Good Way to Save: Spring Cleaning Your Pantry March 31, 2006
Slashfood, the food blog, has had a series called “Spring Cleaning“, where they’re pulling everything out of their cupboards and trying to use it up to make room for new items for the spring. It’s a good way to maximize the canned and dry goods that never seem to be used. They offer suggestions for restocking the pantry once your cleanup is done too. It’s also a good way to save money on groceries and reduce the wasted food that’s spoiled. Everyone has food in their pantry that’s of unknown origin or date, right? I have a can of pumpkin that I’m sure from Thanksgiving for pie, but I don’t remember which Thanksgiving I got it. Hate to waste, but that one is probably going in the garbage.
Related post: Simple Way to Save on Groceries
Would You Take GM’s Buyout Package? March 29, 2006
Last week, more than 120,000 hourly workers for General Motors and auto supplier Delphi were offered buyouts of up to $140,000. It’s tough to see such a large company having to cut so many workers.
If you took that offer, you’d have to give up retirement and health benefits. Given the choice, would you take a large payment and no benefits, or a smaller payment and continued health care coverage? $140,000 is no small sum, but it’s not an amount you can live off of, unless you are close to retirement. If you face such a choice, don’t underestimate the value of benefits because those costs will only go up over time. Consider tax implications too. If your buyout is considered severance pay, as opposed to a lump-sum pension payment, it will be taxed as ordinary income. That could push you into the next tax bracket, and the employer must withhold more tax, thus making the payout smaller than the stated number.
If you’re young, you have time on your side. If you’re able to put all the $140,000 in an interest bearing account such as ING Direct for 5 years with an interest rate of 4% compounded monthly, you’d end up with $170,939.52. That’s $6000 per year of income if you were able to get another job that pays for your living expenses. The problem with many of the GM workers is that getting another job is probably not that easy, since the US auto industry is not exactly booming. At my age (30s), I’d take it since I wouldn’t know if GM would cut me later without the buyout package.
So, would you take the buyout?
Expect no Inheritance from Your Parents March 27, 2006
There was an interesting article from yesterday’s NY Times about the expectations of receiving an inheritance. According to the article, the majority of the US households (86%) do not expect to receive an inheritance. I’ve read that hundreds of billions of dollars are being passed on every year. However, most elderly Americans can probably forget about passing on an inheritance to their children.
After all, the evidence shows that baby boomers are going to need it: working Americans are unprepared for their own retirement, economists say. They have little savings of their own, and are facing the possible erosion of Social Security and the limits of company pensions…
In 2004 median inheritances — half were bigger and half were smaller — amounted to about $29,000 in today’s money, according to a Federal Reserve analysis of the Survey of Consumer Finances.
The two biggest reasons for the decreases in inheritance are healthcare costs and longer life expectancies. The poor and middle class will spend more and more on healthcare and retirement living, while the small percentage of wealthy families are getting a bigger slice of the inheritance pie. The wealth and inheritance $782,000 is concentrated in the top 2 percent of the richest.
It’s a good idea to live and spend as if you will not receive any inheritance. We shouldn’t have a sense of entitlement about getting things from our parents. Plus, we should feel lucky that our parents will live longer than previous generations. I’m not even sure my parents will have anything left to pass down, but we’re saving as much as we can into our 401k retirement plan since we don’t expect any inheritance. In fact, we should plan on taking care of our parents as they took care of us growing up.
Source:
NY Times: Inherit the Wind; There’s Little Else Left
By EDUARDO PORTER
Published: March 26, 2006
Find Average Health Procedure Costs Online March 23, 2006
A company called Health Grades, Inc. began a service that allows customers to reserach the average costs of 55 hospital procedures. Medical procedures are complex, so it’s difficult to compare like we can with airfare or cars. Many factors are involved such as hospital and doctor rates, pricing, and quality. But this information can be a helpful guide for consumers when looking at specific procedures when you get a high quote from a doctor’s office. Health Grades also allows you to research hospitals and physicians. When it comes to your health, you shouldn’t compromise service, but you should know when you get ripped off.
