One Million Bucks!

Money Hackers Carnival #52 @ OMB!

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Wed, 18 Feb 2009 14:23:00 +0000

Hey gang. I am hosting this week's Money Hacker's Carnival!

No cutsie themes this week -- just pure, unadulterated good personal finance advice coming at ya! Enjoy the myriad of posts...

Pinyo (our fearless leader) presents Share Your Favorite Financial Websites and Win $50 posted at Moolanomy

Lance Cooper presents Obama?s Stimulus Plan Is A Complete Joke posted at Recession Thoughts

Carrie presents ING Sub-accounts for Travel and Auto posted at Less is More

Tyler Metzger presents Exploiting history with a debit card posted at Taking Charge

Peter presents Pay off all debt using the Debt Snowball posted at Bible Money Matters

Chris Holdheide presents 8 Ways To Know You Are Trying To Get Out Of Debt Like A Poor Person posted at stumbleforward.com

Abigail Perry presents Never-never (save) land posted at i pick up pennies

J. Maloney presents Gold Investing Chihuaha Investing posted at Gold Investing

Save Money presents Frugal Frauds Revealed posted at How I Save Money.net

FIRE Finance presents What Should We Do If Our Mutual Fund Goes Belly Up? posted at FIRE Finance

The Shark Investor presents Strategies For Raising Funds: Borrow Your Way To Wealth posted at The Shark Investor

Tom presents Marriage should be treated like business posted at Tomasz Gorecki

Monitor Bank Rates presents Health Savings Account as a Retirement Account? posted at MonitorBankRates.com

KCLau presents Money Tips Group Writing Project posted at KCLau's Money Tips

theparttimelife presents libraryflix queue posted at the part-time life

Northern Cheapskate presents There's No Such Thing as Recession-Proof posted at Northern Cheapskate

FFB presents Paying Back The Economic Stimulus Payment - Lots Of Tax Confusion posted at Free From Broke

Patrick @ Military Money presents What to Do About a Lost or Stolen Stimulus Check posted at Military Finance Network

Patrick @ Money Saving Deals presents GoDaddy Coupon Codes posted at Money Saving Deals

Patrick @ Cash Money Life presents $25 Sign-up Bonus from Lending Club posted at Cash Money Life

Raj Patel presents Automatic Bill Payers Beware of Credit Card Issuers posted at DebtGoal

David presents Capital One No Hassle Miles Rewards Credit Card Review posted at Credit Card Offers IQ

David presents Stupid Advice from a Payday Lender Courtesy of Google News posted at Payday Loans Review

DR presents Why Some Online Credit Card Applications Say ‘Hurry Up And Wait’ posted at The Dough Roller

PFR presents Provident Bank Checking Account $123 Bonus posted at Personal Finance Reviews

Nesher presents Free trade recorder and equity curve money management system posted at Internet Stock Trading for Beginners

Dana presents Ways to Save on Your Water Bill posted at Not Made Of Money

Sun presents Stamps for First Class Mail to Increase to 44 Cents in May posted at Earn More Invest Wisely at The Sun's Financial Diary

Dan presents Deal of a Lifetime in Muni Bond Investments? posted at Darwin's Finance

DJ presents How to Feed a Family on a Budget posted at The Family Wallet

kathryn presents #1 Way to Save Big Bucks posted at Out of Debt - Christian Finances and Debt Help

Shaun Connell presents Introduction to Online Savings Accounts posted at Financial Advice

Miss M presents Deliverance from Debt: A Plan of Attack posted at M is for Money

Madison presents Midwestern Disaster Area Tax Impacts posted at Tax Gab

Madison presents American Express $100 Gift Card posted at My Dollar Plan

VC presents What To Look For When Investing In A Company posted at The Penny Daily

The Smarter Wallet presents A Stock Trading System For Shorting Stocks: How To Short Estee Lauder posted at The Smarter Wallet

BankMan presents Is Online Banking Safe? posted at High Yield Savings Accounts

nickel presents MyFICO ScoreWatch: Free Access to Your FICO Credit Score posted at fivecentnickel.com

PT presents 5 Rules of Spring Training (for Your Finances) posted at Prime Time Money

CreditAddict presents What to Do if Your Credit Card or Wallet is Stolen posted at Credit Card Addict

Silicon Valley Blogger presents Free Stock Charting Tool To Check Stocks, Chart Market Trends posted at The Digerati Life

Isaac Yassar presents Why You Should Never Join MLM posted at Isaac Yassar's Overture

glblguy presents 7 Simple Ways to Start Improving Your Life posted at Gather Little by Little

vh presents Do no-buy days work? posted at Funny about Money

apply4-credit presents What Exactly Does Pre-Approved Mean for You? posted at Apply4-Credit.com

CreditCardAssist.com presents To Close or Not to Close The Secured Credit Card Account posted at CreditCardAssist.com

Jeff Rose presents Identity Theft - Capital One saved Me! posted at Papa Boomer

Mr Credit Card presents Secured Credit Cards - What are they? posted at Ask Mr Credit Card's Blog

