll have to unblock popup control) to see how long you’re expected to live. Actually, they have a whole raft of interesting calculators that are free to use.
Your mileage may vary.
Buy QQQQ Direct
Soon investors will be able to buy shares of the Nasdaq-100 ETF (exchange tracking fund) directly from the stock market, cutting out commissions to a middle market-maker like a stock broker or mutual fund company. The Nasdaq’s chief marketing officer, John Jacobs, explains, “This is a very inexpensive, web-based program that allows investors to directly send money in and have the trust pick up as much of the expense as possible.” He further told Jen Ryan of the Dow Jones Newswire:
The program – which Jacobs hopes will be up and running in the third quarter – is intended to target small investors who don’t have a brokerage account but want to invest directly in ETFs. Investors will pay just $1 or $2 at most per trade, which is dramatically less than what most brokerages charge. The QQQQ trust will assist with the transaction costs …
Here’s how the program will be set up: Investors will send money to a “direct purchase” program, where it will accumulate. After a certain point – Nasdaq is still exploring the frequency of these transactions – the money will be directly invested in the QQQQ trust, sans broker …
If the program – which is a joint effort by Nasdaq and a partner who Jacobs declined to name – is successful, Jacobs expects it will be expanded to include Nasdaq’s BLDRS – four ETFs based on Bank of New York Co.’s (BK) index of American depositary receipts.
Medicare Savings
Want to save up to $2,100 a year (according to a government estimate) on Medicare? Don’t mind a little (well, a lot, really) of paperwork? Persistence will pay off for low income/savings persons who plan to take part in the new Medicare prescription drug benefit starting next January. The savings will come from participating in a plan for Medicare beneficiaries with income below $14,355 a year, and no more than $11,500 in savings in bank accounts, stocks, and bonds. If you receive Medicaid, SSI, or have your Medicare premiums paid by your state government, you already qualify for this extra help, and you don’t need to apply. The Social Security Administration which is managing this program is sending out 19 million notices to Medicare beneficiaries who may qualify based on government benefits.
You can find out more about this new plan from Social Security (or call 800-772-1213), through the Administration on Aging’s Benefits Check Up (or call 800=424-9046), or visit the Access to Benefits Coalition.
Lower Rental Car Charges
Sometimes you just have to rent a car — you’ve flown to a distant location for business or a vacation, your own auto is in the repair shop, or you need a larger vehicle for a special family trip. Here are some suggestions to help with the increasingly difficult chore of picking a rental car.
Don’t buy collision and/or liability insurance that the rental company offers, or sometimes insists that you must have. Check with your own auto insurance company first. Most often your own insurance covers rental cars, too. Only buy additional coverage if the rental car has a higher value than your own car, you don’t have full coverage, or the state you’re renting in has a higher level of coverage required. Your credit card company many insure rental cars, too, if you pay with that credit card. Such coverage is more often seen with the “platinum” cards. Another potential option is your homeowners or renters insurance, which will cover expensive personal items like jewelry, furs, and computers.
Some other cost-saving tips include renting your car far in advance or at the last minute when you can often get more car for your money as the rental offices run out of the popular low price models. Don’t, however, accept a free upgrade unless you really need it for the additional space inside. Bigger cars use more gasoline per mile. Don’t skip asking at local companies where your chances of negotiating a better deal are higher. Finally, try to rent from a site off the airport grounds if you’ve flown somewhere. The rental companies pay dearly for onsite locations and pass the costs on to the consumer.
If the Bubble Bursts
Marketwatch.com’s columnist Paul B. Farrell offers two scenarios for what to do if the “global mega-bubble” bursts: stay the course or play a new game:
If you believe a global megabubble is near, what’s your best strategy? Cash out now, at the top? Sell real estate, stocks too, rent, pay off debt? Then patiently wait until prices drop and buy bargains? Yes, that may be the best strategy for some.
The second expert we consulted, Gary Shilling, is an economist and author of “Deflation: How to Survive & Thrive in The Coming Wave of Deflation.” Shilling cautions: “There’s no such thing as a sure thing, so 100% cash is never appropriate. My recommendation now is 20% stocks, 50% bonds (mainly Treasurys) and 30% cash.”
Farrell gives specific investment suggestions from the experts he tapped for this article.
Fuel Deduction
If you’re buying a new car this year, buy the right kind and you will be able to deduct up to $2,000 on your Form 1040 federal income taxes for 2005. Here’s what the IRS released last month:
WASHINGTON — The Internal Revenue Service has certified the model year 2006 Toyota Highlander Hybrid as being eligible for the clean-burning fuel deduction. This certification means that taxpayers who purchase one of these hybrid vehicles new during calendar year 2005 may claim a tax deduction of up to $2000 on Form 1040.