Check them out at www.healthgrades.com.
Saving on Airfare March 22, 2006
Sorry for the lack of posts in the past few days. I’ve been out of town for business and for family. We flew out to Chicago for the weekend and had a good time with family. I travel a lot for work, so finding the best deals on the net for airfare is important. If you haven’t used Kayak.com to search for tickets, this online search tool is invaluable. What I like about it is that it searches flights from all the major airlines and travel sites from one location. The searches allow a lot of parameters and looks at nearby airports. This is the first site I use to look for cheap airfare. I found round trip flights to Chicago from NYC for $135 and round trip flights to Florida from NYC for $150.
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List: 21 Ideas to Save Money March 19, 2006
- Pay yourself first.
- Save as much as you can when you are young.
- It’s okay to have money in the bank.
- Don’t borrow your own money and pay someone else the interest.
- The people that are impressed with what you have today, won’t be impressed when you live on the street during retirement.
- Don’t buy brand new cars.
- Coupons are a good thing.
- Saving $5.00 on a $100 item is exactly the same as saving $5 on a $6 item. It’s $5.
- Compound interest only works if you actually save money.
- Making money while you sleep is far better than making money while you are awake.
- We create the situations we are in.
- Set yourself up for success. No one will do it for you.
- Buy things that appreciate.
- Everyone can join a credit union.
- There are a ton of things in life that are FREE.
- Don’t wait until tomorrow to start saving. Tomorrow is always tomorrow.
- Never pay retail. NEVER.
- Where there’s a deal, there’s a better deal.
- Own your money, don’t let your money own you.
- Most of the people that you think have money, have debt.
- If you don’t ask, the guaranteed answer is no.
Nine Trillion Dollars? March 16, 2006
The Senate voted Thursday to allow the national debt to swell to nearly $9 trillion, preventing a first-ever default on U.S. Treasury notes.
How did the national debt become so large? Someone has to be taxed on that eventually. What will our future generation do?? Want to know how much $1,000,000,000,000 is? “To burn through $1 trillion in the average American life span of 77 years, you’d have to part with about $35,580,857 and change every day from birth.” Wonder how much tax they’d have to pay?
Source:
CNN - What would you do with a trillion?
Real Estate: Cashing In or Trading Up? March 15, 2006
With real estate prices so high, do you know anyone who has sold and cashed out to downsize? Because we’re relatively young, since last summer, we thought of selling our home and downsizing until the market conditions are better to buy a bigger home for a future-growing family. (Remember capital gains in real estate is tax free in the US up to $250k for an individual or $500k for a married couple). In NYC, even if we wanted to downsize, it is more expensive to sell and rent or buy. As mentioned before, rental costs average $3755 per month in 2005 in Manhattan. We’re seeing a softening in the NJ market, so we have decided to place our home up for sale and move to an area with more potential for gains. Of course we’re not saving more, but we’re moving to an area we love and believe that that area is more desirable place for real estate in the long run.
Speaking of downsizing, this is an the extreme opposite of it. I don’t know why there’s a need for rich people to buy bigger and bigger homes. The article from March 13, 2006 in the NY Times about the 38,929 square foot, 11 bedroom, 16 bathroom house in Greenwich, CT is rediculous. Who needs that much room? Click on the graphic for the image of the house:
He said he wanted a home that would be suitable for entertaining and have room for his children’s friends and his future grandchildren to sleep over. “We have one guest room,” he said of his current 5-bedroom house. “I go down in the morning and there’s people sleeping on sofas.”
Poor guy. He’s got no room in his house, so he’s building a home with 4 kitchens and 11 bedrooms. Maybe he should charge the people who stay overnight on a regular basis? It’s hard to feel sorry for these people, but I suppose if you have the money, you’re entitled to do what you want.
So, are you cashing in or trading up?
Source:
Land of the Big Puts ‘Too Big’ to the Test
By ALISON LEIGH COWAN, NY Times, March 13, 2006
Men Aren’t Giving Women Credit on Money Issues March 14, 2006
There’s an interesting article on men, women, and money over at CNN.