ChristianPF presents 10 tips for surviving a layoff posted at Christian Personal Finance Blog

Deposit Accounts presents Stimulating $400 Per-Worker Tax Credit for 2009 and 2010 posted at Deposit Accounts

Retirehappy presents Should I Sell Everything? posted at My Retirement Blog

Mr. Banker presents High Interest Money Market Accounts (MMA) posted at Best Interest Rate Banks

The Investor presents Why a little passive income from a side project is worth a lot more than you think posted at Monevator

Raily Arena presents Finding Online Work That Pays posted at Make Money Easy Online

Jeff Rose presents Why Avoid Bankruptcy? posted at Good Financial Cents

Aryn presents 50 Ways to Cut Your Spending/Expenses by 10% posted at Sound Money Matters

Todd presents Gold Gold Gold. Is it really a good inflation hedge? posted at HarvestingDollars

korprit presents Beginner Stock Market Investing - Put in the work, and reap the rewards posted at Stock Market For Beginners Investing

Chris presents Layoffs 2009: Tracking the Damage posted at Financial Reflections

J. Money presents Budgeting In Style: Exploring the Envelope Method! posted at Budgets are Sexy.

Tushar Mathur presents Investment expert offers 10 tips for surviving the recession posted at Everything Finance

LAL presents Home Mistake posted at LivingAlmostLarge

FMF presents A Creative Use for Dollar Coins posted at Free Money Finance

jim presents Don’t Buy Suze Orman FICO Kit Platinum (Yet) posted at Blueprint for Financial Prosperity

Investing School presents 30 Components of The Dow Jones Industrial Average Index posted at Investing School

Roshawn Watson presents Lame Defense for $18.4 Billion in Wall Street Bonuses posted at Watson Inc

Peter presents Money Free World posted at we overstep

Josanne Anthony presents Money I'm Entitled To Throw Away posted at Brilliant Babblings

Wenchypoo presents Updated for 2008 Taxes: Turning a $57,000 Salary into a Zero Tax Liability posted at Wisdom From Wenchypoo's Mental Wastebasket

D4L presents Do As I Say, Not As I Do posted at Dividends Value

Madeleine Begun Kane presents Only Peons Have To Pay Taxes posted at Mad Kane's Political Madness

MBB presents TurboTax vs. TaxCut - Best 2009 Tax Software posted at Money Blue Book Finance

Matthew Paulson presents How to Make Sure that Your Savings is FDIC Insured. posted at Fine-Tuned Finances

Finance Tips 101 presents Alarming Identity Theft Statistics Are Cause For Concern posted at Finance Tips 101

MoneyNing presents First National Bank Omaha FNBO Direct Review posted at Personal Finance Blog by Money Ning

Joshua Lee presents What Will The Recession Do To The Blogging Community? posted at The Brainy Money Blog

Beef Up Your Piggy presents Stick To The List posted at Beef Up Your Piggy

cobra presents Who is Qualified for COBRA? posted at Understand COBRA

Brooke presents Super-Saver Mode posted at Dollar Frugal

Raily Arena presents Why Making Money Online is NOT so Easy posted at Make Money Easy Online

Raily Arena presents How to Sell Your Own Home during Economic Recession posted at How to Sell Your Own Home

Jared Maloney presents Fad: Law School posted at Fade That Fad

That's it for this weeks Money Hackers Carnival... Thanks for all the submissions!

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OMB! Poll Results: How Did Your Portfolio Do In 2008?

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Thu, 05 Feb 2009 14:00:00 +0000

The most recent OMB! poll results are in and they were as I suspected: death and destruction in 2008!

15 people responded to the poll and the results are as follows:

Like me, a whopping 80% of you were down by 20% or more and only a 13% of you were up in 2008. Let's raise a glass and pray for a better 2009!!!

If you missed the poll, please comment below and tell me how you did!

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Compare Credit Cards at Credit Land

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Tue, 03 Feb 2009 13:00:00 +0000

The economy is tough right now and ensuring that you have access to credit for emergency purposes is an important topic.

It's also important to ensure that you have the right card for your needs. Whether you want cash back (which I wholeheartedly recommend here: Cash Back Credit Cards vs. Points/Rewards Credit Cards), a low rate, reward points, flexible payments, or to support a good cause, it's always important to do your research.

By the way, if you are looking for a good cash back credit card check out this post: The Best Cash Back Credit Card: Chase Freedom.

One of the best ways to evaluate which credit card is best for your is via a credit card comparison website. One site that recently reached out to me is Credit Land. If your credit record is perfect, then cards are usually easy to get, but if you only have fair credit, then they have section on their website that is devoted just for you. Check it out and tell me what you think.

Have you come accross a better credit card comparison site? If so, please comment below and tell me what you recommend. Thanks!

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OMB! MONTHLY UPDATE: JANUARY NET WORTH: $250,067 (+16.1%)

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Sat, 31 Jan 2009 15:24:00 +0000

January 2009: Good News, Bad News...