Under Working Families Relief Act of 2004 which was signed into law in October of 2004, the clean-burning fuel deduction is limited to up to $2,000 for certified vehicles first put into service in 2005 and $500 for vehicles placed in service in 2006. No deduction will be allowed after 2006.
Federal Law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.
This one-time deduction must be taken in the year the vehicle is originally used. The taxpayer must be the original owner. Individuals do not have to itemize deductions on their tax return to claim this deduction. This benefit can be taken as an adjustment to income on the Form 1040.
The amount of the deduction for the Toyota Highlander Hybrid was set after the manufacturer, Toyota Motor Sales, U.S.A., Inc. documented for the IRS the incremental cost related to the vehicle’s electric motor and related equipment.
Read the whole release at the government website.
Help on the Web
Cruise your mouse on over to Sound Money Tips daily for a free and simple financial tip. For example, today’s tip was:
The Citi Dividend Platinum Select Card is offering 5% cash rewards on purchases at supermarkets, drugstores and gas stations and 1% cash back on all other purchases.
The post also offered information on how to apply for the card, additional details about it, and a link to an article about the importance of the newer trend in credit cards–offering cash rewards.
This is just one of several blogs on personal finances offered through former Morgan Stanley analyst David Jackson’s Seeking Alpha website. He covers Internet stocks and investing in them and in China, and information on exchange-traded funds, among many investment-oriented websites.
Those blogs, like this one, are among the almost 14 million that the blog search engine Technorati follows and rates.
ATM Fees Rising
If you are currently in the habit of replenishing your cash funds from ATM machines other than at the bank where you keep your money, you might want to check up on the fee you’re being charged. Don’t just grab the cash an run, leaving the receipt at the machine or in the trash. And check your bank statement (who bothers to read all those fine-print brochures they keep sending, anyway?) According to research done at Bankrate, the average fee to use another bank’s ATM is now up to $1.35. Overall in the US, ATM use fees have risen $1.40 just this year alone!
The rates charged by ATM machines are rising faster in urban areas and within the larger ATM networks. This was confirmed by research performed by Dartmouth professor Victor Stango and UC Davis professor Christopher Knittel. What’s more, ATM machines that have no fees are becoming very scarce. Blame inter-bank charges for the change. It will pay you (in a lack of a surcharge) to look for ATM machines that participate in a network within your bank’s system. Some of the larger ones include the STAR, MoneyPass, FastbankFree, CO-OP (nonprofit credit unions), and Allpoint. Also, Washington Mutual is the only banking system currently free of ATM charges, but this could change at any time. In New Jersey, Pennsylvania, Delaware, Maryland and Virginia, look for “Wawa” ATM’s in gas stations and convenience stores for fee-free service.
Benefits of Membership
They’re everywhere–membership groups, affliliations–offering enticing benefits including discounts on purchases. But are they really such a good deal? Consider the prospect of joining a gym, a workout plan or health club. Most people find that just complying with the exercise part is a challenge. Will paying an average annual cost of $100 - $150 to join and maybe $50 a month really induce you beyond the weight or health concerns you have already? Maybe the club has other conveniences that suit your lifestyle. If you travel a lot, look for one with multiple, handy locations. Consider if you will really take advantage of all that a club offers, such as a spa, classes, and special equipment.
Auto clubs can be another attractive opportunity you should probably pass up unless your car insurance does not cover emergency roadside assistance. There are less expensive ones that offer only what your really need. The most well-known, the American Automobile Association also provides trip planning, maps, and travel assistance, but it can cost as much as $77 a year in addition to an enrollment fee. Wholesale clubs where you purchase items in bulk quantities sound like a good idea, but if you don’t have the area to store large supplies, it’s difficult to overcome that membership fee of around $40 a year to generate the savings that will make it truly beneficial.
Up Your FICO!
“What’s a FICO?” you’re probably wondering. That’s the short-hand term that describes your credit rating. It comes from the Fair Isaac Corporation, the company that invented the FICO credit risk score that lenders use. You actually have three FICO’s, one from each of the major credit tracking organizations:
If you’re looking to increase or improve your credit rating, usually because you want to borrow funds or take out an insurance policy, here are some actions you that will help. Keep the balance on your credit cards paid off or low. Stop transfering balances to credit cards with lower fees. Be certain your bank reports to the credit agencies listed above. Don’t apply for credit cards you don’t need. Close any accounts you don’t use. Make multiple loan applications (say you’re mortgage shopping, for example) within a two-week period, and they will all count as one credit inquiry, not endangering your credit rating.
These tips can help you qualify for lower rates on your insurance premiums, mortgages, and auto financing.