The gap between the financial issues that people care about most and what their spouses think they hold important may not be the Grand Canyon. But some couples will need an awfully big bridge to get across it.
For instance, our survey found that only 27% of men believe their wives think having the right investments is very important. Yet nearly half of women say they do care (approximately the same proportion as men).
Likewise, only 45% of men say that having cash stashed for emergencies is very important to their spouse vs. 67% of women who believe it’s crucial.
Women come much closer in gauging what matters to men. If anything, they tend to give guys too much credit, believing their husbands care more about paying off debt and saving for big purchases than men actually do.
When asked about their family’s income, both men and women say they earn more than their spouses believe they make, according to a study by Jay Zagorsky, a research scientist at Ohio State University. Overall, Zagorsky found, the typical husband says his household earns 5% more and is 10% wealthier than the wife says, while the wife reports that the family owes about $500 more than her husband says.
There’s a huge gap on money issues with men and women. It seems true with some of my friends and with my parents. My father never gave credit to my mom with managing money. He thinks that she doesn’t know anything about saving and only knows about spending. It’s partly true, but he’s also not helping the situation by not allowing her to learn about managing personal finances. As a result, my mom has no experience or knowledge on investing or retirement funds. He figures that he should worry about bringing home the money while she should take care of the family. It’s old school, and he’s worked hard to give the family a comfortable life financially, but at the expense of my mom’s knowledge with money. I think it’s a tough balance, but we should all encourage eachother to learn about money, so when emergencies arise, we’ll be better prepared.
Source:
Men, women…and money
By Pat Regnier and Amanda Gengler
Tax Around the World: China March 13, 2006
While we’re on the topic of China and how their personal savings rate is 30%, (vs. -0.4% in USA), let’s take a look at their taxation laws.
- The tax on an individual’s income is progressive. As of 2005, an individual’s income is taxed progressively at 5% - 45%.
- A limited company in China is liable for tax at the rate of 33% in 2005.
- Companies in China that are located in specific legally defined areas pay company tax of 24%.
Capital Gains Tax in China
- An individual’s capital gains are taxable in China at the rate of 20%.
- Capital gains tax for a Chinese company is added to the regular tax.
- A 10% deduction at source is made from the capital gains of a foreign company in China.
- On taxing capital gains from the sale of real estate, when calculating the capital gain the purchase cost is deducted from the sale price at the 20% rate. When the capital gains are in excess of 50% of the purchase price, the rate of capital gains tax fluctuates between 30% - 60%. (It is 60% when the capital gain is over 200% when compared to the cost).
Ouch! Compare that with USA’s capital gains tax for real estate. As of 2006, Real estate gains in the US are tax free up to $250,000 gains for an individual and $500,000 for a married couple.
2005 China National Tax Brackets
(for an Individual)
| Tax Base - Yuan (US$ equivalent) | Tax |
| 1 - 500 (US$62.11) | 5% |
| 501 - 2,000 (US$248.47) | 10% |
| 2,001 - 5,000 (US$621.18) | 15% |
| 5,001 - 20,000 (US$2,484.72) | 20% |
| 20,001 - 40,000 (US$4,969.44) | 25% |
| 40,001 - 60,000 (US$7,454.16) | 30% |
| 60,001 - 80,000 (US$9,938.88) | 35% |
| 80,001 - 100,000 (US$12,423.59) | 40% |
| 100,001 and above | 45% |
* The table relates to income from a business. Income from a wage is taxable at 5% - 35%.
* Passive income such as interest and royalties is taxable at a standard rate of 20%.
Overseas Income
- An individual and company who are Chinese residents are also taxed on their income outside China and receive a credit for overseas taxes.
- Qualification for residence for an individual:
- Permanent residence in China while an individual who has no permanent residence in China but has lived in China for less than 5 years is taxed on his income in China, or overseas income that has its origins in China.
(n.b.: as of 3/10/06, 8.0492 Yuan = US $1)
Source:
http://www.novexcn.com/personal_icm_tax_99.html