The Good
For the past three January's my net worth has dramatically increased due to my annual bonus. I wrote a post about this year's bonus season here: PART II: How Much Will Your Bonus Be This Year? To summarize, my bonus this year was $44,000, and it was paid in January.

The Bad (Sort of...)
My lovely wife was finally laid off. I say 'finally' because all signs were pointing in that direction. Her firm, which began with 52 employees is down to only 18, and likely to suffer more.

While this is certainly 'bad' from a net worth growth perspective, I'm hopeful that there is a silver lining, giving her a chance to take care of some minor health issues, study for a career related exam, and soon kids may be in the works (scary!).

This weekend I will be performing an expense audit to ensure we are operating as lean and mean as I am comfortable with. Most importantly, we need to ensure we are operating with positive monthly cash flow - a stalwart of building long term net worth.

Net Worth Summary

Checking: No material change here.

Savings: Savings increased dramatically for a couple reasons:

1) After maxing out my 401(k) for the year, the net balance of my bonus was deposited into my savings account

2) I sold my position in the mutual fund I owned in my brokerage account to capture the tax loss carryforward savings. For a full explanation on how tax loss carry forwards work, check out this post (one of my most read posts): Tax Loss Carryforwards = Huge Tax Savings Ya' Jerk!

3) My investment partner and I have been thinking about going in on another investment property, so I've been keeping cash on the sidelines for the right time. The DJIA is down about 9% YTD, so I look like a genius for the time being.

Brokerage: As I just mentioned, I cashed out of my position, taking a loss.

Roth IRA: No changes here, but you can see that 9% drop that I was referring to.

401(k): As you can see, I was able to max out my 401(k) for 2009 via my bonus check. I feel extremely blessed/lucky that I can do this. I split the funds between a Roth and a Traditional 401k. I wrote a post about the differences here: Roth 401k Vs. Traditional 401k.

My company also matches my contributions as follows: 50 cents on the dollar up to 5% of my salary. I have to be honest here, I've done the math on this, but it appears that my company's contribution of $6,125 YTD, is more then I calculated. I have to contact HR to figure out what's going on here.

Real Estate: Still held at cost. Tough month here though, we had to use $2,000 from the partnership account to fix a leaky rough. We will likely do a distribution from this account this month.

Liabilities & Expense Reimbursement: Standard revolving credit card debt. As you can see we have a net positive here if you include my expected business expense reimbursements.

With my net worth up almost $35k or 16.1%, why can't every month be like January?

How did you guys do in January? Up? Down? Sideways?

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Savings Account Comparison: Which Savings Account Offers the Highest Interest Rate?

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Mon, 26 Jan 2009 14:00:00 +0000

The table below compares the nations top 10 highest savings account interest rates, which require a minimum balance of no more than $1,000 and also charge no fees.

I currently use E*Trade. Although their customer service is not great, they have a high savings account interest rate, free checking, and a low cost brokerage service all under one roof so that I can easily and quickly transfer cash among the various accounts.

In today's up and down economy, parking a good chunk of cash in a savings account is a good move. Having access to cash means having the capacity to invest when the time is right for you.

Here are some banks to consider in selecting your account. Note that the best bank for you may not always offer the highest rate:

Please comment below if you have seen better rates matching the criteria described above.
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Tax Deductions, Tax Credits, & Tax Exemptions for 2008

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Sun, 25 Jan 2009 14:00:00 +0000

Below are some great tax deductions, credits, and exemptions for which you may be eligible:

The value of each personal and dependency exemption, available to most taxpayers, is $3,500, up $100 from 2007.

The new standard deduction is $10,900 for married couples filing a joint return (up $200), $5,450 for singles and married individuals filing separately (up $100) and $8,000 for heads of household (up $150).

Note that nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.

Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $65,100, up from $63,700 in 2007.

The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $4,824, up from $4,716. The income limit for the credit for joint return filers with two or more children is $41,646, up from $39,783.

The maximum Hope credit, available for the first two years of post-secondary education, is $1,800, up from $1,650 in 2007.

The income limit for the savers credit is $53,000 for joint filers (up $1,000), $39,750 for heads of household (up $750) and $26,500 for singles and married persons filing separately (up$500). Low-and moderate income workers who contribute to a retirement plan, such as an IRA or 401(k), may qualify for the credit, which is available in addition to any other tax savings that apply.

The income limitations on Roth IRA contributions begin to phase in for joint filers with incomes exceeding $159,000 (up from $156,000) and $101,000 (up from $99,000) for singles and heads of household.

For contributions to a traditional IRA, the deduction phase-out range for an individual covered by a retirement plan at work begins at income of $85,000 for joint filers (up from $83,000) and $53,000 for a single person or head of household (up from $52,000).

Participants in most employer-sponsored 401(k) plans and 403(b) plans for employees of public schools and certain tax-exempt organizations can contribute up to $15,500, unchanged from 2007. Individuals, age 50 or over, can make an additional contribution of up to $5,000, also unchanged from 2007.

