investing · Personal Finance

The In-SECURE Act

I have a general rule for life in the United States: anything which saves you money is eventually removed.

A few of you may know about the passage and signing of the SECURE Act in December 2019. This drama-free legislation made some interesting reforms to retirement plan rules, allowing Americans to make certain penalty-free (but not tax-exempt) withdrawals for qualifying reasons, and also lengthened the timeline under which required minimum distributions (RMDs) must be taken by retirees.

That all sounds good, but there is something else to the story. A separate shift in distribution laws could leave you seriously screwed down the road where taxes are concerned.

Under previous rules, people who inherited an IRA from their parents had the liberty of “stretching” RMDs over the course of their own lifetimes, thus reducing the taxes paid on that money and building inter-generational wealth. Not anymore.

The SECURE Act upends this tradition by placing a 10-year distribution requirement on such inheritance IRAs. So if your parent dies and hands over an account with $500,000, you would need to withdraw something like $50,000 annually to spread it out over that period, or take the lump sum. In either case, taxes will be high.

Perhaps the rule won’t be so horrible for folks who inherit at the age of eighteen, but for others it is bad news. Imagine pulling in a six-figure salary at age 45 and having to stack $50,000 on top of that. Your taxes will giggle with delight.

A broader issue relates to how America prevents people from building wealth if they are not extremely rich. Under current tax laws you can even be penalized for making too much while also maxing out a Roth IRA, and few lucrative deductions are available for middle class people. The SECURE Act is just a garnish on that system.

investing · Personal Finance · Uncategorized

Expense Ratios Simplified

What the heck is THAT?

We’re talking about the elusive “Expense Ratio,” which governs some of the charges passed on to the investment fund participants by money managers. In most cases, this figure will be something like 0.04-0.99 percent, numbers that successfully flummox the mathematically disinclined. They don’t look expensive, and in fact they really don’t seem like much at all.

But the truth is in the fee lines. If you go by the first glance, it is easy to end up paying hundreds if not thousands of dollars worth of expensive charges that eat away at the base return.

Consider the following S&P 500 options for a second, and keep in mind that the returns are a few months old:

American Funds AMCAP Fund

5-year return:  8.94%

Gross and Net Operating Expenses: 0.36%, or $3.60 per $1000

Vanguard Institutional Index Fund

5-year return: 9.63%

Gross and Net Operating Expenses: 0.04%, or $0.35 per $1000

Those numbers make a BIG difference, and we’re not even including the other administrative fees. Plugging them into a calculator we get:

A difference of over $26,000 over thirty years, all while the participant thought he was “saving” money.

Now let’s look at a bond fund for comparison:

Ivy High Income Fund

5-year return: 3.91%

Gross and Net Operating Expenses: 0.57%, or $5.70 per $1000

What’s really sad is that the bond fund has a much lower return, and yet charges higher fees, eating away at growth for the saver or retiree. Expense ratios DO matter, even if they seem like legalese at first glance. Choose the low-cost fund whenever possible

Uncategorized

A Warning About H&R Block

For those of you considering H&R Block for taxes this year, it’s worth paying attention to a rather dishonest ruse they employ to generate money.

On Amazon, a popular option is the H&R Block Tax Software Deluxe + State 2019, which offers a special wherein you get a 4 percent bonus gift card on any refund total. It currently retails at $29.99 and sounds great, but things should be broken down a bit more for clarity.

Let’s take a look at the feature bullets:

  • Five free federal e-files and unlimited federal preparation and printing
  • One state program download included – a $39.95 value
  • Guidance on maximizing mortgage interest and real estate tax deductions
  • Reporting assistance on income from investments, stock options, home sales, and retirement
  • Quickly import your W-2, 1099, 1098, last year’s personal tax return
  • Free live product help via chat – or get tax help from a tax expert for a fee
  • Help Center has more than 13,000 articles, frequently asked questions, and tips in case you get stuck while preparing your taxes
  • Must allocate all or a portion of Federal refund to Amazon.com Gift Card to receive 4% Refund Bonus

In other words, you (or the household) is probably covered under the five free federal e-files, assuming it’s not a massive family. However, while you do get ONE state program download, you receive ZERO state files with the bundle.

How much does a state file cost? Oh, just $19.95, or roughly SIXTY PERCENT of the price tag for the “Deluxe” package:

Imagine doing that for several family members, and all of a sudden you’re at eighty bucks so that H&R can SUBMIT the return. And in case the family is too large, or you foolishly purchased a less fancy package, expect to pay $9.95 per federal return to e-file:

But don’t worry, cause it’s “Deluxe.”

Uncategorized

How I Chose a Laptop

In my book on van life, I wrote about my struggle surrounding the purchase of a new vehicle. You never get exactly what you want, or that very thing ends up with a crucial flaw unmaking its viability.

When it comes to a new laptop, things are much the same way. Too cheap means poor quality, but sometimes going pricey isn’t much better. The carnival marches on.

Initially, I set out with the objective of securing a machine that would properly balance between gaming, video editing speed, and a large storage capacity. The first aspect was less important, as I don’t game much anymore, but it’s rare to find a model with a basic graphics card which can do the others equally well.

After some preliminary searching, I found the Acer Nitro 5. This guy seemed to have the right combination of features for a good price, although it also appeared too good. As it turns out, the model enjoys subpar battery life, and the build quality plus graphics card are not terribly impressive. Furthermore, Acer’s reputation is spotty, to say the least.