Individuals participating in SIMPLE retirement plans can contribute $10,500, unchanged from 2007. Those, age 50 or over, can make an additional contribution of up to $2,500, also unchanged from 2007.

The annual contribution limit for most defined contribution plans rises to $46,000, up from $45,000 in 2007.

Remember to always consult a tax professional to determine if you are eligible to take advantage of these deductions, credits, and exemptions.

Source: http://www.irs.gov/newsroom/article/0,,id=174876,00.html

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2008 Federal Income Tax Brackets

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Sat, 24 Jan 2009 14:00:00 +0000

As a reminder, below are the marginal tax rates for 2008:

Single
10% on income between $0 and $8,025
15% on the income between $8,025 and $32,550; plus $802.50
25% on the income between $32,550 and $78,850; plus $4,481.25
28% on the income between $78,850 and $164,550; plus $16,056.25
33% on the income between $164,550 and $357,700; plus $40,052.25
35% on the income over $357,700; plus $103,791.75

Married Filing Jointly or Qualifying Widow(er)
10% on the income between $0 and $16,050
15% on the income between $16,050 and $65,100; plus $1,605.00
25% on the income between $65,100 and $131,450; plus $8,962.50
28% on the income between $131,450 and $200,300; plus $25,550.00
33% on the income between $200,300 and $357,700; plus $44,828.00
35% on the income over $357,700; plus $96,770.00

Married Filing Separately
10% on the income between $0 and $8,025
15% on the income between $8,025 and $32,550; plus $802.50
25% on the income between $32,550 and $65,725; plus $4,481.25
28% on the income between $65,725 and $100,150; plus $12,775.00
33% on the income between $100,150 and $178,850; plus $22,414.00
35% on the income over $178,850; plus $48,385.00

Head of Household
10% on the income between $0 and $11,450
15% on the income between $11,450 and $43,650; plus $1,145.00
25% on the income between $43,650 and $112,650; plus $5,975.00
28% on the income between $112,650 and $182,400; plus $23,225.00
33% on the income between $182,400 and $357,700; plus $42,755.00
35% on the income over $357,700; plus $100,604.00

Source: Internal Revenue Service, Revenue Procedure 2007-66.

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Invest Some Time in Knowing Your Taxes: (Part 6 of 6)

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Fri, 23 Jan 2009 14:00:00 +0000

This time of year everyone is thinking taxes! With that in mind, we are featuring a guest authored mini-series this week about saving on taxes!

Our guest author is Bob O'Brien, a senior instructor at mywealth.com who will offer some great ways to stave off the tax man!

Below the final post 6 of 6 and Bob's concluding remarks - Enjoy!

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6. On the opposite spectrum, the Roth is not a bad place to start an emergency fund
In a Roth IRA you can always draw out your contributions with zero tax. Invest them conservatively in things like a money market and once your emergency fund is 6 – 9 months of monthly expenses start investing more aggressively. Every year you do not put money into a Roth is a lost opportunity! Ideally though, you want to have your Roth fully invested, and have a real emergency fund.

In conclusion...
These are just a couple of mistakes I have seen people make and there are more depending in person’s situation and estate planning goals.

The main point is that the allocation of your investments and assets should take into consideration taxes, and seeking out that answers to the question will save you a lot of money over the long run.

Don’t forget to check out our courses and you will be able to ask questions that pertain to you own situation!

***

I hope that you have enjoyed this weeks mini-series guest posts on taxes. A special OMB! "THANKS" to our guest author Bob O'Brien!

If you've missed any part of the 6 part series, you can click on this post's title heading and you will then see the related posts links down below.

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Invest Some Time in Knowing Your Taxes: (Part 5 of 6)

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Thu, 22 Jan 2009 14:00:00 +0000

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Invest Some Time in Knowing Your Taxes: (Part 4 of 6)

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Wed, 21 Jan 2009 14:00:00 +0000

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Invest Some Time in Knowing Your Taxes: (Part 3 of 6)

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Tue, 20 Jan 2009 14:00:00 +0000

This time of year everyone is thinking taxes! With that in mind, I am going to feature a guest authored mini-series this week about saving on taxes!

Our guest author is Bob O'Brien, a senior instructor at mywealth.com who will offer some great ways to stave off the tax man!

Below is post 3 of 6 - Enjoy!

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3. Keep Stocks & Capital Investments in Accounts Subject to Capital Gains

This compliments my last point. With a 15% capital gain and dividend rate, why not? In addition, if you have losses you will be able to sell and harvest the losses to offset future gains. Remember if you have all of these in a 401k/IRA that’s OK, but if when you have money outside the IRA you generally keep the bonds in the IRA and the stocks outside.

Check back tomorrow for part 4 of our 6 part series from guest author Bob O'Brien, or subscribe below to ensure you don't miss it!

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Invest Some Time in Knowing Your Taxes: (Part 2 of 6)

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Mon, 19 Jan 2009 14:00:00 +0000

This time of year everyone is thinking taxes! With that in mind, we are featuring a guest authored mini-series this week about saving on taxes!

Our guest author is Bob O'Brien, a senior instructor at mywealth.com who will offer some great ways to stave off the tax man!

Below post 2 of 6 - Enjoy!
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2. Keeping Bonds in an IRA or Tax Sheltered Accounts

Pretty simple, but most people fail to do this. Bonds pay interest which is taxed as ordinary income, as opposed to the favorable 15% tax rate for capital gains and dividends. Ordinary income for most is usually at least 25% and in many cases higher. Making tax sheltered accounts like IRA’s and 401k’s the best home for Bonds.

Check back tomorrow for part 3 of our 6 part series from guest author Bob O'Brien, or subscribe below to ensure you don't miss it!

Also seen as a featured post here: http://www.pimpyourfinances.com/2009/01/money-hacks-carnival-presidential-edition/

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Invest Some Time in Knowing Your Taxes: (Part 1 of 6)

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Sun, 18 Jan 2009 14:00:00 +0000

This time of year everyone is thinking taxes! With that in mind, I am going to feature a guest authored mini-series this week about saving on taxes!

Our guest author is Bob O'Brien, a senior instructor at mywealth.com who will offer some great ways to stave off the tax man!

Below is Bob's introductory post - Enjoy!

***

I realize that for most of us taxes is a pretty boring topic, but a couple of distinctions here and there and you can save thousands over your lifetime and probably hundreds of thousands if you are a saver and educated investor.

It’s always amazed me as a Financial Planner how often people never make the link between their taxes and their investing portfolio. Many people feel that investing is one thing and taxes are another and fail to plan properly.

The real beauty is that most tax strategies are generally risk free and it’s like free money as opposed to investment strategies where we have to manage risk.

However, you will find that good tax strategies are similar to investment strategies in the fact that they are balanced, and you make decisions based upon your situation.

So let’s identify some common tax mistakes and make certain that we are avoiding them.

1. Not Selling Because You Have to Pay Taxes

As a Financial Planner and Tax Preparer, I have seen this way too many times. It's unbelievable how many people would rather hold a stock until it’s extinction than pay the 15% capital gains tax. Pay some tax, take a profit and diversify, because there are no sacred cows out there.

Check back tomorrow for part 2 of our 6 part series from guest author Bob O'Brien, or subscribe below to ensure you don't miss it!

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How Do 401k Contributions Affect My Paycheck?

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Sat, 17 Jan 2009 15:28:00 +0000

One of my loyal readers, Jason L., wrote me and asked:

"If I contribute to my company's new 401(k) program, will my take home pay go up?"

The Answer: Not Exactly. And here’s why…

Contributions to a traditional 401(k) are siphoned out of your paycheck prior to any government taxation, which is the second best benefit of the traditional 401(k) program.

The best feature of most, but not all, 401(k) program's is the employer's matching contribution. Most employers match around 3% or so. My employer matches 50% of every dollar that I contribute up to a total of 5%, which equals 2.5% total.

OMB! Note: You're literally giving up free money if you don't take your company up on this generous offer!

Now back to Jason's question...

Since your contributions to a traditional 401(k) are not taxable, your income tax expense liability that you owe to Uncle Sam every April 15th is lower, and thus your overall net income will be higher; but your actual take home pay each paycheck will still be lower.

Let’s walk through a simple example:

Scenario 1: Contribute $0 to Your 401(k)
Gross Annual Income: $50,000
Less: 401(k) Contribution: $0
Taxable Income: $50,000
Marginal Tax Bracket: 25%
Less: Taxes: -$12,500
Total Net Income: $37,500
Number of Paycheck’s Per Year: 24
401(k) Contribution Per Paycheck: $0
Take Home Pay Per Paycheck: $1,562.50

Scenario 2: Contribute $5,000 to Your 401(k)
Gross Annual Income: $50,000
Less: 401(k) Contribution: $5,000
Taxable Income: $45,000
Marginal Tax Bracket: 25%
Taxes: -$11,250
Total Net Income: $38,750 = ((($50k - $5K)*(1-25%))+$5k)
Number of Paycheck’s Per Year: 24
401(k) Contribution Per Paycheck: $200 ($5k / 24)
Take Home Pay Per Paycheck: $1,406.25 (($45k-$11.25k)/24)

What Have We Learned?
While contributing to a traditional 401(k) will increase your total income ($38,750 vs. $37,500 = +$1,250), your actual “cash in hand” from your paycheck will still be lower each pay period ($1,406.25 vs. $1,562.50 = -$156.25).

The Bottom Line
The bottom line is that a small sacrifice in monthly cash flow can reduce your overall taxes for the year and thereby increase your overall total net income. Also, if your company offers any sort of match, I personally think you’re crazy not to take their free money. These are great ways to grow your net worth.