Buoyed by some positive comments about Asus, I investigated the TUF FX505DT, which was a step up from the previous one, albeit still at a solid price. A couple of factors turned me away from it though, including the limited storage options and mediocre reviews for the Ryzen processor. To be fair, reviewers may be techies themselves, but for me a laptop is a long-term investment, not something for a couple of years.

Another one that received attention was the Lenovo Ideapad L340, a feller with good general reviews and a largely positive manufacturer reputation. I have heard that Lenovo’s quality declined over the past few years however, probably driven by the same industry obsession with cheap build material to subsidize costs.

I would almost end up pulling the trigger on the L340, save for it’s less capable processor and, once again, poor storage options. Someone will start screeching about the cloud or externals right now, but I’m, old-fashioned when it comes to memory.

My final and conflicted stop would be with the HP Omen 15-CE198WM. I currently own an HP that has lasted almost eight years, and the Omen offered a decent provision of storage, graphics performance, and speed wrapped up in one. Probably a bit too expensive given the age of the components, but I’m happy with the results thus far. My biggest gripe would be the fan noise and slightly jagged edges on the exterior.

Regardless of what you choose, a laptop is prone to having issues at some point, so I elected to purchase a 4-year protection plan through Asurion, which is less costly than options from other providers.

Culturalism · Personal Finance

The Masks of China

As some of you already know, Xi Jingping was photographed at the Beijing Coronavirus hospital wearing the transmission prevention mask which has become iconic during the crisis. This is while reports suggest he has failed to visit Wuhan, where the outbreak originated.

From what we can see now, there are a few possible takeaways:

1. The virus threat is not serious, and Xi simply has to put up the image of containment, in a (non-malicious) propaganda act.

2. A massive calamity is being covered up in China, but we still need take the Thomas Friedman approach, because their government is honest.

3. It’s the Russians.

Thoughts?

Personal Finance

How To Stay Warm Sleeping In Your Car

Is there a way to car camp in the cold comfortably?

This is a pretty common question among van dwellers who aren’t somewhere in the Deep South. That’s because most of us can sleep in humid regions without too much trouble, especially considering the aid of a cooling mattress or some battery-powered fans.

On the flip side, cold weather car camping always becomes an issue. Part of the problem is that heaters draw so much power, making battery-operated versions quite rare.

Sure, one can try to install an inverter or keep the heat on all night, but that way lies the risk of Carbon Monoxide. Propane heaters are not much better, especially if you intend to sleep in a smaller vehicle.

So where does that leave us? As it turns out, with a couple of decent options.

1. Use a Proper Sleeping Bag

Ditch the Coleman easy rip zippers and choose something durable. I’ve found the WolfTraders -30 model to be quite satisfactory, even if it is a bit expensive. Remember, minimalism doesn’t mean Cheapito thinking, particularly when it comes to holding in the heat.   

2. Bundle Up

You probably heard as a kid that the body loses heat at its ends. Make sure to wear a fresh pair of warm socks, some gloves, and a thick hat or balaclava while resting. The head is especially crucial, because it is usually more exposed, and you don’t want to be covered by the bag completely, or breathing will create moisture and possible sickness.

Invest in some thermal shirts and long underwear. They’re not terribly expensive, but do the job well.

3. Utilize Hand Warmers

A large pack of these little guys will run 14-20 bucks, but provide excellent comfort. One or two in the bag or in a hoodie pocket can make a lot of difference. Just avoid sticking them in that place.

4. Hot Water Bottles

This is one few people will readily think of, despite the ease and affordability. Purchase one or two of these fellows with the fabric case and boil water at work with an electric kettle or somewhere with a free outlet and place them at the bottom of your bag. They will prevent that chill that builds up around the feet, especially if that end is near a car door or trunk.

5. Get a Remote Starter

Although pricey (usually around $300.00) this feature can be a major boon in chilly weather. Once you get out of the bag upon waking, the change in temperature can be uncomfortable and cause sickness. Instead, keep the button close by and tap it so the car heats up before exiting. This also works as a precedent to going to sleep so the car is not freezing when you get in.

To be cautious, purchase a battery-operated carbon monoxide detector and keep it in the car as a safeguard.

Culturalism

Mitt Romney Has No Conscience

Much has been made of Willard Romney’s decision to vote for the “Abuse of Power” article in the Senate’s impeachment trial. Republicans are angry, while Hollywood leftists can’t stop praising Corporations are People for his brilliant move.

 As it turns out, the actual process remains less interesting than Romney’s justifications. In a speech beforehand and an interview with Fox News, Romney did the prototypical. He appealed to God, the Constitution, and his conscience.

Yet it’s highly doubtful that he has one. Let’s turn back time for a second. In 1994 and 2002, Romney staunchly defended the right to abortion, and then bounced back in 2006 as he prepared to run for president, now “firmly pro-life.”

In 2005, Romney vetoed emergency contraception for rape victims, only to cycle back and support access for all women in 2012.

Romney famously declared “Let Detroit go bankrupt,” but proceeded to defend the Wall Street bailout as a way to prevent an economic meltdown.

For all his love affairs with the Constitution, Romney endorsed waterboarding, denial of Miranda rights, and the Patriot Act. He also responded to a debate question on congressional military authorization by saying “You sit down with your attorneys and tell you watcha have to do”

As if that’s not enough, Romney has been on both sides of the Obamacare and immigration debates.

Then we have Romney’s famous “phony” speech, where he roundly attacked Donald Trump as a fraud. Of course he infamously proceeded to congratulate Trump on winning, and audition for Secretary of State.

But yes, he is a man with a conscience.