Here are some great calculators to sensitize your personal scenarios:
http://calculators.aol.com/tools/aol/paycheck01/tool.fcs
http://finance.yahoo.com/calculator/career-work/pay-02

Thanks for the question Jason! I hope this post answers it...

Do you have question? Let me know and I will try to answer it...

OMB! Note: This was a featured post here:
http://blogs.creditcards.com/2009/01/189th-carnival-of-personal--finance.php

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To My Loyal Subscribers: THANK YOU!

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Sun, 11 Jan 2009 22:03:00 +0000

I just wanted to send a big "THANK YOU" to all my loyal readers.

I've been blogging for only a few months now, but I already have about 15-20 loyal subscribers, which I think is great...

I write for you, so I'd like for you to tell me:

- What personal finance questions do you have?

- What are you focused on these days?

- What do you want to know more about?

I encourage you to email me at omb.onemillionbucks@gmail.com or post a comment with a question, and I will do my best to research and respond.

And if you're just visiting for the first time or have been here before, I always value and welcome new subscribers of course - and it's free!

Otherwise, have a great weekend and thanks again for being a loyal subscriber...

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How to Hire A Contractor or Handy Man: OMB! Top 10 List

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Thu, 08 Jan 2009 14:00:00 +0000

I recently had a leaky roof on my rental property, so I thought I would share some critical steps to ensure that you get the right contractor for every job.

1. Ask friends / co-workers for a referral. This is usually the best way to find a reliable and competent contractor.

2. Ensure that they are licensed and insured/bonded for work over $500. If anything goes wrong and you need to take legal action, you'll be out of luck if they don't have the right credentials.

3. Make sure they speak your language. I can't tell you how many times a language barrier as resulted in issues on the job, unless it is a simple fix.

4. Ask them for references. Always a good idea since they all claim to do good work. It's also important to be on site as much as possible when the work is performed.

5. Consider Contractor.com or Angie's List to find a highly ranked contractor. For small or simple jobs Craigslist is a great resource too.

6. Get at least three estimates and rarely go with the bottom one. You usually get what you pay for here. Always try to do it right the first time - nothing is more frustratingly then paying for the same work twice.

7. Define the scope of the services and costs via a written contract signed in advance of any work. Define what the guaranteed maximum price is that you will pay unless there is a scope change. Always get scope changes in writing. Also, always try to pay by the project and not by the hour.

8. Never pay more then 2/3's as an up front deposit. I suggest as little as possible and generally never pay more than 50%. Payment by check is best, so that you control when final payment is processed and you also have a record of payment.

9. Always use a "Can Do" contractor. I've found contractors come in two forms: Either the "We can find a solution for that!" attitude or the "that's going to be a problem" attitude. The former figures out creative solutions to tough issues (and usually takes pride in doing so), while the latter spends more time making excuses why something "won't work".

10. Always do a final walk through prior to final payment to ensure they've met all of the contracted scope of work to your level of satisfaction. Final payment is your best (and usually only) leverage for a job well done!

Any other suggestions that I missed? Anyone have any 'contractor horror stories' - love to hear them!

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Yahoo Personal Finance: 20 Dos & Don'ts for 2009

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Wed, 07 Jan 2009 14:30:00 +0000

I wanted to feature a personal finance article that I just read on Yahoo! Personal Finance.

It was a nice list of personal finance do's and don'ts for 2009 (check out the full article here) by Ben Steverman.

Steverman writes:

“During the worst economic crisis in a lifetime, the right financial decisions are crucial. BusinessWeek asked financial planners for some advice on what to do -- or not to do -- with your money in the New Year.”

Below is The Top 20 List. I’ve highlighted the lucky 7 that I perceive to be the best advice:

1. Don't try to predict the future.
2. Do keep enough cash available.
3. Do invest internationally.
4. Don't try to pick one winning investment. Diversify.
5. Do think about energy efficiency.
6. Don't stop contributing to 401(k) and other retirement accounts.
7. Do live below your means. Save.
8. Don't make sudden moves.
9. Do pay off expensive debts.
10. Don't give up on stocks.
11. Do track your spending.
12. Don't pay high management fees.
13. Do review your credit reports.
14. Don't follow the herd.
15. Do write down an investing plan and budget, and stick to them.
16. Don't forgo necessary insurance.
17. Do check out your financial adviser.
18. Don't invest in anything you don't understand.
19. Do make sure safe investments are actually safe.
20. Don't take more risk than you can handle.

Steverman concludes: “The past year has given investors an idea of how bad market conditions can get. In the future, investors may want to evaluate how much risk they're really willing to take and how long they're willing to wait to get outsize returns.”

Which points do you think are the most important? I'd love to hear your comments - thanks!

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Roth 401k Vs. Traditional 401k

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Tue, 06 Jan 2009 06:11:00 +0000

The 401(k) account (both the Roth and Traditional) is a great investment vehicle because it offers tax advantages over a regular investment account.

Many employers will also contribute certain amounts along side your contributions, making all the sweeter!

The maximum 2009 contribution to any 401k account in is $16,500.

So Which is Better - Roth or Traditional?
This, like most financial decisions, depends upon your own particular circumstances, such as your age, annual contribution amount, investment time horizon, your current tax rate, and your expected tax rate at retirement.

Key Points on the Roth 401(k) (or 403(b) in the Non-Profit Sector)
- Pay taxes on contributions this year (no tax deduction savings)
- Contributions and earnings grow tax free
- Pay no taxes on qualified distributions after 59 1/2
- Better for those with longer investment horizons (+5 yrs)
- Better for those who will forgo a tax break now in return for less tax exposure in retirement
- Better if you think you will be in a higher tax bracket in retirement vs. now
- No income limitations in a Roth 401k (unlike Roth IRA)

Key Points on The Traditional 401(k)
- Pay NO taxes on contributions this year (tax deduction savings)
- Pay taxes on contributed and earned dollars at the time of distribution
- Better for those with shorter investment horizons (-5 yrs)
- Better for those seeking a tax deduction in the current year (i.e. - tighter budget)
- Better if you think you will be in a lower tax bracket in retirement vs. now

The Bottom Line
There are benefits to both, and as such, I think it makes the most sense to utilize both. I’m still finalizing my ratio, but I think this year I will do 60%-70% in a traditional, so my taxes are a bit lower during these tough times, and the rest in the Roth, so that when I retire, I don’t have to worry about a tax bill then.

What are you planning on doing? Any other pro’s and con’s to these investment vehicles?

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A Second Stimulus Check Coming?

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Sun, 04 Jan 2009 17:22:00 +0000

Many people have been wondering if a second stimulus check would be coming along with Obama's proposed second stimulus package.

The short answer is: nobody knows yet.

I've scoured the news and web for the answer. I've seen rumors, talks, etc., but no real solid info on whether or not a second stimulus check would be part of the proposed second stimulus package.

Latest Highlights of the Second Stimulus Package

- May Be passed in February '09
- Could Be as High as One Trillion Dollars
- Primarily a Public Works Construction Program
- Enact a Windfall Profits Tax to Provide a $1,000 Rebate to Americans
- $50 billion to Jumpstart the Economy & Prevent 1M Lost Jobs
- Provide a Tax Cut for Working Families
- Eliminate Income Taxes for Seniors Making Less than $50k
- Simplify Tax Filings for Middle Class Americans
- Create 5 Million New Green Jobs
- Provide Tax Relief for Small Businesses and Start Up's
- Create a Universal Mortgage Credit

And so on... the details of the plan are found on Obama's Website.

*** January 18th Update ***

"House Offers $825 Billion Stimulus"
- House Democrats yesterday presented an $825 billion stimulus package
- About $550 billion would be used to build new schools and highways, invest in energy and health-care projects and provide unemployment and health benefits for out-of-work Americans
- The rest would provide tax relief for businesses and individuals. If approved, most workers would get about a $500 tax cut in their paychecks

The other info that I found was mostly on other blog's such as those found here:

- Cash Money Life
- Prime Time Money
- Blueprint for Financial Prosperity
- Bible Money Matters
- Frugal Dad

Please comment if you've read anything differently (cite sources)!

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OMB! Poll Results: How Much Did You Spend on Gifts This Holiday?

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Fri, 02 Jan 2009 19:30:00 +0000

The inaugural OMB! poll results are in!

Thank you very much to all my readers who took the time to vote, and please take a moment to vote in the new poll on the right sidebar.

Apparently most of your families did better then good 'ol Clark W. Griswold did in the classic Christmas Vacation:

Uncle Lewis: Clark, Bethany and I figured out the perfect gift for you!
Clark W. Griswold: Aww, you didn't have to get me anything...
Uncle Lewis: Darnit, Bethany, he guessed it!

Poll Results
To my surprise, 47% of you said that you spent over $1,000 on gifts this holiday season.

(Note: It was a last minute poll, so we only had 19 votes)

That percentage surprises me given this struggling economy, but it's good to see that the spirit of giving is alive and well nonetheless. We tried to limit gifts within my family to $50 / person -- it worked for some, but not for all.

If you missed the poll, please comment on how much you spent? What was the best gift that you received?

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OMB! MONTHLY UPDATE: DECEMBER NET WORTH: $215,370 (+2.1%)

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Thu, 01 Jan 2009 17:20:00 +0000

HAPPY NEW YEAR!!!

2008 was a tough year for most, myself included. I'm hoping we've hit the market bottom though, more or less, and it will be a slow upward churn from here.

December's results are below. For now, the standard month over month data is shown, but I'll show a year over year comparison in another post.

Results Analysis:

Checking: No material dollar value change.

Savings: Savings went down significantly because I paid off some off-balance sheet debt as a Christmas gift to my father in-law.

Technically, I should have had the loan on my balance sheet, but I could have stopped payment whenever I needed to, so I didn't show it. Either way, it's 100% paid off, and now we have essentially no debt heading into 2009, except for the loan on my investment property and normal revolving credit lines which are paid off every month.

Brokerage, IRA's, 401k's: All of my investment accounts benefited by a slight up tick in the market over the past 30 days. I hope you all remembered to harvest your tax loss carry forwards! I almost forgot to sell two last positions, but I did so yesterday.

Real Estate: All held at equity cost - I will consider marking to market in 2009. We had to use $2k in the property's checking account for roof improvements.

Credit Cards: As you can see, we are at a net positive between the cards and the business expense reimbursements.

I'd love to hear your comments - how did your December treat you?

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7 Improvements To The OMB! Blog

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Wed, 31 Dec 2008 03:51:00 +0000

As you may have noticed, I have made some updates as follows:

1. Added Amazon as a sponsor to help monetize the site (I hope my readers don't mind, after all, this is a website devoted growing our net worth :-)

2. Updated the sidebar to be more user friendly, show my net worth at all times, and show comments (it's through feedburner, so it's a bit slower).

3. Added a footer to all of my posts inviting readers to subscribe to the feed if you enjoy the content (see below - subscribe to OMB! if you like!).

4. Added quantcast and sitemeter to the page footer to track my progress (click on the buttons if you want to see the site stats).

5. Added star ratings to the top of all my blogs (please rank this post!).

6. Included an OMB! poll that I will update frequently.

7. Added a translator widget for all of my international readers (bottom right corner).

I'd like to hear your comments about these improvements - Love em' or Hate em'?

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The Frugal Father In-Law: The Haircut

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Tue, 30 Dec 2008 03:03:00 +0000

Haircuts are be expensive! Some of my more well-to-do co-workers spend north of $30 per cut every 3 weeks. This translates into more then $500 per year!

My father in-law invested in a pair of $20 clippers and let's his wife cut his hair. Most of the time, his wife uses out of the box hair dye for herself too...

I actually cut my own hair, believe it or not, and I've been doing it for years. Nobody has ever said a word to me about a "bad cut". Both he and I are lucky though, because we both have wavy hair, which masks most mistakes.

Even though I save hundreds each year by cutting my own hair, my wife makes up for it a bit, as you may have read in the "Happy Wife, Happy Life" post...sometimes it's worth it!

Anyone else out there cut their own hair, or have someone help them cut it?

No Taxes on Rental Income for 14 Days!

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Mon, 29 Dec 2008 19:27:00 +0000

Did you know that you can rent your primary home for up to 14 days per year TAX FREE!?!

IRS Publication 527, which discusses rental income taxation and expenses, reads as follows:

Rental of property also used as a home:
"If you rent property that you also use as your home and you rent it fewer than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses..."

Frequent OMB! readers may recall that I live in DC. We are trying to earn some extra cash by renting out our apartment during the inauguration for 4 nights at $650 per night. This income would be 100% tax free!

There are even homes in Georgetown asking $30,000 for 4 days use! I've also heard about homes that are rented near Augusta, Georgia for the Masters Golf Tournament every year for $25,000 - $75,000 a pop -- all 100% tax free.

Keep this in mind for your own living arrangements the next time there is a big event in town!

UPDATE: I just found this official DC guidance on taxes as well: http://newsroom.dc.gov/show.aspx/agency/otr/section/2/release/15480/year/2008

Why Is My Bonus Taxed So Much?

omb.onemillionbucks@gmail.com ("Patrick Bateman") — Sun, 28 Dec 2008 04:46:00 +0000

If you were lucky enough to receive a bonus this year you may be wondering "How much will my bonus be taxed?" or "Why is the tax rate on my bonus so high?"

The full information is found in Section 7 of IRS Publication 15, which discusses Supplemental Wages.

The short answer answer is that at bonus is taxed by one of three ways as follows:

1. If you make over $1,000,000 then there is a 35% federal tax imposed (but I'm guessing that you don't make over a million dollar bonus if you are reading this blog :-)

2. If you make less than $1,000,000 then you can be taxed at:

--a. A flat 25% or...

--b. Add the bonus dollar amount to the regular salary or wage amount for that period. Calculate the total tax due, then subtract the taxes already withheld from the salary or wages. The balance due is the amount to be withheld.

Don't forget the following additional bonus withholdings as well:

1. Social Security Taxes = 6.2% up to $106,800 of income (2009)
2. Medicare Taxes = 1.45% on all wages
3. FUTA (Federal Unemployment TAxes) = 6.2% up to $7,000 of income
4. State Taxes (lest we forget) = See your local state government website

The Bottom Line: Even though it may seem like you are paying higher taxes now, at the end of the year, your income tax liability is still run through the normal calculations.

If you want, you can change your w-4 so that less or more is withheld in each paycheck so that you are even at the end of the year. Here is a cool calculator that is related to the subject:

http://calculators.aol.com/tools/aol/paycheck04/tool.fcs

I'd be interested to know how much the withholding is for each state - please comment if you know - thanks!

Author's Note: This was a featured post on "Don't Mess With Taxes!" found here: http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/